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Central Excise – Quantum of Cenvat Credit – Eligibility to CENVAT credit on services used in handling, transporting and crushing ore in captive mines – Dept of the view that CENVAT credit of the service tax paid on the input services in handling, transporting and crushing ore in the mines can be allowed only to the extent the ore was transported to and used in the factory - Whether CENVAT credit for service tax paid on input services in handling, transporting and crushing ore in captive mines can be claimed only to the extent that the ore was physically transported to and used in the factory, or whether credit is ava... [Read more]

Central Excise – Quantum of Cenvat Credit – Eligibility to CENVAT credit on services used in handling, transporting and crushing ore in captive mines – Dept of the view that CENVAT credit of the service tax paid on the input services in handling, transporting and crushing ore in the mines can be allowed only to the extent the ore was transported to and used in the factory - Whether CENVAT credit for service tax paid on input services in handling, transporting and crushing ore in captive mines can be claimed only to the extent that the ore was physically transported to and used in the factory, or whether credit is available for services rendered on the entire quantity of ore extracted, including the portion that was discarded as waste in the mines – HELD - The manufacturer is entitled to CENVAT credit for the entire service tax paid on handling, transporting and crushing services of ore, including the portion that was ultimately discarded. The definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 encompasses any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products - The term manufacture includes any process incidental or ancillary to the completion of a manufactured product. The scope of input service extends to services used in processes incidental to manufacture through the expressions directly or indirectly and in or in relation to manufacture. Almost all manufacturing processes involve removal of excess or unwanted material, and the crushing and handling of ore in the mines constitute essential processes incidental and ancillary to the ultimate manufacture of final products. The services rendered on the material that is eventually discarded are integral to the overall manufacturing process as they cannot be separated from the process that produces the useful output. The finding that credit should be limited only to the quantum of ore reaching the factory was incorrect in principle as it improperly bifurcates a single service based on the physical yield rather than evaluating whether the service itself was used in the manufacturing process - The impugned order is set aside and the appeal is allowed [Read less]

Customs – Valuation, Related Party Transactions – Supply from an associated enterprise - Rejection of Declared Transaction Value based on International Competitive Bidding – Import of goods under comprehensive engineering, procurement and construction contracts following international competitive bidding process for Solar Photovoltaic Power Project - Rejection of declared value of imported goods redetermination under Rule 12 of the Customs Valuation Rules – HELD - Where contracts between importers and suppliers encompass both supply and service components including design, engineering, manufacturing, procurement, ... [Read more]

Customs – Valuation, Related Party Transactions – Supply from an associated enterprise - Rejection of Declared Transaction Value based on International Competitive Bidding – Import of goods under comprehensive engineering, procurement and construction contracts following international competitive bidding process for Solar Photovoltaic Power Project - Rejection of declared value of imported goods redetermination under Rule 12 of the Customs Valuation Rules – HELD - Where contracts between importers and suppliers encompass both supply and service components including design, engineering, manufacturing, procurement, packing, forwarding, supply, transportation, installation, testing, commissioning and performance guarantees at a lump-sum price determined through international competitive bidding awarded to the lowest bidder, the relationship between the parties does not influence pricing, thus making the declared transaction value acceptable under Rule 3 of the Customs Valuation Rules - The contractual obligations encompass comprehensive engineering, procurement, construction services and performance guarantees at lump-sum prices determined through transparent and independent decision-making. The evidence relied upon by the Revenue comprises computer printouts of overseas banker letters lacking certification under Section 138C(4) of the Customs Act, 1962, thereby losing evidentiary value. The identical factual situations in earlier appeals involving the same investigation and evidence have been decided by the Tribunal and upheld by the Supreme Court, establishing that declared transaction values could not be rejected - The Principal Commissioner correctly accepted the declared transaction value and rejected the proposed rejection under Rule 12 of the Customs Valuation Rules, 1962, as there exists no valid basis to challenge the genuineness or accuracy of the invoiced values when derived from arms length transactions conducted through competitive international bidding - The impugned order rejecting the show cause notice is upheld and the Revenue appeals are dismissedrnrnConfiscation and Penalties - Whether goods are liable to confiscation and whether penalties can be imposed when there is no misdeclaration of value – HELD - Since the imported goods were established to be correctly valued and declared by the importers, confiscation under Section 111(m) of the Customs Act is not permissible as the goods are neither prohibited nor have any duty implications - Consequently, penalty under Section 112(a) of the Customs Act cannot be imposed as it is contingent upon confiscation of goods - Further, penalty under Section 114AA of the Customs Act cannot be imposed on the importer parties since the charges of over-invoicing have been found unmaintainable and no false or incorrect declarations exist in the import documentation - When goods are held not liable for confiscation due to correct valuation and declaration, no ancillary penalties can follow - The appeals are dismissed. [Read less]

