More Judgements

1. Home
2. More Judgements

GST - Bail in GST Evasion Cases - Right to bail in non-bailable offences under GST Act where investigation is completed and trial is not likely to commence within reasonable time – Applicant is arrested in connection with alleged creation of fake GST-registered firms and fraudulent availment of input tax credit through issuance of invoices without actual supply of goods - Whether bail should be granted to an accused under Section 132 of the CGST Act, 2017, notwithstanding the seriousness of the alleged offence and prima facie evidence against him – HELD - Bail is a rule and jail is an exception. Even in cases of non-ba... [Read more]

GST - Bail in GST Evasion Cases - Right to bail in non-bailable offences under GST Act where investigation is completed and trial is not likely to commence within reasonable time – Applicant is arrested in connection with alleged creation of fake GST-registered firms and fraudulent availment of input tax credit through issuance of invoices without actual supply of goods - Whether bail should be granted to an accused under Section 132 of the CGST Act, 2017, notwithstanding the seriousness of the alleged offence and prima facie evidence against him – HELD - Bail is a rule and jail is an exception. Even in cases of non-bailable offences under the GST Act, bail must be granted where the investigation is completed, charge is not framed, the trial is triable by a Magistrate, the maximum punishment is limited, the accused has no criminal antecedents, and there is no risk of tampering with evidence or intimidating witnesses. The detention pending trial cannot be punitive in nature and prolonged custody without trial commencement violates the constitutional guarantee of personal liberty - The absence of exceptional circumstances warranting denial of bail, combined with the likelihood that the trial would not conclude within a reasonable period, necessitates release on bail - Bail is granted to the applicant on furnishing personal bond and two sureties, subject to conditions including non-tampering with evidence, non-intimidation of witnesses, regular appearance before the trial court, and prohibition from leaving India without court permission – The bail application is allowed [Read less]

Service Tax - Education Services under ICT Scheme - Bundled Services - Exemption under Negative List and Mega Exemption Notification – Implementation of Information and Communication Technology scheme in Government schools along with supply of hardware, software, installation and commissioning services, maintenance services, and computer-aided education to students and teachers – Demand of service tax contending that the services were not covered under the negative list or the exemption notification - Whether bundled services comprising supply, installation and commissioning of computer hardware and software along with... [Read more]

Service Tax - Education Services under ICT Scheme - Bundled Services - Exemption under Negative List and Mega Exemption Notification – Implementation of Information and Communication Technology scheme in Government schools along with supply of hardware, software, installation and commissioning services, maintenance services, and computer-aided education to students and teachers – Demand of service tax contending that the services were not covered under the negative list or the exemption notification - Whether bundled services comprising supply, installation and commissioning of computer hardware and software along with imparting computer-aided education to students in government schools fall within the scope of education services covered under section 66D(l) of the Finance Act, 1994 (negative list regime until 13.05.2016) and subsequently under Entry 9 of the Mega Exemption Notification No. 25/2012-S.T. (from 14.05.2016), thereby exempting such services from service tax liability - HELD - The services rendered by the appellant under the ICT scheme include systematic instruction and training of students through technology as part of the school curriculum, constitutes education within the ordinary meaning of the term. The services involve providing infrastructure as a medium for delivering education which forms the predominant nature of the bundled service. The services are naturally bundled in the ordinary course of business under section 66F(3)(a) of the Finance Act, with the essential character being education - The services fall squarely within section 66D(l)(i) being education upto higher secondary school level and section 66D(l)(ii) being education as part of a curriculum for obtaining a qualification recognised by law - When section 66D(l) was omitted with effect from 14.05.2016, the exemption was not withdrawn but was moved from the statute to the notification through amendment, making the transition revenue-neutral - The appellant qualifies as an educational institution under the amended clause 2(oa) of the Notification and exempt under entry 9(a) of the notification as services provided by an educational institution to its students - The demand for service tax is set aside - The appeal of the assessee is allowed and the revenue appeal is dismissed [Read less]

Service Tax - Liability on construction of residential complex comprising individual houses, Merit of Macro Marvel Projects Ltd. vs CST case - Interpretation of "residential complex" definition under Section 65(91a) of the Finance Act, 1994 - Whether individual houses built as part of a layout with common facilities constitute a residential complex liable to service tax – HELD – The individual houses, being residential units as defined in the explanation to Section 65(91a), when constructed as part of a complex with more than twelve units and common facilities within an approved layout, squarely fall within the definit... [Read more]

Service Tax - Liability on construction of residential complex comprising individual houses, Merit of Macro Marvel Projects Ltd. vs CST case - Interpretation of "residential complex" definition under Section 65(91a) of the Finance Act, 1994 - Whether individual houses built as part of a layout with common facilities constitute a residential complex liable to service tax – HELD – The individual houses, being residential units as defined in the explanation to Section 65(91a), when constructed as part of a complex with more than twelve units and common facilities within an approved layout, squarely fall within the definition of residential complex. The explanation to the definition, inserted to remove doubts, explicitly declares that residential unit means a single house or a single apartment, and therefore the earlier judicial interpretation in Macro Marvel that individual houses do not qualify as residential complex is based on an incomplete reproduction of the definition and is contrary to the explicit statutory explanation. The finding in Macro Marvel that the law makers did not want individual residential houses to be subject to levy of service tax is contrary to the explicit explanation in the definition itself which was inserted to remove any doubts – The Revenue is correct in its submission that individual houses with some common facilities squarely fall in the definition of residential complex and the explanation in the definition for removal of doubts will remove any shadow of doubt on this issue. Since there are several decisions which followed Macro Marvel, this matter has to be referred to a larger bench to decide - During the relevant period, Macro Marvel order of this Tribunal was already issued, hence, it was reasonable for any assessee to presume that no service tax was payable on its activities if there was an order or judgment to that effect on the question. Therefore, extended period of limitation could not have been invoked in the present case - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Denial of cenvat credit based on statements of transporters without cross-examination – Violation of Natural justice - Whether cenvat credit can be denied to the appellant merely on the basis of uncross-examined statements of transporters when there is no other corroborative evidence on record to substantiate the allegation of non-receipt of raw materials – HELD - The allegations against the appellant is substantiated by the adjudicating authority on the basis of the statement of the owners/authorised persons of the vehicles. There is no other corroborative evidence available on record to substantiate ... [Read more]

Central Excise - Denial of cenvat credit based on statements of transporters without cross-examination – Violation of Natural justice - Whether cenvat credit can be denied to the appellant merely on the basis of uncross-examined statements of transporters when there is no other corroborative evidence on record to substantiate the allegation of non-receipt of raw materials – HELD - The allegations against the appellant is substantiated by the adjudicating authority on the basis of the statement of the owners/authorised persons of the vehicles. There is no other corroborative evidence available on record to substantiate the allegations of non-receipt of the raw material into the factory. Thus, the owners/authorised persons needs to be cross examined and in the absence of cross-examination, their statements cannot be relied upon - The principle of natural justice requires that when statements of witnesses form the sole basis of an adverse order against an assessee, the assessee must be given an opportunity to cross-examine such witnesses. The absence of cross-examination renders the statements unreliable and constitutes a serious breach of natural justice, thereby making the order a nullity - The impugned order is set aside and the matter is remanded back to the adjudicating authority with directions to allow cross-examination of the vehicle owners and authorised persons whose statements were relied upon and thereafter pass an appropriate order – The appeal is allowed by remand [Read less]

Customs - Misclassification of Food Testing Kits – Appellants imported food testing kits such as ELISA tests for detecting fungal toxins, allergens, and veterinary drug residues in food items and wrongly declared them as diagnostic test kits claiming benefit of exemption Notification no. 50/2017-Cus dated 30.6.2017 for life-saving drugs and diagnostic test kits - Whether the Food Testing Kits were correctly classifiable under customs tariff item 3822 00 90 or 3822 00 19 and whether the importer was entitled to exemption notification benefits – HELD - The kits were clearly not intended for human or animal diagnostics bu... [Read more]

Customs - Misclassification of Food Testing Kits – Appellants imported food testing kits such as ELISA tests for detecting fungal toxins, allergens, and veterinary drug residues in food items and wrongly declared them as diagnostic test kits claiming benefit of exemption Notification no. 50/2017-Cus dated 30.6.2017 for life-saving drugs and diagnostic test kits - Whether the Food Testing Kits were correctly classifiable under customs tariff item 3822 00 90 or 3822 00 19 and whether the importer was entitled to exemption notification benefits – HELD - The kits were clearly not intended for human or animal diagnostics but were exclusively meant for food testing purposes. The declaration as "diagnostic use only" was a deliberate misrepresentation with full knowledge that the goods were food testing kits and not diagnostic use items - Considering that the test kits were clearly not intended for diagnostics but were actually meant for food testing and were wrongly indicated as ‘Diagnostic use only’, there was a clear mis-declaration with full knowledge - The invocation of extended period of limitation and imposition of penalties on the importer and its Directors call for no interference – The appeals are dismissed [Read less]

GST - Classification of Polypropylene Leno Bags – Appellant had voluntarily declared its products under Tariff Heading 3923 2900 and availed duty Drawback benefits prior to the introduction of GST – Appellant sought Advance Ruling seeking reclassification of the same products under Tariff Heading 6305 33 00, contending that the bags are manufactured through weaving of polypropylene strips and should be classified as synthetic textile products – The AAR order held that the polypropylene leno bags manufactured by the appellant can be classified under the Chapter Heading 6305 33 00 – The AAAR set aside the order passe... [Read more]

GST - Classification of Polypropylene Leno Bags – Appellant had voluntarily declared its products under Tariff Heading 3923 2900 and availed duty Drawback benefits prior to the introduction of GST – Appellant sought Advance Ruling seeking reclassification of the same products under Tariff Heading 6305 33 00, contending that the bags are manufactured through weaving of polypropylene strips and should be classified as synthetic textile products – The AAR order held that the polypropylene leno bags manufactured by the appellant can be classified under the Chapter Heading 6305 33 00 – The AAAR set aside the order passed by the AAR. The Writ Court had dismissed the challenge to AAAR Order - Whether polypropylene leno bags manufactured from plastic granules through a weaving process can be classified as textile products under tariff heading 6305 33 00 instead of the plastic bag classification under heading 3923 2900 – HELD - The appellant is entitled to seek reclassification notwithstanding its earlier voluntary disclosure under 3923 2900 and obtaining duty drawback on the basis of such classification. However, the bags cannot be classified as textile products. The raw materials used are plastic granules, which per se cannot be termed as textile products. To qualify as synthetic textile, the strips used for weaving must meet specific parameters of cross-sectional diameter and deniers, which the strips used by the manufacturer do not satisfy as concurrently held by the Appellate AAR and the Ld. Single Judge. Furthermore, the bags are commonly known in the market as plastic sacks and not as synthetic textile or textile sacks – The appeal is dismissed [Read less]

GST - Refund of IGST on export through the Foreign Post Office - The arguments of Foreign Post Office (Respondent no.5) is that they are not duty-bound to process the request under the law even though Section 16 of the IGST Act, 2017 statutorily mandates so – HELD - A Government entity responsible for handling exports through postal services is statutorily bound under Section 16(3) of the IGST Act, 2017 and Rule 96 of the CGST Rules, 2017 to process refund requests for IGST paid on goods exported by the petitioner. The conduct of the postal authority in shirking its responsibility and contending that it is not duty-bound... [Read more]

GST - Refund of IGST on export through the Foreign Post Office - The arguments of Foreign Post Office (Respondent no.5) is that they are not duty-bound to process the request under the law even though Section 16 of the IGST Act, 2017 statutorily mandates so – HELD - A Government entity responsible for handling exports through postal services is statutorily bound under Section 16(3) of the IGST Act, 2017 and Rule 96 of the CGST Rules, 2017 to process refund requests for IGST paid on goods exported by the petitioner. The conduct of the postal authority in shirking its responsibility and contending that it is not duty-bound to process such requests despite clear statutory mandate is prima facie contrary to the provisions of the law - While the Circular dated 4th June, 2018 prescribes the procedure for processing refund requests with a timeframe of 10 days from receipt of records from the Customs department, the postal authority's reliance on the absence of retrospective applicability of such procedure is not tenable as the statutory obligation itself mandates the discharge of this function - The matter is adjourned to allow the postal authority to demonstrate its willingness to comply with the statutory mandate and to obtain appropriate instructions from its competent officers to assist the court in resolving the issue of refund processing – Ordered accordingly [Read less]

The deeming fiction of constructive service u/s 169 of the CGST Act applies only to physical modes and certain electronic modes with acknowledgement, but not to mere uploading on the Common Portal where no acknowledgement is generated.

Service Tax liability on uninvoiced allocations made by parent company to subsidiary - Absence of contractual agreement and service provision - Parent company allocates certain expenses to its subsidiary group entities through both invoiced and uninvoiced allocations. The invoiced allocations are properly charged with markup as per transfer pricing policy and service tax is paid under Reverse Charge Mechanism. However, uninvoiced allocations representing expenses for the parent company's own consumption are reflected only in the parent company's books of accounts and not in the subsidiary's accounts – Demand of service t... [Read more]

Service Tax liability on uninvoiced allocations made by parent company to subsidiary - Absence of contractual agreement and service provision - Parent company allocates certain expenses to its subsidiary group entities through both invoiced and uninvoiced allocations. The invoiced allocations are properly charged with markup as per transfer pricing policy and service tax is paid under Reverse Charge Mechanism. However, uninvoiced allocations representing expenses for the parent company's own consumption are reflected only in the parent company's books of accounts and not in the subsidiary's accounts – Demand of service tax on uninvoiced allocations contending that since debit entries were made in the system maintained by the parent company for the subsidiary, service tax liability arises – HELD - Service tax is a contractual levy premised on an understanding between service provider and service recipient, and absent any contractual agreement for provision of services between the parent company and subsidiary with respect to uninvoiced allocations, no service tax demand can be raised - The statutory provisions of Section 67 and Rule 7 of the Point of Taxation Rules require that the debit entry must be reflected in the books of accounts of the person receiving services, and since uninvoiced allocations are not reflected in the subsidiary's accounts but only in the parent company's accounts, the subsidiary cannot be attributed with service tax liability. The uninvoiced allocations represent cost sharing or reimbursement of expenses meant for the parent company's own consumption and not services provided to or consumed by the subsidiary, therefore such allocations cannot be subjected to service tax - The appellate authority's order dropping the entire demand of service tax and penalties is confirmed and the Revenue appeal is dismissed [Read less]

GST - Writ Jurisdiction, Validity of a consolidated show cause notice – Challenge to legality and validity of a consolidated SCN, covering multiple financial years and the consequent adjudication order – HELD - The substantive issue regarding consolidated show cause notices is pending before a larger bench of another High Court and hence judicial propriety demands restraint from expressing opinion on merits at the current stage – Further, the writ petition is not maintainable as an efficacious alternative statutory remedy exists in the form of appeal before the appellate authority - The petitioner having failed to ch... [Read more]

