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2026-VIL-1744-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Provisional release under Section 110A of Customs Act - Quantum of Bond and Bank Guarantee - Appellant imported areca nut from Bangladesh and claimed duty exemption under Notification No.99/2011-CUS on the strength of a SAFTA Certificate of Origin - On a DRI alert and suspicion that the goods were of Indonesia/Thailand origin routed through Bangladesh, the goods were seized - Principal Commissioner permitted provisional release subject to a Bond and a Bank Guarantee, the latter fixed by adding duty, equivalent penalty and fine - Whether the amounts of Bond and Bank Guarantee imposed are justified - HELD - Since the Tariff value provisions come into play, the assessable value of the consignment is determined on that basis, and the Bond directed for that value is in order. Once a Bond is executed, the importer is bound to honour the amount specified therein. Penalty and fine would become recoverable only after investigations prove the Revenue's case after litigation at various stages - It is premature to quantify the likely penalty and fine before any steps have been taken for verifying the authenticity of the Certificate of Origin. A consignment imported earlier from the same exporter on the basis of the Certificate of Origin was allowed to be cleared with SAFTA benefit after final assessment. Ends of justice would be met with adequate revenue protection if the amount of the Bond is increased to the figure fixed earlier as Bank Guarantee and the Bank Guarantee is substantially reduced - The Bond is enhanced and the Bank Guarantee is reduced, and upon fulfilment of these conditions the Appellant is eligible for provisional release of the consignment - Customs - Waiver of demurrage and detention charges on goods seized and provisionally released - Regulation 6(1) of the Handling of Cargo in Customs Areas Regulations, 2009 - Appellant imported goods which were seized on suspicion regarding the country of origin and permitted to be released provisionally, and sought waiver of demurrage and detention charges - Whether demurrage and other charges are to be waived in respect of the detained consignment - HELD - Regulation 6(1) of the Handling of Cargo in Customs Areas Regulations, 2009 provides that, subject to any other law for the time being in force, the Customs Cargo Service Provider shall not charge any rent or demurrage on the goods seized or detained or confiscated by the proper officer. Since the confiscated goods are being released on provisional basis, the Revenue officials are directed to issue a complete waiver order towards demurrage and other charges in respect of the detained consignment. The Appellant may also be allowed to carry out the fumigation exercise at its own cost, under the supervision of Customs Officials, so as to avoid further deterioration of the consignment - The Revenue is directed to waive demurrage and other charges. [Read less]

2026-VIL-1749-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Competence of officer issuing Show Cause Notice - Corrigendum making the notice answerable to the Principal Commissioner - Appellant imported electric two-wheeler components in CKD condition and claimed the concessional rate under Notification No.50/2017-Cus - SCN issued by an Assistant Commissioner culminated in confirmation of duty, confiscation under Section 111(m) and penalty under Section 112 - Appellant contended that the demand exceeded the monetary limits of the Assistant Commissioner, that a corrigendum cannot validate a notice void ab initio, and that the proceedings were without jurisdiction - Whether the issue of the SCN by the Assistant Commissioner followed by a corrigendum vitiates the proceedings - HELD - A corrigendum is valid where it corrects, clarifies or supplements the Show Cause Notice, with no prejudice to the noticee, before adjudication. Apart from making the notice answerable to the Principal Commissioner, no prejudice was caused to the Appellant. The expression proper officer is function specific and not officer specific, and an Assistant Commissioner who has been designated as an officer of Customs under Section 2(34) of the Customs Act is the proper officer - A corrigendum is nothing but a correction and relates back to the notice itself, and a change in the answerable to clause does not alter the nature of the notice - The contention that the Assistant Commissioner had no power to issue the notice is rejected, and the issue of a corrigendum does not vitiate the adjudication proceedings - Pre-notice consultation before issue of Show Cause Notice - Appellant contended that the consultative letter relied on in the impugned order was never received, that pre-consultation is a substantive safeguard and not an empty formality, and that there was no effective consultation before the Show Cause Notice was issued - Whether the Show Cause Notice is vitiated for want of pre-notice consultation - HELD - The impugned order notes that the Appellant itself referred to the receipt of the pre-consultative letter in its reply to the Show Cause Notice, and the Revenue pointed out that the reply admitted the receipt of such letter. Having admitted the receipt, the Appellant cannot now take up the plea of non-receipt or of the nature of the letter - The contention of lack of pre-consultation is rejected - Maintainability of demand under Section 28 of the Customs Act, 1962 where Bills of Entry were self-assessed and not challenged - Appellant contended that the Bills of Entry attained finality and the Revenue could not proceed without challenging the self-assessment - Whether the Revenue can issue a Show Cause Notice under Section 28 for differential duty without challenging the self-assessment - HELD - The Apex Court in the case relied on by the Appellant was concerned with a claim of refund under Section 27, where re-assessment is not permitted nor can conditions of exemption be adjudicated - Non-payment of duty during self-assessment is governed by Section 28, which deals with recovery of duties not levied or not paid and is entirely different from the refund provisions under Section 27 - Section 28(1) enables recovery where exemption has been wrongly availed. The coordinate Bench has held that a clearance order cannot debar the issue of a show cause notice. There is no bar in the issuance of a Show Cause Notice under Section 28 for demanding differential customs duty without challenging the self-assessment of goods - The contention of the Appellant is rejected - Classification of electric two-wheeler imported in CKD condition without battery pack and charger - Rule 2(a) of the General Rules for the Interpretation - Appellant declared the goods as e-Bike in CKD condition with all pre-assembled essential parts and components under CTH 87116020, whereas the Adjudicating Authority held that the goods retained the essential character of a complete vehicle - Whether the goods imported without certain components possess the essential character of a complete vehicle and are classifiable accordingly - HELD - Rule 2(a) is an expansion rule and prevents classification from being defeated merely because an article arrives incomplete, unfinished or knocked down, provided the conditions are met at the time and in the condition in which the goods are presented to Customs. The decisive inquiry is the identity and character of the goods as presented for assessment - The HSN Explanatory Notes for Chapter 87 state that an incomplete or unfinished vehicle is classified as the corresponding complete vehicle provided it has the essential character of the latter, as for example a motor vehicle not yet fitted with wheels, tyres and battery. Battery pack and charger, even though not imported, are precisely the components cited in the HSN Notes which do not affect the essential character of the imported goods. The Appellant itself declared the goods as e-Bike in CKD condition and not as parts - The goods possess the essential characteristics of a complete vehicle and satisfy Rule 2(a), and the classification under CTH 87116020 is upheld - Eligibility for concessional rate under Sl. No. 531A(1) of Notification No.50/2017-Cus and alternative claim under Sl. No. 531A(2) - Appellant imported electric two-wheeler kits in knocked down condition and claimed the concessional rate, but the battery pack, charger and electric compressor were not imported - Whether the Appellant is eligible for the benefit of the Notification and the alternative entry - HELD - The exemption is available to electrically operated motor cycles imported in knocked down condition containing all the necessary components, and it is an admitted fact that the battery pack, charger and electric compressor were not imported. The benefit under the Notification cannot therefore be extended to the Appellant - The alternative exemption under Sl. No. 531A(2) was not claimed at the time of import, and a notification benefit not claimed at the time of filing of the Bill of Entry cannot be entertained later, as held by the Tribunal on identical facts - The Appellant is not entitled to the benefit of the Notification, and the demand is upheld - Confiscation under Section 111(m) and penalty under Section 112(a)(ii) of the Customs Act, 1962 where no redemption fine was imposed - Appellant contended that since the goods were duly declared, there was no mismatch with the entry made, and that penalty falls if confiscation is set aside as no redemption fine was imposed - Whether the penalty imposed can be set aside on the ground that no redemption fine was imposed - HELD - Confiscation and redemption fine are separate actions and are legally distinct outcomes. The Tribunal has upheld the Order-in-Original in an identical case of confiscation without imposition of redemption fine. There is no reason to differ from those findings - The confiscation and penalty are upheld, and the appeal is dismissed. [Read less]

2026-VIL-1748-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Taxability of tender fee collected by a State corporation for tender documents - Appellant collected tender cost/fee from bidders, which the Commissioner (Appeals) treated as part of service covered by Section 65B(44) of the Finance Act, 1994 - Appellant contended that the amount was recovery towards sale of tender documents, being printed material containing details of work, formats of agreement, terms and conditions and bid dates, which amounts to trading of goods and not service - Whether the tender fee collected by the Appellant is exigible to service tax - HELD - Service tax is required to be paid for a ... [Read more]

2026-VIL-1747-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Liability of sub-contractor when main contractor has paid service tax – Invocation of extended period of limitation - Appellant, a sub-contractor providing works contract services for painting of residential and public buildings, did not pay service tax, and the demand for the extended period was confirmed along with interest and penalties - Appellant contended that it entertained a bona fide belief that it was not liable to pay tax when the main contractor had paid the tax, as several Tribunal decisions held so, and that such a view would otherwise amount to double taxation - Whether the demand for the ext... [Read more]

2026-VIL-1746-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Invocation of extended period of limitation - Audit by Internal Audit Group noticed that the Appellant, rendering Testing, Calibration and Certification Services, had not discharged service tax liability for a part of the period - Show Cause Notice invoking the proviso to Section 73(1) of the Finance Act, 1994 was issued - Appellant contended that the demand was worked out from its own books of account and there was no suppression - Whether the Revenue was justified in alleging suppression and invoking the extended period of limitation and whether the tax demand is in order - HELD - A SCN that is wholly time-... [Read more]

2026-VIL-1743-CESTAT-AHM-CE | CESTAT CENTRAL EXCISE

Central Excise – Eligibility of sewage pumps and drainage pumps to concessional rate of duty under Sr. No. 235 of Notification No. 12/2012-CE - Appellant manufactured power driven pumps and, from April 2016, availed the concessional rate of duty on sewage pumps and drainage pumps, after paying duty at the full rate earlier, and the Respondent denied the benefit and demanded differential duty with interest - Whether sewage pumps and drainage pumps are power driven pumps primarily designed for handling water within the entry - HELD - An exemption notification is to be interpreted strictly and the burden of proving that the goods fall within its four corners is on the assessee. Words of a fiscal statute not defined therein are to be understood in the sense in which they are understood in the trade and in common parlance. The term water is not defined in the Central Excise Tariff and, as per dictionary meaning and common parlance, refers to clean water and not to sewage or drainage water. The Appellant itself, in reply to the audit objection, contended that the design and manufacturing process of pumps for handling water differ from pumps for sludge or muddy sewage water. The certificate of the Chartered Engineer only states that the pumps can also be used for clean water and does not comment on the similarity of design. The decision relied upon by the Appellant is distinguishable as the notification covers pumps primarily designed for handling water - The benefit of the entry is available only to power driven pumps primarily designed for handling clean water, the Appellant is not entitled to the concessional rate on sewage pumps and drainage pumps, and the differential duty with interest is upheld - Central Excise – Plea of res judicata and change of departmental stand on the basis of audit objection - Appellant contended that the Respondent, having accepted through the audit memo that concessional duty was inadmissible and later that it was payable, could not take a different stand and demand full duty - Whether the Respondent is barred from taking a different stand on the rate of duty applicable to the pumps - HELD - Res judicata does not apply to tax matters for different periods as the cause of action for each period is distinct. The Appellant contested the audit para at that time, and the audit observation was neither pursued by the Respondent nor implemented by the Appellant, and no show cause notice was issued. A decision not followed by either side cannot be pleaded for implementation on the ground of res judicata. The Respondent is not barred from taking a different stand where there is just cause or public interest - The plea is devoid of merit and is rejected - Central Excise – Penalty under Rule 25(1) of the Central Excise Rules, 2002 read with Section 11AC(1)(a) - Appellant initially paid duty at the full rate, started claiming the concessional rate after the audit objection, and the Respondent then demanded differential duty, and the Commissioner (Appeals) imposed penalty at a percentage of the duty - Whether penalty is imposable on the Appellant - HELD - The Appellant was initially paying the full rate of duty and began claiming the concessional rate subsequent to the objection raised by the Audit, after which the Respondent took a U-turn and demanded differential duty. There is no evidence against the Appellant which could warrant imposition of penalty - The penalty is set aside, the impugned order is upheld with this modification, and the appeal is partly allowed. [Read less]

2026-VIL-1741-CESTAT-DEL-CE | CESTAT CENTRAL EXCISE

Central Excise – Clubbing of clearances of two firms and demand on the basis of statements of suppliers – Respondent, a proprietary concern claiming SSI exemption, was alleged to have purchased raw material and cleared goods clandestinely, and the Revenue clubbed the clearances of another firm owned by the father of the proprietor, relying on the statements of the suppliers that orders and payments for both firms were made by the proprietor of the Respondent, and the Commissioner (Appeals) dropped the demand, interest, penalty and redemption fine and reduced the penalty on confiscation - Whether the clearances of the o... [Read more]

2026-VIL-1734-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax – Taxability of cancellation fee, refund fee and no show fee collected by an airline as Declared Service under Section 66E(e) of the Finance Act, 1994 - Appellant, an airline carrying passengers by air, collected cancellation, refund and no show charges from passengers and paid service tax on the abated value of these charges as part of its transport service – Dept-Respondent treated them as a distinct service of tolerating an act, demanded service tax on the full amount without abatement along with interest by invoking the extended period, and imposed penalties - Whether the cancellation charges collected from passengers are consideration for a declared service under Section 66E(e) chargeable to service tax on the full amount - HELD - The promise of the airline to carry the passenger and the promise of the passenger to pay the fare form the consideration for each other. Where the contract itself fixes the amount payable on default, such amount is liquidated damages, and the intention of the parties at the time of buying the ticket is that the passenger would fly and not that the ticket be cancelled so that the airline gets some money. The cancellation charges are intended to compensate the airline to some extent for the failure of the contract. They are in the form of compensation for failure of the contract and are not consideration, and there is no separate agreement with an intent that the passenger would default so that the airline would get compensation. The contention of the Respondent that passengers were aware at the time of booking that a cancellation fee could be charged and that it is an integral part of the agreement does not alter this position. Section 66E(e) can be invoked only if the purpose of the agreement itself is to tolerate an act, and it does not apply where the agreement is to do an act and compensation is charged for default by one of the parties. This interpretation of the expression tolerating an act has also been accepted by the Board in its Circular with respect to GST. Even though the Appellant wrongly paid service tax on the compensation after availing abatement, once there is no charge of service tax at all, it is irrelevant whether abatement was availed or not - The demand of service tax on the cancellation fees cannot be sustained, the impugned order is set aside, and the appeals are allowed [Read less]