GST - Intermediary Services or Import of Service, Procurement Hub Services - Appellant-company entered into a procurement agreement with Foreign Company to provide comprehensive procurement services including identification, selection, and approval of suppliers, negotiation of terms, and facilitation of supply from selected suppliers - Appellant initially pays IGST under reverse charge treating it as import of services, subsequently seeks refund claiming the services constitute intermediary services with place of supply outside India - Whether services provided by a foreign entity comprising supplier identification, selec... [Read more]

GST - Intermediary Services or Import of Service, Procurement Hub Services - Appellant-company entered into a procurement agreement with Foreign Company to provide comprehensive procurement services including identification, selection, and approval of suppliers, negotiation of terms, and facilitation of supply from selected suppliers - Appellant initially pays IGST under reverse charge treating it as import of services, subsequently seeks refund claiming the services constitute intermediary services with place of supply outside India - Whether services provided by a foreign entity comprising supplier identification, selection, approval, negotiation of procurement terms, and facilitation of supply between the recipient and third-party suppliers constitute intermediary services under section 2(13) of the IGST Act, 2017, or constitute import of services – HELD - The CBIC Circular 159/15/2021-GST establishes that intermediary services require four essential prerequisites: minimum of three parties in the transaction, two distinct supplies with ancillary supply being merely facilitative, the service provider maintaining character of agent or broker with only supportive role, and crucially, the service provider must not supply goods or services on principal-to-principal basis on its own account - In the present case, although three parties exist in form, the foreign entity renders comprehensive procurement services on its own account as an independent contractor functioning as centralized procurement hub for the entire multinational group, providing core services to the group rather than merely arranging or facilitating supplies between two independent principals. The relationship constitutes principal-to-principal service provision on own account rendering the definition's exclusionary clause applicable, distinguishing it from true intermediary arrangements where the facilitator merely connects unrelated parties without providing substantive services independently - The outsourcing or sub-contracting of services on principal-to-principal basis does not constitute intermediary services – The services received by the appellant are in the nature of an import of service and the place of supply shall be in India. Thus, it will not come within the purview of Section 13(8)(b) of the IGST Act, and definition provided in Section 2(13) of the Act - The orders of first appellate authority is confirmed and the appeal is dismissed [Read less]

Customs - Retrospective application of Notification to pre-notification shipments – Petitioner imports platinum alloy jewellery which was dispatched on 30th and 31st March 2026 and arrived at Indian ports on 1st and 2nd April 2026 at 01:39 AM – The Notification No. 02/2026-27 dated 01st April, 2026 changing the import policy from "free" to "restricted" for such goods is published in the e-Official Gazette on 2nd April 2026 at 20:52:28 hours - Customs authorities refuse to clear the goods citing the new restriction, though the goods had arrived before the notification was published - Whether a notification restricting i... [Read more]

Customs - Retrospective application of Notification to pre-notification shipments – Petitioner imports platinum alloy jewellery which was dispatched on 30th and 31st March 2026 and arrived at Indian ports on 1st and 2nd April 2026 at 01:39 AM – The Notification No. 02/2026-27 dated 01st April, 2026 changing the import policy from "free" to "restricted" for such goods is published in the e-Official Gazette on 2nd April 2026 at 20:52:28 hours - Customs authorities refuse to clear the goods citing the new restriction, though the goods had arrived before the notification was published - Whether a notification restricting imports can be applied retrospectively to goods that have already been dispatched and arrived at Indian ports before the notification was published in the Official Gazette – HELD – The said Notification cannot be applied retrospectively to the goods in question. A notification or subordinate legislation becomes enforceable only upon publication in the Official Gazette in a manner reasonably calculated to bring it to the notice of all affected persons - The requirement of publication in the Gazette is not an empty formality but an act by which an executive decision is transformed into law. With the shift from analog to digital publication of gazettes, the exact date and time of electronic publication assumes significance. Delegated legislation can only be prospective in nature unless the parent statute expressly vests the authority with power to make rules with retrospective effect. Under the Foreign Trade (Development & Regulation) Act, 1992, no such power exists to make amendments retrospectively - Since the goods arrived at Indian ports on 2nd April 2026 at 01:39 AM, approximately twenty hours before the Notification was published at 20:52:28 hours on the same date, the Notification cannot travel backward in time to affect these consignments. The goods were imported prior to the notification coming into force and are therefore liable to be cleared in accordance with the conditions that prevailed before the notification's issuance - The petitioner's goods be processed for release immediately without requiring import authorization or license under the impugned notification, subject to fulfillment of other official procedures - The writ petition is allowed [Read less]

Customs - Relevance of statements recorded under Section 108 of the Customs Act, 1962 without compliance with Section 138B procedure - During inquiry into alleged evasion of duty by a SEZ unit, statements were recorded from several employees under Section 108 of the Customs Act. These statements were subsequently used by the Commissioner as primary evidence to conclude that the unit had not undertaken any manufacturing activity and had diverted duty-free imported goods to the domestic market - Whether statements recorded under Section 108 of the Customs Act can be relied upon as evidence in customs proceedings when the pro... [Read more]