GST - Writ Jurisdiction, Validity of a consolidated show cause notice – Challenge to legality and validity of a consolidated SCN, covering multiple financial years and the consequent adjudication order – HELD - The substantive issue regarding consolidated show cause notices is pending before a larger bench of another High Court and hence judicial propriety demands restraint from expressing opinion on merits at the current stage – Further, the writ petition is not maintainable as an efficacious alternative statutory remedy exists in the form of appeal before the appellate authority - The petitioner having failed to challenge the show cause notice at the first instance and approached the Court only after the adjudication order, which appears to be a belated attempt to stall the adjudicatory process envisaged under the statute, and no exceptional circumstances warranting interference under Article 226 of the Constitution are established - The petition stands dismissed on the ground of availability of efficacious alternative statutory remedy [Read less]

Service Tax - Import of goods against foreign currency payments – Appellant made foreign current payment for import of goods and debited them as advertisement and sales promotion charges - Service tax demand on payments made in foreign currency under RCM alleging they relate to import of services – HELD - As per Section 66A or Notification No.30/2012-ST dated 20-06-2012, Service tax is payable on reverse charge basis on import of service and not on payments for import of goods. In the absence of proper evidence from the Revenue establishing the receipt of taxable services, the CA certificates cannot be overlooked being... [Read more]

Service Tax - Import of goods against foreign currency payments – Appellant made foreign current payment for import of goods and debited them as advertisement and sales promotion charges - Service tax demand on payments made in foreign currency under RCM alleging they relate to import of services – HELD - As per Section 66A or Notification No.30/2012-ST dated 20-06-2012, Service tax is payable on reverse charge basis on import of service and not on payments for import of goods. In the absence of proper evidence from the Revenue establishing the receipt of taxable services, the CA certificates cannot be overlooked being certificates from experts having training and knowledge of accounting systems. In the absence of any evidence, it cannot be presumed that payments have been made towards import of service. The demand of service tax not related to import of service, is set aside - Service Tax on Accrual Entries – Appellant makes provisional accrual entries at year-end for anticipated expenses when corresponding invoices are not received, and reverses these provisions in the subsequent year when actual invoices are received and payment is made. The Revenue demands service tax on these accrual entries – HELD - Under rule 7 of Point of Taxation Rule 2007, the point of taxation on RCM basis is the date of payment or three months from invoice date, whichever is earlier, and since neither payment was made nor invoice received in the year of accrual entry, the demand is not maintainable as these entries are estimates not against actual expenses or invoices - Service Tax on Events and Accommodation Services Outside India – HELD - Under Rule 5 and Rule 6 of Place of Provision of Service Rules, the place of provision of services relating to events and accommodation is where the event is actually held, and since the place of provision is outside India, the services are not imported into India and thus are not liable to service tax in India - Service Tax on Reimbursement of Expenses Incurred Outside India – HELD – The reimbursement of expenses such as food cannot be considered as receipt of BAS. Moreover, as the services are consumed outside India, it cannot constitute import of service. Further, service tax is not leviable on reimbursement of expenses for the period in question - Service Tax without Identification of Nature of Service - A demand for service tax is made on certain foreign currency payments without the revenue identifying the nature of service allegedly received. All payments in foreign currency cannot be presumed to be towards receipt of taxable services, and service tax cannot be demanded based on presumption. Since the revenue has not identified the nature of service, the demand lacks foundation and set aside - Revenue Neutrality as ground for setting aside Demand – HELD - It is settled law that revenue neutrality is a good ground for setting aside demands, particularly when tax liability is discharged under reverse charge mechanism, as the assessee pays the tax and takes the credit resulting in no gain to the government exchequer, and by following catena of judgments of the Tribunal and the Supreme Court, the entire demand being revenue neutral is set aside on this ground alone - Extended Period of Limitation in cases involving Interpretation of Service Tax Provisions - The revenue issues demand beyond the normal period of limitation on the ground that the assessee failed to disclose certain transactions – HELD - Since the entire case relates to interpretation of provisions relating to import of services, reverse charge mechanism, and place of provision of service rules, the extended period of limitation could not have been invoked. The demands beyond normal limitation period are set aside. [Read less]

Central Excise – Availment of Cenvat Credit based on invoices from Non-existent Dealers - Evidentiary Value of Third Party Statements - Disallowance of the Cenvat credit and recovery thereof, relying primarily on statements recorded from third parties during investigation and data seized from their premises – HELD – The statements recorded under section 14 of Central Excise Act cannot be relied upon unless the procedure prescribed under section 9D is followed, which requires examination of the witness before the authority and affording opportunity to cross-examine. Further, denying cross-examination is not justified ... [Read more]

Central Excise – Availment of Cenvat Credit based on invoices from Non-existent Dealers - Evidentiary Value of Third Party Statements - Disallowance of the Cenvat credit and recovery thereof, relying primarily on statements recorded from third parties during investigation and data seized from their premises – HELD – The statements recorded under section 14 of Central Excise Act cannot be relied upon unless the procedure prescribed under section 9D is followed, which requires examination of the witness before the authority and affording opportunity to cross-examine. Further, denying cross-examination is not justified as it is a statutory mandate and essential tool of justice delivery to test the veracity of evidence - Merely because company issuing invoice is found non-existent, the appellant cannot be denied Cenvat credit unless involvement of the assessee with knowledge about such non-existence is proved. Once an assessee acts with reasonable diligence in maintaining records as per the Rules and the invoices contain all requisite particulars, casting an impossible burden on the assessee to verify the credentials of dealers would be impractical and contrary to the Rules. There is no evidence showing the assessee received knowledge of bogus invoices or participated in the fraud - The recovery of Cenvat credit and imposition of penalty are set aside and the appeal is allowed [Read less]

Customs - Penalty under section 112(b) of Customs Act – Sale of fabrication materials and scrap to a company (NTAL) located in SEZ against prescribed certificates - Department alleges appellants purchased non-duty paid goods clandestinely removed by NTAL – The impugned order imposes penalty relying solely on records maintained by the NTAL and statement of appellant's manager recorded under section 108 without following procedure contemplated under section 138(B) – HELD - For imposing penalty under Section 112(b), two conditions are required: first, acquiring possession or being concerned with goods liable for confisc... [Read more]

Customs - Penalty under section 112(b) of Customs Act – Sale of fabrication materials and scrap to a company (NTAL) located in SEZ against prescribed certificates - Department alleges appellants purchased non-duty paid goods clandestinely removed by NTAL – The impugned order imposes penalty relying solely on records maintained by the NTAL and statement of appellant's manager recorded under section 108 without following procedure contemplated under section 138(B) – HELD - For imposing penalty under Section 112(b), two conditions are required: first, acquiring possession or being concerned with goods liable for confiscation, and second, knowledge or belief about such goods being liable for confiscation - The appellants have categorically clarified through replies, general purchase ledgers, bank statements and certificates that no purchase transactions of non-duty paid goods occurred and they are manufacturers not traders, hence they neither acquired possession nor dealt with any non-duty paid goods - Department's reliance on third-party records alone without independent corroborative evidence and improper procedure for recording statement renders penalty unjustifiable - Absent proof of both requisite conditions, penalty cannot be sustained – The impugned order is set aside and appeals are allowed [Read less]

Service Tax – Demand based on third party data and financial statements - Department initiated proceedings based on third party data and financial statements to demand service tax - Whether the appellant is liable to pay service tax when the same is already paid by the service recipient – HELD - The Appellant being a service provider is not liable to pay Service Tax when the same is already paid by the service recipient under RCM – Further, the demand raised by invoking longer period of limitation is solely based upon the financial statements submitted by the appellant and the third party data, which has consistently... [Read more]

Service Tax – Demand based on third party data and financial statements - Department initiated proceedings based on third party data and financial statements to demand service tax - Whether the appellant is liable to pay service tax when the same is already paid by the service recipient – HELD - The Appellant being a service provider is not liable to pay Service Tax when the same is already paid by the service recipient under RCM – Further, the demand raised by invoking longer period of limitation is solely based upon the financial statements submitted by the appellant and the third party data, which has consistently been held to be as not proper by Tribunal in various decisions - The impugned order is not sustainable on limitation itself. Accordingly, demand and penalties imposed are set aside and the appeal is allowed [Read less]

Service Tax - Bar of Limitation to issue second Show Cause Notice - Bar of limitation for issuance of subsequent show cause notice invoking extended period on identical grounds – Appellant was issued two consecutive show cause notices for service tax demands for the financial years 2015-16 and 2016-17. The first notice for 2015-16 was subsequently dropped by the additional commissioner. The second notice for 2016-17 was issued invoking the extended period of limitation on the basis of information provided by the income tax department, alleging suppression of facts - Whether the second show cause notice invoking the exten... [Read more]

Service Tax - Bar of Limitation to issue second Show Cause Notice - Bar of limitation for issuance of subsequent show cause notice invoking extended period on identical grounds – Appellant was issued two consecutive show cause notices for service tax demands for the financial years 2015-16 and 2016-17. The first notice for 2015-16 was subsequently dropped by the additional commissioner. The second notice for 2016-17 was issued invoking the extended period of limitation on the basis of information provided by the income tax department, alleging suppression of facts - Whether the second show cause notice invoking the extended period of limitation can be sustained when the department had full knowledge of the facts and activities of the appellant at the time of issuing the first notice – HELD – The suppression of facts cannot be alleged against the assessee if all relevant facts were already in the knowledge of the Department when the first notice was issued. The appellant was regularly filing returns and therefore the same set of facts could not be taken as suppression of facts in the subsequent notice. The Commissioner (appeals) is completely silent on the limitation issue in his order. A subsequent notice invoking extended period of limitation on similar and identical grounds is not sustainable when the Department possessed all necessary information at the time of the first notice - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Export Transportation Services - Procedural Delay in Filing Exemption Forms – Appellant filed applications for service tax exemption on transportation charges for export cargo under the Notification No. 18/2009-S.T. dated 07th July, 2009 prescribing a specific form and timeline. The forms were filed with delay beyond the prescribed period, though all substantive conditions for exemption were satisfied and the forms were subsequently acknowledged by the authority - Whether service tax exemption can be denied solely on the ground of procedural delay in filing the prescribed forms when all substantive conditio... [Read more]

Service Tax - Export Transportation Services - Procedural Delay in Filing Exemption Forms – Appellant filed applications for service tax exemption on transportation charges for export cargo under the Notification No. 18/2009-S.T. dated 07th July, 2009 prescribing a specific form and timeline. The forms were filed with delay beyond the prescribed period, though all substantive conditions for exemption were satisfied and the forms were subsequently acknowledged by the authority - Whether service tax exemption can be denied solely on the ground of procedural delay in filing the prescribed forms when all substantive conditions for exemption have been fulfilled – HELD - The procedural requirements should not frustrate substantive rights. The procedural provisions are directory in nature, intended only to facilitate verification and not to deny legitimate benefits. Relying on the precedent that substantive benefits cannot be denied on technical grounds, since there was no dispute regarding the rendering of transportation services in relation to exports and all substantive conditions were met, the procedural violation is condoned and the exemption benefit is allowed – Further, the denial of exemption solely on procedural grounds would be contrary to settled legal principles and judicial precedents consistently affirming that procedural lapses cannot override substantive entitlements - The service tax demand on transportation charges for export cargo is set aside and the exemption benefit is allowed despite the procedural delay in filing the prescribed Forms - Erroneous Computation of Gross Transportation Charges - Service Tax Component Already Included in Charged Amount - Department computed taxable transportation charges based on the gross amount reflected in the profit and loss account without deducting the service tax and interest components already paid and included in that gross figure. The assessee submitted statutory returns showing the service tax paid for the relevant period - Whether service tax liability can be demanded on transportation charges when the charged amount already includes the service tax component previously paid by the assessee – HELD - The gross amount in the profit and loss account included both the service tax paid on transportation charges and interest on late payment. Revenue erroneously computed the taxable value without deducting these components, resulting in a demand for service tax on amounts already discharged. The assessee had provided copies of statutory returns filed with the department clearly showing the service tax paid, which were available on record but not considered during investigation - The service tax demand is set aside holding that the computation was erroneous and not legally sustainable, as it sought to impose tax liability on amounts already paid and included in the gross charges - Partially Accepted Exemption Claims - Arbitrary Rejection of Balance Amount Without Justification - Whether partial acceptance of exemption claims coupled with unexplained rejection of the remaining claimed amount constitutes valid adjudication – HELD - The adjudicating authority had specifically recorded the submission of exemption forms for the total claimed amount but thereafter granted relief only for a portion without providing any justifiable reasons or grounds for denying relief on the balance amount. Such selective acceptance followed by unexplained rejection is legally untenable and arbitrary. Once an authority acknowledges submission of all required documentation for the full claimed amount, it cannot arbitrarily accept part of the claim and reject the remainder without articulating cogent reasons supported by law and facts on record - The service tax demand on the balance amount that was rejected without justification is set aside - Penalty under Section 78 – HELD - The entire demand had been raised on the basis of records and documents submitted by the assessee itself. No evidence has been adduced by the Revenue to demonstrate mala fide intent to evade payment of service tax, nor any corroborative evidence brought on record showing that the assessee had indulged in suppression or wilful misstatement. The imposition of penalty requires proof of fraudulent intent or deliberate evasion, which are absent in the facts of the case. The bona fides are evident from the assessee's subsequent compliance through voluntary disclosure schemes and submission of required documentation - The penalty under Section 78 is set aside in its entirety as being unsustainable both in law and on facts - Abatement in Transportation Service Tax - Whether confirmed service tax liability on transportation services should be calculated with or without the benefit of statutory abatement – HELD - For service tax liability arising on transportation services, the assessee is eligible for abatement of seventy-five percent from the taxable value as a statutory benefit applicable to the transportation service category. The abatement is a valuation principle specifically provided in the service tax regulations for transportation services and cannot be withheld from assesses even when the underlying claim for exemption is rejected, as abatement operates as a separate benefit from exemption – The service tax liability on confirmed transportation charges must be calculated after allowing the benefit of seventy-five percent abatement from the taxable value. [Read less]

GST - Service of notice – Assessee filed an appeal before the GSTAT against an order passed by the Respondent-authority - Registry attempted to serve notice on the respondent through the official portal and email, but the respondent fails to acknowledge receipt or provide necessary credentials for verification of documents. Despite multiple reminder communications, no response is forthcoming from the respondent through any channel – HELD - Where service through the portal and email contemplated under the statute proves unsuccessful despite reasonable attempts and reminders, service may be effected through additional mo... [Read more]

GST - Service of notice – Assessee filed an appeal before the GSTAT against an order passed by the Respondent-authority - Registry attempted to serve notice on the respondent through the official portal and email, but the respondent fails to acknowledge receipt or provide necessary credentials for verification of documents. Despite multiple reminder communications, no response is forthcoming from the respondent through any channel – HELD - Where service through the portal and email contemplated under the statute proves unsuccessful despite reasonable attempts and reminders, service may be effected through additional modes including registered post and speed post in accordance with the statutory provisions relating to service of notices. The service upon the respondent shall be effected not only through the portal and email but also through registered post and speed post in accordance with Section 169 of the CGST Act, 2017, to ensure proper service and compliance with procedural requirements – Ordered accordingly [Read less]