2026-VIL-1733-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax – Limitation for refund of accumulated CENVAT credit on export of services under Rule 5 of the CENVAT Credit Rules, 2004 - Appellant, engaged in providing Business Auxiliary Service and Business Support Service, filed a refund claim for a quarter under Rule 5 read with Notification No. 27/2012-CE (NT), part of which was rejected as time-barred by reckoning the relevant date as the date of the export invoice - Whether the refund claim of accumulated CENVAT credit attributable to export of services is partly barred by limitation - HELD - The issue of limitation is governed by Rule 5 read with Notification No. 27/2012-CE (NT). The Madras High Court has held that the limitation under Section 11B of the Central Excise Act, 1944 applies to refund claims under Rule 5. However, the relevant date in the case of export of services requires separate consideration, as Section 11B does not specifically prescribe a relevant date for such exports. The Larger Bench of the Tribunal held that the limitation of one year is to be reckoned from the last day of the quarter in which the foreign exchange is received. The Larger Bench did not dispense with the application of Section 11B but determined the relevant date for export of services in the context of Rule 5 and the applicable notification. The Respondent's contention that limitation must invariably be reckoned from the date of the export invoice cannot be accepted. The plea that the subsequent amending Notification is prospective does not, by itself, displace the principle laid down by the Larger Bench regarding determination of the relevant date - The issue is decided in favour of the Appellant and the impugned order is set aside to that extent - Service Tax – Refund of CENVAT credit attributable to invoices of unregistered premises - Respondent rejected part of the refund claim on the ground that the invoices pertained to unregistered premises, contending that registration is a mandatory condition under Notification No. 27/2012-CE (NT) - Whether the refund can be denied solely on the ground that the invoices pertain to unregistered premises - HELD - The issue is covered by the judgment of the jurisdictional High Court, which held that Rule 5 of the CENVAT Credit Rules, 2004 does not prescribe registration of the premises as a prerequisite for claiming refund of unutilised CENVAT credit attributable to exported services. The requirement concerning the jurisdiction of the authority to which the refund application is to be made cannot be construed as a prohibition against refund merely because the premises from which the services were exported were unregistered. The Tribunal decision relied upon by the Respondent cannot prevail over the binding decision of the jurisdictional High Court - The rejection of refund merely on the ground of non-registration of the premises is set aside, the Appellant is eligible for consequential relief as per law, and the appeal is disposed of accordingly. [Read less]

2026-VIL-1737-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Construction of Residential Complex Service - Sections 65(91a) and 65(105)(zzzh) of the Finance Act, 1994 - Builder or developer - Period prior to 01.07.2010 - Composite works contract - Appellant, engaged in construction of residential complexes, was alleged to have constructed a residential complex of more than the sanctioned number of units without payment of service tax, and the demand was confirmed with interest and penalties and upheld in appeal - Appellant contended that the additional units were created by buyers converting common rooms, that a developer was not liable before the Explanation to Section 65(105)(zzzh) was inserted with effect from 01.07.2010, and that the construction was a composite contract of goods and services - Whether the demand under Construction of Residential Complex Service is sustainable - HELD - The description of the Appellant as a developer or contractor is not conclusive, and the Department must establish that the activity answers the statutory description of the taxable service. The number of units was a factual dispute to be resolved on the basis of the sanctioned plan, building records and agreements. Alterations by purchasers cannot be attributed to the Appellant without evidence, and Revenue failed to discharge its burden. The Explanation inserted with effect from 01.07.2010 expanded the scope of the taxable service and cannot be applied retrospectively. Composite works contracts could not be taxed under the construction service categories prior to 01.06.2007, and for the subsequent period they could not be taxed under Construction of Residential Complex Service, which covers only services simpliciter. The sale of undivided shares of land and non-payment of VAT do not establish that the contracts were service contracts simpliciter. Strong suspicion and grave doubts cannot take the place of legal proof - Demand is not sustainable and is set aside - Service Tax - Sub-contract and petty job receipts - Construction of Residential Complex Service - Burden of proof - Receipts were treated as consideration for construction services on the ground that the Appellant did not produce documents showing that they related to activities distinct from the residential complex - Whether the demand on such receipts is sustainable - HELD - The absence of supporting documents does not dispense with the Department's obligation to establish the nature of the taxable service and the legal basis for the demand. The Department had not shown that specific documents were called for under summons and not produced. Composite works contracts cannot be taxed under the construction service categories merely by allowing an abatement. The impugned order does not establish that the receipts represented consideration for services simpliciter - Demand is set aside - Service Tax - Renting of Immovable Property Service - Section 65(105)(zzzz) of the Finance Act, 1994 - Small service provider exemption - Revenue contended that the property was let out for commercial purposes, whereas the Appellant contended that the rental income for the earlier year was below the threshold and that service tax was paid from December 2009 onwards - Whether the demand is sustainable - HELD - The mere fact that the property was let out for commercial purposes does not conclude the amount of tax payable. The eligibility for the exemption, the year-wise receipts and the tax paid required verification, and the Adjudicating Authority neither considered the contentions of the Appellant nor rebutted them with cogent reasons. In the absence of sufficient evidence, the benefit must enure to the Appellant. Considering the small duty and that the events occurred more than a decade ago, remand would impose a disproportionate burden - Demand is set aside - Service Tax - Extended period of limitation and penalties - Sections 73(1), 77 and 78 of the Finance Act, 1994 - Whether limitation requires separate determination and whether penalties survive - HELD - Since the demands are unsustainable on merits, limitation need not be separately determined and the penalties under Sections 77 and 78 cannot survive - Impugned order is set aside and the appeal is disposed of with consequential relief, if any. [Read less]

2026-VIL-1174-BOM | High Court SGST

GST - Rejection of appeal for shortfall in pre-deposit without notice - Principles of natural justice - The Petitioner challenged the order of the Commissioner (Appeals) rejecting its appeal against the demand of tax under reverse charge mechanism - Whether the Appellate Authority can dismiss an appeal for shortfall in pre-deposit without a defect memo, notice or opportunity of hearing, and without considering the amount already deposited - HELD - It was not in dispute that no defect memo, notice or opportunity was granted before dismissing the appeal. The amount deposited during investigation far exceeded the statutory am... [Read more]

2026-VIL-190-GSTAT-RPR | Tribunal SGST

GST - Duplicate e-way bills against same invoice - The Department noticed two e-way bills generated on different dates against each of two invoices and alleged that the later e-way bill in each pair represented another movement on which tax was not paid. The Appellant contended that there was one continuous movement and that the later e-way bills were generated only because the earlier ones expired during transit owing to delay, change of vehicle and trans-shipment - Whether the later e-way bills evidence separate consignments and additional outward supplies, and whether the Appellant discharged the evidentiary burden of showing continuity of the same consignment - HELD - A second e-way bill does not by itself create a presumption of a second taxable supply, and the burden of establishing short payment under Section 73 of the CGST Act, 2017 remains on the Department. However, it is a separate contemporaneous declaration of movement with its own number, validity and vehicle particulars. Facts about actual movement, trans-shipment and the reason for the later e-way bill are especially within the knowledge of the Appellant and its transporter, and the explanation must be tested against the transport record and the e-way bill history - Rule 138 provided for Part-B updating on change of conveyance and for extension of validity in exceptional circumstances including trans-shipment. For one invoice, the original e-way bill expired without extension and a fresh e-way bill showing the same dispatch place was generated after expiry. For the other invoice, the original e-way bill itself showed repeated vehicle updates and an extension, yet a new e-way bill declared a new vehicle, a fresh validity period and the full original distance, with changing GR dates and a pleaded route unreconciled with the declared distance. No delivery acknowledgment, transporter continuity statement, toll or GPS record or recipient confirmation was produced to establish that the same goods moved. The Appellant also failed to show that the tax on these supplies was reported and paid in the returns - The later e-way bills evidence separate consignments, and the demand of IGST under Section 73 is upheld – The appeal is dismissed - Interest and penalty on demand under Section 73 - Plea of absence of fraud or intention to evade - HELD - Section 73 applies to tax not paid or short-paid for reasons other than fraud, wilful misstatement or suppression, so absence of fraudulent intent does not neutralise a liability established under it. Interest is attracted under Section 50(1) - Penalty under Section 73(9) of ten per cent of the tax determined or the prescribed minimum, whichever is higher, does not call for interference, and the adjudicating authority confined the tax to less than proposed in the notice - The interest and penalty are upheld, the appeal is dismissed. [Read less]

2026-VIL-1730-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Exemption under Sr. No. 528 and 528A of Notification No. 50/2017-Cus - Condition No. 9 - Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 - Manufacture through job worker - Appellant, engaged in manufacture of electric buses, imported components at concessional/nil rate of duty, filed intimations, furnished continuity bond with security and filed returns under the Rules - Appellant entered into an MOU with its sister concern for fabrication of the buses from the imported components at the premises shared by both, and the imported goods were shown as sold to the sister concern under tax invoices - Department alleged that the imported goods were sold and cleared as such without permission, in violation of Rule 7(2) - Whether the Appellant violated the provisions of the IGCR Rules, 2017 so as to lose the benefit of the exemption - HELD - The IGCR Rules operationalise verification of the end-use condition through intimation, bond, records and returns. Rule 7 places a primary obligation on the importer to use the goods within six months and provides an option of re-export or home clearance for unutilised or defective goods - It is admitted that the Appellant followed the procedure of intimation, bond and returns, that the imported components were used in the manufacture of electric buses supplied to the transport corporation, and that both entities shared the same manufacturing premises. The only lapse is that the Appellant entered into a business arrangement with the sister concern for fabrication and the imported goods were shown as sold to the job worker. There is no allegation that the imported goods were not used for the purpose for which they were imported - The Tribunal has repeatedly treated obligations under such Rules as procedural or facilitative where the importer's substantive entitlement is not in doubt, and held that the end-use condition is satisfied where goods are used on behalf of the importer in a job worker's factory. The subsequent amendment of the Rules expressly provides for sending goods to a job worker, recognising the business practice. Procedural lapses can be condoned if substantial compliance is met. Even though the buses were manufactured on job work, the imported components did not leave the Appellant's factory premises - There is substantial compliance with the Notification and duty cannot be demanded - The impugned order is set aside and the appeal is allowed [Read less]

2026-VIL-1745-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Exemption under Notification No.25/2012-ST to works contract services provided to local authority or governmental authority - Appellant executed composite turnkey works contracts for construction of water treatment and effluent treatment plants for a Public Health Engineering Department and Municipal Corporations and discharged service tax under the Works Contract (Composition Scheme) Rules, 2007, but continued to pay at the old composition rate after it was increased - Demands raised for three different periods were confirmed by the Adjudicating Authority and upheld by the Commissioner (Appeals), who ignored the plea of exemption under Sl. Nos. 12 and 13 of Notification No.25/2012-ST dated 20.06.2012 - Whether the Appellant is eligible for exemption in terms of Notification No.25/2012-ST - HELD - The Notification specifies that services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation or completion of a civil structure meant predominantly for use other than commerce, and of a pollution control or sewage treatment plant, are exempt from service tax. It is not the case of the Revenue that the Appellant's claim is incorrect, nor has the Revenue denied that the Appellant executed the works contracts for construction of water and effluent treatment plants for local authorities and governmental authorities. The replies to the Show Cause Notices and the Statement of Demand categorically stated that the Appellant was engaged in composite turnkey works contracts for such bodies, and these facts were never denied by the Department. The Commissioner (Appeals) very conveniently ignored this plea. The reference of a similar issue to the Larger Bench in another case need not be gone into, as the Appellant there had not undertaken works contracts for civic bodies. By virtue of the Mega Exemption Notification, the service tax liability on works contracts executed for local bodies and governmental authorities becomes exempt - The demands upheld in the impugned Order-in-Appeal cannot sustain and the appeals are allowed [Read less]

2026-VIL-1751-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - De novo adjudication on remand - Evidentiary value of Chartered Accountant's certificate and balance sheet – Appellant-society was alleged to have rendered Business Exhibition Service without payment of service tax - Earlier Tribunal order set aside the demand under Club and Association Services and remanded the matter only to verify the difference between the revenue sharing certified by the organiser and the receipts shown in the balance sheets, including grants received directly from the Government of India - On remand, the demand for earlier periods was dropped, but the demand for the period covered by the Show Cause Notice was confirmed on the differential amount, on the ground that the Chartered Accountant's certificate was not cogent evidence - Whether the Adjudicating Authority travelled beyond the remand order - HELD - The only direction in the remand order was to ascertain the difference between the revenue sharing certified by the organiser and the amount shown as receipt from the exhibition in the balance sheet. The observation of the Adjudicating Authority that a CA certificate is not conclusive evidence is cannot be accepted. It is settled law that books of account, balance sheets and Chartered Accountant's certificates are admissible documents for proof of their contents. The difference in the amount recorded in the books and in the income certificate was explained by the Appellant as arising from the accrual method of accounting, whereas taxes were paid on the actual amount received, and the Adjudicating Authority was silent on this submission. The impugned order was also silent on the earlier observation that service tax liability had been fully discharged by the organiser and the same amount cannot be charged twice. Sole reliance on balance sheet figures is not acceptable in the absence of any supporting evidence - The Adjudicating Authority travelled beyond the terms of the remand order and failed to observe judicial discipline. The order under challenge is set aside and the appeal is allowed [Read less]

2026-VIL-1750-CESTAT-ALH-ST | CESTAT SERVICE TAX

Service Tax - Goods Transport Agency services - Exemption for transportation of agricultural produce, services of hiring vehicles to other Goods Transport Agencies and reverse charge mechanism - Appellant-GTA issuing consignment notes, was served a Show Cause Notice for a financial year, and the demand, modified by the Commissioner (Appeals), was confirmed on the entire amount shown in the Income Tax Return - Whether the receipts of the Appellant are exempt or are liable to service tax in the hands of the Appellant - HELD - The Appellant received amounts against transportation of potato, which is an agricultural produce. Transportation of agricultural produce is exempt under Entry No.21(a) of Notification No.25/2012-ST dated 20.06.2012 - The amount received for giving vehicles on hire to other Goods Transport Agencies is distinctly covered and specifically exempted under Entry No.22 of the same Notification. The Appellate Authority confirmed the demand on the entire amount shown in the Income Tax Return without appreciating that the Appellant was engaged in transportation of goods - As per Notification No.30/2012-ST, the liability to pay service tax on GTA services provided to specified recipients, including a body corporate, is solely on the service recipient under the RCM - The Form-26AS indicating the names of the recipients is enough to prove that such recipients are body corporates. The Appellant, being the service provider, has no statutory liability to pay the tax on such services, and confirming the demand on it is contrary to the specified legal mandate - The receipts against agricultural produce and hire of vehicles are exempt and the confirmation of demand on the entire amount cannot be sustained on this ground - Service Tax - Computation of liability of Goods Transport Agency - Abatement under Notification No.26/2012-ST, threshold exemption under Notification No.33/2012-ST and penalties under Sections 77 and 78 of the Finance Act, 1994 - Appellant contended that, after excluding exempted receipts, the balance was eligible for abatement and threshold exemption, and submitted a calculation of the liability payable - Whether the demand is to be re-determined after abatement and threshold exemption and whether the penalties are sustainable - HELD - Under Notification No.26/2012-ST and its amendments, in the case of transportation of goods by a GTA, abatement is allowed on the amount received and service tax is leviable only on the remaining portion. The proceedings initiated for the preceding financial year were dropped by the Adjudicating Authority, and accordingly the Appellant is eligible for the threshold exemption from the aggregate value of services provided during the relevant financial year under Section 66B in terms of Notification No.33/2012-ST - Applying the exemptions, the threshold exemption and the abatement to the total receipts yields a substantially reduced taxable value, and the figures submitted by the Appellant may be verified and the demand along with applicable interest appropriated from the amount of pre-deposit - The penalties imposed under Sections 78, 77(1)(a), 77(1)(c) and 77(2) are set aside, the demand is modified subject to verification, and the appeal is partly allowed. [Read less]