Customs - Relevance of statements recorded under Section 108 of the Customs Act, 1962 without compliance with Section 138B procedure - During inquiry into alleged evasion of duty by a SEZ unit, statements were recorded from several employees under Section 108 of the Customs Act. These statements were subsequently used by the Commissioner as primary evidence to conclude that the unit had not undertaken any manufacturing activity and had diverted duty-free imported goods to the domestic market - Whether statements recorded under Section 108 of the Customs Act can be relied upon as evidence in customs proceedings when the procedure contemplated under Section 138B of the Customs Act has not been followed – HELD – The Section 138B requires that statements recorded during inquiry shall be relevant for proving the truth of facts only when the person who made the statement is examined as a witness before the adjudicating authority and the adjudicating authority forms an opinion that the statement should be admitted in evidence in the interests of justice. An opportunity of cross-examination must be provided to the person against whom such statement has been made. These provisions are mandatory and failure to comply with the procedure means no reliance can be placed on statements recorded under Section 108. The rationale behind these precautions is that statements recorded during inquiry by officers have every chance of being recorded under coercion or compulsion, and the mandatory procedure is designed to neutralize this possibility. In the present case, since the prescribed procedure was not followed before the Commissioner, the reliance placed on such statements was unjustified and the findings based thereon cannot be sustained - The order of the Commissioner relying on statements recorded under Section 108 without following Section 138B procedure is set aside and all related appeals are allowed [Read less]

Service Tax - Classification of Newspaper distribution services – Appellant is engaged in transporting and distributing newspapers from a printing press to various distribution centres, while undertaking activities such as loading, unloading, binding, counting, making bundles, and packaging – Demand of service tax on the ground that the services provided constitute taxable cargo handling services under Section 65B(44) of the Finance Act, 1994 - Whether services involving transportation of newspapers along with incidental activities of loading, unloading, and packaging constitute taxable cargo handling services or fall ... [Read more]

Service Tax - Classification of Newspaper distribution services – Appellant is engaged in transporting and distributing newspapers from a printing press to various distribution centres, while undertaking activities such as loading, unloading, binding, counting, making bundles, and packaging – Demand of service tax on the ground that the services provided constitute taxable cargo handling services under Section 65B(44) of the Finance Act, 1994 - Whether services involving transportation of newspapers along with incidental activities of loading, unloading, and packaging constitute taxable cargo handling services or fall within the exemption under Section 66D(p) of the Finance Act, 1994 - HELD - The services provided constitute transportation of goods covered under Section 66D(p) of the Finance Act, 1994, which is included in the negative list of taxable services. The primary objective of the agreement between the parties was transportation and distribution of newspapers from the printing press to designated centres, with loading and unloading activities being merely incidental and ancillary to the main transportation service - The evidence from Income-tax Returns showing depreciation on vehicles and vehicle hiring charges corroborates that the appellant was primarily engaged in providing transportation services. While the agreement mentions activities like loading and unloading, these do not transform the contract into a cargo handling service contract; rather, they remain subsidiary to the core transportation function - A composite contract involving transportation with ancillary activities must be classified based on its primary objective and substance. Since the services fall within the exempted category of transportation services under Section 66D(p), the appellant cannot be held liable for service tax - The order-in-appeal confirming the service tax demand is set aside and the appeal is allowed [Read less]

Service tax liability on royalty received from franchisees - Whether service tax demand can be sustained on royalty received from franchisees when the appellant claims that not all royalty amounts were received by it and that it had paid full service tax on amounts actually received – HELD - The relied upon document clearly indicated the amounts received by the appellant and the demand of service tax was calculated only on such received amounts as recorded in the statement. The appellant failed to maintain details of royalty amounts in its accounting system and admitted during statement that the listed amounts represente... [Read more]

Service tax liability on royalty received from franchisees - Whether service tax demand can be sustained on royalty received from franchisees when the appellant claims that not all royalty amounts were received by it and that it had paid full service tax on amounts actually received – HELD - The relied upon document clearly indicated the amounts received by the appellant and the demand of service tax was calculated only on such received amounts as recorded in the statement. The appellant failed to maintain details of royalty amounts in its accounting system and admitted during statement that the listed amounts represented gross receipts of franchisee centers on which royalty was received. The appellant's submission that some payments were not received is rejected as the appellant provided no supporting details for this claim. Mere assertions without documentary evidence cannot override the established facts on record that royalty amounts were actually received – The appeal is dismissed [Read less]

Central Sales Tax Act, 1956 - Consignment sales versus Inter-State sales - Applicability of pre-search period evidence to post-search period transactions - Following an inspection conducted on 26.07.1995, the assessing authority disallowed claim of consignment sales for the period 01.08.1995 to 31.03.1996 based on materials and slips recovered during inspection, which related to the pre-inspection period - Appellate Commissioner set aside this assessment, finding that the transactions were genuine consignment sales based on the agreement. The Sales Tax Appellate Tribunal restored the assessing authority's order by extrapol... [Read more]