Customs – Classification of relays, feeder management intelligent electronic devices (FMIEDs), Principal function test - Appellant imported four types of electrical relays namely Midos relays, relays for tap changer control and transformer monitoring, K-range relays, and MICOM claiming classification under Customs Tariff Item 8536 49 00 and exemption under Serial Number 376 of Notification No. 12/2012 - Dept issued a show cause notice disputing the classification and claiming the goods were feeder management intelligent electronic devices classifiable under tariff item 8536 90 90 with contact ratings exceeding 7 amperes ... [Read more]

Customs – Classification of relays, feeder management intelligent electronic devices (FMIEDs), Principal function test - Appellant imported four types of electrical relays namely Midos relays, relays for tap changer control and transformer monitoring, K-range relays, and MICOM claiming classification under Customs Tariff Item 8536 49 00 and exemption under Serial Number 376 of Notification No. 12/2012 - Dept issued a show cause notice disputing the classification and claiming the goods were feeder management intelligent electronic devices classifiable under tariff item 8536 90 90 with contact ratings exceeding 7 amperes - Whether the imported goods are relays classifiable under CTI 8536 49 00 or feeder management intelligent electronic devices classifiable under CTI 8536 90 90, and whether they are eligible for exemption under the notification for relays with contact rating up to 7 amperes – HELD - The primary function test enunciated in Section Note 3 to Section XVI of the tariff schedule and affirmed in the Circular dated 19.04.2007 regarding classification of multi-functional products requires that when a composite machine performs multiple complementary functions, classification shall be determined by the machine or component which performs the principal function - The relays are devices used for control, protection and supervision of electrical systems from overcurrent and voltage, and that additional features resulting from technological advancements such as digital displays, data recording and alarm functions are merely ancillary to the primary protective function and cannot alter the core function for which the goods are purchased - The technical brochures identify the goods as relays and that in trade parlance customers specifically placed orders for relays by mentioning specifications and standards - Three of the four products namely Midos relays, relays for tap changer control and transformer monitoring, and K-range relays all had contact ratings of 5 amperes, whereas the Commissioner had erroneously assumed all four products had contact ratings above 7 amperes solely based on the specification of MICOM relays - The appellant had voluntarily paid the differential duty amount for MICOM relays prior to issuance of the SCN - The confirmation of differential duty for the three products other than MICOM along with interest and penalties are set aside. All four products are held to be classifiable under CTI 8536 49 00 as relays. The products except MICOM were declared entitled to exemption under the notification. The imposition of penalties under sections 112 and 114AA of the Customs Act is set aside - The appeals are partly allowed [Read less]

Customs - Classification - Rule 2(a) of General Rules for Interpretation - Appellant, engaged in manufacturing and assembling mobile phones, imported certain goods declaring them as 'parts of mobile phones' – Dept reclassified the imported goods as complete mobile phones in CKD/SKD condition under the tariff item applicable to mobile phones attracting a higher rate of basic customs duty, by invoking rule 2(a) of the General Rules for Interpretation of the Customs Tariff Act, 1975, confirmed differential duty with interest, confiscated the goods with an option to redeem on payment of redemption fine, and imposed penalty f... [Read more]

Customs - Classification - Rule 2(a) of General Rules for Interpretation - Appellant, engaged in manufacturing and assembling mobile phones, imported certain goods declaring them as 'parts of mobile phones' – Dept reclassified the imported goods as complete mobile phones in CKD/SKD condition under the tariff item applicable to mobile phones attracting a higher rate of basic customs duty, by invoking rule 2(a) of the General Rules for Interpretation of the Customs Tariff Act, 1975, confirmed differential duty with interest, confiscated the goods with an option to redeem on payment of redemption fine, and imposed penalty for improper importation - Whether the imported goods, being parts of mobile phones accompanied by locally procured components, could be treated as complete or finished mobile phones by invoking rule 2(a) of the General Rules for Interpretation so as to attract reclassification and consequent differential duty liability – HELD – The Rule 2(a) of the General Rules for Interpretation stipulates that incomplete or unfinished goods must possess the essential character of the complete or finished goods for them to be classified as such. The burden to establish reclassification lies squarely upon the department and not upon the assessee - Further, the Chartered Engineer engaged by the Department himself categorically opined that the unassembled parts imported by the appellant form an incomplete mobile phone and the goods were without battery essential for power backup and without camera, they required fitment of additional parts along with some basic manufacturing process - Since the expert report of the Chartered Engineer did not conclusively establish that the imported parts possessed the essential character of a complete or finished mobile phone, it is the department that bears the burden of proving reclassification by adducing proper evidence - The impugned order erred in placing the burden upon the appellant to demonstrate that the goods were not complete mobile phones. The view taken by the Principal Commissioner that the goods were complete mobile sets by virtue of rule 2(a) of the General Rules for Interpretation cannot be sustained – The impugned order is set aside and the appeal is allowed [Read less]

Customs - Invocation of Extended Period of Limitation under Section 28(4) of the Customs Act for wrong classification of goods – Appellant imported various packaging materials and components declaring them under different Customs Tariff items than those proposed by the Department - The Department issued notice alleging wrong classification and invoking the extended period of limitation, contending that the importer willfully misclassified goods to evade duty – Whether the extended period of limitation can be invoked merely on the ground that the importer self-assessed the goods under one tariff classification – HELD ... [Read more]

Customs - Invocation of Extended Period of Limitation under Section 28(4) of the Customs Act for wrong classification of goods – Appellant imported various packaging materials and components declaring them under different Customs Tariff items than those proposed by the Department - The Department issued notice alleging wrong classification and invoking the extended period of limitation, contending that the importer willfully misclassified goods to evade duty – Whether the extended period of limitation can be invoked merely on the ground that the importer self-assessed the goods under one tariff classification – HELD - The extended period of limitation cannot be invoked in the circumstances of the case as under the self-assessment regime, the importer is required to declare facts truthfully in the bill of entry, but the officer has the authority to reassess and take a different view on classification without establishing that there was suppression of facts with intent to evade duty - Department must establish not only suppression of facts but also that such suppression was deliberate and intentional to evade payment of duty. Merely because an importer indicates a particular tariff item in the B/E and the goods were physically examined and cleared does not constitute wilful misstatement or suppression attracting the extended period - Additionally, the Commissioner cannot examine grounds not specifically raised in the show cause notice. The reliance on statements made under Section 108 without following the procedure under section 138B is improper - The impugned order confirming the demand of duty under the extended period of limitation is set aside and the appeal is allowed [Read less]

Service Tax - Rebate on Export of Services - Eligibility of credit availed prior to service tax registration - Whether Cenvat Credit availed prior to obtaining service tax registration is admissible for the purpose of claiming rebate on export of services – HELD - A plain reading of the relevant provisions of the Finance Act and the Cenvat Credit Rules does not reveal any statutory condition making service tax registration a pre-condition for availment of Cenvat Credit. The obligation to register under the Finance Act is applicable only to persons liable to pay service tax, whereas the appellant, being exclusively engage... [Read more]

Service Tax - Rebate on Export of Services - Eligibility of credit availed prior to service tax registration - Whether Cenvat Credit availed prior to obtaining service tax registration is admissible for the purpose of claiming rebate on export of services – HELD - A plain reading of the relevant provisions of the Finance Act and the Cenvat Credit Rules does not reveal any statutory condition making service tax registration a pre-condition for availment of Cenvat Credit. The obligation to register under the Finance Act is applicable only to persons liable to pay service tax, whereas the appellant, being exclusively engaged in export of services during the disputed period, was not liable to pay any service tax, and therefore was not required to obtain registration during that period. The credit availed on input services, though accumulated prior to registration, could lawfully be taken upon obtaining registration, subject to compliance with other applicable provisions of the Cenvat Credit Rules including nexus with output services and availability of proper documents - Multiple High Courts and co-ordinate benches have consistently held that there is no statutory provision disentitling a person from taking credit merely on account of non-registration during a period when registration itself was not required – The denial of credit solely on the ground of non-registration is not legally sustainable and set aside - The matter requires re-examination of the factual matrix including supporting documents by the original authority to verify eligibility of the credit under the provisions prevailing during the relevant period - Appeal allowed by way of remand - Cenvat Credit - Nexus between input services and output services - Eligibility of credit on certain input services such as life insurance for employees, rent-a-cab, hotel bills, air travel, medical check-up, annual maintenance contracts and vehicle maintenance - Whether credit on such input services can be denied on the ground that they lack a direct nexus with the provision of output services exported – HELD - The period in question falls prior to the amendment effected by the Finance Act of a later year, and that under the unamended definition of input service in the Cenvat Credit Rules, any service used in relation to business activities was eligible for credit, which carried a wider scope than what was introduced by the subsequent amendment. The Tribunal has consistently held that various categories of input services including those pertaining to management, maintenance or repair, air travel, outdoor catering, insurance for employees and entertainment expenses are eligible as input services in the context of provision of output services during this period, and that the original adjudicating authority failed to consider these binding decisions while denying credit on account of absence of nexus - Each denied input service requires fresh examination in the factual context of the appellant by applying the ratios laid down by the co-ordinate benches on the eligibility of such input services - Appeal allowed by way of remand [Read less]

Service Tax - Refund – Time Limit for Filing Claim – One Year Period Computation - Appellant filed a refund claim for a quarterly period (July to September 2016) on 27.07.2017 for services exported in convertible foreign exchange – Rejection of refund claim on the ground that remittances were received beyond one year from the date of receipt and therefore time-barred under Notification No. 27/2012 read with Rule 5 of Cenvat Credit Rules, 2004 - Appellant contended that the one year period should be computed from the last date of the quarter for which refund was filed and not from the actual date of receipt of each re... [Read more]

Service Tax - Refund – Time Limit for Filing Claim – One Year Period Computation - Appellant filed a refund claim for a quarterly period (July to September 2016) on 27.07.2017 for services exported in convertible foreign exchange – Rejection of refund claim on the ground that remittances were received beyond one year from the date of receipt and therefore time-barred under Notification No. 27/2012 read with Rule 5 of Cenvat Credit Rules, 2004 - Appellant contended that the one year period should be computed from the last date of the quarter for which refund was filed and not from the actual date of receipt of each remittance – HELD - The Notification No. 14/2016 dated 01.03.2016 amended the earlier Notification No. 27/2012 and provided a specific time limit for service providers, requiring refund claims to be filed before expiry of one year from the date of receipt of payment in convertible foreign exchange - A plain reading of the notification clearly requires filing of refund claim within one year from the date of receipt of convertible foreign exchange. The case laws relied upon the appellant are distinguished on the ground that they dealt with provisions under Notification No. 27/2012 and not the amended provisions applicable post 01.03.2016. Accordingly, the limitation has to be counted from the date of receipt of remittances and not from the last date of the quarter - The matter is remanded back to the original Refund Sanctioning Authority to decide the refund claim – The appeal is allowed by way of remand - Refund – Evidence of Receipt of Foreign Exchange – Acceptance of FIRC and BRC - The appellant submitted Form FIRC as evidence of receipt of foreign exchange instead of Bank Realisation Certificate, contending that Circular dated 12.03.2009 permits acceptance of FIRC in lieu of BRC. Department rejected the refund claim on the ground that strict compliance with Notification No. 27/2012 required production of BRC and not FIRC for the relevant period 2016-17 – HELD - What is crucial is that the document should categorically indicate that foreign exchange has been received in respect of the invoices under the cover of which export of service has taken place. The evidence of receipt of foreign exchange can be in the form of FIRC or BRC or both, provided there is corroboration with invoices in respect of which refund has been claimed. Accordingly, the matter is remanded to the original Refund Sanctioning Authority with direction to examine whether remittances have been received in respect of the invoices under the cover of which export of service has taken place, based on documents to be submitted by the appellant. [Read less]

Service Tax – Payments towards for technology transfer, technical assistance under Inter-Governmental Agreement – Demand under Scientific and Technical Consultancy Service - Appellant, an aircraft manufacturer, entered into an agreement with a foreign state-owned entity for transfer of licence and technological documentation for production of aircraft in India under an Inter-Governmental Agreement - The appellant made payments for technology transfer, technical assistance, supply of parts, training and related services - Whether payments made by the appellant for services rendered by a foreign government organization i... [Read more]

Service Tax – Payments towards for technology transfer, technical assistance under Inter-Governmental Agreement – Demand under Scientific and Technical Consultancy Service - Appellant, an aircraft manufacturer, entered into an agreement with a foreign state-owned entity for transfer of licence and technological documentation for production of aircraft in India under an Inter-Governmental Agreement - The appellant made payments for technology transfer, technical assistance, supply of parts, training and related services - Whether payments made by the appellant for services rendered by a foreign government organization in connection with technology transfer and technical assistance constitute "Scientific or Technical Consultancy Service" liable to service tax under RCM – HELD - The definition of Scientific or Technical Consultancy Service under Section 65 of the Finance Act, 1994 requires that the service must be rendered by a scientist, a technocrat, or a science or technology institution or organization. The foreign state entity in question is a governmental organization responsible for export of defence and dual use technology, acting as an exclusive state intermediary agency, and therefore cannot be classified as a science or technology institution or organization - The Tribunal relied on its earlier coordinate bench decisions involving the same appellant and the same foreign entity under identical factual matrices where it was conclusively established that the entity is a government organization and not a scientific or technical institution. Even the Department did not press this aspect when it filed an appeal before the Supreme Court against the coordinate bench's earlier order, thereby accepting the position. No evidence was placed on record to establish that the appellant received services from any individual scientist or technocrat in their individual capacity - The demand of Service Tax under Scientific or Technical Consultancy Service is set aside. However, confirmation of demand of Service Tax on MMR and penalty thereon is sustained - The appeals filed by assessee are allowed partly and the appeal filed by the Department is dismissed [Read less]

Service Tax - Taxability of Compensation/Liquidity Damages for non-fulfillment of contractual obligations - Appellant, a testing service provider, received compensation from its client at a fixed rate per unit when the client failed to meet the guaranteed minimum number of units for testing as per the contract - Adjudicating authority treated this compensation as part of the gross amount received for the testing service and levied service tax under the Determination of Value Rules - Whether compensation or liquidity damages paid by the client due to its inability to honor its contractual commitment to send the agreed-upon ... [Read more]

Service Tax - Taxability of Compensation/Liquidity Damages for non-fulfillment of contractual obligations - Appellant, a testing service provider, received compensation from its client at a fixed rate per unit when the client failed to meet the guaranteed minimum number of units for testing as per the contract - Adjudicating authority treated this compensation as part of the gross amount received for the testing service and levied service tax under the Determination of Value Rules - Whether compensation or liquidity damages paid by the client due to its inability to honor its contractual commitment to send the agreed-upon number of units is liable to service tax as part of the consideration for testing services – HELD - The payment was in the nature of liquidity damage paid solely because the client could not send the agreed-upon quantity of units, and not for any service actually provided by the appellant - The adjudicating authority had treated the payment as a reimbursable expense while invoking the Rule 5(1) of Service Tax (Determination of Value) Rules, 2006, which has been held ultra vires by the High Court and upheld by the Supreme Court – The payment is more in the nature of liquidity damage and it is paid only because of the inability of the client to send the guaranteed minimum number of units for testing. Service tax cannot be levied on liquidity damages or compensation received due to non-performance by the other party - The demand for service tax on compensation charges is set aside - Taxability of Renting of Immovable Property Service - Whether the demand for service tax on renting of immovable property can be reopened for classification when the appellant has already paid the tax and received the benefit of penalty waiver – HELD – The demand is upheld as the appellant had not disputed the taxability before the adjudicating authority. Once the adjudicating authority had already extended the benefit of penalty waiver as a matter of statutory obligation and the appellant had paid the outstanding tax with interest, the classification issue cannot be reopened at the appellate stage. [Read less]