2026-VIL-1732-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax – Show cause notice – Specification of statutory category – Outdoor Catering Service under Section 65(105)(zzt) of the Finance Act, 1994 – Appellant, registered for providing outdoor caterer's service, operated an on-site mess at the premises of the service recipient and did not pay service tax claiming exemption under Notification No. 22/2006-ST, which was alleged in audit to be ineligible, and the demand was confirmed with interest and penalties and upheld in appeal – Appellant contended that the show cause notices failed to specify the statutory category and that the lower appellate authority expanded the scope of the dispute by referring to a canteen – Whether the show cause notices were vitiated – HELD – The test is whether the notice disclosed the essential factual and legal foundation of the charge so that the assessee could reasonably defend itself. The Appellant was registered for providing outdoor caterer's service, and the charge was that it did not pay tax claiming the benefit of an ineligible exemption notification. The notice disclosed the foundation of the charge. The word canteen occurred only in the analysis of the submissions and did not expand the scope of the dispute – Contention rejected - Service Tax – Outdoor Catering Service – Sections 65(24), 65(76a) and 65(105)(zzt) of the Finance Act, 1994 – Continuous operation of mess at premises of service recipient – Appellant supplied food and beverages at the Staff College under an agreement, with consideration comprising collections from trainees and employees and subsidy from the service recipient – Appellant contended that continuous supply is not for a purpose or occasion, that the premises became its own place of business, that the trainees and employees were the recipients, and that the amount was the sale value of food – Whether the activity constitutes outdoor catering service – HELD – An outdoor caterer provides catering services at a place other than his own. Continuous operation of the mess does not make the premises the Appellant's own, as they continued to belong to and be provided by the Staff College. The contract was entered into with the Staff College, which provided the premises and subsidised the food, so that the Appellant was the service provider and the Staff College was the service recipient. The trainees and employees were merely the ultimate beneficiaries. The consideration cannot, merely because it was referable to food supplied, be treated as sale of goods, and service tax on outdoor catering is distinct from VAT on sale of food and beverages – The activity is taxable as outdoor catering service - Service Tax – Exemption – Notification No. 22/2006-ST – Services provided to the Reserve Bank of India – Appellant claimed exemption for outdoor catering services and relied on a certificate issued by the Staff College – Whether the benefit of the notification is available – HELD – The notification exempted services provided to the Reserve Bank of India only where it was liable to pay the service tax under Section 68(2) of the Finance Act, 1994 read with Rule 2 of the Service Tax Rules, 1994. Outdoor catering was not a service in respect of which the Reserve Bank of India was made liable under Section 68(2), so the condition was not satisfied. Rendering service to its establishment or payment of subsidies cannot dispense with the express condition, and the certificate cannot confer an exemption contrary to the statutory conditions – Denial of the benefit of the notification is upheld - Service Tax – Extended period of limitation – Proviso to Section 73(1) of the Finance Act, 1994 – Bona fide belief of non-taxability based on exemption notification and certificate – First show cause notice invoked the extended period, whereas the subsequent notice was issued within the normal period – Department alleged that the Appellant did not disclose its claim of exemption and the non-payment came to light only during audit – Whether the extended period can be invoked – HELD – Where taxability admits of two plausible views, extended limitation cannot be invoked in the absence of a positive and blameworthy act evidencing intent to evade. The bona fide belief of the Appellant, founded on the notification and the certificate, was not without basis, and the divergent views of the High Court and the Tribunal establish the interpretative nature of the issue. As no suppression or intention to evade is established, the demand is confined to the normal period – Demand beyond the normal period is set aside and the demand for the normal period is sustained - Service Tax – Penalty – Sections 76, 77 and 78 of the Finance Act, 1994 – Whether penalties are sustainable when the allegation of misdeclaration and the circumstances for invoking the extended period are not established – HELD – As these are not established, the requisite ingredients for penalty under Sections 76, 77 and 78 are absent – Penalties set aside - Service Tax – Interest and valuation – Section 75 and Section 67(2) of the Finance Act, 1994 – Appellant contended that gross receipts should be treated as cum-tax and that, absent principal liability, no interest arises – Whether interest is payable and cum-tax benefit is admissible – HELD – Once the liability for the normal period is sustained, interest under Section 75 follows as a statutory consequence of delayed payment. The Appellant is entitled to the benefit of Section 67(2) where the gross amount charged is inclusive of service tax, and the duty needs to be re-worked out – Interest is upheld on the surviving liability, the matter is remanded to the original authority only to re-quantify the demand and interest within 90 days, and the appeal is partly allowed. [Read less]

2026-VIL-1754-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Cenvat credit of service tax paid on sales commission - Appellant sent goods to its depots on stock transfer basis under agreements with commission agents who procured orders, arranged dispatch and collected payments, and the Head Office distributed the credit of service tax on commission as Input Service Distributor - The Department alleged that services used beyond the stage of manufacture and clearance from the factory are not input services - Whether service tax paid on commission to agents for sale of goods through depots qualifies as input service and whether the credit distributed by the Input Servi... [Read more]

2026-VIL-193-GSTAT-PYG | Tribunal SGST

GST - Penalty under Section 129(3) for transport of goods without e-way bill, Requirement of intent to evade tax - Appellant was transporting motorcycles accompanied by a valid e-invoice carrying the invoice reference number, QR code and the engine and chassis number of each unit, but no e-way bill was produced - First Appellate Authority upheld the demand holding that Section 129 creates strict liability irrespective of intent - Whether penalty can be sustained for the sole omission of an e-way bill where the transaction is accompanied by a genuine e-invoice and there is no evidence of tax evasion - HELD - The question is to be answered by reference to the statute as it stood on the date of interception. Before its amendment with effect from 01.01.2022, Section 129(6) provided that where tax and penalty were not paid, further proceedings shall be initiated in accordance with Section 130, which confines confiscation and penalty to goods dealt with intent to evade payment of tax. Section 129 as it then stood was therefore the first step of a process leading into a section built around intent - The Allahabad High Court, interpreting the same unamended provision, has consistently held that intent to evade tax is a necessary condition. The decision of the Supreme Court applied to a differently worded sales tax statute with no such link and involved a deliberate scheme, and is distinguishable - The motorcycles were uniquely identifiable by engine and chassis numbers, their sale required registration with the transport authorities – Further, the e-invoice matched the returns, tax had already been paid at the time of purchase, physical verification found no mismatch. There is nothing on record suggesting concealment of the goods, their value or destination, while the explanation for the lapse was specific and verifiable - The First Appellate Authority erred in relying on the later amended version of Section 129, which treats the provision as one of strict liability and did not apply to the transaction - Intent to evade tax was a necessary condition for imposing penalty under Section 129 for the transaction, and the penalty for the sole omission of the e-way bill cannot be sustained and set aside – The appeal is allowed - Passing of the penalty order within a short time of the show cause notice and demand of tax a second time on the same consignment - Violation of Section 75(4) and principles of natural justice - Show cause notice and detention order were served on the Appellant, who deposited the demanded amount under protest, and the final order under Section 129(3) was passed within less than an hour of the notice - Whether passing the penalty order within such a short time after the show cause notice is a fatal defect - HELD - Though Section 129(3) as it then stood did not prescribe any time limit, the word "shall" in Section 75(4) makes it mandatory to grant an opportunity of hearing where an adverse decision is contemplated. Effectively no time was afforded to respond to the notice, and it was neither physically nor legally possible for the adjudicating authority to have applied its mind to the explanation of the Appellant or the traceability of the motorcycles within that time. The failure to provide a reasonable opportunity of hearing is a fatal defect, and the haste renders the order a jurisdictional nullity - Demanding tax a second time under Section 129(1)(a) on the same consignment, when the tax had been discharged through returns, amounts in substance to double taxation, and levy of an additional penalty is contrary to the statutory scheme - The orders of the FAA and the Adjudicating Authority are set aside and the appeal is allowed. [Read less]

2026-VIL-192-GSTAT-RPR | Tribunal SGST

GST - Maintainability of appeal under Section 112(1) against an order-in-original passed under Section 73(9) while the first appeal under Section 107 remains pending - Appellant filed an appeal in Form GST APL-05 challenging the original adjudication order, while its first appeal in Form GST APL-01 against the same order was still pending before the Appellate Authority - Whether an appeal under Section 112(1) is maintainable directly against an order-in-original when an appeal under Section 107 against that order remains pending and no appellate or revisional order is challenged - HELD - Section 107(1) provides the first appeal against an order of the adjudicating authority, while Section 112(1) permits an appeal to the Tribunal only against an order passed under Section 107 or Section 108. The statutory sequence places original adjudication before the Appellate Authority and an appellate or revisional order before the Tribunal. The right of appeal is statutory and requires clear authority of law, and want of jurisdiction cannot be cured by consent - The officer who passed the impugned decision acted as an adjudicating authority and not as an appellate or revisional authority. Neither the filing nor the pendency of the first appeal converts the original decision into an order under Section 107 - The procedural power under Rule 24(4) of the GSTAT (Procedure) Rules, 2025 cannot enlarge the category of appealable orders prescribed by Section 112(1). The defect is jurisdictional and not a defect of presentation, so rectification of the description of the respondent, uploading of missing documents or proof of deposit cannot make an original adjudication order directly appealable - The request for protection against recovery cannot confer appellate jurisdiction on the Tribunal. The question whether the deposit satisfies Section 107(6) and the extent of protection under Section 107(7) are for the competent authority - The filing is rejected as not maintainable and registration as a regular Tribunal appeal is declined [Read less]

GSTAT Order | Tribunal SGST

GST - Input tax credit on invoices issued by a supplier whose registration was cancelled retrospectively - Section 16(2)(a) and 16(2)(c) of CGST Act, 2017 - SCN under Section 73 alleged that the credit was received from a supplier whose registration was cancelled retrospectively, and the demand with interest and penalty was confirmed relying on Section 16(2)(a) and an Instruction of the Board - FAA set aside the demand - Department filed appeal contending that retrospective cancellation shows the transactions were not genuine and that payment of tax to the Government was not verified - Whether input tax credit availed on invoices issued by a supplier who was registered on the dates of the invoices becomes inadmissible for the sole reason that the registration is afterwards cancelled with effect from a prior date - HELD - Section 16(2)(a) requires an invoice issued by a supplier registered under the Act, and an invoice is issued on a day, so the supplier must be registered on that day. On the dates of the invoices the supplier held a registration and the common portal showed a registered taxable person - Section 29(2) empowers cancellation from a retrospective date, but it only fixes the date from which the registration is treated as at an end between the Department and the registrant. Section 29(3) keeps the supplier answerable for tax on its supplies and contains no provision withdrawing the credit of those who bought from it - A buyer who has done everything the law asks on the day of purchase cannot hold his credit at the mercy of a later cancellation of which he had no notice. The Instruction of the Board only guides officers in scrutiny, cannot add to Section 16 a disqualification the Section does not contain, and does not bind an authority deciding an appeal - As regards Section 16(2)(c), the invoices appear in FORM GSTR-2A and the supplier filed its returns in FORM GSTR-3B, which cannot be filed without discharging the liability declared. Neither the notice nor the order alleged that the supplier failed to pay the tax - Retrospective cancellation of a supplier's registration does not by itself render the credit inadmissible, though it may be a reason for the Department to enquire and issue a notice if it has material that goods were not received, tax was not paid or the recipient was party to a fraud - The order of the First Appellate Authority is confirmed and the appeal of the Department is dismissed [Read less]

2026-VIL-183-GSTAT-KLK | Tribunal SGST

GST - Failure of First Appellate Authority to record reasons under Section 107(12) of CGST Act, 2017 - Cryptic and non-speaking order - Appellant was served with a demand notice under Section 74(1) for suppressing the value of outward supply of goods pertaining to FY 2017-18 - Appellant contended that the amounts identified by the Revenue were advances received from customers, no tax invoice was raised as no delivery was made, and there was no fraud, wilful misstatement or suppression of facts for invoking Section 74(1) - Whether the order of the First Appellate Authority, which recorded no points for determination and no ... [Read more]

2026-VIL-1173-PAT | High Court VAT

Bihar Value Added Tax Act, 2005 – Taxability of Mobile charger sold as part of composite pack with cellular phone under single MRP - Appellant sold cellular phones and chargers in composite packs under a single label and single MRP and discharged tax at the rate applicable to cellular phones - Assessing Authority treated the charger as an independent accessory taxable at the residual rate and created a differential tax liability on a notional value ascribed to the charger by best judgment - Tribunal following the Supreme Court decision in Nokia India case on mobile chargers - Appellant contended that the decision is distinguishable as the dealer there itself treated the charger as an accessory - Whether the Tribunal was justified in applying the Supreme Court decision to levy differential tax on chargers sold in a composite pack - HELD - The Supreme Court held that a mobile charger is an accessory and not a part of the cellphone, that it is an independent product which can be sold separately, and that merely making a composite package of cellphone and charger does not make it a composite good for the purpose of interpreting the Schedule entry - The Supreme Court was fully conscious that the charger was sold in a composite pack and nevertheless held that it retained its character as an independent accessory. Exclusive compatibility, warranty conditions and a single declared MRP are commercial attributes which do not alter the basic nature of the goods. The sale of standalone chargers by the Appellant at the residual rate reinforces that the charger is a distinct commercial commodity. Once the charger is held to be a separate taxable commodity, the residual entry is attracted and the absence of a separate machinery provision for splitting does not nullify the classification. Valuation by best judgment is a question of fact, and no material showed that the notional value was arbitrary or perverse - The decisions of other High Courts turned on differently worded Schedule entries and cannot be pressed into service against binding precedent - The mobile charger sold as part of a composite pack remains an accessory taxable at the residual rate - The finding of the Tribunal upholding the levy of differential tax on mobile chargers sold as part of composite packs with cellular phones, by applying the decision of the Hon’ble Supreme Court in, and the coordinate Bench decision of this Court, is affirmed - The challenge to this finding is rejected - The appeals are dismissed - Classification of toner and cartridges - Entries 3 and 4 of Part II of Schedule III - Entry 97 excluding toner and cartridge from printing ink - Residual entry - Assessing Authority treated toner and cartridges as unspecified goods taxable at the residual rate, which was affirmed by the First Appellate Authority and the Tribunal - Whether toner and cartridges are classifiable under Entries 3 and 4 as computer peripherals and their parts and accessories, or fall under the residual entry - HELD - Entry 97 specifically deals with printing ink excluding toner and cartridge. The express exclusion is a clear legislative pointer, since if the legislature had intended these goods to fall under the IT-products entries it would have been unnecessary to carve them out of the printing-ink entry and leave them to the residual entry. The exclusion is not otiose and shows that toner and cartridges were deliberately kept outside the lower-rate entries. By the functional test and common parlance, toner and cartridges are consumables which are periodically exhausted and replaced and do not form a permanent or integral component of the printer. The analogy with paper, without which a printer cannot produce output, and with fuel, without which a vehicle cannot run, is apposite, as neither is treated as a part or accessory of the machine - A taxing statute is construed strictly, and where the Schedule itself contains an express exclusion and the goods answer the description of consumables, the residual entry is rightly attracted - Toner and cartridges do not fall under Entries 3 and 4 of Part II of Schedule III and are liable to tax at the residual rate. The finding of the Tribunal is affirmed - Remand by Tribunal of issues of trade discount, entry-tax set-off, D-IX reconciliation and interest - Vague show cause notice - Appellant sought clarification of the governing principles on the remanded issues and contended that the show cause notice was vague and reflected a premeditated mindset, and that the orders were non-speaking and ignored the written submissions and authorities cited - Whether any substantial question of law survives on the remanded issues and whether the procedural complaints warrant interference - HELD - The Tribunal correctly observed that a genuine post-sale discount is not a taxable event but that its factual foundation must be verified. It gave a clear exposition that entry-tax set-off is available only when VAT liability is actually incurred on the sale of the imported scheduled goods, with the credit for closing stock to be examined in the succeeding year against the opening stock. It rightly deprecated the use of pure presumptions on D-IX declarations and directed verification against the books of account, tax being imposable only if actual suppression or misuse is established. Interest under Section 39(4) is fastened when any of the specified conditions is satisfied and does not require a separate finding of wilful default. The Tribunal's rejection of the contention that the amount collected is tax-inclusive discloses no error. Since all these issues stand remanded with adequate guidance, no substantial question of law survives at this stage - As regards the procedural complaints, the Appellant fully participated in the assessment and appellate proceedings, filed replies and produced documents, no prejudice was demonstrated, and participation without protest weakens the challenge to the show cause notice - The challenge based on natural justice and non-speaking orders is rejected, the Assessing Authority shall re-examine the remanded issues after giving the Appellant a reasonable opportunity of hearing and recompute the liability. [Read less]