Central Sales Tax Act, 1956 - Consignment sales versus Inter-State sales - Applicability of pre-search period evidence to post-search period transactions - Following an inspection conducted on 26.07.1995, the assessing authority disallowed claim of consignment sales for the period 01.08.1995 to 31.03.1996 based on materials and slips recovered during inspection, which related to the pre-inspection period - Appellate Commissioner set aside this assessment, finding that the transactions were genuine consignment sales based on the agreement. The Sales Tax Appellate Tribunal restored the assessing authority's order by extrapolating the pre-search findings to the post-search period - Whether the movement of goods from one State to another constitutes an inter-State sale or a consignment sale when an agreement explicitly provides for consignment terms, and whether evidence and materials relating to the period prior to 01.08.1995 can be used to characterize transactions occurring after 01.08.1995 – HELD - Under section 6A, when a dealer claims that movement of goods from one State to another was occasioned by transfer to an agent and not by sale, the burden lies on the dealer to prove this through statutory declarations and supporting evidence. However, once the dealer discharges this initial burden through proper documentation and agreement, the Department cannot rely on mere assumptions and conjectures to displace this burden. The agreement executed on 01.08.1995 explicitly provides that the principal will consign products to the agent depending upon availability as per marketing conditions, that goods remain the property of the principal until sold, that the principal will insure the goods in transit and custody until sold, and that the agent will render monthly statements of account. These contractual terms clearly establish the consignment nature of the transactions - The Appellate Tribunal erred in extrapolating materials and evidence relating to transactions from 01.04.1995 to 31.07.1995 to transactions occurring after 01.08.1995. The slips, blank cheques, and debit notes recovered during inspection prior to 01.08.1995 and cannot serve as evidence for characterizing transactions executed pursuant to the agreement dated 01.08.1995 – The order passed by the Tax Appellate Tribunal is set aside to the extent that it treated transactions occurring from 01.08.1995 to 31.03.1996 as inter-State sales - The assessment regarding consignment sales is set aside and the finding of the Appellate Commissioner that the transactions constitute consignment sales is upheld. The penalty reduced to a lesser amount is restored – The appeal is partly allowed [Read less]

Customs – Refund of Special Additional Duty (SAD) - Procedural Deficiency vs. Substantive Compliance – Rejection of refund of SAD on grounds of non-production of original documents, absence of endorsement on invoices, lack of correlation between imported and sold goods, and alleged jurisdictional infirmity – Appellant-importer submitted all original documents which were acknowledged by the Department but subsequently became untraceable due to reorganization of Commissionerates - Whether rejection of refund claims is sustainable when the importer has substantially complied with substantive conditions of the Notificati... [Read more]

Customs – Refund of Special Additional Duty (SAD) - Procedural Deficiency vs. Substantive Compliance – Rejection of refund of SAD on grounds of non-production of original documents, absence of endorsement on invoices, lack of correlation between imported and sold goods, and alleged jurisdictional infirmity – Appellant-importer submitted all original documents which were acknowledged by the Department but subsequently became untraceable due to reorganization of Commissionerates - Whether rejection of refund claims is sustainable when the importer has substantially complied with substantive conditions of the Notification – HELD - The record that the importer had duly filed original documents which were acknowledged by the department, and the subsequent loss of these documents cannot be attributed to the importer's failure - The requirement of endorsement on invoices is not mandatory and substantive conditions are satisfied once it is established that the importer had not passed on Special Additional Duty credit and goods suffered VAT/CST on subsequent sale - The Specified Officer of the SEZ specifically confirmed discharge of duties including SAD and maintenance of records relating to duty payments – The procedural infractions cannot defeat substantive entitlement. The refund claims must be processed in accordance with Board Circulars No. 6/2008-Cus, 16/2008-Cus, and 18/2010-Cus which reflect the Board's policy that SAD refund is a beneficial scheme to be implemented in a facilitative manner. The importer cannot be denied statutory benefit of interest under Section 27A of the Customs Act since the refund claims came to be rejected on account of jurisdictional uncertainty which itself subsequently stood clarified - The jurisdictional refund sanctioning authority is directed to grant refund together with applicable interest under Section 27A of the Customs Act, 1962 – The appeal is allowed [Read less]

Customs – Concessional CVD exemption for imported cement under Notification No. 04/2006-CE – Appellant imported ordinary Portland cement claiming concessional countervailing duty under Clause 1C of the exemption notification - Department alleged that cement imported in packaged form with printed RSP was not eligible for exemption and reassessed the imports under Clause 1A(ii) by adopting a contemporaneous RSP from another importer, resulting in a differential duty demand along with interest and penalty under the extended period provision - Whether the appellant is entitled to concessional CVD exemption under Clause 1C ... [Read more]