Service Tax on Delayed Payment Charges in Stock Broking Services – Appellant collected penalties from clients for delayed payment of settlement amounts to the stock exchange, treating such charges as delayed payment charges rather than service tax consideration - Department sought to levy service tax on these amounts as declared service under section 66E(e) of the Finance Act, 1994, contending that tolerating delayed payment constituted a taxable service – HELD - The delayed payment charges collected by stock brokers for amounts advanced on behalf of clients towards purchase of securities are relatable to interest on f... [Read more]

Service Tax on Delayed Payment Charges in Stock Broking Services – Appellant collected penalties from clients for delayed payment of settlement amounts to the stock exchange, treating such charges as delayed payment charges rather than service tax consideration - Department sought to levy service tax on these amounts as declared service under section 66E(e) of the Finance Act, 1994, contending that tolerating delayed payment constituted a taxable service – HELD - The delayed payment charges collected by stock brokers for amounts advanced on behalf of clients towards purchase of securities are relatable to interest on funds deployed and thus fall within the negative list under section 66D(n) of the Finance Act, 1994, covering deposits, loans or advances where consideration is by way of interest or discount - Although the Board's earlier Circular dated 03.08.2011 became inapplicable post-01.07.2012 due to material changes in law including introduction of the negative list and declared service provisions, the delayed payment charges pertaining to stock broking services represent time value of money and constitute interest on advances extended to clients, thereby exempting them from service tax liability under the negative list rather than treating them as declared service - The demand of service tax on delayed payment charges towards stock broking services is set aside. However, the demand of service tax on delayed payment charges towards DEMAT account services is upheld - The appeal is partly allowed - Service Tax on Delayed Payment Charges in DEMAT Account Services - The delayed payment charges collected for failure to pay account maintenance fees cannot be equated to interest and therefore does not qualify for exemption under the negative list. Such charges represent consideration received for tolerating the act of default in payment by the account holder and thus constitute declared service under section 66E(e), making them liable to service tax as integral components of the DEMAT account service. The demand of service tax on delayed payment charges towards DEMAT account services is upheld. [Read less]

Service Tax - Eligibility for abatement under conditional Notification No.01/2006-ST dt.01.03.2006, as amended vide Notification No.34/2011-ST dt.01.05.2011 – Appellant availed Cenvat credit on input services (maintenance and repair, internet, and courier services) during the period prior to 30.06.2012 while claiming abatement benefit under Notification No.01/2006-ST as amended by Notification No.34/2011-ST - Whether the appellant was eligible for abatement when the conditions of the notifications clearly prohibited taking Cenvat credit on inputs, capital goods or input services – HELD – The exemption notifications i... [Read more]

Service Tax - Eligibility for abatement under conditional Notification No.01/2006-ST dt.01.03.2006, as amended vide Notification No.34/2011-ST dt.01.05.2011 – Appellant availed Cenvat credit on input services (maintenance and repair, internet, and courier services) during the period prior to 30.06.2012 while claiming abatement benefit under Notification No.01/2006-ST as amended by Notification No.34/2011-ST - Whether the appellant was eligible for abatement when the conditions of the notifications clearly prohibited taking Cenvat credit on inputs, capital goods or input services – HELD – The exemption notifications issued under Section 93 must be construed strictly and it is incumbent upon the appellant to justify that the services in question were not used for providing the taxable services. The maintenance and repair services, internet services and courier services have direct nexus with hotel operations and the provision of accommodation and restaurant services, making it inconceivable that such services were not utilized for the taxable services - The invoices pertained to the period prior to 30.06.2012 and the appellant had availed credit on these input services, thereby clearly violating the condition of non-availment of Cenvat credit prescribed by the notifications. In the absence of any cogent and substantive evidence demonstrating that these services were not used, either partly or exclusively, for providing the taxable services, the benefit of the Notifications cannot be extended - The impugned order is upheld and the appeal is dismissed [Read less]

Central Sales Tax Act, 1956 - Inter-State Sale of Natural Gas - Jurisdiction of State to Levy VAT - Constitutional Competence – Delivery Point and Transfer of Title – Respondents operating under a Production Sharing Contract with the Government of India for an offshore deep-water block, entered into Gas Sales and Purchase Agreements with buyers in various States – The natural gas extracted from the offshore basin was delivered at a designated onshore processing terminal in one State ("delivery point"), with title, risk, and possession passing to the buyers at that point, following which the buyers independently arran... [Read more]

Central Sales Tax Act, 1956 - Inter-State Sale of Natural Gas - Jurisdiction of State to Levy VAT - Constitutional Competence – Delivery Point and Transfer of Title – Respondents operating under a Production Sharing Contract with the Government of India for an offshore deep-water block, entered into Gas Sales and Purchase Agreements with buyers in various States – The natural gas extracted from the offshore basin was delivered at a designated onshore processing terminal in one State ("delivery point"), with title, risk, and possession passing to the buyers at that point, following which the buyers independently arranged transportation of the gas through common carrier pipelines across multiple States to their facilities in another State - Assessing authority of the destination State levied VAT on the transaction, treating the same as an intra-State sale on the ground that the gas, being fungible and co-mingled in the common carrier pipeline, constituted unascertained goods that were appropriated only upon receipt at the buyers' factories within that State, and that the sale was therefore completed within its territory — HELD – The Section 3 of the CST Act, enacted pursuant to Article 269(3) to formulate principles for determining when a sale takes place in the course of inter-State trade or commerce, operates as the primary and overriding provision, and Section 4 of the CST Act, which fixes the territorial situs of a sale for the purpose of identifying the appropriate State, is expressly made subject to Section 3 and cannot be invoked to override an established inter-State character of a transaction – In the present case, the delivery point was unambiguously fixed at the onshore processing terminal in the originating State and the transportation thereafter was effected solely under separate carriage agreements between the buyers and the pipeline operators, who acquired no title to the gas and acted merely as carriers – The co-mingling and fungibility of gas in the common carrier pipeline was a statutory compulsion arising from the open access common carrier regime mandated by the applicable Regulations. The physical intermixing of gas in the pipeline after the sale was concluded at the delivery point was a mere incident of transportation that could neither alter nor relocate the character of an already completed inter-State sale; the subsequent re-metering at the destination point is held to be legally irrelevant to the determination of the taxable event - The nature of goods, whether ascertained or unascertained, is irrelevant for the purposes of Section 3(a) of the CST Act, once it is established that a contract of sale occasions the movement of goods from one State to another - The Explanation 3 inserted into Section 3 of the CST Act by the Finance Act, 2016, was clarificatory and not substantive in nature and did not alter the pre-existing legal position but merely gave explicit statutory expression to what was already implicit in Section 3; accordingly, the argument that the Explanation was applicable only prospectively is rejected - The destination State had itself recognised the inter-State character of the transaction by issuing statutory declaration forms to the buyers under the CST Rules. Having approbated the inter-State nature of the transaction in that manner, it was not open to the State to reprobate by simultaneously asserting jurisdiction to levy VAT on the same transaction - The judgment of the High Court quashing the assessment order and directing refund of the tax realised, is confirmed – The Revenue appeals are dismissed [Read less]

Customs - Classification of Agricultural Products containing Plant Alkaloids – Appellant declared imported products as bio-fertilizers under Chapter Heading 3101 0099 - Department reclassified them as insecticides under Chapter Heading 3808 9199 on the basis of laboratory reports showing presence of naturally occurring plant alkaloids such as Matrin, Oxymatrin, Dehydromatrin and Dehydrooxymatrin, and initiated confiscation proceedings under Section 111(d) and 111(m) of the Customs Act, 1962 with penalties under Section 112(a) and 114AA - Whether the imported goods could be classified as insecticides liable for confiscati... [Read more]

Customs - Classification of Agricultural Products containing Plant Alkaloids – Appellant declared imported products as bio-fertilizers under Chapter Heading 3101 0099 - Department reclassified them as insecticides under Chapter Heading 3808 9199 on the basis of laboratory reports showing presence of naturally occurring plant alkaloids such as Matrin, Oxymatrin, Dehydromatrin and Dehydrooxymatrin, and initiated confiscation proceedings under Section 111(d) and 111(m) of the Customs Act, 1962 with penalties under Section 112(a) and 114AA - Whether the imported goods could be classified as insecticides liable for confiscation without registration under the Insecticides Act, 1968 – HELD - The tariff classification cannot be determined on assumptions or isolated chemical presence and must consider composition, primary use, marketed identity and commercial understanding of the product. The laboratory reports merely identified presence of certain constituents without categorically certifying that the goods were insecticides within the meaning of Chapter 38 or the Insecticides Act, 1968. Significantly, one report expressly recorded absence of pesticides peaks, thereby undermining the department's allegation. The denial of cross-examination opportunity to the laboratory report authors violated principles of natural justice, rendering reliance on such technical reports legally unsustainable, particularly where such reports constitute the primary substantive evidence rather than mere corroborative evidence - Department failed to establish deliberate suppression or wilful mis-statement as the goods were imported through proper B/E with declared descriptions and supporting literature, demonstrating an interpretational dispute rather than clandestine misdeclaration. No evidence was produced that the imported goods were prohibited under law, banned for import, or caused any hazard - Reclassification of goods, confiscation under Section 111(d) and 111(m), Customs duty demands, and penalties under Section 112(a) and 114AA are unsustainable and set aside - The impugned orders are set aside and the appeal is allowed [Read less]

Customs - Confiscation of goods based solely on Classification change - An importer imported canvas shoes and declared them under CTH 6402 9990, which the revenue authorities sought to change to CTH 6404 1910. Although both tariff headings attracted the same rate of duty at 35% ad valorem, the adjudicating authority confiscated the majority of the imported goods under Section 111(m) of the Customs Act, 1962, without providing any reasoning or legal basis for such confiscation - Whether a mere change in tariff classification, which results in no change in the duty quantum, can constitute a valid ground for confiscation of g... [Read more]

Customs - Confiscation of goods based solely on Classification change - An importer imported canvas shoes and declared them under CTH 6402 9990, which the revenue authorities sought to change to CTH 6404 1910. Although both tariff headings attracted the same rate of duty at 35% ad valorem, the adjudicating authority confiscated the majority of the imported goods under Section 111(m) of the Customs Act, 1962, without providing any reasoning or legal basis for such confiscation - Whether a mere change in tariff classification, which results in no change in the duty quantum, can constitute a valid ground for confiscation of goods under Section 111(m) of the Customs Act – HELD - Confiscation cannot be justified merely on the basis of change in classification when there is no material impact on the duty leviable, as such action would be arbitrary and violate principles of natural justice. The adjudicating authority's order was completely silent on reasons for confiscating these non-counterfeit goods and that the fact of physical shortage of goods in the shipment demonstrated the importer's lack of mala fides in the transaction. Accordingly, the confiscation of non-counterfeit goods was set aside and their release was ordered on payment of a redemption fine – The confiscation of non-counterfeit goods is set aside and goods are ordered to be released – The appeal is partly allowed - Confiscation of goods on account of Intellectual Property Rights Violation – Appellant received imported shoes, certain pairs of which were identified by right holders as counterfeit or infringing goods (branded shoes) based on a technical report obtained by the Revenue authorities from the right holders - Whether confiscation of goods on grounds of intellectual property rights infringement could be sustained when the determination of counterfeit nature was made without affording the importer an opportunity to participate in the verification process and without sharing the technical evidence – HELD - Although the appellant failed to formally dispute the violation of intellectual property rights and the supplier's admission of error established the infringement, procedural fairness required that the technical reports obtained from right holders should have been shared with the importer in compliance with the doctrine of natural justice, even if the importer may not have formally sought a written show cause notice. However, since the supplier himself admitted the mistake and the facts clearly established that counterfeit goods were mixed in the shipment without the importer's mala fides, the confiscation of counterfeit goods could be sustained - The absolute confiscation of counterfeit branded goods is maintained - Reduction in Penalty - The adjudicating authority imposed a penalty under Section 112(a)(i) and 112(a)(ii) of the Customs Act. However, the importer suffered significant financial losses due to delays in the clearance process, including ground rent and container rent extending over a prolonged period, caused by lapses on the part of the revenue authorities, particularly a delay of forty-nine days between the examination of goods and issuance of the seizure notice and further delays at various adjudication stages - Whether the penalty imposed on the importer should be reduced considering the severe financial hardship caused by the department's own procedural lapses and delays – HELD - While the importer's conduct in importing counterfeit goods warranted some penalty, the exceptional circumstances of departmental delays and procedural lapses that caused substantial financial loss to the importer were relevant considerations in determining the appropriate quantum of penalty. The appellant had suffered severely due to the department's negligence and that a substantial reduction in penalty would meet the ends of justice. The penalty is reduced from Rs. 75,000/- to Rs. 5000/-. [Read less]

Customs - Classification of Blood Glucose Meters and Related Medical Diagnostic Instruments – Appellant imported blood glucose meters, urine analyzers, and blood gas analyzers during the specified period and classified them under Customs Tariff Item 9027 80 90 (instruments for physical or chemical analysis) at nil basic Customs duty under Notification No. 24/2005-Cus. - Revenue issued notice reclassifying the goods under Customs Tariff Item 90189099 (medical instruments) and demanding differential duty with penalty, contending that glucose meters are medical diagnostic instruments rather than laboratory analytic instrume... [Read more]

Customs - Classification of Blood Glucose Meters and Related Medical Diagnostic Instruments – Appellant imported blood glucose meters, urine analyzers, and blood gas analyzers during the specified period and classified them under Customs Tariff Item 9027 80 90 (instruments for physical or chemical analysis) at nil basic Customs duty under Notification No. 24/2005-Cus. - Revenue issued notice reclassifying the goods under Customs Tariff Item 90189099 (medical instruments) and demanding differential duty with penalty, contending that glucose meters are medical diagnostic instruments rather than laboratory analytic instruments – Whether blood glucose meters should be classified under heading 9027 (instruments for chemical analysis) or heading 9018 (medical, surgical instruments) – HELD – The Heading 9027 is more specific than heading 9018 as it directly covers instruments for chemical analysis. The HSN Explanatory Note to heading 9018 expressly excludes instruments and appliances in laboratories to test blood, directing such items to heading 9027 - Further, glucose meters are primarily used by individuals at home and in workplaces rather than exclusively in professional medical practice, thereby falling outside the scope of heading 9018 - The consistent precedent established in the cases of Bayer Pharmaceuticals and Abbott Healthcare, which had been affirmed by the Apex Court, is that glucose meters are classifiable under heading 9027 – The Glucose meters merit classification under CTI 90278090 and entitled the benefit of Notification No.24/2005-cus dated 01.03.2005 - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise – Transfer/Sale of manufacturing unit – Backward integration between sister concerns – Demand of duty on goods manufactured and captively consumed at the acquired unit during the interregnum between the date of acquisition and the date of grant of amended registration, when the final products manufactured therefrom have already suffered duty on clearance - Whether the transfer of the unit could be disregarded merely because the amendment of registration was granted at a later date – HELD – The documentary evidence on record, including the Deed of Sale and the Central Excise Registration Certificate... [Read more]