2026-VIL-1756-CESTAT-AHM-CU | CESTAT CUSTOMS

Customs – Larger Bench - Binding effect of the judgment of the High Court on the Larger Bench and maintainability of the reference - Advance Authorisation, Non-compliance of pre-import - Interest, confiscation, redemption fine and penalty on non/delayed payment of IGST under Section 3(7) read with Section 3(12) of the Customs Tariff Act, 1975 for the period prior to the amendment effective from 16.08.2024 - Appellants imported goods under an Advance Authorisation claiming exemption from integrated tax and compensation cess, subject to the pre-import condition - Appellants deposited the tax along with interest and obtaine... [Read more]

2026-VIL-1758-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs – Valuation of old and used machinery – Redetermination on overseas enquiries and expert opinion – Appellant imported old and used printing machines, which were examined, valued by Chartered Engineers and cleared on payment of duty on enhanced assessable values, and the Respondent later rejected the values and redetermined them under the Customs Valuation Rules on the basis of values received through COIN offices and the report of two experts of an Institute – Appellant contended that the redetermination was arbitrary and that its request for cross-examination of the experts was ignored – Whether the redetermination of value and the consequent differential duty on the seized machines, the machines cleared earlier and the machine cleared provisionally are sustainable – HELD – Of the enquiries claimed with several COIN offices, only a single letter was produced, which had no reference to the Bill of Entry or the details of the machines and no documentary back up, so its evidentiary value is nil - The expert report did not show the qualification of the experts or the authority of the Institute to determine the price of second-hand machines, and gave an approximate value directly without the original value, usage, present value or method adopted, which makes it a hollow report devoid of any technicality - Ignoring the request for cross-examination of the experts is a blatant disrespect of the principles of natural justice - The re-valuation is arbitrary and without corroborative and cogent documentary evidence, and the differential duty on all the machines is set aside - The machine cleared on provisional assessment was also subjected to a demand without finalising the assessment, and no case of enhancement of value was made out - The appeals are allowed - Customs – Confiscation and redemption fine – Sections 111(m), 124 and 125 of the Customs Act, 1962 – Seized machines released provisionally and machines cleared earlier in the normal course – Respondent confiscated the machines and imposed redemption fine on the ground of undervaluation, though a notice under Section 28 alone had been issued – Whether confiscation and redemption fine can be sustained without a notice under Section 124 and for machines not available for confiscation – HELD – Where goods are seized and released provisionally, confiscation requires a notice under Section 124, which serves a purpose distinct from a notice under Section 28 for recovery of duty. No such notice was issued for the machines provisionally released, and confiscation was also based on the undervaluation which stands discarded - The machines cleared earlier after assessment were not available for confiscation and were not shown to be cleared under bond, so no redemption fine can be imposed under Section 125, as held by the Larger Bench - The confiscation and the redemption fine are set aside - Customs – Extended period of limitation – Section 28 of the Customs Act, 1962 – Suppression alleged on the basis of subsequent undervaluation of machines assessed by Customs – Show cause notice invoked the extended period for machines which were examined and assessed by Customs officers with Chartered Engineer's certificates on record, and some Bills of Entry were beyond five years from the date of notice – Whether the extended period was available to the Respondent – HELD – The goods were released after the Bills of Entry were assessed by Customs officials on the basis of Chartered Engineer's certificates which were considered, and hence no suppression can be alleged, particularly as the undervaluation has gone uncorroborated - Where all material particulars are disclosed and within the knowledge of the assessing authority, the extended period cannot be invoked, as it is an exception to the normal rule and cannot compensate for the delay on the part of the Department - The demand under the extended period is time barred and is set aside - Customs – Penalty – Sections 112 and 114A of the Customs Act, 1962 – Penalty on importer and on the Directors, alleged to be concerned in undervaluation – Whether penalties survive where the demand and confiscation have been set aside – HELD – Since the confirmed demands and confiscation are not sustainable, the question of imposing penalty on the importer does not arise, and as the case against the importer does not survive, the penalties on the Directors under Section 112(a) and (b) also do not survive - The penalties and the impugned order are set aside, and the appeals are allowed with consequential relief as per law. [Read less]

2026-VIL-1727-CESTAT-ALH-ST | CESTAT SERVICE TAX

Service Tax - Supply of ready mix concrete produced at a batching plant - Abatement under Rule 2A of Service Tax (Determination of Value) Rules, 2006 - Appellant supplied ready mix concrete produced at a batching plant to a contractor for its project site and paid service tax after availing abatement of 60% of the gross contract value - Revenue issued a show cause notice for differential service tax under the extended period, which was confirmed by the Assistant Commissioner and upheld by the Commissioner (Appeals) - Appellant contended that the activity of producing ready mix concrete amounts to manufacture covered under Section 66D(f) of Finance Act, 1994, that the contract was in the nature of a works contract as cement was supplied by the service recipient, and that the service tax already paid has to be allowed - Whether the Appellant is liable to pay differential service tax on the activity of supplying ready mix concrete - HELD - The Supreme Court in Larsen & Toubro Ltd. held that concrete produced at batching plants using cement, aggregates and water with admixtures and delivered by transit mixer is a manufactured, marketable commodity - The Appellants are therefore manufacturing an excisable product and were required to pay Central Excise duty. However, they paid service tax after availing abatement, and the amount of service tax paid is much higher than the amount that would have been paid as Central Excise duty. The interest of Revenue is therefore more than taken care of. Even from the perspective of service tax, the service being in terms of a works contract, the abatement has been correctly availed. Once it is held that the services provided are works contract services, Rule 2A comes into picture and the taxable value is determined after allowing abatement as provided - The impugned order is not legally sustainable and is set aside, and the appeal is allowed - Service Tax - Demand based on Form 26AS data - Verification of consideration received for taxable service - Appellant contended that the entire differential receipts reflected in Form 26AS cannot be treated as the value of taxable services without establishing that the same represent consideration received for a service rendered - Whether the demand adopting figures in Form 26AS without verification can be sustained - HELD - The SCN was issued by adopting the figures reflected in the Form 26AS statement. Revenue has not made any effort to verify whether the amount related to any consideration received by the Appellant towards rendering of any taxable service - The impugned order is not legally sustainable and is set aside, and the appeal is allowed. [Read less]

2026-VIL-1728-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax - Exemption under Sl. No. 14(a) of Notification No. 25/2012-S.T. - Original works pertaining to railways - Explanation 1(a) to Rule 2A of Service Tax (Determination of Value) Rules, 2006 - Appellant, engaged in works contract services exclusively for the Indian Railways, did not obtain registration or file returns, believing that the services were exempt, and the demand was raised on the basis of Form 26AS and TDS data - Exemption was extended by the lower authorities for four of the seven contracts, and the demand in respect of the remaining three contracts, comprising the making of base arrangement for erection of OHE masts on piers of bridges, a composite programme of works at a railway station, and repair of goods wharf, was confirmed - Whether the three surviving contracts qualify as original works eligible for exemption under Sl. No. 14(a) - HELD - Original works include all new constructions, additions and alterations to abandoned or damaged structures to make them workable, and erection, commissioning or installation of structures. The making of a base arrangement for erection of OHE masts directly facilitates the creation of a new structural component of the electrification system and is not repair or maintenance. The identical earlier contract had been granted exemption by the adjudicating authority, and the Commissioner (Appeals) gave no contract-linked or evidence-based reasoning for denying it for this contract. A composite contract comprising construction of a catwalk, new roads, a new drain and replacement of a pipe has to be read as a whole, and the isolated words 'repairs of floor' cannot alter its essential character, which is consistent with the principle of bundled services in Section 66F. The observation that there is no concurrence between 'new construction' and 'original work' is without any basis. The nomenclature 'repair of goods wharf' is not conclusive, and the schedule of work comprising foundations, footings, earthwork, centering and shuttering and brickwork shows substantial reconstruction/new construction, which is fortified by the certificate of the Railway authority. The Revenue cannot adopt shifting positions on similar facts without disclosing the distinguishing basis - All three contracts qualify as original works eligible for exemption under Sl. No. 14(a), and the demand is set aside – The appeal is allowed - Service Tax - Extended period of limitation under proviso to Section 73(1) of Finance Act, 1994 - Information received through inter-departmental sharing - Penalties under Sections 77, 78 and 70 - Show cause notice invoked the extended period for the Financial Years 2015-16 and 2016-17 on the allegation of suppression, based on Form 26AS data received through the Income Tax Department - Appellant contended that the demand was barred by limitation and that penalties could not be imposed - Whether the extended period was validly invoked and whether penalties are sustainable - HELD - The foundation of the proceedings was information received through inter-departmental sharing and scrutiny of the Form 26AS data, and the receipts were not transactions which remained wholly beyond the knowledge of the Department. Any delay within the Department in processing or acting upon information already available with a governmental agency cannot constitute suppression or wilful withholding by the Appellant. The contracts, work orders, payment certificates and certificates of the competent railway authorities show the bona fide nature of the Appellant's claims. The ingredients of suppression of facts or wilful misstatement with intent to evade payment of tax are not established, and the entire demand raised beyond the normal period fails on limitation as well. Once the demand itself is set aside, the foundation for penalties under Sections 77, 78(1) and 70 read with Rule 7C also ceases to exist - The demand with interest and the penalties are set aside and the appeal is allowed [Read less]

2026-VIL-1725-CESTAT-AHM-ST | CESTAT SERVICE TAX

Service Tax - Corporate guarantee given for loan to foreign sister concern - Department treated this arrangement of being a guarantor for the bank for the loan extended to the foreign sister concern as Banking and Financial Services for the period prior to the negative list, and as intermediary services for the later period, in which certain consideration was received by way of debit note from the entity abroad - Whether standing as a guarantor amounts to Banking and Financial Services or intermediary services chargeable to service tax - HELD - Merely standing as a guarantor, which is an independent contract under the Indi... [Read more]

2026-VIL-1729-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise - Cenvat credit on capital goods supplied by contractors for a plant set up within the factory - Splitting of a works contract into supply and erection orders - Passing of property in goods - Appellant took credit of the excise duty on the manufacturers' and dealers' invoices naming the contractor as buyer and the Appellant as consignee at its factory - Revenue contended that the contracts were composite works contracts for a plant which is immovable, that the Appellant had taken credit on non-excisable inputs in the guise of capital goods, and that the contracts were deliberately split to facilitate credit - Whether the contracts are in substance a single works contract and whether the split was artificial and when property in the goods passed - HELD - A split into two instruments is recognised only where the agreements are in truth separate. The letter of intent accepted a single price for supply, installation, testing and commissioning, and both purchase orders incorporated the same letter, bill of quantities and tender document. They fixed a common completion schedule, took security on the combined value, withheld part of the supply price until erection and commissioning, and ran the defects liability period from commissioning - The contract with each contractor is in substance a single works contract for the design, supply, erection and commissioning of a system, falling within the Explanation to Section 65(105)(zzzza). Recording the price of goods and of erection in separate instruments reproduces the division which Article 366(29A)(b) effects by legal fiction, and nothing on record shows that the documents were not acted upon as written, so the split is not shown to be a sham or colourable device - In a works contract, the property in the goods passes when the goods are incorporated in the works, and the completion certificate is not the point at which it passes. The contractors held the goods at site for the purpose of executing their own work, and property vested in the Appellant, at the latest, on incorporation into the systems in its factory. The case of bailment fails as there was no delivery of goods by the Appellant to the contractors, and the Revenue's proposition that the Appellant received only a plant is also untenable as it acquired the very duty-paid goods as components of its plant – The appeal is allowed - Rules 2(a)(A), 3(1) and 4(2) of Cenvat Credit Rules, 2004 - Credit on capital goods received and used in the factory - Appellant took credit of duty paid on goods supplied through contractors and installed as part of systems of a new plant within its factory, and the lower authorities held that the goods were consumed by the contractors in bringing into existence an immovable, non-excisable plant and were therefore inputs of a non-excisable product on which no credit can be taken - Whether the goods are capital goods received and used in the factory of the Appellant so as to entitle it to credit under Rules 2(a) and 3(1) - HELD - The conditions of entitlement are the description of the goods, payment of duty evidenced by a prescribed document, receipt in the factory and use in the factory. None of them speaks of ownership at the point of receipt, of the person from whom the goods were bought or of the person who installs them. The requirement of receipt in the factory is one of place and not of person, and the duty-paying invoices named the Appellant's factory as the consignee. The definition of capital goods speaks of goods used in the factory and not of goods used by the manufacturer, and handling by the contractor in the course of installation is the ordinary prelude to the use of capital goods - Excisability of the product into which goods are worked is decisive for inputs claimed by the person who makes that product, and any disability on that account lay with the contractors who erected the plant as their output. The plant is not the Appellant's final product but the means by which its excisable final products are made. The Board's Order treats an erected plant as immovable and not excisable but states that its components remain dutiable and says nothing about credit. If credit were denied, the duty would stay embedded in the cost of the final goods and be borne again, causing the cascading which the credit scheme exists to remove, and since most heavy machinery is installed on foundations, a construction denying credit on that basis would empty the definition of capital goods of most of its content. The Rules exclude only civil and structural items and not machinery integrated into a plant - The goods satisfy the definition of capital goods in the Appellant's hands and the Appellant is entitled to the credit - Explanation to Rule 3 of Cenvat Credit Rules, 2004 - Rule 2A of Service Tax (Determination of Value) Rules, 2006 - Whether credit is barred where the works contractor's services are treated as works contract - Revenue contended that the value of the goods stood exempted or excluded from service tax under Notification No. 12/2003-ST or Rule 2A, that the bar on credit to the works contractor prevails over the Cenvat Credit Rules by the Explanation to Rule 3, and that the Appellant would otherwise enjoy a double benefit - Whether the credit of the Appellant is barred by the Explanation to Rule 3 - HELD - The Explanation is attracted only if there is a rule or notification granting exemption on condition of non-availability of credit, a claim to that exemption in respect of these very goods, and a condition capable of operating against the person claiming credit. The principle that classification at the supplier's end cannot be altered at the recipient's end does not prevent an authority from construing the recipient's own contracts to determine what it received, but it forbids the Revenue from attributing to a service provider a classification or valuation that it did not adopt - The value of the goods transferred in a works contract was never within the levy, and Rule 2A is a valuation provision framed under Section 94(2)(aa) and not an exemption under Section 93. Therefore, neither an exemption under Notification No. 12/2003-ST nor the deduction under Rule 2A on the value of goods can attract the Explanation. From 01.07.2012, Explanation 2 to Rule 2A is addressed only to the provider of the taxable service. For the earlier period, Rule 2A contained no restriction on credit, and a circular addressed to the provider is not a rule or notification granting exemption - The coordinate Bench decision relied upon by the Revenue is distinguishable on facts and was rendered before the Supreme Court decision holding that no question of exemption arises where there is no levy. There is no double benefit, as the duty was paid once by the manufacturers and credited once by the Appellant. An adjudicating authority which declines to follow decisions cited before it owes the assessee the reason, and the Commissioner (Appeals) wrongly inverted the burden by faulting the Appellant for not showing a valid reason for placing two sets of orders - The Explanation to Rule 3 does not bar the credit for either period - Extended period of limitation under proviso to Section 11A(1) and Section 11A(4) of Central Excise Act, 1944 - Interest and penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC - Appellant contended that separate orders are an industry practice, that the credit was reflected in the returns, that the burden of proving suppression lies on the Revenue - Whether the extended period was validly invoked and whether interest and penalty are sustainable - HELD - Suppression means that correct information was not disclosed deliberately to evade payment of duty, and there must be some positive act on the part of the assessee. Non-disclosure of information which the law does not require to be disclosed is not suppression, and the requirements for a valid notice must be found in the notice [Read less]