Customs – Concessional CVD exemption for imported cement under Notification No. 04/2006-CE – Appellant imported ordinary Portland cement claiming concessional countervailing duty under Clause 1C of the exemption notification - Department alleged that cement imported in packaged form with printed RSP was not eligible for exemption and reassessed the imports under Clause 1A(ii) by adopting a contemporaneous RSP from another importer, resulting in a differential duty demand along with interest and penalty under the extended period provision - Whether the appellant is entitled to concessional CVD exemption under Clause 1C of Notification No. 04/2006-CE notwithstanding importation of cement in 50 kg bags with printed RSP – HELD - The Notification distinguishes between goods intended for retail sale and those intended for industrial or institutional use. The explanation appended to the Notification clarifies that packaged goods not intended for retail sale would still qualify for exemption under Clause 1C. The relevant test is the nature of sale and intended consumer category rather than mere packaging or existence of printed RSP - The records consistently disclose that the imported cement was supplied only to industrial and institutional consumers and the Department has failed to produce even a single instance of retail sale - Further, the lower authorities erred in rejecting the declared RSP under Rule 12 of the Customs Valuation Rules without undertaking a proper valuation determination under Section 14 of the Customs Act, as the dispute remained confined to applicability of the exemption notification and not the intrinsic value of imported goods - The imports pertained substantially to the period prior to introduction of self-assessment and the Department was fully aware of the nature of the imports and had consciously extended concessional assessment. The allegation of suppression or wilful misstatement lacks factual foundation, and invocation of the extended period is unsustainable – Once invocation of the extended period fails, the consequential demand of differential duty, interest and penalty cannot survive on limitation as well - The impugned order-in-appeal is set aside and the appeal is allowed [Read less]

Central Excise - Classification of Manufactured Tobacco Product – Appellant-manufacturer of tobacco products filed returns showing classification under CETI 2403 99 10 as chewing tobacco from 2012 to 2016. The Department issued multiple orders during this period confirming the same classification - Subsequently, SCN issued contending that the product should be classified as zarda scented tobacco under CETI 2403 99 30 and demanded differential excise duty - Whether the goods manufactured and cleared by the assessee are classifiable as chewing tobacco under CETI 2403 99 10 or zarda scented tobacco under CETI 2403 99 30 - H... [Read more]

Central Excise - Classification of Manufactured Tobacco Product – Appellant-manufacturer of tobacco products filed returns showing classification under CETI 2403 99 10 as chewing tobacco from 2012 to 2016. The Department issued multiple orders during this period confirming the same classification - Subsequently, SCN issued contending that the product should be classified as zarda scented tobacco under CETI 2403 99 30 and demanded differential excise duty - Whether the goods manufactured and cleared by the assessee are classifiable as chewing tobacco under CETI 2403 99 10 or zarda scented tobacco under CETI 2403 99 30 - HELD - The assessee and the Department have consistently classified the product as chewing tobacco throughout the relevant period. The assessee filed ten returns from August 2012 to March 2016 consistently showing classification under CETI 2403 99 10, and the department itself issued thirteen orders between 2012 and 2016 confirming this classification. No objection was raised by the department during this entire period - The Supreme Court decision in Commissioner of Central Excise and S.T., Alwar vs. Tara Chand Naresh Chand establishes that once both the assessee and the Department have consistently classified a product in a particular manner, the department cannot subsequently contend that a different classification applies. The principles of consistency, estoppel and reliance prevent the Department from changing its classification stance after years of accepting the assessee's returns and issuing confirmatory orders - The demand for differential excise duty, interest under section 11AA, and penalty under section 11AC of the Central Excise Act cannot be sustained and set aside - All demands against the assessee are set aside and the appeals are allowedrnrnImposition of Penalty under Rule 26 of Central Excise Rules - Whether penalties under Rule 26 of the Central Excise Rules can be imposed on individuals when the order does not contain a clear finding that the goods are liable to confiscation – HELD - The Rule 26(1) provides that penalty is imposable only when a person knowingly deals with excisable goods which are liable to confiscation under the Act or the rules. A clear finding and discussion regarding confiscation or goods being liable to confiscation is an essential ingredient and prerequisite for imposing penalty under Rule 26 - The mere mention of confiscation while imposing penalties without a separate discussion and finding is insufficient to satisfy the statutory requirement. The impugned order lacks any discussion establishing that the goods were liable to confiscation, which is a mandatory condition for imposing penalties under rule 26 - Penalties imposed under Rule 26 of the Central Excise Rules are set aside. [Read less]

Central Excise - CENVAT Credit on Marine Cargo Insurance Services - Appellant provided detailed head-wise break-up of CENVAT credit availed on various insurance services including marine cargo insurance during the show cause reply - Commissioner considered the CENVAT credit pertaining to survey services instead of the actual amount claimed for marine cargo insurance services - Whether CENVAT credit can be denied on marine cargo insurance services when the assessee has submitted proper documentation and head-wise break-up showing that such services were directly connected with the manufacturing business – HELD - The CENVA... [Read more]