Central Excise – Transfer/Sale of manufacturing unit – Backward integration between sister concerns – Demand of duty on goods manufactured and captively consumed at the acquired unit during the interregnum between the date of acquisition and the date of grant of amended registration, when the final products manufactured therefrom have already suffered duty on clearance - Whether the transfer of the unit could be disregarded merely because the amendment of registration was granted at a later date – HELD – The documentary evidence on record, including the Deed of Sale and the Central Excise Registration Certificate subsequently obtained, conclusively establishes that there was a genuine sale of the manufacturing unit by Respondent No.1 to Respondent No.2 - The substantive right of possession arising from the sale agreement cannot be defeated by the procedural delay in filing the surrender/amendment application, since such filing necessarily depends on prior compliances such as cancellation/amendment of factory licence, ground plan certification, and clearance of dues, which are beyond the immediate control of the parties. The ingots manufactured at the acquired unit were captively consumed by the purchaser for manufacture of TMT Bars and Miss Roll, which were cleared on payment of appropriate duty, and therefore demanding duty again on the intermediate ingots would amount to double taxation on the same goods in a wholly revenue-neutral situation - While the purchaser ought to have awaited grant of amended registration before commencing production, for such procedural lapse, imposition of penalty under Rule 25 of the Central Excise Rules, 2002 for violation of Rule 9(1) read with Notification No.35/2001 (N.T.) is upheld - The penalties imposed by the Commissioner (Appeals), not being contested and already paid to give a quietus to litigation – The order of the Commissioner (Appeals) setting aside the duty demand is upheld and the appeal filed by the Revenue is dismissed [Read less]

Service Tax - Security Services provided by Police Department – Exemption from Service Tax – Demand of service tax on police department providing security services to banks – HELD - The issue is no longer res integra having been decided by various tribunal and high court decisions establishing that activities performed by sovereign public authorities in discharge of statutory functions are not exigible to service tax. The security services rendered by the police constitute a sovereign function discharged in furtherance of statutory obligations rather than a service rendered for consideration, and therefore do not fal... [Read more]

Service Tax - Security Services provided by Police Department – Exemption from Service Tax – Demand of service tax on police department providing security services to banks – HELD - The issue is no longer res integra having been decided by various tribunal and high court decisions establishing that activities performed by sovereign public authorities in discharge of statutory functions are not exigible to service tax. The security services rendered by the police constitute a sovereign function discharged in furtherance of statutory obligations rather than a service rendered for consideration, and therefore do not fall within the definition of security agency service taxable under the Finance Act. The fees collected by the police department for such statutory functions are collected as statutory fees deposited into the Government treasury and not as service consideration - The impugned order confirming the demand for service tax is set aside and the appeal is allowed [Read less]

Service Tax - Investment in Mutual Fund Units - Reversal of CENVAT Credit - Whether investment in and redemption of mutual fund units constitutes trading of goods under Section 66D(e) and an exempted service under Rule 2(e) of the CENVAT Credit Rules, 2004, thereby rendering the assessee liable to reverse CENVAT Credit availed on common input services – HELD – Before any activity can be classified as an “exempted service? under Rule 2(e) of the CENVAT Credit Rules, 2004, it must first constitute a “service” within the meaning of Section 65B(44) of the Finance Act, 1994. The service must involve an activity carrie... [Read more]

Service Tax - Investment in Mutual Fund Units - Reversal of CENVAT Credit - Whether investment in and redemption of mutual fund units constitutes trading of goods under Section 66D(e) and an exempted service under Rule 2(e) of the CENVAT Credit Rules, 2004, thereby rendering the assessee liable to reverse CENVAT Credit availed on common input services – HELD – Before any activity can be classified as an “exempted service? under Rule 2(e) of the CENVAT Credit Rules, 2004, it must first constitute a “service” within the meaning of Section 65B(44) of the Finance Act, 1994. The service must involve an activity carried out by one person for another for consideration, requiring two distinct parties and a service provider-recipient relationship. The mere investment in mutual fund units and their subsequent redemption involves no rendering of any activity for any other person for consideration. The Revenue failed to identify any other party to whom the assessee rendered a service – Further, upon redemption, mutual fund units cease to exist rather than being transferred to any third party, and therefore no transfer of title, which is essential to trading, takes place - The extended period of limitation is inapplicable. The activity in question does not amount to a service under Section 65B(44) of the Finance Act, 1994, and consequently cannot be classified as an exempted service under Rule 2(e) of the CENVAT Credit Rules, 2004 – The demand for service tax reversal of CENVAT Credit, interest, and penalty is set aside. The appeal is allowed [Read less]

Service Tax - Construction Services - Burden of Proof - Demand of service tax on construction of residential complexes based on an intelligence report alleging non-payment of tax on certain services - Whether the burden lies on the revenue to establish that construction services were for residential complexes, thereby making them taxable, or whether the appellant must prove that the construction was of individual houses which are exempt from service tax - HELD - The principle "he who asserts has to prove" applies to tax assessments, and where the Department issues notice alleging construction of taxable residential complex... [Read more]

Service Tax - Construction Services - Burden of Proof - Demand of service tax on construction of residential complexes based on an intelligence report alleging non-payment of tax on certain services - Whether the burden lies on the revenue to establish that construction services were for residential complexes, thereby making them taxable, or whether the appellant must prove that the construction was of individual houses which are exempt from service tax - HELD - The principle "he who asserts has to prove" applies to tax assessments, and where the Department issues notice alleging construction of taxable residential complexes, it is incumbent upon the Department to substantiate its allegations with documentary evidence during the assessment proceedings itself. Since the Department failed to produce sufficient evidence beyond the appellant's production of maps to establish that the constructions were indeed of residential complexes as opposed to individual houses, the burden not having been discharged by the revenue, the demand cannot be sustained - The confirmation of the demand for service tax on construction of residential complexes is set aside and the appeal is allowed - Service tax demand of additional payments based solely on a legal notice - The second demand for service tax is based solely on a legal notice issued by the client's advocate asserting that additional payments were made for commercial construction services - Whether a legal notice between parties constitutes sufficient evidence to establish receipt of additional consideration for taxable services – HELS - A mere legal notice from one party's advocate claiming additional payments is not competent evidence to establish the actual receipt of consideration by the service provider, particularly when the service provider disputes the claim through a counter notice and neither party has pursued the matter through civil proceedings or obtained any judicial determination. Without credible evidence establishing that additional amounts were actually received as consideration for taxable services, the demand cannot be sustained. The confirmation of this demand is also set aside and the appeal is allowed. [Read less]

Customs - Extra Duty Deposit - Refund and Interest on Delayed Refund – Respondents-assessee imported coal in bulk from a related party supplier and the B/E were provisionally assessed pending Special Valuation Branch investigation – Respondent deposited Extra Duty Deposit at one percent of the declared assessable value as per Board Circular - Upon completion of SVB investigation, the proper officer accepted the declared transaction value and directed finalization of all pending provisionally assessed bills of entry - Whether Extra Duty Deposit collected under Board circular in SVB cases constitutes duty within the mean... [Read more]

Customs - Extra Duty Deposit - Refund and Interest on Delayed Refund – Respondents-assessee imported coal in bulk from a related party supplier and the B/E were provisionally assessed pending Special Valuation Branch investigation – Respondent deposited Extra Duty Deposit at one percent of the declared assessable value as per Board Circular - Upon completion of SVB investigation, the proper officer accepted the declared transaction value and directed finalization of all pending provisionally assessed bills of entry - Whether Extra Duty Deposit collected under Board circular in SVB cases constitutes duty within the meaning of the Customs Act or is merely a deposit, and whether the importer is entitled to interest on delayed refund of such deposit and if so, from what date – HELD – The Extra Duty Deposit is not a duty of customs as defined under the Customs Act but is in the nature of a deposit collected for the specific purpose of ensuring timely submission of information by the importer during SVB investigation so as to enable expeditious finalization of provisional assessment. Though its quantum is measured on the basis of declared assessable value, that measure does not convert its character into duty, since the obligation to pay it arises not from a charge under the taxing statute but from a Board Circular prescribing a security mechanism - Further, since Extra Duty Deposit is collected in the context of provisional assessment proceedings under Section 18 of the Customs Act, the mechanism for its refund and for payment of interest on delayed refund is governed by the provisions of Section 18 read mutatis mutandis with Section 27A. The self-contained machinery of Section 18 providing for adjustment and refund of excess amounts paid at the provisional assessment stage, along with interest for delay beyond three months from the date of final assessment, overrides the general refund provisions of Section 27 by virtue of the non obstante clause in Section 18 - The proper officer was not justified in treating the refund application as disposed of merely on account of non-finalization of provisional assessments. The delay in finalization of provisional assessments is entirely attributable to the Department and not to the importer, who had furnished all requisite documents and information. Since the SVB order accepting the declared transaction value had attained finality without being challenged by either side, there was no outstanding purpose for which the EDD could have been retained by the department, as it was not required to cover any deficiency in finally assessed duty - Interest is payable on the Extra Duty Deposit refund amount from the date of expiry of three months from the date of receipt of the refund application as originally submitted and acknowledged by the custom house, until the date of actual payment of the refund - The impugned order of the Commissioners (Appeals) granting such interest is upheld – The appeal filed by Revenue is dismissed [Read less]

Customs - Valuation of imported plant and machinery with bundled technical services - The importer imported key components of lime kiln machinery valued at a separate consideration under a contract that also included engineering package, license fee and technical assistance valued at a separate consideration - Department sought to include the value of technical services, license fees and engineering charges in the assessable value of imported goods, contending that the supply of such services was a condition of sale of the plant and machinery and that the importer had split a single invoice into two invoices merely to evad... [Read more]

Customs - Valuation of imported plant and machinery with bundled technical services - The importer imported key components of lime kiln machinery valued at a separate consideration under a contract that also included engineering package, license fee and technical assistance valued at a separate consideration - Department sought to include the value of technical services, license fees and engineering charges in the assessable value of imported goods, contending that the supply of such services was a condition of sale of the plant and machinery and that the importer had split a single invoice into two invoices merely to evade customs duty - Whether the separately contracted and invoiced technical services, engineering package and license fees could be included in the assessable value of imported plant and machinery under section 14 of the Customs Act, 1962 read with rule 10(1)(c) of the Customs Valuation Rules, 2007 – HELD - Where a single contract involves importation of dutiable equipment and services for post-importation activities, and these two sets of items are segregable with separate invoices and separate contractual obligations, the consideration for services cannot be added to the assessable value of imported goods. The contract clearly bifurcated the obligations into two parts: technical assistance and licensing for one part, and supply of key components for the other part. The buyer was separately responsible for procuring additional machinery and undertaking local construction. There was no binding obligation in the contract to purchase services as a prerequisite for purchasing equipment - Royalties and license fees are includible in transaction value only when they are required to be paid as a condition of sale of the imported goods itself, which was not the case here as the services were relatable to post-importation activities of setting up and operating the plant. The intention to split invoices could not be inferred from the contract terms, which expressly provided for separate considerations - payment under the technical services agreement is not a payment as a condition of sale of the imported plant and therefore, is not includible in the transaction value under Rule 10 (1)(e) of CVR - The decision of the authorities below requiring inclusion of technical services charges in the assessable value is set aside and the appeal is allowed [Read less]

Customs - Classification of Mixed Iron Ore Consignments - Appellant exported iron ore consignments containing a mixture of iron ore fines and iron ore lumps declaring certain parameters including Fe percentage and moisture content at the time of export under self-assessment - Department subsequently received final invoices and analytical reports from the discharge port showing variations in the declared parameters and sought to reassess the shipping bills - Whether export consignments having a mixture of iron ore lumps with predominantly iron ore fines can be separately segregated to apply different rates of duty, or wheth... [Read more]

Customs - Classification of Mixed Iron Ore Consignments - Appellant exported iron ore consignments containing a mixture of iron ore fines and iron ore lumps declaring certain parameters including Fe percentage and moisture content at the time of export under self-assessment - Department subsequently received final invoices and analytical reports from the discharge port showing variations in the declared parameters and sought to reassess the shipping bills - Whether export consignments having a mixture of iron ore lumps with predominantly iron ore fines can be separately segregated to apply different rates of duty, or whether the entire consignment must be treated as iron ore fines – HELD - The mixed consignments of iron ore fines and lumps cannot be separately segregated to apply different rates of duty. The entire consignment has to be treated as iron ore fines and the applicable rate of iron ore fines must be applied for charging export duty. This principle is based on Rule 3(b) of the General Rules of Interpretation and is consistent with settled precedent established by coordinate benches - The demand of differential based on treating certain quantities as iron ore lumps attracting higher duty rates is set aside – The appeal is allowed by way of remand - Determination of Export Duty Based on Declared Parameters - The appellant initially exported goods under self-assessment declaring certain Fe content and moisture content based on provisional invoices. The Department later sought to redetermine the duty based on Fe content and moisture percentage as determined by authorities at the discharge port, which differed from the initially declared parameters - Whether in the case of self-assessed (finally assessed) shipping bills based on provisional invoices, the Department can resort to redetermination of export duty based on parameters determined at the discharge port instead of the parameters declared at the time of export – HELD - For moisture content, the declared moisture content at the time of export must be taken and any variation in quantity due to moisture content has no significance when duty is charged on an ad valorem basis. The Fe content must be taken as declared at the time of export since the assessment is final and self-assessed. However, where a contract explicitly permits determination of Fe content at the discharge port, the CIQ report parameters may be considered - Export Duty Value Based on Final Invoice and Bank Realization Certificates - Whether the assessable value in self-assessed exports can be redetermined based on final invoice value and bank realization certificates instead of the value declared at the time of export – HELD - The assessable value must be determined based on the value declared at the time of export, and bank realization certificates alone cannot be used to redetermine the assessable value. The fact that bank realizations do not match the full invoice amount does not justify adopting the BRC value as the assessable value for duty purposes. The declared amount must be taken as the assessable value so long as there is no allegation or evidence of receipt of additional consideration or the invoice being not genuine - The reassessment based on final invoice value or actual bank realizations is not permissible - Invocation of Extended Period and Imposition of Penalty - Whether the extended period of reassessment is invokable and penalties are imposable when there is misdeclaration of parameters at the time of export which came to the knowledge of the department only after receiving final invoices and discharge port reports – HELD - The extended period of reassessment is invokable when there is clear misdeclaration at the time of export in respect of certain parameters which came to the department's knowledge only when final invoices or relevant reports from the discharge port were submitted. There is deliberate withholding of information regarding the provisional nature of invoices and parameters subject to variation, which constitutes a wrong declaration. The extended period becomes invokable on these grounds, and penalties are justified. The matter is remanded to the adjudicating authority to redetermine the differential duty if any [Read less]