2026-VIL-1724-CESTAT-ALH-CE | CESTAT CENTRAL EXCISE

Central Excise - Refund of service tax paid under Reverse Charge on royalty after introduction of GST under Section 142(3) of CGST Act, 2017 – Appellant deposited service tax on royalty paid in foreign currency under RCM on the conduct of an audit - Refund claim was rejected by the Dept - Appellant contended that the audit was conducted and the payment was made after the introduction of GST and therefore the claim should be dealt with in terms of Section 142(3) - Whether the refund in cash of service tax paid by the Appellant is admissible - HELD - There were conflicting decisions of various Benches of the Tribunal and a... [Read more]

2026-VIL-1726-CESTAT-ALH-CE | CESTAT CENTRAL EXCISE

Central Excise - Exemption to Ready Mix Concrete manufactured at the site of construction - Amendment of Entry No. 144 of Notification No. 12/2012-CE by way of substitution - Appellant, engaged in providing construction of complex service, manufactured Ready Mix Concrete (RMC) at the site of construction and captively used it in its own residential projects - Following the judgment of the Supreme Court holding that RMC and concrete mix are different and that the exemption for concrete mix is not available to RMC, duty was demanded on RMC for the period October 2014 to February 2016 and penalty was imposed under Section 11AC, which was upheld by the Commissioner (Appeals) - Appellant contended that Entry No. 144, which exempted concrete mix, was substituted by a later notification to cover concrete mix or ready mix concrete manufactured at the site of construction, and that a substitution has retrospective effect - Whether the substitution of Entry No. 144 has retrospective effect from the date of the original notification so as to exempt RMC manufactured at site during the disputed period - HELD – The amendment of Entry No.144 of Notification No.12/2012 dated 17-03-2012 vide Central Excise Notification No.12/2016 dated 01-03-2016 by way of “substitution? has a retrospective effect from 17-03-2012 - The Hon’ble Karnataka High Court has held that an amendment by substitution has retrospective effect and the provision has to be read and construed as if the altered words had been written into the Act or Rules from their inception - A substituted provision is deemed to have been part of the Act from the very inception. In the case of an exemption notification issued by way of substitution, no substantive right is taken away nor is any penal consequence imposed, and a person eligible for the benefit of an exemption notification should be given the same liberally. In view of the binding decisions of the High Court and the Supreme Court, the later notification had a retrospective effect from the date of the original notification - The Appellant was eligible for exemption from payment of Central Excise Duty on manufacture and clearance of RMC during the disputed period - The entire demand is set aside on merits, the demand of interest and penalty also falls, and the appeal is allowed - Central Excise - Extended period of limitation - Demand on Ready Mix Concrete manufactured at the site of construction for the period October 2014 to February 2016 was raised by invoking the extended period of limitation - Whether the extended period of limitation could be invoked - HELD - The Tribunal agreed with the submission of the Appellant that, in the facts of the case, the extended period of limitation could not have been invoked - The extended period is held to be not invocable and the appeal is allowed. [Read less]

2026-VIL-1739-CESTAT-ALH-CU | CESTAT CUSTOMS

Customs – Challenge to enhancement of declared value accepted by the importer through a letter of acceptance - Appellant imported polyester knitted fabrics under Bills of Entry, and the Respondent rejected the declared value under Rule 12 of the Customs Valuation Rules, 2007 on the basis of contemporaneous import data, whereupon the Appellant, whose requests for provisional clearance were not acted upon, submitted letters of acceptance, and the Commissioner (Appeals) rejected the appeals holding that no speaking order under Section 17(5) of the Customs Act, 1962 was required - Whether the appeals were correctly rejected on the ground that the Appellant accepted the enhancement of value in writing at the time of clearance - HELD - Rule 12(2) mandates that the proper officer must intimate to the importer in writing the grounds for doubting the truth or accuracy of the declared value, and this mandate cannot be ignored or waived. Formation of opinion regarding reasonable doubt and communication of the grounds is mandatory, and a subterfuge to bypass the statutory mandate is unacceptable. The facts are similar to the case before the Supreme Court where repeated requests for provisional assessment were ignored and the importer was forced to submit a letter of acceptance. The letters of acceptance do not mention any details of the alleged contemporaneous import data, and there is a wide gap which has not been bridged by the Respondent, so their contents cannot be taken at face value. Under Section 17(5), the waiver is confined to the speaking order which the proper officer is obliged to pass, and it does not deprive the importer of the statutory right to question the correctness of the decision of the proper officer, whether on the formation of opinion or on merits. A valuation addition based solely on NIDB data is unwarranted and any reassessment must be supported by independent and cogent evidence. The Commissioner (Appeals) failed to take into account the ratio of the Supreme Court judgment in its entirety, and the issue is squarely covered by the judgment of the Delhi High Court - The impugned orders are not sustainable in law, and all the appeals are allowed [Read less]

2026-VIL-1172-BOM | High Court SGST

GST - Power of Police to register FIR and investigate offences under CGST Act, 2017 along with offences under Bharatiya Nyaya Sanhita, 2023 - FIR was registered at the instance of a State Tax Officer alleging offences under Section 132(1) of the CGST Act and Sections 318(4), 336(3) and 340(2) of BNS, on the allegation that false and fabricated documents were submitted for obtaining registration and bogus invoices were generated without actual business transactions solely for availing fraudulent input tax credit - Whether the police can register an FIR and carry out investigation when offences under the CGST/SGST Act are alleged, and whether the investigation is liable to be declared illegal and quashed - HELD - Under Section 4(2) of the Code, offences under any other law are to be investigated, inquired into and tried according to the provisions of the Code, subject to any enactment regulating the manner or place of investigating such offences. The Supreme Court has held that offences under the Indian Penal Code committed while committing an offence under a special statute are not displaced, and that it is open to the specialised agency to get the assistance of any other legally constituted investigating agency. If offences falling under the Penal Code or any other enactment are also detected during the investigation, there is no inhibition to pass over the investigation to the regular police. Section 72 of the CGST Act specifically provides that all officers of Police shall assist the proper officers in the implementation of the Act - In the present case, the accused are also charged for offences under Sections 318(4), 336(3) and 340(2) of BNS, which are not common with any of the offences under the CGST Act. There is no bar to a trial or conviction of an offender under two different enactments, and the bar is only to the punishment of the offender twice for the same offence. The police are therefore not debarred from carrying out the investigation - An FIR is not an encyclopedia of the entire case and only sets the investigation machinery into motion, the Petitioner is not the accused therein and the matter is still at the stage of investigation, and the FIR need not be quashed even if the investigation was to be conducted by a different agency - The contention of the Petitioner is not sustainable, the prayers to declare the initiation of investigation illegal and to quash it are rejected - The Writ Petition is dismissed [Read less]

2026-VIL-195-GSTAT-CTT | Tribunal SGST

GST - Section 16(2)(c) read with Sections 41 and 42 of the CGST Act - Eligibility of input tax credit not reflected in GSTR-2A, Condition of payment of tax by the supplier - Credit availed in GSTR-3B exceeded the credit available in GSTR-2A - Show cause notice under Section 73 led to a confirmed demand - First Appellate Authority admitted additional credit on the basis of the reconciliation statement and updated GSTR-2A and sustained the balance - Appellant contended that non-population of invoices in GSTR-2A does not imply non-payment of tax by suppliers - Whether credit on invoices not populated in GSTR-2A can be denied under Section 16(2)(c) when the Appellant has not shown payment of tax by the suppliers - HELD - Section 16(2) lays down cumulative mandatory conditions, and clause (c) makes payment of the tax charged on the supply a condition for entitlement, subject to Section 41. Credit taken under Section 41 is merely provisional and not absolute and remains subject to the statutory conditions and restrictions. Section 42 allows the recipient to reduce the liability when the supplier subsequently declares the invoice - Though non-population of invoice details is not conclusive proof of non-payment of tax, the statute recognises non-disclosure as non-payment and disclosure as payment, so non-disclosure of invoice details in the prescribed manner means that tax has not been paid - The burden of proving eligibility lies on the claimant under Section 155. The Appellant admitted in its reconciliation statement that the invoices had not been uploaded by the suppliers and did not make any credible effort to prove payment of tax at the adjudication stage, the first appeal stage or before the Tribunal, so remand for a further opportunity is not justified - The communication of the discrepancy through scrutiny under Section 61 substantially met the requirement of communicating the unmatched credit. Omission of Section 42 does not alter the scheme, as the amended Section 41 provides for reversal and reclaim of credit with interest, and the earlier provision applies to the year in dispute - The demand of tax upheld in the order of the FAA is confirmed – The appeal is disposed of - Computation of interest on ineligible credit and levy of interest based on Rule 36(4) not proposed in the show cause notice - Interest was computed in the order of the FAA on the tax demand confirmed on unmatched credit and also on provisional credit availed in excess of the limit in Rule 36(4) - Appellant contended that Rule 36(4) has no legal backing in view of Section 41 and that the levy of interest was not indicated in the show cause notice, relying on Section 75(7) - Whether interest can be levied by applying Rule 36(4) and how the interest liability is to be computed - HELD - Rule 36(4) only places a limit on availing provisional credit in excess of the credit available in GSTR-2A and does not make the provisional credit absolute. Credit remains reversible in the event of non-payment of tax by the supplier, and interest is due from the date the credit is availed ineligibly to the date it is refunded by way of addition to the output liability or otherwise - Levy of interest on the amount of provisional credit availed in excess of the limit in Rule 36(4) was not contemplated in the show cause notice, and is outside the scope of the original adjudication - Interest under Section 42(8) is mandatory and incidental to recovery of ineligible credit, so Section 75(7) does not prevent its levy even if it was not proposed in the notice. Interest on the confirmed tax demand was not computed strictly as per Section 42(8), which requires invoice-level matching to specify the invoices not populated, the date of receipt and the input tax involved - The order relating to interest is set aside and remanded to the Adjudicating Officer for fresh computation strictly as per Section 42(8) after identifying the invoices not populated, the interest levied on the basis of Rule 36(4) is deleted. [Read less]

2026-VIL-194-GSTAT-AGR | Tribunal SGST

GST - Validity of proceedings under Section 130 for unaccounted goods found during inspection - Adjudicating Officer imposed penalty and fine in lieu of confiscation under Section 130(2) of the CGST Act - FAA set aside the orders holding that seizure and confiscation cannot be made for unaccounted goods and that proceedings under Section 73/74 should be launched - Revenue filed appeals against the setting aside of tax, penalty and fine - Whether the FAA rightly set aside the tax, penalty and fine imposed under Section 130(2) - HELD - Section 35(1) requires registered persons to keep true and correct accounts, and Section 3... [Read more]

2026-VIL-1752-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - CENVAT Credit on capital goods, inputs and input services where both dutiable and exempted goods are manufactured - Appellant, a manufacturer of biscuits valued under Section 4A, where biscuits below a specified retail price are fully exempt under Notification No.03/2006-C.E. , was issued a Show Cause Notice for reversal of CENVAT Credit on the ground that it manufactured both dutiable and exempted goods and had irregularly taken credit on capital goods, inputs and input services - Appellant contended that credit on capital goods cannot be denied unless the goods are exclusively used in the manufacture of exempted goods, and that credit on inputs and input services was taken only in proportion to dutiable goods - Whether the demand for reversal of CENVAT Credit is sustainable - HELD - As per Rule 6(4) of the CENVAT Credit Rules, 2004, CENVAT Credit is not allowable on capital goods only when they are exclusively used in the manufacture of exempted finished goods. The Appellant has admittedly been manufacturing dutiable as well as exempted goods, and the Department has failed to come out with any documentary evidence that the Appellant was in fact not manufacturing dutiable goods. The demand on capital goods therefore stands set aside on merits. As regards inputs and input services, the credit availed is a very small amount when compared with the huge turnover of the Appellant, and this itself shows that it represents only the proportionate credit taken in respect of dutiable goods. There is no reason to uphold the confirmed demand even in respect of inputs and input services - The demand is set aside on merits - Extended period of limitation for demand of CENVAT Credit - Suppression of facts - Appellant took CENVAT Credit at fifty percent in the year of receipt and the balance in the next financial year, and contended that all details were recorded in the RG-23C Register and disclosed in the monthly Returns filed with the Department, so that the Department was aware of the credit taken - Whether the extended period could be invoked for the demand of CENVAT Credit - HELD - The Appellant has disclosed all the details of the credit taken in its RG-23C Register as well as in the ER-1 Returns. A perusal of the ER-1 Return filed for one of the months shows that credit has been taken on inputs and capital goods during the said period and that the utilization has also been shown. No case of suppression of facts or wilful mis-statement is made out against the Appellant - The confirmed demand for the extended period is set aside on account of time bar, and the appeal is allowed [Read less]

2026-VIL-184-GSTAT-TVP | Tribunal SGST

GST - Section 73 of CGST Act, 2017 - Order confirming demand on a ground not alleged in the show cause notice and without answering the contentions of the taxpayer - SCN alleged short payment of IGST on the basis of a comparison of GSTR-1 and GSTR-3B, and stated that no amendment was made in the details furnished within the statutory deadline - Appellant contended that IGST was paid by mistake under CGST/SGST and the excess remittances were available under those heads - Adjudicating Authority confirmed the demand by invoking Section 16(2)(a) of the SGST/CGST Act, stating that there would be revenue loss to the exchequer - Whether the order can be sustained when the demand is confirmed on a ground which was not alleged in the show cause notice - HELD - There is no reference to Section 16(2)(a) anywhere in the show cause notice. While the show cause notice was issued on the ground of short payment of tax on account of non-filing of a rectification, the order confirmed the demand under Section 16(2)(a), which is on an entirely different footing and was not alleged anywhere in the show cause notice. The order also did not analyse or answer the contentions raised by the Appellant - For this reason alone the order of the Adjudicating Authority is liable to be set aside in its entirety – The appeal is allowed - GST - Payment of tax under CGST/SGST head instead of IGST - Short payment of tax under Section 73 of KGST Act / CGST Act - Sections 77 of CGST Act and 19 of IGST Act - Appellant was issued a SCN for short payment of IGST based on the comparison of GSTR-1 and GSTR-3B, and the demand was confirmed - Appellant contended that the shortfall was only due to a clerical mistake at the time of submitting GSTR-3B as IGST payments were made under CGST/SGST, and that there was no non-payment of tax in substance - Whether payment of tax under the head CGST/SGST instead of IGST amounts to non-payment/short payment of tax actionable under Section 73 - HELD - The jurisdictional High Court has approved the principles that tax paid wrongly under CGST and SGST should rightly be adjusted, that the electronic credit ledger is a pool of funds for IGST, CGST and SGST, and that proceedings under Section 73 are attracted only where tax has not been paid or short paid or erroneously refunded. The law as laid down by the jurisdictional High Court is applicable and the Tribunal is duty bound to follow it - The excess credit available in the CGST/SGST account, arising out of a clerical mistake of paying in the CGST/SGST account instead of the IGST account, is eligible to be set off against the shortfall in IGST due. The contention of Revenue that the excess under CGST and SGST together is lower than the IGST shortfall was not disputed by the Appellant despite ample opportunities, and any amount still due after set off is liable to be recovered along with interest as per applicable legal provisions - Payment of tax under the head CGST/SGST instead of IGST does not amount to non-payment/short payment of tax and no action lies under Section 73. The order in appeal is set aside and the appeal is allowed with the excess credit to be set off against the IGST shortfall through the electronic credit ledger, and any balance amount recovered in cash with interest – The appeal is allowed [Read less]