Central Excise - CENVAT Credit on Marine Cargo Insurance Services - Appellant provided detailed head-wise break-up of CENVAT credit availed on various insurance services including marine cargo insurance during the show cause reply - Commissioner considered the CENVAT credit pertaining to survey services instead of the actual amount claimed for marine cargo insurance services - Whether CENVAT credit can be denied on marine cargo insurance services when the assessee has submitted proper documentation and head-wise break-up showing that such services were directly connected with the manufacturing business – HELD - The CENVAT credit on marine cargo insurance services cannot be denied when the assessee has provided relevant documents and head-wise break-up demonstrating that the services are directly connected with the business and qualify as input services under the applicable credit rules. The Principal Commissioner's finding that the appellant neither offered explanation nor submitted documents stands incorrect as the documentary evidence was clearly presented in the show cause reply. The assessee becomes entitled to avail the full credit claimed for marine cargo insurance services as such services are directly used in or in relation to the manufacturing activity - The disallowance of CENVAT credit on marine cargo insurance services is set aside – The assessee appeal is allowed and the Revenue appeal is dismissedrnrnCENVAT Credit on Works Contract Services for Plant and Machinery - Principal Commissioner confirmed the demand for disallowance holding that works contract services are specifically excluded from the definition of input services under Rule 2(l) of CCR, 2004 - Whether CENVAT credit can be denied on works contract services when such services pertain to repair and maintenance of plant and machinery rather than construction of a building or civil structure – HELD -The works contract services for repair, maintenance, erection, painting and fabrication of plant and machinery cannot be construed as construction of a civil structure and therefore do not fall within the excluded category of input services. The exclusion clause in the applicable Rules specifically restricts the bar to works contract services used for construction of building or civil structure or a part thereof and laying of foundation or making structures for support of capital goods. Since the appellant's services relate to repair and maintenance of existing plant and machinery which are integral to the manufacturing activity, they qualify as input services. The strict interpretation of taxing statutes must be applied only to the specific language used in the rules, which clearly distinguishes between works contract for construction and those for plant and machinery maintenance - The denial of CENVAT credit on works contract services for plant and machinery repair and maintenance is set aside and the credit is allowed.rnrnCENVAT Credit on Manpower Supply Services for Plant Maintenance - Whether CENVAT credit on manpower supply services for repair and maintenance of plant and machinery can be denied when invoices demonstrate that such services were integral to the manufacturing operations – HELD - The CENVAT credit cannot be denied on manpower supply services for repair and maintenance of plant and machinery when documentary evidence from supplier invoices clearly establishes that the services were provided for such purpose during factory shutdown. Since the repair and maintenance activities undertaken are integral to the manufacturing activity of the assessee, they qualify as input services under the applicable credit rules. The characterization of such services as civil construction services is incorrect and unsustainable - The denial of CENVAT credit on manpower supply services is set aside and the credit is allowed - Further, the CENVAT credit cannot be denied on the ground of procedural lapses such as missing description in invoices when all substantive conditions prescribed under the credit Rules are fulfilled - The allowance of CENVAT credit on manpower supply services is upheld and the department's appeal challenging the same is dismissed. [Read less]

Central Excise - Cenvat Credit on invoices of bogus/non-existent suppliers, Invocation of extended period of limitation - The invoices showed abnormally high values without indicating fabric width or variety. Multiple suppliers shared the same address, delivery challans were signed illegibly without disclosure of identity or designation - Whether the appellant is entitled to avail Cenvat Credit on invoices issued by fake/non-existent suppliers - HELD - The Rule 7(2) of the Cenvat Credit Rules casts a duty upon credit availers to take all reasonable steps to ensure inputs are duty-paid and to verify the identity and existe... [Read more]

Central Excise - Cenvat Credit on invoices of bogus/non-existent suppliers, Invocation of extended period of limitation - The invoices showed abnormally high values without indicating fabric width or variety. Multiple suppliers shared the same address, delivery challans were signed illegibly without disclosure of identity or designation - Whether the appellant is entitled to avail Cenvat Credit on invoices issued by fake/non-existent suppliers - HELD - The Rule 7(2) of the Cenvat Credit Rules casts a duty upon credit availers to take all reasonable steps to ensure inputs are duty-paid and to verify the identity and existence of suppliers. The appellant failed to satisfy this requirement by not conducting proper verification of supplier identity and genuineness of transactions - The invoices themselves displayed multiple red flags including abnormally inflated values, absence of fabric specifications, common addresses among different suppliers, illegible signatures on delivery challans without identity disclosure, and absence of transport details. These circumstances collectively demonstrate that the appellant knowingly availed credit on false documents - Similar modus operandi was widely prevalent among fabric processors in Surat, as indicated by alert circulars issued by the DGCEI. The concurrent findings of all lower authorities regarding the fake nature of invoices and supplier non-existence support invocation of extended period under Section 11A(1) of the Central Excise Act, 1944 - The appellant's contention regarding principle of natural justice is rejected as the request for documents was made after adjudication order and was never raised during the show cause notice stage - The impugned order confirming recovery of availed Cenvat Credit along with interest and equal penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 is upheld – The appeal is dismissed [Read less]