Customs - CVD Exemption on imports under Advance Authorisation - Retrospective Application of Notification – Appellant imported hot and cold rolled stainless steel flat products under a valid Advance Authorisation Scheme during the period from September 7, 2017 to October 12, 2017, when a countervailing duty was imposed vide Notification 01/2017-Cus. (CVD) dated 07.09.2017. Subsequently, the Notification dated October 13, 2017 exempt countervailing duty on imports made under Advance Authorisation - Whether countervailing duty is leviable on imports made against Advance Authorisation during the intervening period between ... [Read more]

Customs - CVD Exemption on imports under Advance Authorisation - Retrospective Application of Notification – Appellant imported hot and cold rolled stainless steel flat products under a valid Advance Authorisation Scheme during the period from September 7, 2017 to October 12, 2017, when a countervailing duty was imposed vide Notification 01/2017-Cus. (CVD) dated 07.09.2017. Subsequently, the Notification dated October 13, 2017 exempt countervailing duty on imports made under Advance Authorisation - Whether countervailing duty is leviable on imports made against Advance Authorisation during the intervening period between the imposition and exemption notifications, and whether the exemption notification has retrospective applicability – HELD – The Government, through the later notification, rectifies its initial mistake by exempting countervailing duty on Advance Authorisation imports. Various high court judgments have already established that such exemption notification operates retrospectively when the objective is to further the policy of the scheme which permits duty-free import of raw materials for export-oriented manufacturing - When the goods have been exported and export obligations have been fulfilled as per the advance authorisation terms, the importer is entitled to the benefit of exemption from the date of the original notification imposing the duty. The word "substitution" in the amending notification indicates that the amendment takes effect from the date of the original notification being amended - The demand for countervailing duty along with interest and penalties is set aside and the appeal is allowed [Read less]

Service Tax - Construction of Roads in Private Industrial Park – Exemption from Service Tax and CENVAT Credit Eligibility – Construction services for development of industrial park with internal roads connecting to existing public roads as per approved master plan – CENVAT Credit on input services used for road construction after paying service tax under partial reverse charge, treating the work as 'Original Works' with 60% abatement – Dept denied CENVAT Credit as an ineligible input service - Whether roads constructed within a private industrial park, which are integrated with the public road network and serve gen... [Read more]

Service Tax - Construction of Roads in Private Industrial Park – Exemption from Service Tax and CENVAT Credit Eligibility – Construction services for development of industrial park with internal roads connecting to existing public roads as per approved master plan – CENVAT Credit on input services used for road construction after paying service tax under partial reverse charge, treating the work as 'Original Works' with 60% abatement – Dept denied CENVAT Credit as an ineligible input service - Whether roads constructed within a private industrial park, which are integrated with the public road network and serve general public access, qualify as roads for use by general public under the exemption notification, thereby making the service provider ineligible to claim CENVAT Credit on input services – HELD - Merely because roads are constructed inside a private industrial park does not render them private roads with restricted entry; the fact that roads are crossed by master plan routes and connected with existing public roads means they are for utility of general public and consequently fall within the scope of exemption notification for construction of roads for use by general public. The fact that roads in question are for the utility of the general public the same would fall within the scope of the exemption Notification No.25/2012–ST dated June 20, 2012 and therefore, the appellant is not entitled to take CENVAT Credit of service tax on the exempted services as per the provisions of Rule 6 of CENVAT Credit Rules, 2004 - The impugned order is upheld on merits regarding exemption applicability but remands the matter for recalculation of recoverable CENVAT Credit for the normal period only, setting aside the extended period of limitation as the issue involves interpretation rather than suppression of facts – The appeal is partly allowed - Demand invoking extended period on the ground that the appellant had suppressed the fact of wrongful availment of CENVAT Credit – HELD - The appellant bonafide believed that the roads built by them were for specific use for Industrial Park and therefore, would fall in the category of private use, which is beyond the scope of the applicability of the exemption notification. In fact the appellant would have benefited by availing the exemption from payment of service tax under the Notification. By not claiming the exemption under the notification, they paid the service tax and if service tax was not payable, in the event the Department would have been liable to refund the said amount with interest. Therefore, it would have been a case of revenue neutral rather than a case of suppression of facts. [Read less]

Customs - Appellant is Director of a foreign company incorporated outside India was alleged to have issued dual invoices reflecting actual transaction value and suppressed values for Customs purposes, with differential amounts being remitted through unofficial channels - Appellant contended that as a Director of a foreign entity, no proceedings could be initiated against him without making the company itself a noticee, and that the Customs Act had no extraterritorial jurisdiction prior to amendment in 2018 - Whether a Director of a foreign company can be held liable for Customs offences relating to undervaluation of import... [Read more]

Customs - Appellant is Director of a foreign company incorporated outside India was alleged to have issued dual invoices reflecting actual transaction value and suppressed values for Customs purposes, with differential amounts being remitted through unofficial channels - Appellant contended that as a Director of a foreign entity, no proceedings could be initiated against him without making the company itself a noticee, and that the Customs Act had no extraterritorial jurisdiction prior to amendment in 2018 - Whether a Director of a foreign company can be held liable for Customs offences relating to undervaluation of imported goods – HELD - The Customs Act is fully applicable to a person who consciously and deliberately participates in fraudulent importation into India, irrespective of whether the principal company is incorporated outside India or whether the Customs Act had explicit extraterritorial provisions at the material time. The taxable event under Customs law is importation into India, and once manipulated invoices are knowingly prepared and utilized for Customs clearance within Indian territory, the offence attains territorial nexus with India and stands completed within Indian territory. A person situated outside India cannot claim immunity merely because the conspiracy originated outside India - The doctrine that where a person knowingly engages in acts contravening statutory provisions and such acts have operative effect within India, he remains personally answerable under law irrespective of nationality or place of incorporation of his associated entity, applies to the present circumstances – The Section 112(a) of the Customs Act uses the expression "any person" which is intentionally broad and encompasses every person who knowingly participates in fraudulent importation or undervaluation irrespective of designation or geographical location - The penalties imposed under Section 112(a) and Section 114AA of the Customs Act, 1962 are sustained and the appeal is dismissed [Read less]

GST - Detention and Release of goods in transit - Demand under Section 129 of the CGST Act, 2017, disputing the ownership, quality, quantity, and authenticity of the accompanying tax invoices and e-way bills - Petitioner sought release of the perishable consignment under Section 129(1)(a) by paying the lesser penalty applicable where the owner comes forward - Revenue contended that since ownership was disputed, the higher penalty under Section 129(1)(b) applicable where the owner does not come forward ought to apply - Whether, when the revenue merely raises a dispute as to ownership in the SCN without producing any concret... [Read more]

GST - Detention and Release of goods in transit - Demand under Section 129 of the CGST Act, 2017, disputing the ownership, quality, quantity, and authenticity of the accompanying tax invoices and e-way bills - Petitioner sought release of the perishable consignment under Section 129(1)(a) by paying the lesser penalty applicable where the owner comes forward - Revenue contended that since ownership was disputed, the higher penalty under Section 129(1)(b) applicable where the owner does not come forward ought to apply - Whether, when the revenue merely raises a dispute as to ownership in the SCN without producing any concrete contrary material to disprove the petitioner's claim of ownership, the consignment ought to be released under Section 129(1)(a) upon payment of penalty equal to two hundred percent of the tax payable, or whether the higher liability under Section 129(1)(b) is attracted – HELD - The provisions of Section 129 of the 2017 Act must be interpreted strictly. On a meaningful and harmonious reading thereof, the legislative intent is to release detained goods subject to fulfillment of conditions, without creating any charge or lien over the goods, since recovery of any crystallized demand is separately provided for under the statute - Where the petitioner is named as consignor and the consignee is named in the very show-cause notice and the revenue has not produced, identified, or discussed any concrete or unimpeachable material in its order raising demand to suggest that the petitioner is not the owner of the consignment, a mere assertion of dispute as to ownership in the SCN is insufficient to deny the petitioner the benefit of Section 129(1)(a) – The adjudication on ownership at this stage is of no relevance since the matter will be examined in a statutory appeal and if the demand is ultimately crystallized, the petitioner will be liable to pay regardless of ownership - The goods being perishable in nature, the consignment deserves to be released expeditiously. The petitioner is entitled to release of the consignment under Section 129(1)(a) upon payment of the applicable penalty. Subject to compliance of the provisions laid down under Section 129(1)(a) of the CGST Act, the consignment shall be released in favour of the petitioner in accordance with law. The writ petition is disposed of [Read less]

GST - Jurisdiction of transit State GST Authorities over Inter-State goods in transit, Scope of cross-empowerment of Central and State Authorities – Jurisdiction to pass penalty orders by the SGST authorities of a transit State against goods originating in one State and destined for another State - Petitioners contend that the transit State authorities lack jurisdiction to detain goods and impose penalties for inter-state transactions where the supply originates and terminates outside the transit State - Revenue authorities argue that cross-empowerment provisions under Section 6 of the Central Act and Section 4 of the IG... [Read more]

GST - Jurisdiction of transit State GST Authorities over Inter-State goods in transit, Scope of cross-empowerment of Central and State Authorities – Jurisdiction to pass penalty orders by the SGST authorities of a transit State against goods originating in one State and destined for another State - Petitioners contend that the transit State authorities lack jurisdiction to detain goods and impose penalties for inter-state transactions where the supply originates and terminates outside the transit State - Revenue authorities argue that cross-empowerment provisions under Section 6 of the Central Act and Section 4 of the IGST Act read with Sections 68 and 129 of the State Act confer jurisdiction on transit State authorities to detain goods and impose penalties for any anomaly in the transaction – HELD - While transit State authorities are empowered to stop, inspect and physically verify goods in transit as a regulatory measure to enforce compliance with prescribed documentation requirements, such power is limited to the extent of noting and reporting deficiencies. The cross-empowerment under Section 6 of the CGST Act and Section 4 of the IGST Act operates only between Central and State authorities with respect to taxable transactions in that State and not between authorities of different States. Since no tax incidence arises in a pure transit State where goods originate and terminate outside such state, no levy of IGST, SGST or CGST can occur in that transit State. Therefore, the transit State authorities cannot impose penalties for violations in inter-state transactions where neither the supply origin nor destination lies within that transit State – Further, permitting transit States to impose penalties would expose goods traversing multiple States to repeated penalties by various State authorities, thereby violating the Constitutional protection of inter-State trade guaranteed under Article 301 of the Constitution. The appropriate action for transit State authorities is to communicate discrepancies noticed to the competent authorities in the origin and destination States while allowing goods to complete their journey unimpeded - The penalty orders are quashed, and goods and vehicles are directed to be released forthwith. The writ petitions are allowed - Issuance of physical tax invoice instead of e-Invoice, Penalty on purchasing dealer – HELD - Issuance of e-Tax Invoice is linked to turnover. That fact is in the special knowledge of the supplier. The purchase/recipient may neither have the means, nor he may be burdened to enquire about the same, before transacting a purchase. That may be a wholly unreasonable burden cast on the recipient/purchaser. To the extent the physical Tax Invoice is not bogus and its issuance is not doubted, the recipient/purchaser may not be penalised, for no fault. [Read less]

GST - Discriminatory Assessment – Petitioner is assessed to tax for a particular period on the basis of facts for which the Revenue authority has already granted refunds by treating petitioner as an exporter in respect of other tax periods - The appellate authority upheld the refund orders in the petitioner's favour by accepting the appeals - Whether the assessment order for the impugned period can be sustained when there is no distinction on facts or in law between the impugned assessment and the earlier periods for which refunds have been granted and the appellate orders have been complied with by the revenue – HELD ... [Read more]

GST - Discriminatory Assessment – Petitioner is assessed to tax for a particular period on the basis of facts for which the Revenue authority has already granted refunds by treating petitioner as an exporter in respect of other tax periods - The appellate authority upheld the refund orders in the petitioner's favour by accepting the appeals - Whether the assessment order for the impugned period can be sustained when there is no distinction on facts or in law between the impugned assessment and the earlier periods for which refunds have been granted and the appellate orders have been complied with by the revenue – HELD - The assessment order is discriminatory and cannot be sustained, as there is no reason forthcoming from revenue to distinguish the issue on the basis of facts or law with regard to the rendering of services by the petitioner for the impugned period as against the other periods - When the revenue itself has accepted the petitioner as an exporter and released refunds for similar facts in other periods in compliance with the appellate orders, it would be discriminatory and arbitrary to tax the petitioner for the impugned period on the same set of facts - The impugned assessment order is quashed and the petition is allowed [Read less]

GST – Taxability of Preferential Location charges on residential/commercial properties, Retrospective application of Circular No. 234/28/2024-GST dated 11.10.2024 – Petitioner sought Advance Ruling as to whether the charges collected by the petitioner against preferential location of its flats are to be taxed independently or along with its main activity of construction/development – The lower authorities ruled that the charges collected against preferential location of the flats are to be taxed independent of the charges received by the petitioner towards development/construction - Whether charges collected by devel... [Read more]

GST – Taxability of Preferential Location charges on residential/commercial properties, Retrospective application of Circular No. 234/28/2024-GST dated 11.10.2024 – Petitioner sought Advance Ruling as to whether the charges collected by the petitioner against preferential location of its flats are to be taxed independently or along with its main activity of construction/development – The lower authorities ruled that the charges collected against preferential location of the flats are to be taxed independent of the charges received by the petitioner towards development/construction - Whether charges collected by developers against preferential location of flats are to be taxed independently or as part of construction services – HELD - The GST Council, in its 54th meeting recommended that choice of location of an apartment is an integral part of supply of construction services and therefore location charges should not be taxed separately but should attract the same rate of GST as applicable to construction services. The Government accepted this recommendation and issued a clarification vide Circular dated 11.10.2024 clarifying that choice of location of an apartment is an integral part of composite supply of construction services and the charges collected by developers against preferential location of an apartment would attract GST at the same rate as applicable to construction services before issuance of completion certificate - The clarification issued by the Government under Section 168(1) of the CGST Act, 2017 binds the tax authorities and has retrospective application. Accordingly, the orders of the Advance Ruling Authority and the Appellate Authority Advance Ruling, which had held that preferential location charges were to be taxed separately from construction service charges are set aside – The writ petition is allowed [Read less]

GST - Ex-parte assessment proceedings – Petitioner contended that it could not participate in the proceedings due to reasons beyond its control and that it received only one Show Cause Notice with merely time of one day to submit its reply - Whether an ex-parte assessment order passed without affording adequate opportunity and reasonable time to the assessee to submit its reply to the SCN can be sustained – HELD – The procedural fairness and natural justice require that sufficient time must be granted to the assessee to respond to show cause notices. Where the material on record demonstrates that inadequate time was ... [Read more]

GST - Ex-parte assessment proceedings – Petitioner contended that it could not participate in the proceedings due to reasons beyond its control and that it received only one Show Cause Notice with merely time of one day to submit its reply - Whether an ex-parte assessment order passed without affording adequate opportunity and reasonable time to the assessee to submit its reply to the SCN can be sustained – HELD – The procedural fairness and natural justice require that sufficient time must be granted to the assessee to respond to show cause notices. Where the material on record demonstrates that inadequate time was provided to the assessee to file its reply, the assessment order becomes vitiated. The matter is remitted to the competent authority to reconsider the case afresh from the stage of issuing a show cause notice with a proper opportunity for the assessee to file its reply - The ex-parte assessment order is quashed and the petition is allowed by remand [Read less]