2026-VIL-185-GSTAT-LCK | Tribunal SGST

GST - Cancellation of registration - Jurisdiction of FAA to impose a condition of cash deposit of disputed ITC and an automatic-void clause while restoring registration - Appellant's registration was cancelled pursuant to a show cause notice issued under Rule 21(a) for non-existence at the declared place of business - FAA set aside the cancellation and directed restoration of registration subject to deposit of the disputed ITC in cash within seven days, failing which the order was to become void - Appellant contended that the Appellate Authority travelled beyond its statutory jurisdiction - Whether the FAA had jurisdiction under Section 107 to impose such a condition - HELD - The SCN was issued for cancellation of registration for non-existence on verification and not for wrong availment of ITC. The FAA has jurisdiction to modify, annul and confirm the impugned order but cannot travel beyond it without following the procedure established by law - The determination of ITC entitlement is a distinct and substantive adjudicatory proceeding governed by Sections 73 and 74, which contemplate issuance of notice in Form DRC-01, adjudication by the proper officer and a meaningful opportunity to the taxpayer to contest the allegations. None of these safeguards were followed - The finding directing reversal of ITC could not have been rendered in proceedings concerning cancellation of registration. The provisos to Section 107(11) bar an order requiring the appellant to pay tax or ITC wrongly availed unless a notice to show cause is given and the order is passed within the time limit specified under Section 73 or 74. An admission must be conclusive in nature, and a conditional admission or simple averment in an affidavit cannot substitute the law without proper examination. The order must be justified within the four corners of the Act - The direction to deposit the amount within seven days is not sustainable in law - The appeal is allowed - Imposition of cash deposit or ITC demand by First Appellate Authority without notice - Principles of natural justice - Audi alteram partem - Appellant contended that the question of cash deposit was never put to it and no opportunity was afforded to address the quantum, mode or feasibility of payment - Whether the impugned condition violates the principles of natural justice - HELD - Though the Appellant submitted an affidavit for repayment of wrongly availed ITC, that is another issue to be determined by the proper officer by issuing a separate show cause notice with proper investigation and detailed inquiry. The FAA should not impose a condition which was not in the show cause notice or the order in original unless the appellant is given notice to show cause against the proposed amount. The impugned order does not show that any notice was given before imposing the condition of cash or tax. An effective and meaningful opportunity must be given before imposing any tax or penalty, and imposing tax without affording opportunity is a clear violation of the principles of natural justice. If there is wrong availment of ITC, interest and penalty would also follow under law - The ITC demand is void and violative of the provisions of the GST Act and the principles of natural justice - Cancellation of registration - Section 75(7) of CGST Act, 2017 - Order passed on a ground different from the show cause notice - Show cause notice was issued for cancellation of registration on the ground of non-existence of the registered firm at the place of business - Proper Officer passed the order in original on the ground that ITC was wrongly availed from four suppliers whose registrations had been cancelled, and cancelled the registration with retrospective effect - Whether the order of the Adjudicating Authority is sustainable on the grounds of the show cause notice - HELD - Under Section 75(7), no demand shall be confirmed on grounds other than the grounds specified in the notice. The Proper Officer neither raised any demand in the show cause notice nor discussed any allegation regarding wrongful availment of ITC, but proceeded to pass the order on an entirely new and different ground. The ground of no place of work in the show cause notice and the ground of wrong availment of ITC in the order are apparently different and contradictory, and are not cohesive to each other, since if ITC was wrongly availed it cannot be said that there was no place of work. An order passed beyond the scope and allegations contained in the show cause notice is legally unsustainable and bad in law - The orders of the First Appellate Authority and the Adjudicating Authority are null and void, the appeal is allowed and the cancellation of registration is revoked, with liberty to the Respondent to initiate proceedings de novo to protect the revenue. [Read less]

2026-VIL-1757-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Re-export of goods re-imported for repair - Substitution of freshly manufactured goods for re-imported goods - Appellant exported goods which were received in damaged condition by the foreign buyer and sent back to India for rework, and cleared the re-imported goods without payment of duty under an exemption Notification on executing a bond and bank guarantee, on the condition that the goods would be re-exported after repairs - Instead of re-exporting the reworked goods, Appellant exported freshly manufactured goods of the same quality in view of the urgent requirement of the overseas buyer, and the shipping bill made no mention that the goods were being re-exported - Whether the Appellant, by exporting freshly manufactured goods in place of the re-imported goods, fulfilled the condition of the Notification so as to escape the demand - HELD - The Notification No. 158/95 CUS dated 14-11-1995 requires the importer to execute a bond undertaking to export the goods after repairs or reconditioning within the specified period and to pay on demand on failure to comply, which makes it clear that the goods to be re-exported are the very goods re-imported into India for which permission was granted to take up repair work and to re-export within the specified time. Nothing in the Notification permits normally manufactured goods to be substituted for the re-imported goods and exported against them - The shipping bill did not mention that the goods dispatched were the re-imported goods after rework, and had this fact been disclosed, the Assistant Commissioner at the Port would have caused necessary verification as to whether the goods being re-exported were the same ones repaired and reconditioned at the factory of the Appellant. This factual evidence could not be verified since the Appellant failed to mention it in the shipping bill - The decision relied upon by the Appellant concerned drawback on re-exports of scrap and was on a completely different issue, while the other decision turned on different facts and was not applicable - The Appellant did not fulfil the requisite condition of the Notification - The appeal is dismissed [Read less]

2026-VIL-1755-CESTAT-MUM-ST | CESTAT SERVICE TAX

Service Tax - Refund of tax paid on services to educational institutions: limitation and maintainability without challenging self-assessment - Exemption for auxiliary educational services under Sl. No. 9 of Notification No.25/2012-ST – Refund claim of service tax paid on housekeeping and canteen/outdoor catering services provided to educational institutions – Appellant filed refund claims on the ground that the services were exempt as auxiliary educational services, after the Board by a Circular clarified the position on a representation made by the Appellant - The Commissioner (Appeals) counted the period of one year from the date of the Board's clarification and held the claims within time, against which the Revenue appealed, whereas the Appellant contended that the tax was paid under protest and that limitation could not bar the claims - Whether the refund claims are barred by limitation and are maintainable - HELD - The Notification No.25/2012-ST was effective from 01.07.2012, the Appellant continued to collect and pay service tax and file ST-3 returns, and raised no contest until the representation to the Board. A Circular can clarify but cannot modify an assessment, and the Board is not the prescribed appellate authority against a self-assessment - It is settled law by the Apex Court that even a self-assessment is an assessment order, and no refund claim is maintainable until it is set aside in appellate proceedings, and this law applies to service tax refunds as well. A refund proceeding is not an appeal and the authority cannot sit in appeal over the assessment - The decisions relied upon by the Appellant on limitation were rendered much before this settled law and dealt only with limitation where duty was paid under a mistaken belief of law. The representation to the Board and the clarification issued cannot be equated with appellate proceedings, and the refund claims were not even maintainable - The submissions on limitation are rejected, the appeals filed by the Appellant are dismissed, and the appeals filed by the Revenue are allowed - Service Tax - Bar of unjust enrichment under Section 11B of the Central Excise Act, 1944 as made applicable to service tax - Credit notes issued to service recipients - Rule 6 of the Service Tax Rules, 1994 - Appellant claimed refund of service tax collected on housekeeping and canteen/outdoor catering services to educational institutions, and contended that the issue of credit notes for the tax collected showed that the incidence of tax was borne by it - Commissioner (Appeals) held that in canteen/outdoor catering the real consumers were the students and faculty members, the educational institutions refused to share fee and pricing information, and the Appellant failed to prove that the incidence of tax was not passed on, and therefore ordered the amount to be credited to the Consumer Welfare Fund - Whether the bar of unjust enrichment applies and whether the issue of credit notes or Rule 6 takes the claims outside it - HELD - The sine qua non for a refund under Section 11B is that the claimant establishes that the incidence of tax has not been passed on to any other person, and the burden lies on the claimant. The buyer in clause (e) of the proviso to Section 11B(2) is not restricted to the first buyer and can be a buyer downstream. A credit note issued after the payment of tax and clearance, and relied upon to show that the burden was not passed on, raises a doubt and cannot be accepted as a reliable document - The argument that Rule 6 of the Service Tax Rules, 1994 takes refunds of service tax outside the bar of unjust enrichment has been answered by the High Court, which held that post-clearance adjustments such as credit notes do not help the assessee to get over the bar under Section 11B - The Appellant failed to prove that the incidence of service tax was not passed on to the students and faculty members who ultimately bore the burden - The bar of unjust enrichment applies, the appeals filed by the Appellant are dismissed, and the appeals filed by the Revenue are allowed. [Read less]

2026-VIL-1753-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax - Classification, Point of taxation - Tax payable on receipt basis and not on accrual - Show Cause Notice issued under Commercial or Industrial Construction Service - Plea that the services rendered were Works Contract Service - Demand for the period 2006-07 to 2008-09 under Commercial or Industrial Construction Service - Appellant contended that many of its contracts were completed much before the period and should not have been included in arriving at the demand, and that the SCN was time barred for most of the period - Whether the demand was correctly quantified, having regard to the amounts actually receive... [Read more]

2026-VIL-1735-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax – Taxability of amount realised from transporters for short delivery and damage of cement as Declared Service under Section 66E(e) of the Finance Act, 1994 - Appellant realised amounts from transporters for failure to deliver the actual quantity of cement or in good condition as per the agreement, and the Respondent treated the recovery as Declared Service, being an obligation to refrain from an act or tolerate an act or a situation, and demanded service tax with interest and penalties - Whether the amount realised from the transporters as compensation or liquidated damages is chargeable to service tax as Declared Service under Section 66E(e) - HELD - The realisation of a small amount for loss suffered by the Appellant on account of failure of the transporters to deliver the actual quantity of cement is in the form of liquidated damages and cannot be considered as consideration for rendering any service. The freight and the amount realised relate to services by way of transportation of goods and not to tolerating an act of the transporter. Services by way of transportation of goods by road, other than those of a goods transportation agency or a courier agency, fall under the negative list under Section 66D(p), and once a service falls under the negative list, the activity cannot be classified as a Declared Service. The Appellant had already paid service tax on the freight paid to the transporters under Section 68(2) read with Rule 2(d)(i)(B), and the amount realised forms part of the value on which tax was paid, so tax cannot be demanded again on the same amount. Amounts collected as penalty or liquidated damages for breach of contract are not consideration for any service, and the contention that such compensation is synonymous with tolerating an act or situation is not acceptable. Under the Explanation to Section 67(1), only the amount payable for a taxable service is consideration - The decisions relied upon by the Appellant are squarely applicable, the demand of service tax with interest under the category of Declared Service is not sustainable and is set aside - Service Tax – Penalties under Sections 78, 77(1)(a) and 77(2) of the Finance Act, 1994 - Respondent imposed penalty under Section 78 on the demand, and penalties under Section 77(1)(a) and Section 77(2) for violation of provisions of Section 70 - Whether the penalties are imposable on the Appellant - HELD - As the demand is not sustainable and the allegation of non-payment of service tax is not sustained, no penalty is imposable under Section 78. The penalty under Section 77(1)(a) is upheld. The penalty under Section 77(2) is also upheld as it has been imposed for violation of provisions of Section 70 - The penalty under Section 78 is set aside, the penalties under Sections 77(1)(a) and 77(2) are upheld. [Read less]

2026-VIL-1177-MAD | High Court VAT

Tamil Nadu Value Added Tax Act, 2006 – Classification of Dupatta - Pre-assessment notices were issued and assessments were framed classifying the goods as taxable. The Assessing Authority rejected the Petitioner's claim of exemption under Entries 3 to 10 of Part A of the IV Schedule and did not quote any rival entry. The first appellate authority and the Tribunal confirmed the levy on the basis that a dupatta is worn only along with the main garment and cannot be sold separately, and classified it under Entry 49 of Part B of Schedule I relating to fibres - Whether the dupatta is classifiable under Entry 49 of Part B of S... [Read more]

2026-VIL-188-GSTAT-SRT | Tribunal SGST

GST - Assignment of leasehold rights of industrial plot allotted by GIDC - Taxability as supply of service - The Respondent assigned the leasehold rights in a plot allotted by the industrial development corporation to a third party. Show Cause Notice alleged that the transaction was supply of service classifiable as "Other Miscellaneous Services" taxable under Sr. No. 35 of Notification No. 11/2017-CT (Rate) - First Appellate Authority set aside the demand following the jurisdictional High Court - Whether GST is leviable on assignment of leasehold rights of a plot allotted by the industrial development corporation - HELD -... [Read more]