Customs - Customs Broker Licensing Regulations, 2013 - The licence was initially suspended, then revoked, and thereafter a show cause notice was issued proposing revocation of licence and forfeiture of security deposit. The inquiry officer established violations of Regulations 11(a), 11(b), 11(n) and 17(9) of the Customs Broker Licensing Regulations, 2013 – HELD - The materials on record sufficiently establish failure of due diligence, supervision and verification expected under the regulations - The statements recorded under Section 108 of the Customs Act indicate that Delhi operations relating to customs clearance acti... [Read more]

Customs - Customs Broker Licensing Regulations, 2013 - The licence was initially suspended, then revoked, and thereafter a show cause notice was issued proposing revocation of licence and forfeiture of security deposit. The inquiry officer established violations of Regulations 11(a), 11(b), 11(n) and 17(9) of the Customs Broker Licensing Regulations, 2013 – HELD - The materials on record sufficiently establish failure of due diligence, supervision and verification expected under the regulations - The statements recorded under Section 108 of the Customs Act indicate that Delhi operations relating to customs clearance activities were substantially coordinated through intermediaries with inadequate supervision by the licence holder. The evidence further indicates that exporters connected with the disputed exports were processed without adequate verification of antecedents and credentials, and the customs work was being carried out through freight forwarding associates and G-card holders whose activities were not effectively monitored - While the evidence falls short of conclusively establishing deliberate collusion, sharing of drawback amounts, or conscious participation in fraudulent scheme, permitting customs work to be carried out through inadequately supervised intermediaries and failure to properly verify exporters constitute serious lapses attracting disciplinary action under CBLR - The Regulation 20(7) confers discretion upon the adjudicating authority either to revoke licence or impose lesser penal consequences depending upon the gravity of violations established in a given case. The adjudicating authority consciously refrained from revoking the licence after noticing absence of conclusive evidence establishing deliberate collusion, and instead exercised discretion by ordering forfeiture of security deposit, which in the facts and circumstances cannot be said to be arbitrary, disproportionate or contrary to law - The appeal filed by the customs broker stands dismissed, and the departmental appeals challenging revocation of suspension and non-revocation of licence are also dismissed – The appeal is disposed of [Read less]

Service Tax - GTA Service, Sub-contractor liability under Reverse Charge Mechanism – appellant engaged in steamer agency and port logistics arranged transportation of cargo on behalf of a principal contractor and paid freight charges to transporters without discharging service tax – Dept initiated proceedings invoking the extended period, contending that the company was a person liable to pay freight under Rule 2(1)(d)(v) of the Service Tax Rules, 1994, and therefore liable to discharge service tax under the RCM applicable to GTA services - Whether a company that arranges vehicles and coordinates cargo movement on beha... [Read more]

Service Tax - GTA Service, Sub-contractor liability under Reverse Charge Mechanism – appellant engaged in steamer agency and port logistics arranged transportation of cargo on behalf of a principal contractor and paid freight charges to transporters without discharging service tax – Dept initiated proceedings invoking the extended period, contending that the company was a person liable to pay freight under Rule 2(1)(d)(v) of the Service Tax Rules, 1994, and therefore liable to discharge service tax under the RCM applicable to GTA services - Whether a company that arranges vehicles and coordinates cargo movement on behalf of a principal contractor can be treated as an independent GTA and liable to discharge service tax under the RCM when the principal contractor has already discharged service tax on the transportation component – HELD - Mere routing of freight payments through a sub-contractor or temporary handling of freight disbursements cannot automatically render it liable as a person liable to pay freight under Rule 2(1)(d)(v), particularly when documentary evidence consistently establish that the company merely incurred expenditure in a representative capacity on behalf of the principal contractor – Under Section 65(50b) of the Finance Act, 1994, issuance of consignment note is an essential statutory attribute of a Goods Transport Agency, and since the appellant never issued consignment notes in its own name and the consignment notes were issued only by the principal contractor which dealt with customers and discharged service tax on the transportation component, the foundational requirement for levy under GTA service itself is absent – Further, once the Dept was informed about the sub-contracting arrangement and discharge of service tax by the principal contractor, it was duty-bound to verify the records of the principal contractor before proceeding against the company, and failure to conduct such verification cannot be used against the assessee in a revenue-neutral situation - The impugned demand is set aside and the appeal is allowed [Read less]

Customs - Valuation - Rejection of Declared Transaction Value under Rule 12 of the Customs Valuation Rules, 2007 and re-determination under Rule 5 – HELD - The rejection of declared transaction value cannot be sustained merely on the ground that it appears lower than certain other imports without producing reliable evidence demonstrating that the declared value is incorrect or that additional consideration has flowed from the importer to the supplier. The acceptance of enhanced value at the time of clearance under compulsion to secure release of goods does not preclude the importer from subsequently challenging the same,... [Read more]