GST - Anti-Profiteering, Real Estate – Methodology for Calculating Profiteering Amount – Respondent-builder claimed that full and commensurate input tax credit benefit had been passed on to all eligible homebuyers and that the DGAP methodology for calculating profiteering was fundamentally flawed - DGAP had computed profiteering amount by adopting a methodology based on the difference between the ratio of input tax credit to turnover under the pre-goods and services tax and post-goods and services tax periods – HELD - The principles laid down by the Delhi High Court in a similar matter, is that in the real estate sec... [Read more]

GST - Anti-Profiteering, Real Estate – Methodology for Calculating Profiteering Amount – Respondent-builder claimed that full and commensurate input tax credit benefit had been passed on to all eligible homebuyers and that the DGAP methodology for calculating profiteering was fundamentally flawed - DGAP had computed profiteering amount by adopting a methodology based on the difference between the ratio of input tax credit to turnover under the pre-goods and services tax and post-goods and services tax periods – HELD - The principles laid down by the Delhi High Court in a similar matter, is that in the real estate sector there is no direct correlation between turnover and ITC availed for a particular period, as expenses in real estate projects are not uniform throughout the life cycle of the project and the accrual of input tax credit is not related to the amount collected from buyers. The proper methodology requires calculating the total savings on account of introduction of goods and services tax for each project and then dividing the same by total area to arrive at the per square feet benefit to be passed on to each flat buyer - The respondent's submissions regarding comparison of goods and services tax availed on actual goods and services purchased in the post-GST period with the input tax credit available on such goods and services by applying applicable rates in the pre-GST period carry weight. The DGAP report is set aside and the matter is remanded for re-investigation. The DGAP shall grant proper and adequate opportunity to the Respondent regarding production of documents for a comparison and such comparison shall be given adequate consideration while re-calculating the amount of profiteering – Ordered accordingly [Read less]

GST - Anti-profiteering investigation – Scope of remand and reconsideration of fresh evidence – Anti-profiteering investigation alleging profiteering due to failure to pass on benefits of GST rate reduction through proportionate price reduction - Respondent subsequently filed fresh documentary evidence establishing that base prices were increased due to substantial increases in raw material costs and crude oil prices during the relevant period - The DGAP contended such fresh evidence cannot be incorporated in the report at a later stage – HELD - While Section 171 of the CGST Act, 2017 creates a presumption that benef... [Read more]

GST - Anti-profiteering investigation – Scope of remand and reconsideration of fresh evidence – Anti-profiteering investigation alleging profiteering due to failure to pass on benefits of GST rate reduction through proportionate price reduction - Respondent subsequently filed fresh documentary evidence establishing that base prices were increased due to substantial increases in raw material costs and crude oil prices during the relevant period - The DGAP contended such fresh evidence cannot be incorporated in the report at a later stage – HELD - While Section 171 of the CGST Act, 2017 creates a presumption that benefits of GST rate reduction must be passed on to consumers, this presumption is rebuttable and prices may legitimately increase depending upon play of market forces, provided clear evidence and contemporaneous documents substantiate such increases – The investigating agency, having admitted that documents were filed by the respondent, cannot thereafter contend that such documents cannot be made the basis for further investigation. The order of the investigating agency is set aside and the matter is remanded for fresh investigation from the beginning, granting liberty to both the investigating agency and the respondent to produce further documents and come to a final conclusion – Ordered accordingly [Read less]

Central Excise - Duty liability on manufacture of mineral concentrates through physical and mechanical processes – Whether process of converting ores into concentrates amounts to manufacture - HELD - When imported or indigenously sourced titanium ores are subjected to physical and mechanical processes of mineral separation, without any chemical treatment or roasting, resulting in the removal of foreign matter and emergence of concentrated mineral sands, the process amounts to manufacture of concentrates liable to excise duty under the Chapter Note inserted in the tariff with effect from 01.03.2011 - The HSN Explanatory N... [Read more]

Central Excise - Duty liability on manufacture of mineral concentrates through physical and mechanical processes – Whether process of converting ores into concentrates amounts to manufacture - HELD - When imported or indigenously sourced titanium ores are subjected to physical and mechanical processes of mineral separation, without any chemical treatment or roasting, resulting in the removal of foreign matter and emergence of concentrated mineral sands, the process amounts to manufacture of concentrates liable to excise duty under the Chapter Note inserted in the tariff with effect from 01.03.2011 - The HSN Explanatory Notes define concentrates as ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport. The processes undertaken result in separation of valuable rare mineral sands from ordinary sand and facilitate further metallurgical operations and economical transport, thereby meeting the definition of concentrates and attracting duty liability, notwithstanding the absence of any chemical treatment or upgradation of the purity of mineral content – The statutory fiction created by Chapter note 4 inserted with effect from 01.03.2011 in the Customs and Excise Tariff, declaring that the process of converting ores into concentrates amounts to manufacture renders the absence of chemical treatment or roasting irrelevant to the question of manufacture. The appeal challenging the confirmation of demand for Central excise duty on concentrated ores manufactured and cleared during the relevant period is partly allowed by setting aside the demand as barred by limitation of time - Non-compliance with procedural requirements for duty-free clearances to EoUs – Whether non-compliance with prescribed procedures results in denial of substantive exemption benefit – HELD - When goods are cleared to 100% Export Oriented Units without following the prescribed procedural requirements like furnishing Form CT-3, such procedural non-compliance does not deprive the assessee of duty-free benefits if the goods were genuinely received and utilized by the Export Oriented Units for the intended purpose. Where the assessee entertains a bona fide belief that the goods are non-dutiable due to unawareness of statutory amendments in the tariff and consequently fails to follow the procedural formalities applicable to dutiable goods, the assessee cannot be compelled to comply with procedures which are impossible to comply with given the belief that no duty liability exists. The maxim Lex non cogit ad impossibilia applies, and procedural lapses cannot override substantive exemptions available to Export Oriented Unit clearances - The assessee is entitled to duty-free benefit for clearances to EOUs despite procedural non-compliance - As-such clearances of unprocessed mineral sands - Whether clearances claimed as traded goods without processing should be excluded from dutiable turnover – HELD - When goods are cleared in their natural or unprocessed form as raw materials without subjecting them to any manufacturing process, such clearances merit exclusion from the turnover for quantification of excise duty demand. The onus lies on the Revenue to discharge by adducing proof that the goods cleared were processed or concentrated products rather than unprocessed or as-such removals, and mere allegations without evidence cannot substitute for proof. Where the Revenue makes assumptions and presumptions regarding the nature of goods cleared and the use for which they were intended, such assumptions cannot form the basis for denying the assessee's claim for exclusion of as-such sales - The assessee's plea to exclude as-such clearances from the turnover is accepted - Applicability of extended period of limitation – HELD - An extended period of limitation under Section 11A(4) of the Central Excise Act cannot be invoked for demanding duty when the issue involved is interpretational in nature and the assessee entertains a bona fide belief that no duty liability arises. Where prior to the statutory amendment defining a particular process as manufacture, coordinate benches of the Tribunal had held that similar processes do not amount to manufacture, and Government undertakings engaged in identical activities do not charge duty until the amendment takes effect, the assessee's non-payment of duty reflects genuine uncertainty regarding liability rather than suppression or evasion. The fact that audit discovers the non-payment of duty does not by itself justify invocation of the extended period, particularly when the assessee had amended its registration to declare the manufacturing activity and commenced payment of duty upon becoming aware of the liability. The charge of clandestine removal is unsustainable where goods are fully recorded in books of accounts and removal documents exist. The demand confirmed under the extended period of limitation is unsustainable and the entire demand is barred by limitation of time. [Read less]

Central Sales Tax Act, 1956 – Branch Transfer – Mandatory Production of Form F Declaration – Petitioner claimed inter-State transfer of goods to its branch located and produced consignment challans duly stamped at border checkgates, transfer invoices, transport receipts, way bills etc but failed to furnish the statutory declaration in Form F - Assessing authority levied tax treating the transaction as an inter-State sale due to non-production of Form F. The first appellate authority allows the claim for branch transfer relying on other documentary evidence. The Tribunal reversed the order, holding that production of ... [Read more]

Central Sales Tax Act, 1956 – Branch Transfer – Mandatory Production of Form F Declaration – Petitioner claimed inter-State transfer of goods to its branch located and produced consignment challans duly stamped at border checkgates, transfer invoices, transport receipts, way bills etc but failed to furnish the statutory declaration in Form F - Assessing authority levied tax treating the transaction as an inter-State sale due to non-production of Form F. The first appellate authority allows the claim for branch transfer relying on other documentary evidence. The Tribunal reversed the order, holding that production of Form F is mandatory to claim exemption under Section 6A of the Central Sales Tax Act - Whether the production of declaration in Form F as proof of inter-branch transfer is mandatory notwithstanding the precedent holding that branch transfer can be proved by alternative evidence – HELD - During the assessment year 1999-2000, the production of Form F declaration was not mandatory to claim exemption from payment of Central Sales Tax under Section 6A. The Section 6A provides an enabling provision offering one mode of discharge of the burden to prove that movement of goods was occasioned otherwise than by way of sale, but it does not estop the dealer from proving such claim through other relevant evidence including books of accounts, invoices, transport receipts, and border checkgate stamps. The deeming fiction introduced by the Finance Act, 2002 amending Section 6A applies prospectively and cannot be applied retrospectively to assessment year 1999-2000 - When the Appellate authority has meticulously examined documentary evidence and recorded findings that goods moved to the branch across State borders with taxes paid thereat, the Tribunal cannot reverse such findings without reference to the assessment records. The principle established in prior decisions clearly indicates that filing of Form F is an easier mode but not the only mode to discharge the burden of proving branch transfer. The Tribunal erred by placing the burden on the dealer to prove inter-State sale rather than examining whether the dealer had discharged the burden through alternative evidence - The order passed by the Tax Tribunal is set aside and the order passed by the first appellate authority is restored - The question of law is answered in favour of the dealer and against the Revenue [Read less]

Customs - Classification of Molybdenum Curved Mirrors and Shields – Respondent-importer declared curved molybdenum mirrors and shields used in automobile lights as plates, sheets, strips and foils classifiable under tariff heading 81029590 attracting basic Customs Duty at 5% - Dept contends same should be classified as other articles of molybdenum under tariff heading 81029900 attracting duty at 10% - Whether the imported goods constitute flat-surfaced products eligible for classification under heading 81029590 or finished articles falling under the residual heading 81029900 – HELD - Once a molybdenum sheet is cut, cur... [Read more]

Customs - Classification of Molybdenum Curved Mirrors and Shields – Respondent-importer declared curved molybdenum mirrors and shields used in automobile lights as plates, sheets, strips and foils classifiable under tariff heading 81029590 attracting basic Customs Duty at 5% - Dept contends same should be classified as other articles of molybdenum under tariff heading 81029900 attracting duty at 10% - Whether the imported goods constitute flat-surfaced products eligible for classification under heading 81029590 or finished articles falling under the residual heading 81029900 – HELD - Once a molybdenum sheet is cut, curved and shaped to function as a shield or distributor of light beam in automobile lamps, it ceases to retain the character of a sheet and becomes a finished article of molybdenum. The importer's own admission that the molybdenum sheets were curved to act as shields establishes that the product is no longer a flat-surfaced product - Although Chapter Note 1(g) of Chapter 74 (applicable mutatis mutandis to Chapter 81) defines plates and sheets as flat-surfaced products that may have some modifications, the curvature here transforms the fundamental character of the product into a specialized reflective or protective article, analogous to how a glass mirror acquires distinct identity from a glass sheet - Applying the General Rules of Interpretation sequentially, since both available tariff headings under Chapter 8102 are equally general descriptions without specific application, Rule 3(c) appropriately applies, requiring classification under the heading occurring last in numerical order - The imported goods are correctly classifiable under heading 81029900 rejecting the distinction drawn between flat-surfaced and flat products - The order of the Commissioner of Appeals setting aside the original orders of assessment is set aside, and the findings of the original adjudicating authority affirming classification under heading 81029900 are upheld - The Departmental appeals are allowed [Read less]

GST – Kerala AAR - Exemption on Healthcare Services - Composite Supply by Ayurvedic Clinical Establishment – Applicant is Ayurvedic hospital providing both inpatient and outpatient healthcare services - Whether the services provided by the applicant to inpatients, comprising medicines, consumables, room accommodation, and other ancillary supplies, constitute a composite supply of healthcare services eligible for exemption under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) – HELD - The applicant, being an Ayurvedic clinical establishment providing diagnosis, treatment, and care under qualified medical p... [Read more]

GST – Kerala AAR - Exemption on Healthcare Services - Composite Supply by Ayurvedic Clinical Establishment – Applicant is Ayurvedic hospital providing both inpatient and outpatient healthcare services - Whether the services provided by the applicant to inpatients, comprising medicines, consumables, room accommodation, and other ancillary supplies, constitute a composite supply of healthcare services eligible for exemption under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) – HELD - The applicant, being an Ayurvedic clinical establishment providing diagnosis, treatment, and care under qualified medical practitioners, falls within the definition of "health care services" as defined under clause 2(zg) of the Notification - In the case of inpatients, medicines, consumables, dietary food, room accommodation, and other ancillary services are intrinsically and naturally bundled with the provision of medical treatment under continuous supervision of the clinical establishment, thereby constituting a composite supply as defined under Section 2(30) of the CGST Act, 2017 wherein the principal supply is healthcare service, and consequently the entire bundle qualifies for exemption under Entry No. 74 of the Notification No. 12/2017-Central Tax (Rate). However, notwithstanding the composite and exempt nature of inpatient healthcare services, the exemption does not extend to room rent exceeding Rs. 5,000 per day as amended by notification no. 04/2022-Central Tax (Rate) dated 13.07.2022 – Ordered accordingly - Whether the services provided by the applicant to outpatients, comprising medicines, consumables etc. constitute a Composite Supply of healthcare services eligible for exemption – HELD - In the case of outpatients, since the hospital primarily provides consultation and the patient is not admitted, there is no continuous or naturally bundled course of treatment under the supervision or control of the hospital, the patient remains at liberty to procure prescribed medicines from any source, and accordingly, the supply of medicines to outpatients cannot be regarded as naturally bundled with healthcare services, making such supplies independent taxable supplies liable to GST at applicable rates. [Read less]

GST – Kerala AAR - Admissibility of Advance Ruling Application - Academic Queries without Specific Factual Matrix – Applicant seeking Advance Ruling regarding applicability of Reverse Charge Mechanism on rent payments to unregistered landlords and purchases of raw materials from unregistered dealers, without disclosing any specific supply undertaken or proposed by the applicant himself – HELD - The Advance Ruling mechanism under Section 95(a) read with Section 97(2) of the CGST Act is intended to provide clarity on tax implications of specific supplies undertaken or proposed by the applicant, not for rendering genera... [Read more]