2026-VIL-189-GSTAT-LCK | Tribunal SGST

GST - Road restoration charges paid to Public Works Department - Whether consideration for supply of service under Sections 2(31) and 7(1) of CGST Act, 2017 - The Appellant, engaged in supply of natural gas through a pipeline network, received permission from the Public Works Department to lay the pipeline, subject to payment of charges for road restoration. The Appellant paid tax under reverse charge mechanism on these charges and applied for refund under Section 54, which was rejected - Appellant contended that the charges are compensatory in nature, like liquidated damages for damage to public property, and lack the contractual reciprocity required for a supply - Whether road restoration charges paid to the PWD constitute consideration for a supply of service under Sections 2(31) and 7(1) of the CGST Act, 2017 - HELD - Section 2(31) defines consideration broadly to include any payment made in respect of, in response to, or for the inducement of, the supply of services. The transaction is distinct from a unilateral wrongful act or an award of post-injury civil damages. The Appellant entered a planned administrative arrangement and voluntarily applied for permission to cut open constructed public roads. The Public Works Department performs a distinct physical asset repair service to return the dug-up roads to their baseline state, and the fee is calculated on the structural volume of the work required. This establishes bilateral transactional reciprocity. The payment is not passive compensation for breach of contract under Circular No. 178/10/2022-GST but a direct fee for service - The case laws on unilateral wrongful acts, breach of contract or court-awarded damages and Circular No. 178/10/2022-GST on liquidated damages are distinguishable, as there is no breach of contract and the payment is a direct fee for service - The charges are consideration for supply of service and on this ground, the contention of the Appellant is rejected and the appeal is dismissed - GST - Exemption for services in relation to functions under Articles 243G and 243W of the Constitution - Notification Nos. 12/2017-Central Tax (Rate) and 14/2017-Central Tax (Rate) - Road restoration charges paid by a business entity - Whether the services are treated as neither a supply under Section 7(2) nor exempt - HELD - Routine upkeep of public roads is a function of local government. However, Notification No. 14/2017 excludes activities only where the government acts as a public authority performing sovereign duties for the collective populace. Where the Public Works Department executes request-driven repairs connected to the pipeline rollout of a commercial entity, it steps out of its generic sovereign capacity. Entry 6 of Notification No. 12/2017 excludes in clause (d) any service provided by the Government or local authority to business entities - An exemption notification must be construed strictly according to its text, and the expression "in relation to" cannot be stretched to override the explicit proviso. Taxability is governed by the nature of the recipient and the transactional context, and not by whether the work is original construction or restoration. The GST law differentiates between services to common citizens and services to commercial entities, and the request of a business entity for the work does not alter this - The services are not covered by Notification No. 12/2017 or 14/2017 and the claim of exemption is rejected - GST - Reverse charge on services supplied by Government or local authority to business entity - Notification No. 13/2017-Central Tax (Rate) - Plea of dual tax incidence and revenue neutrality - Refund under Section 54 of tax paid under reverse charge - HELD - Under Notification No. 13/2017, any taxable service supplied by the Government or a local authority to a business entity located in the taxable territory must be taxed under reverse charge by the recipient. There was no clear proof on record that the Public Works Department raised a tax invoice under forward charge or deposited tax for this permit. The statutory framework cannot be bypassed by abstract claims of revenue neutrality or double tax incidence. Tax paid by the Appellant under reverse charge was a valid statutory payment, and the First Appellate Authority committed no error in confirming the rejection of refund - The Appellant is liable to pay tax under reverse charge and the refund is not admissible - GST - Validity of Show Cause Notice and Order-in-Original - Absence of Document Identification Number - Vagueness of notice and breach of natural justice - The Appellant contended that the notice and order were issued without a DIN, that the notice was vague and travelled beyond its scope, and that natural justice was violated - HELD - The notice clearly detailed the factual and legal grounds on non-applicability of Notification No. 14/2017 to request-driven commercial road cutting. The Appellant understood the inquiry, as shown by its exhaustive point-wise reply, leaving no room for a plea of surprise or prejudice. The entire refund and dispute workflow, including application, notice, reply, processing and final order, was processed through the authenticated electronic GST portal. There is no doubt regarding the identity, source, integrity or authenticity of the documents issued by the proper officer. The mere absence of a physical DIN does not invalidate the adjudication, violate natural justice, or extinguish the tax liability - The contentions on DIN, vagueness of notice and natural justice are rejected - GST - Refund sanctioned in other States on identical facts - Binding effect - The Appellant contended that its registrations in other States were granted refunds under identical facts and that the department cannot take an inconsistent approach - Whether such refund orders bind the Tribunal - HELD - A refund sanction order passed by a proper officer in one State jurisdiction does not operate as a binding precedent or res judicata over an independent proceeding before the Appellate Authority of another State. If the officer allowed refund overlooking the restrictive criteria of Entry 6 of Notification No. 12/2017, such an erroneous order has no binding value, as the Tribunal is bound to apply the law as enacted - The reliance on refund orders of other States is rejected, the appeal is dismissed and the Order-in-Appeal is upheld. [Read less]

2026-VIL-182-GSTAT-SRT | Tribunal SGST

GST - Leviability of GST on assignment of leasehold rights in a plot allotted by industrial development corporation - Section 7(1)(a) read with Clause 5(b) of Schedule II and Clause 5 of Schedule III of CGST Act, 2017 - Binding effect of jurisdictional High Court judgment - Respondent, a lessee/licensee of the industrial development corporation, entered into an agreement to assign the lease in favour of a third party, and the corporation issued the Final Transfer Order - Whether GST is leviable on the assignment of leasehold rights of the plot of land allotted by the industrial development corporation - HELD - The case is ... [Read more]

2026-VIL-1175-RAJ | High Court VAT

Central Sales Tax – Concessional rate of tax on inter-State sales for Micro and Small Enterprise under notification issued under Section 8(5) of the Central Sales Tax Act, 1956 - Respondent-assessee established an industrial unit and, a few years later, another unit at a different place more than 500 kms away, both registered as small enterprises under the MSMED Act, 2006, and the assessing authority clubbed the investment in plant and machinery of both units, held that the limit was exceeded, denied the concessional rate under the notification, and levied differential tax, interest and penalty, which the Tax Board set aside - Whether the unit set up at a different place would be a different enterprise so as not to club its investment in plant and machinery for determining the status of Micro and Small Enterprise - HELD - The Explanation inserted in the notification by the amendment provides that, for ascertaining the status of Micro and Small Enterprise, the investment made in plant and machinery in different enterprises set up under the same ownership shall not be clubbed. The Industries Department had also clarified that the MSMED Act does not provide for clubbing of investments of different enterprises set up by the same person or company for classification as micro, small and medium enterprises, and the provisions for clubbing of investment of units had been withdrawn. Unless mutual dependence between two units is established, they cannot be clubbed together, and the absence of common funding and financial flow-back makes clubbing unjustified. An exemption notification should be liberally construed once the entrepreneur fulfils the eligibility criteria, and no condition should be read into it when there is none. The Petitioner failed to establish that the two units had common interest in the business of each other or common funding and financial flow-back, and mere ownership by the same assessee does not establish mutuality of business interest - The investments in the two enterprises are to be treated as separate, and since neither enterprise exceeded the prescribed investment limit, the assessment orders denying the concessional rate are legally unsustainable - The order of the Tax Board suffers from no illegality, perversity or jurisdictional error, and the revision petitions are dismissed [Read less]

2026-VIL-187-GSTAT-CHE | Tribunal SGST

GST - Pre-deposit for appeal before Tribunal - Section 112(8)(b) of CGST Act, 2017 - Adjustment of excess pre-deposit made under Section 107(6) - The Appellant had deposited ten per cent of the entire demand while filing the first appeal. The FAA remanded a part of the demand and upheld the rest. The Registry raised a defect for non-payment of pre-deposit under Section 112(8). The Respondent contended that a further ten per cent of the remaining tax in dispute must be paid separately "in addition to the amount paid under sub-section (6) of section 107" - Whether a further deposit is required when the amount deposited under Section 107(6) exceeds the cumulative pre-deposit under Sections 107(6) and 112(8) computed on the tax surviving in dispute - HELD - The measure under Section 112(8)(b) is the tax in dispute "arising from the said order" and "in relation to which the appeal has been filed". The words "in addition to the amount paid under sub-section (6) of section 107" fix a cumulative quantum, being ten per cent at the first stage plus a further ten per cent at the second stage on the tax in dispute in the present appeal. The Act does not require a fresh challan, nor does it bar reckoning an amount already lying with the Revenue against the same demand - Pre-deposit is not a separate levy but a portion of the disputed tax itself, and the requirements under Sections 107(6) and 112(8) are not watertight compartments - The Respondent's construction would require the Revenue to refund the excess with interest and the Appellant to re-deposit the same money, a circular exercise that serves no revenue purpose. This view is supported by the decisions of the High Courts and the GSTAT, and by CBIC Circular No. 224/18/2024-GST, which allows adjustment of advance payments towards pre-deposit under Sections 107 and 112 and binds departmental officers - The pre-deposit requirement stands satisfied and the defect is cured. The proper officer shall map the appropriated amount against the demand, the First Appellate Authority shall generate FORM GST APL-04 and the Registry shall admit the appeal after compliance – Ordered accordingly [Read less]

2026-VIL-197-GSTAT-BLR | Tribunal SGST

GST - Input tax credit under Section 16(2)(c) of the CGST Act, 2017 - Demand under Section 73(9) on the sole ground that the suppliers had not paid the tax to the Government - Appellant contended that a bona fide purchaser cannot be denied credit for the default of the supplier, relying on decisions of the Calcutta High Court and the jurisdictional High Court reading down Section 16(2)(c) - Whether, after the decision of the Supreme Court dismissing the special leave petitions against the judgment upholding Section 16(2)(c), the provision can be read down in favour of a bona fide purchaser - HELD - Section 16(1) confers the entitlement to credit and Section 16(2) conditions it, with cumulative conditions opening with a non obstante clause. The Supreme Court, with reasons, held that the Delhi VAT Act and the CGST Act rest on different statutory schemes, that Sections 41, 73 and 74 provide a framework under which a purchaser may re-avail credit once the supplier discharges the tax, and that there is no ground to hold Section 16(2)(c) unconstitutional or to read it down - Where the Supreme Court gives reasons, the law stated in those reasons is a declaration under Article 141 and binds all courts and Tribunals - The jurisdictional High Court rendered its judgment before the Supreme Court pronounced on the question, and the Tribunal is bound to apply Section 16(2)(c) as enacted and upheld - An honest purchaser is not without remedy, as Circular No. 183/15/2022-GST enables the purchaser to establish the supplier's payment by a certificate for 2017-18 and 2018-19, and the proviso to Section 41(2) permits re-availing the credit once the supplier pays the tax - Section 16(2)(c) applies as enacted and cannot be read down, and payment of tax to the supplier, however well proved, does not by itself satisfy the clause. The Appellant must prove that the suppliers paid the tax to the Government - The appeal is disposed of - Burden of proving payment of tax by the suppliers for the year 2018-19 and Circular No. 183/15/2022-GST - Notice for the mismatch - First Appellate Authority held that a certificate from the supplier was required as the difference per supplier was below the prescribed limit and none was produced - Appellant contended that the demand rested on a mere comparison of GSTR-3B with GSTR-2A and that the Adjudicating Authority did not apply the Circular - Whether the Appellant has proved, as Section 155 requires, that the suppliers paid the tax - HELD - A shortfall in GSTR-2A does not by itself establish that the supplier failed to pay the tax, as GSTR-2A is a facilitator for self-assessment and not an instrument of assessment, and neither Section 16(2)(aa) nor Rule 36(4) was in force during that year - The Circular does not dispense with Section 16(2)(c) and does not shift to the Department the burden placed by Section 155 on the claimant, but prescribes the manner of discharging that burden. The Appellant produced no certificate from either supplier or an accountant, no return of the supplier and no letter to the supplier, and nothing explains why a supplier paid in full through the bank could not be approached - Mere production of invoices or payment through the bank is not enough, and Section 155 states the same principle in express terms – However, the contention that the adjudication was mechanical has substance since the Circular binds the Department and a demand on a bare comparison of the returns without following it is liable to be set aside - The First Appellate Authority applied the Circular and informed the Appellant what was required, the Appellant still produced nothing before the Tribunal. A party complaining of a procedural lapse must show real prejudice, which is not shown - The condition in Section 16(2)(c) is not satisfied, and this finding by itself sustains the demand - Plea of genuine purchase and evidence of movement and receipt of goods - Whether the Appellant has established its plea that the goods actually moved from the supplier and were received by it - HELD - The plea must be established by the party raising it. An e-way bill was mandatory for the inter-State movement above the prescribed value, and it is the contemporaneous record connecting the invoice with a vehicle carrying the goods to a stated destination. Physical movement is to be proved by details of the vehicle, payment of freight charges and acknowledgement of taking delivery. The e-way bill was within the reach of the Appellant, and its unexplained non-production weighs against the claim that the goods moved as the invoice states. The subsequent movement of the goods to the place of export is equally unrecorded. The export documents, in the absence of any record linking them with the supplier's invoice and without explanation of the difference in description, classification and rate of tax, do not establish the link - Even if receipt were proved, it would go only to Section 16(2)(b) and cannot establish that the supplier paid the tax. The finding does not confirm the demand on a new ground barred by Section 75(7), as the demand rests on Section 16(2)(c) and the finding only answers the plea of the Appellant - Absence of an e-way bill does not defeat credit in every case, but where a recipient relies on the genuineness of an inter-State purchase above the threshold value, the e-way bill is the primary evidence of movement, and if it is not produced and its absence is not explained, movement must be proved by other reliable contemporaneous evidence - The plea of genuine purchase fails - Confirmation of tax, interest under Section 50(3) read with Rule 88B(3) and penalty under Sections 73(9) and 122(2)(a) - Adjudicating Authority directed recovery of interest at applicable rates without any working or finding on utilisation, and imposed penalty at the statutory minimum under each enactment - Whether the tax, interest and penalty are payable - HELD - Tax is sustained for the reasons recorded on the failure to prove payment by the suppliers, including the portion relating to the supplier for which no material was produced. Interest is compensatory and follows the tax, and Section 50(3) levies interest on credit wrongly availed and utilised, with Rule 88B(3) prescribing that interest runs from the date of utilisation to the date of reversal or payment and that credit is treated as utilised when the balance in the electronic credit ledger falls below the amount wrongly availed. The liability to interest is upheld, but the grievance about computation is well founded as the order records no working and no finding on utilisation - Penalty under Section 73(9) is mandatory at ten per cent of the tax or the prescribed minimum, whichever is higher, and does not depend on fraud or intent to evade, which are the province of Section 74, so the absence of such a finding does not assist the Appellant - The demand of tax and the penalty are upheld, and interest is payable on the credit wrongly availed and utilised - The appeal is dismissed. [Read less]

2026-VIL-196-GSTAT-LCK | Tribunal SGST

GST – Rejection of appeal on account of non-appearance - Demand on input tax credit confirmed ex parte on the basis of mismatch between GSTR-3B and GSTR-2A - The First Appellate Authority rejected the appeal as the Appellant did not appear due to medical issues - Whether the order of the First Appellate Authority is sustainable when the substantive dispute on the credit was not examined - HELD - The non-appearance before the adjudicating or appellate authority cannot, in the peculiar facts of the case, be treated as sufficient to conclude the proceedings without consideration of the substantive dispute. Sufficient cause has to be considered in the context in which the party was proceeded against, which is the material date on which the appeal was disposed of - The medical certificate is accepted. The order of the First Appellate Authority does not adequately address the issue, does not reveal that the details of the case were examined on merit and does not record reasons on the material having a bearing on the tax liability - The case is decided on its merits on the facts presented before the Tribunal - Mismatch of GSTR-3B and GSTR-2A for the year 2017-18 - Verification procedure under the CBIC Circular dated 27.12.2022 - Appellant relied on a Chartered Accountant certificate issued during the pendency of the appeal, which the Respondent opposed because it was issued after the appeal was filed - Whether the alleged mismatch required examination in accordance with the verification procedure under the Circular and whether the certificate issued later can be considered - HELD - The difference between GSTR-3B and GSTR-2B or GSTR-2A requires examination, but it cannot in isolation be conclusive proof that credit was wrongly availed. It has to be appreciated in the context of the invoices, books of account, supplier particulars, payment records and other material forming part of the transaction - Since the dispute pertains to 2017-18, the verification approach under the Circular is relevant, as it facilitates examination of discrepancies by reference to the underlying transaction and supplier-side records instead of treating the numerical difference as determinative. The Circular requires a certificate where the difference exceeds the prescribed limit, and applies to cases where adjudication or appeal proceedings are still pending. The certificate is admissible as corroborative material because its subsequent date does not by itself render it inadmissible, particularly when the matters certified can be correlated with the books, invoices, returns and other contemporaneous records - The matter cannot be allowed to linger indefinitely for want of a proactive and responsive approach of the Respondent - The orders of the First Appellate Authority and the Adjudicating Authority are set aside to the extent challenged, and the consequential demand of tax, interest and penalty is set aside - The appeal is allowed by way of remand. [Read less]

2026-VIL-191-GSTAT-RJK | Tribunal SGST

GST - Confiscation under Section 130 of the CGST Act - Order passed on the same day as the notice - Breach of natural justice - Goods were intercepted in transit without the Appellant's invoice and e-way bill, and were detained under Section 129(1). The adjudicating authority issued a notice under Section 130 allowing seven days to show cause and directing appearance at a fixed time on the same date, and passed the confiscation order on that very date, recording that no objections were filed - Whether an order of confiscation passed on the same day as the notice, which itself allowed seven days for reply, satisfies Section... [Read more]

2026-VIL-1740-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs – Absolute confiscation of gold seized in a town seizure under Sections 111(b), 111(d) and 111(p) of the Customs Act, 1962 - Gold bars were recovered from a person intercepted at a railway station, who stated that he was acting on the directions of the Appellant and that the gold was smuggled, while the Appellant claimed ownership and produced the purchase invoice reflected in the GSTR-2A of the Appellant, with the gold being sent for manufacture of jewellery, and the Respondent ordered absolute confiscation and imposed penalties, which were set aside by the Commissioner (Appeals) in view of the demise of the App... [Read more]

2026-VIL-1731-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Classification of imported DHA algae oil - Chapter 15 versus Chapter 29 and Heading 2106 of Customs Tariff - Appellant imported DHA algae oil and classified it as an unsaturated acyclic monocarboxylic acid under Chapter 29, claiming the benefit of exemption notification - Department alleged misdeclaration, reclassified the goods under Heading 1515 as other fixed vegetable oil, confirmed differential duty with interest, ordered confiscation with redemption fine and imposed penalties -- Whether the imported goods are classifiable under Chapter 29 as claimed by the Appellant or under Heading 1515 as held by the Department - HELD - Classification is determined by the terms of the headings and Section or Chapter Notes under GRI 1, with assistance from the Harmonized System of Nomenclature and its Explanatory Notes. Chapter 15 covers animal or vegetable fats and oils, and the imported DHA algae oil is an edible oil derived from plant source, in which fatty acids make up almost the entire structure. Chapter Note 1(e) of Chapter 15 does not exclude fatty acids of edible oil. Heading 2916 applies only to separate chemically defined organic compounds, and excludes oleic acid of purity less than 85% and other fatty acids of purity less than 90% - The test reports show that the goods contain DHA at about half and several other fatty acids, with none of the required purity. The goods are therefore a mixture of fatty acids as constituent of edible oil and not a pure DHA fatty acid. The end use of the product in the food industry is not relevant for classification unless the Tariff entry mentions it, and it is the product at the time of importation, its appearance and composition which matter. Heading 2916 and Heading 2106 are not about oils, and merely because a constituent such as linolenic acid is mentioned, an oil containing it cannot fall under Heading 2916. As per GRI 1 and GRI 2, a reference to a substance includes mixtures, and Heading 1515 is the most specific among the three headings - The goods are classifiable under Chapter 15 and were wrongly classified under Chapter 29, the benefit of the exemption notification was wrongly claimed, and the demand of differential duty with interest, penalty and appropriation of the bank guarantee is upheld - The appeal is dismissed [Read less]

2026-VIL-1738-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs – Liability of Power of Attorney holders of a deceased sole proprietor for duty, interest, penalty and fine - Appellant was a proprietorship concern whose sole proprietor expired before issuance of the Show Cause Notice, which was served on the sons of the proprietor who held Power of Attorney and managed the business - Whether the authorised signatories of the deceased sole proprietor can be held liable to pay duty, interest, penalty and fine - HELD - Section 2(26) of the Customs Act, 1962 defines importer to include any owner, beneficial owner or any person holding himself out to be the importer. Beneficial owner under Section 2(3A) means any person who exercises effective control over the goods being imported. The son of the proprietor, in his statement under Section 108, acknowledged that he exercised effective control of the business as Power of Attorney holder and is therefore the beneficial owner. The objection to admissibility of the statements is not sustainable as the documentary evidence recording both sons as Power of Attorney holders prevails over oral testimony, and the Appellant could not falsify it - The authorised signatories holding Power of Attorney can be held liable for imports effected during the lifetime of the proprietor through them, and the issue is decided against the Appellant - Customs – Rejection of declared transaction value on the basis of NIDB data – Respondent rejected the declared value of imported watch movements under Rule 12 of the Customs Valuation Rules relying on NIDB data and a single foreign invoice, while the Appellant had mis-declared the quantity imported - Whether the rejection of declared value and enhancement of assessable value by referring to NIDB data is correct in law - HELD - Section 14 of the Customs Act, 1962, as amended, provides that the value of imported goods shall be the transaction value, that is the price actually paid or payable, which can be discarded only in the circumstances stipulated therein. The Respondent produced no evidence that the transaction value differed from the declared value or that the NIDB value pertained to similar products. The single foreign invoice relied upon was not part of the record and reliance on it violates the Valuation Rules. Mere NIDB data cannot form the basis of rejection of transaction value, and the burden was upon the Respondent to prove that the price paid or payable was at the enhanced rate - The declared value was wrongly rejected and enhanced. However, as the Appellant acknowledged the incorrect declaration of quantity, duty is payable on the undeclared quantity at the declared value per piece - Customs – Enhancement of value of past consignments on the basis of rejection of value of live consignments - Respondent enhanced the value of past Bills of Entry on the basis of the rejection of declared value in the live consignments - Whether the rejection of declared value of live consignments can form the basis of enhancement of value of the past consignments - HELD - The value per piece was rightly declared by the Appellant and the Respondent could not produce better evidence to reject it. The enhancement of value of the past Bills of Entry was founded only on the observations with respect to the live Bills of Entry, and once those findings are set aside, the enhancement is not sustainable - The order enhancing the value of past Bills of Entry is set aside in favour of the Appellant - Customs – Confiscation of goods of live and past consignments – Goods covered by past Bills of Entry had already been cleared - Whether the imported goods of live as well as past consignments are liable to confiscation - HELD - The confiscation of goods of past Bills of Entry was confirmed only because of the observations with respect to the live Bills of Entry, and since those findings are set aside, the confiscation is also liable to be set aside. The goods of past consignments were already cleared, and the order of confiscation of such goods has no legs to stand upon - The confiscation is set aside in favour of the Appellant - Customs – Penalty under Sections 112(a)(ii), 114A and 114AA of the Customs Act, 1962 – Appellant mis-declared the quantity of goods imported, which was an acknowledged fact - Whether the penalties are imposable under Sections 114A and 114AA of the Customs Act - HELD - As the admitted difference in quantity is huge, it is difficult to believe any bona fide. Penalty under Section 112(a)(ii) is not imposable as the present is not a case of confiscation. The penalty under Section 114AA is upheld on account of the admitted mis-declaration. Since the conclusion on valuation does not warrant penalty on the differential duty, the remaining penalty is not sustainable - The penalty under Section 114AA is upheld, the remaining penalty is set aside, and the appeal is partially allowed. [Read less]

2026-VIL-1742-CESTAT-DEL-CE | CESTAT CENTRAL EXCISE

Central Excise - Manufacture - Body building activity on fully built motor vehicles - Admissibility of exemption under Notification No. 12/2012-CE (S. No. 276 read with Condition No. 27) - Appellant engaged in body building on motor vehicles, received fully built motor vehicles, carried out certain modifications such as mounting tipper bodies and fixing side panels, doors and windows, and cleared them to customers claiming exemption treating the activity as body building on chassis - Adjudicating authority held that the activity amounted to manufacture of body of motor vehicle or parts and accessories, denied the exemption, confirmed the duty demand and imposed penalties - Whether the activities undertaken on fully built motor vehicles amount to manufacture under Section 2(f) of the CEA, 1944 read with the Chapter Note to Chapter 87, and whether the exemption is admissible - HELD - Goods are to be assessed to central excise duty in the form in which they are cleared. The documents of clearance themselves described the items as fully built motor vehicles - Mere addition of value is not sufficient to conclude that manufacture has taken place. If the fully built motor vehicles were cleared after modification, it must be established that the Appellant started with something other than a fully built motor vehicle before the activity can be treated as manufacture. Otherwise the Appellant has only refined or remade the existing motor vehicles, and whether such activity amounts to manufacture under Section 2(f) is the first point of determination. The impugned order does not determine whether the activities qualify as manufacture. Even if the activities amount to manufacture by virtue of the Chapter Note to Chapter 87, the starting point of manufacture must be the building of body on the chassis in the form it was received. If the activities were not in relation to building body on chassis, it needs to be determined whether the Chapter Note applies and whether the activities constitute manufacture at all. In the absence of any consideration of the issue of manufacture and excisability of the goods in the form in which they were cleared, the matter requires reconsideration along with the admissibility of the exemption notification – The appeal is allowed by remand - Central Excise - Extended period of limitation - Section 11A of the Central Excise Act, 1944 - Invocation for demand on clearances of body built motor vehicles under claim of exemption - Appellant 1 was registered with the department for a long time, regularly paid duty, filed returns and was subjected to departmental assessment, scrutiny and audit - Department invoked the extended period on the allegation of intent to evade payment of duty for the period beyond the normal period and the demand was confirmed - Whether the extended period of limitation could be invoked for making the demand - HELD - It is not the case of the Revenue that something was actively suppressed by the Appellant. The Appellant was registered, filed returns as prescribed and its records were audited from time to time. The Appellant was clearing the same or similar goods after undertaking these processes in the past also, without any objection by the Revenue authorities. Merely because the authorities changed their opinion in respect of the clearances, the Appellant cannot be said to be suppressing facts with intention to evade payment of duty. The Appellant undisputedly entertained a bonafide belief that the goods cleared were exempt from payment of duty for the long period. In the absence of fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment of duty, invocation of the extended period is unwarranted, in light of the pronouncement of the Hon'ble Supreme Court. The decisions relied upon in the impugned order are distinguishable - Extended period of limitation could not have been invoked and the demand, if any, should be limited to the normal period of limitation under Section 11A of the Central Excise Act, 1944 - Central Excise - Penalty under Section 11AC of the Central Excise Act, 1944 - Imposition on Appellant 1 for short payment of duty on clearances of body built motor vehicles - Penalty equal to the confirmed duty was imposed on Appellant 1 under Section 11AC on the ground of suppression with intent to evade duty - Whether the penalty under Section 11AC is sustainable where the charge of suppression and intent to evade payment of duty is not upheld - HELD - The penalty under Section 11AC is attracted only where the short payment or non-payment of duty is by reason of fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment of duty. As the charge of suppression, misstatement etc. with intent to evade payment of duty cannot be upheld for invoking the extended period of limitation, the penalty imposed on Appellant 1 in terms of Section 11AC cannot be upheld, as clarified by the Hon'ble Supreme Court distinguishing the issues of recovery, interest and penalty arising under Sections 11A, 11AA, 11AB and 11AC - Penalty imposed on Appellant 1 under Section 11AC set aside - Central Excise - Penalty under Rule 26 of the Central Excise Rules, 2002 - Imposition on Appellant 2, the Executive Director of Appellant 1, for acts of commission and omission leading to short payment of duty - Penalty was imposed on Appellant 2 under Rule 26 and was challenged in appeal as not legal and not sustainable - Whether the penalty on Appellant 2 under Rule 26 is sustainable - HELD - No case is made out against Appellant 2 for imposition of penalty under Rule 26, specifically when it is not found that duty was being evaded by resorting to fraud, collusion, suppression or misstatement with the intent to evade payment of duty - Penalty imposed on Appellant 2 under Rule 26 set aside and the appeal of Appellant 2 is allowed. 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2026-VIL-1736-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax – Demand for period up to 30.06.2012 – Non-classification of service under sub-clauses of clause (105) of Section 65 of the Finance Act, 1994 – Appellant carrying on business as mechanical, civil and refractory contractor, was registered for three taxable services and filed ST-3 Returns - Department compared gross receipts in audited Balance Sheets and Form 26AS with the taxable value declared in the returns, treated the entire difference as suppressed value and issued a show cause notice, which was confirmed in adjudication along with interest and penalties – Whether a demand raised without classifying the service under a specific sub-clause of Section 65 is sustainable – HELD – In the positive list regime existing up to 30.06.2012, it is mandatory to classify the service under the specific sub-clauses of clause (105) of Section 65. The annexure to the notice merely aggregates job contract bills, labour contract and machine hire charges appearing in the Balance Sheet, deducts the value declared in the ST-3 Returns and taxes the difference, without classifying the service rendered under a particular sub-clause. In the absence of classification, the Appellant is denied the opportunity of demonstrating whether it is liable to service tax at all. A notice which does not disclose the charge and the correct classification of the service is not a notice in the eye of law. The issue is no longer res integra, as it has been held that where the notice and the adjudication order are vague as to the taxable service, the demand is not sustainable and no demand can be confirmed unless the person concerned is put on notice of the exact liability – Demand of service tax confirmed for the period prior to 30.06.2012 is not sustainable and is set aside - Service Tax – Demand for period from 01.07.2012 – Negative list regime – Non-invocation of Section 66B of the Finance Act, 1994 – Show cause notice issued after introduction of the negative list described the demand by reference to the erstwhile positive list categories and invoked only Sections 66, 67, 68, 69 and 70, with the impugned order also confirming violation of Sections 66, 67, 68 and 70 – Whether a demand for the period after 01.07.2012 is sustainable when the charging provision, Section 66B, has not been invoked in the notice – HELD – With effect from 01.07.2012, service tax is leviable on the basis of the negative list, and Section 66B became the charging section for levying service tax on the value of all services other than those specified in the negative list. The provisions of Section 66B must therefore be invoked for such a demand, which has not been done in the notice. A demand cannot be sustained upon repealed or inapplicable provisions, and the notice did not put the Appellant on notice of the provisions applicable for the period after 01.07.2012. Findings traversing beyond the scope of the show cause notice are unsustainable. A defective show cause notice cannot be cured by giving a finding in the impugned order by the adjudicating authority. As the notice has not specified the category for the period prior to 30.06.2012 and has not invoked Section 66B for the period after 01.07.2012, the entire demand is legally unsustainable on this ground itself, and there is no need to go into the merits of the demands – Demand for the period after 01.07.2012 is not sustainable and the order is set aside - Service Tax – Extended period of limitation – Proviso to Section 73(1) of the Finance Act, 1994 – Demand founded solely on the difference between value declared in ST-3 Returns and gross receipts in Balance Sheets and Form 26AS – Notice invoking the extended period was issued against the Appellant, a registered assessee who filed ST-3 Returns throughout the period and paid service tax, without any enquiry from service recipients or examination of work orders, invoices or agreements – Whether the extended period of limitation can be invoked where the demand rests only on a comparison of returns with Balance Sheets and Form 26AS – HELD – Audited Balance Sheets are statutory documents and Form 26AS is generated from the records of the Department's own sister wing, and nothing was concealed. The Appellant was a registered assessee, filed ST-3 Returns and paid service tax during the period. The impugned order records no evidence of intent to evade at all. Where the demand is raised on the basis of Form 26AS or third-party income tax data without investigation at the Appellant's end or independent verification, the demand is unsustainable and the extended period of limitation is not invocable, as consistently held by the Tribunal – Demand of service tax confirmed by invoking the extended period of limitation is not sustainable - Service Tax – Interest and penalty – Sections 75, 77 and 78 of the Finance Act, 1994 and late fee under Rule 7C of the Service Tax Rules, 1994 – Confirmation of interest, penalties and late fee along with the demand of service tax – Whether interest and penalties survive when the demand of service tax is not sustained – HELD – As the demand of service tax is not sustained, the question of demanding interest or imposing penalty does not arise – Interest and penalties are set aside, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law. [Read less]

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