GST – Kerala AAR - Admissibility of Advance Ruling Application - Academic Queries without Specific Factual Matrix – Applicant seeking Advance Ruling regarding applicability of Reverse Charge Mechanism on rent payments to unregistered landlords and purchases of raw materials from unregistered dealers, without disclosing any specific supply undertaken or proposed by the applicant himself – HELD - The Advance Ruling mechanism under Section 95(a) read with Section 97(2) of the CGST Act is intended to provide clarity on tax implications of specific supplies undertaken or proposed by the applicant, not for rendering general advisory opinions on issues affecting third parties. The application discloses only hypothetical scenarios without any clearly identifiable transaction or concrete factual matrix pertaining to the applicant's own business activities - The applicant himself clarified during personal hearing that the questions are prospective in nature and relate to issues that may arise for his clients, and are not linked to any specific supply undertaken or proposed by him - The scheme of Advance Ruling contemplates rulings only in relation to supplies of the applicant and is not intended to function as a forum for providing general clarification on GST provisions or answering academic queries. Accordingly, the application fails to satisfy the essential requirement that questions must relate to a supply of goods or services undertaken or proposed by the applicant - The application is rejected as not maintainable [Read less]

GST – Kerala AAR - Classification od used Gunny Bags - Whether used gunny bags without plastic coating, arising after use in packing of raw materials are classifiable as reusable packing bags under Heading 6305 of the Customs Tariff Act, 1975 attracting GST at 5%, or as waste or scrap under other headings attracting GST at 18% - HELD – The classification must be determined based on the common parlance, commercial identity, essential character, condition at the time of supply, and intended use of the goods. The goods do not become waste or scrap merely on account of prior use so long as they retain their identity and fu... [Read more]

GST – Kerala AAR - Classification od used Gunny Bags - Whether used gunny bags without plastic coating, arising after use in packing of raw materials are classifiable as reusable packing bags under Heading 6305 of the Customs Tariff Act, 1975 attracting GST at 5%, or as waste or scrap under other headings attracting GST at 18% - HELD – The classification must be determined based on the common parlance, commercial identity, essential character, condition at the time of supply, and intended use of the goods. The goods do not become waste or scrap merely on account of prior use so long as they retain their identity and functional utility, since waste and scrap arise only when goods lose their original utility and are fit solely for recovery of constituent material - The impugned goods were intact, bundled and capable of reuse without further processing as evidenced by photographic material and sale invoices describing them as old gunny bags supplied as identifiable packing material, such goods clearly retained their form, structure and commercial identity as packing sacks - The Heading 6309 expressly excludes sacks and bags showing signs of wear from its ambit and directs their classification under their respective headings, while Heading 6310 applies only to worn-out textile materials reduced to cuttings or fragments fit solely for recovery, conditions which the impugned goods did not satisfy - Applying the GST rate notification, it is held that goods falling under Heading 6305 attract GST at 5% where the sale value does not exceed rupees two thousand five hundred per piece, and 18% where the sale value exceeds rupees two thousand five hundred per piece, with the clarification that where such bags are worn out, torn or reduced to waste rendering them unfit for reuse, the classification may differ and would require independent examination - The used gunny bags without plastic coating are classifiable under Heading 6305 as reusable packing bags and attract GST at 5% where sale value does not exceed rupees two thousand five hundred per piece and 18% where it exceeds that threshold – Ordered accordingly [Read less]

M.P General Sales Tax Act, 1958 - Works Contract or Inter-State Sale - Nature of Contract - Supply of a reformed gas waste boiler unit with terms providing for fabrication of piping, site assembly, welding, thermal insulation, and testing to be completed at the recipient's location along with commissioning contract and operational support - Whether the transaction constitutes an inter-state sale covered under the Central Sales Tax Act or a works contract liable to sales tax – HELD - The transaction constitutes a works contract and not merely an inter-state sale, as the contract explicitly provides for fabrication, site a... [Read more]

M.P General Sales Tax Act, 1958 - Works Contract or Inter-State Sale - Nature of Contract - Supply of a reformed gas waste boiler unit with terms providing for fabrication of piping, site assembly, welding, thermal insulation, and testing to be completed at the recipient's location along with commissioning contract and operational support - Whether the transaction constitutes an inter-state sale covered under the Central Sales Tax Act or a works contract liable to sales tax – HELD - The transaction constitutes a works contract and not merely an inter-state sale, as the contract explicitly provides for fabrication, site assembly, welding, thermal insulation, testing, and commissioning at the recipient's location, coupled with separate charging for commissioning and operational support services, which are essential components that transform the nature of the transaction from a simple supply of goods to an execution of works contract - The State of Madhya Pradesh has jurisdiction to levy sales tax on the turnover computed after deducting labour and other charges and adding notional profit - The writ petition is dismissed [Read less]

GST – Expiry of E-way Bill, Imposition of Penalty - During transportation the vehicle was intercepted at the location approximately ten kilometres away from the destination, at which point the e-way bill had expired – Levy of penalty equivalent to two hundred percent of the tax payable on the goods - Whether imposition of a penalty at the rate of two hundred percent of the tax payable was justified in the absence of any intention to evade payment of tax, where the only irregularity was the expiry of the e-way bill and the delay in seeking extension was approximately fifty minutes beyond the eight-hour grace period perm... [Read more]

GST – Expiry of E-way Bill, Imposition of Penalty - During transportation the vehicle was intercepted at the location approximately ten kilometres away from the destination, at which point the e-way bill had expired – Levy of penalty equivalent to two hundred percent of the tax payable on the goods - Whether imposition of a penalty at the rate of two hundred percent of the tax payable was justified in the absence of any intention to evade payment of tax, where the only irregularity was the expiry of the e-way bill and the delay in seeking extension was approximately fifty minutes beyond the eight-hour grace period permitted under the rules – HELD – The sub-rule 10 of Rule 138 of the CGST Rules, 2017 provides a validity period for e-way bills and its proviso permits extension of the validity period within eight hours from the time of its expiry in circumstances of exceptional nature, thereby granting latitude to the transporter - The vehicle was intercepted approximately fifty minutes after the expiry of the permissible eight-hour window for seeking extension and no allegation of an intention to evade payment of tax was made by the department - The imposition of two hundred percent penalty is not warranted in cases involving failure to renew the e-way bill within the stipulated time. Though the statute empowers imposition of a rigid and high penalty of two hundred percent, whether or not such penalty is justified depends upon whether there existed any intention to evade payment of tax. Finding no such allegation in the present case and considering that the delay was merely fifty minutes beyond the permissible extension window, the imposition of the maximum penalty is harsh and would cause grave prejudice to the petitioners - The impugned order is set aside and the petitioner is directed to pay a nominal token fine of Rs. 10,000/-, the respondents are directed to refund the balance amount after adjusting the token fine from the amount already deposited – The petition stands disposed of [Read less]

Central Sales Tax Act, 1956 - Exemption under Section 5(3) of the CST Act, 1956 - Deemed export - Requisite conditions and documentary evidence to establish supply was effected pursuant to pre-existing export order - Non-production of the agreement entered into between the Indian exporter and the foreign buyer - Whether a dealer can claim exemption under Section 5(3) of the Central Sales Tax Act, 1956 on the basis of a purchase agreement between the dealer and the exporter, without production of the export agreement between the exporter and the foreign buyer, and whether Form H and bill of lading are sufficient evidence to... [Read more]

Central Sales Tax Act, 1956 - Exemption under Section 5(3) of the CST Act, 1956 - Deemed export - Requisite conditions and documentary evidence to establish supply was effected pursuant to pre-existing export order - Non-production of the agreement entered into between the Indian exporter and the foreign buyer - Whether a dealer can claim exemption under Section 5(3) of the Central Sales Tax Act, 1956 on the basis of a purchase agreement between the dealer and the exporter, without production of the export agreement between the exporter and the foreign buyer, and whether Form H and bill of lading are sufficient evidence to establish the nexus between the goods and the export transaction – HELD - The exemption under Section 5(3) of the Central Sales Tax Act cannot be claimed merely on the basis of a purchase agreement between the dealer and the exporter. The provision requires that the sale transaction must be effected in pursuance of, and for compliance with, an agreement or order for export existing between the exporter and the foreign buyer - The statutory Form H mandates disclosure of the export agreement or order number and date, signifying that the sale must have a direct nexus with the export transaction. The production of Form H and bill of lading is insufficient without the export agreement establishing the link between the goods supplied and the export obligation - Additionally, the purchase contract dated 01.01.2008 but notarized only on 20.05.2014, pertaining to the assessment year 2007-08, raises serious doubts regarding its genuineness and acceptability. The requirements under Section 5(3) read with Rule 12(10)(a) are both substantive and evidentiary in nature, and non-fulfillment of these requirements proves fatal to the dealer's case - The orders passed by the Tribunal, First Appellate Authority, and the adjudicating authority are upheld - The Sales Tax Revision Petition stands dismissed [Read less]

GST – Kerala AAR - Grant of Rights through Auction - Taxability of consideration received by a statutory religious board for auctioning the right to collect remnant rice offerings at a temple – HELD - The transaction does not involve the supply of pre-ascertained or identified quantities of rice as goods at the time of contract, but rather the conferment of an exclusive commercial licence or right upon the successful bidder to collect and appropriate offering remnants arising during temple operations for a specified period, the quantity and nature of which are uncertain at the time of contracting. The use of a competit... [Read more]

GST – Kerala AAR - Grant of Rights through Auction - Taxability of consideration received by a statutory religious board for auctioning the right to collect remnant rice offerings at a temple – HELD - The transaction does not involve the supply of pre-ascertained or identified quantities of rice as goods at the time of contract, but rather the conferment of an exclusive commercial licence or right upon the successful bidder to collect and appropriate offering remnants arising during temple operations for a specified period, the quantity and nature of which are uncertain at the time of contracting. The use of a competitive auction mechanism evidences that the activity is undertaken in the course or furtherance of business with the objective of maximising consideration. The religious origin of the offerings does not alter the essential legal character of the contractual arrangement, which is the grant of a right for consideration. Once an article is offered by a devotee, it ceases to retain the character of agricultural produce and becomes an asset of the temple - Although the Applicant is a statutory religious board, it is a body corporate engaged in “business” within the meaning of Section 2(17) of the CGST Act, 2017. Accordingly, the assignment of rights and licences for consideration constitutes “supply” under Section 7(1) of the CGST Act, 2017. The transaction therefore falls squarely within the ambit of a licence or grant of rights constituting a supply of services, and is accordingly taxable under the relevant provision of the Act – Ordered accordingly - Taxability of consideration received by a statutory religious board for auctioning the right to collect coconuts and broken coconuts offered by devotees at temples under its administration - Whether the assignment of collection rights for coconuts constitutes a sale of nil-rated goods or a taxable supply of services – HELD - The subject matter of the auction is not the coconuts as goods but the exclusive commercial right or licence granted to the successful bidder to collect and appropriate such offerings during a specified period. The adoption of a competitive tendering mechanism indicates that the activity is undertaken in the course or furtherance of business. The exemption or nil-rating applicable to coconuts as goods is not attracted since the applicant does not supply the coconuts as commodities but confers a right to collect them. The consideration flows from the contractor to the applicant in exchange for the conferment of this exclusive right, and the underlying nature of the transaction is therefore a supply of services and not a sale of goods - Taxability of consideration received for auctioning the right to collect clothing abandoned by pilgrims in a river - Whether such transaction constitutes a supply of goods or a taxable supply of services – HELD - There is no transfer of identified or ascertained goods at the time of the contract, and the quantity and nature of the clothing to be collected remains uncertain and dependent on future events, with the successful bidder bearing the associated commercial risk. The grant of an exclusive commercial privilege to collect and deal with such materials for a lump-sum auction amount constitutes the conferment of a right or licence, which is a supply of services. The hygienic and religious objective underlying the arrangement does not alter the contractual and commercial character of the transaction. The exemption applicable to sanitation services supplied to Governmental authorities is not attracted since the supply made by the applicant is not the sanitation activity itself but the grant of a right to the contractor to carry out such activity. The activity falls within the scope of business and constitutes a taxable supply of services - Taxability of consideration received for auctioning the right to harvest coconuts from coconut palms situated on temple lands - Whether the assignment of such agricultural rights constitutes a taxable supply or is exempt under the relevant notification – HELD – Coconuts on the tree constitute agricultural produce in their primary form. The assignment of the right to collect and manage such standing crops through auction is intrinsically linked to the activity of harvesting and cannot be viewed in isolation from agricultural operations. The relevant exemption notification exempts services relating to agricultural operations directly related to production of agricultural produce, including harvesting. The grant of the right to collect and manage such produce falls squarely within the scope of this exemption as it is directly related to harvesting operations. The applicant does not derive revenue from a commercial licence unconnected to agricultural activity but assigns the right to carry out harvesting of crops attached to temple lands, which is a service directly related to agricultural operations - Taxability of honorarium and sitting fees paid by a statutory religious board to its president and members - Whether such payments attract reverse charge liability as services supplied by a director to a body corporate – HELD - The Notification No. 13/2017-Central Tax (Rate) prescribing reverse charge liability is restricted to services supplied by a director of a company or a body corporate, and does not extend to services rendered by members of a statutory board or governing body, unless such persons hold the legal status of directors in law. The president and members of the board are statutory functionaries appointed under the governing legislation and do not constitute a board of directors, nor are they appointed as directors under any corporate law. Merely being members of the board of a body corporate does not render them directors for the purposes of the said notification. The services rendered by such persons therefore do not fall within the prescribed category, and the reverse charge provisions are accordingly not attracted - Tax is not payable under reverse charge - Taxability of advocate fees and legal expenses paid by a statutory religious board to unregistered advocates - Whether reverse charge is attracted on legal services received by the applicant – HELD - The Notification No. 13/2017-Central Tax (Rate) mandates reverse charge on legal services provided by an individual advocate or firm of advocates to a business entity located in the taxable territory. The definition of business under the relevant provision is wide and inclusive, covering all activities undertaken for consideration, including activities incidental or ancillary thereto, irrespective of profit motive. The applicant, being engaged in revenue-generating activities such as auctioning of rights and generating consideration from temple assets, qualifies as a business entity. Legal services provided by advocates to the applicant therefore attract reverse charge, and the applicant, as recipient of such services, is liable to discharge the tax - Tax is payable under reverse charge - Taxability of consideration received for auctioning the right to perform religious rituals such as specific ceremonies within temple premises - Whether such transaction is exempt as the conduct of a religious ceremony or constitutes a taxable supply of services – HELD - The exemption for conduct of religious ceremonies is applicable to the person who actually performs the ceremony and not to a transaction by which the right to perform such ceremonies is granted to a third party for consideration. The applicant does not itself conduct the religious ceremony but grants an exclusive licence or right to a qualified priest or acharyan through a competitive auction process. Such a transaction is a commercial supply undertaken in the course or furtherance of business and is distinct from the actual conduct of a religious ceremony. The religious nature of the underlying ritual does not alter the contractual character of the arrangement between the applicant and the suc [Read less]

The benefit of concessional rate extends to parts used in the manufacture of renewable energy devices and not restricted only to supply of entire systems. The solar inverters are integral parts of SPGS and eligible for the concessional rate of 5%.