Customs - Valuation - Rejection of Declared Transaction Value under Rule 12 of the Customs Valuation Rules, 2007 and re-determination under Rule 5 – HELD - The rejection of declared transaction value cannot be sustained merely on the ground that it appears lower than certain other imports without producing reliable evidence demonstrating that the declared value is incorrect or that additional consideration has flowed from the importer to the supplier. The acceptance of enhanced value at the time of clearance under compulsion to secure release of goods does not preclude the importer from subsequently challenging the same, as there is no estoppel in taxation matters. Where goods consist of mixed consignments of used garments which inherently vary in quality, condition and composition, adoption of a uniform benchmark value without establishing comparability of goods in terms of quality, condition or commercial level is contrary to the scheme of the valuation rules. In the absence of any detailed comparison or market survey conducted to appraise the value, rejection of transaction value is liable to be set aside - The enhancement of value carried out is set aside and the declared value is ordered to be accepted – The appeal is partly allowedrnrnConfiscation - Restricted Goods without License - Import of second-hand garments restricted under Foreign Trade Policy without valid DGFT license – HELD - Import of goods without requisite authorization or license under the Foreign Trade Policy constitutes a violation of import policy and renders the goods liable to confiscation under Section 111(d) of the Customs Act, 1962. While procedural requirements such as fumigation and compliance with health and safety regulations are prescribed, these do not override the substantive requirement under the Foreign Trade Policy that import of second-hand goods other than capital goods is restricted and requires valid license. However, in the absence of any evidence of misdeclaration with respect to description, quantity or value, confiscation under Section 111(m) is not sustainable. Accordingly, confiscation is upheld only under Section 111(d) of the Customs Act.rnrnRedemption Fine - Section 125 of the Customs Act, 1962 - Proportionality and quantum – HELD - Redemption fine should correspond broadly to the margin of profit available to the importer and should not be fixed arbitrarily without evidence. In the absence of any deliberate misdeclaration or intent to evade duty, and given the nature of trade in used clothing which is highly heterogeneous and involves limited and uncertain profit margins, fixation of redemption fine at a higher percentage is not justified. The socially sensitive end-use of goods, coupled with the absence of any reliable market study or evidence of higher realizable value, is relevant while determining quantum of fine. Redemption fine must be reasonable and proportionate to the circumstances of the case and should bear nexus to the margin of profit without assuming a punitive character. Accordingly, redemption fine at 10 per cent of the declared invoice value is held to be fair, reasonable and proportionate to the facts and circumstances of the case. [Read less]

Customs - Limitation in appeals under Customs Act – Rejection of appeals as time-barred without determining date of communication – HELD - The rejection of appeals as time-barred cannot be sustained because the impugned orders lack any discussion or evidence regarding the crucial date of communication, rendering the conclusion regarding delay speculative and unsustainable in law. Further, there is no methodology or working provided for arriving at the alleged delay, and the uniform application of a ninety-one-day delay across all cases reflects a mechanical and non-reasoned approach that violates principles of natural ... [Read more]

Customs - Limitation in appeals under Customs Act – Rejection of appeals as time-barred without determining date of communication – HELD - The rejection of appeals as time-barred cannot be sustained because the impugned orders lack any discussion or evidence regarding the crucial date of communication, rendering the conclusion regarding delay speculative and unsustainable in law. Further, there is no methodology or working provided for arriving at the alleged delay, and the uniform application of a ninety-one-day delay across all cases reflects a mechanical and non-reasoned approach that violates principles of natural justice. The appellant's contention regarding computation of limitation was not examined by the lower appellate authority, resulting in non-speaking orders contrary to principles of natural justice. Accordingly, the impugned Orders-in-Appeal are set aside and the matter is remanded to the Commissioner (Appeals) to ascertain the actual date of communication, recompute the limitation period in accordance with law, and consider the applicability of the condonable period, following which the appeals shall be admitted and decided on merits if delay is found within condonable limits – The appeals are allowed by remand [Read less]

Service Tax – Taxability of Corporate Guarantee without consideration - Levy of service tax on Corporate Guarantee at an arbitrary rate of 3.5 percent on the amount of guarantee, without any consideration being charged by the appellant - Whether the provision of Corporate guarantee by a company to its associated enterprises, without charging any commission, interest, or fees, constitutes a taxable service under the Finance Act, 1994 and leviable to service tax – HELD - The provision of corporate guarantee without consideration does not constitute a taxable service. The definition of service under Section 65B(44) of the... [Read more]

Service Tax – Taxability of Corporate Guarantee without consideration - Levy of service tax on Corporate Guarantee at an arbitrary rate of 3.5 percent on the amount of guarantee, without any consideration being charged by the appellant - Whether the provision of Corporate guarantee by a company to its associated enterprises, without charging any commission, interest, or fees, constitutes a taxable service under the Finance Act, 1994 and leviable to service tax – HELD - The provision of corporate guarantee without consideration does not constitute a taxable service. The definition of service under Section 65B(44) of the Finance Act, 1994 mandates that an activity must be carried out by a person for another for consideration to qualify as a taxable service - In the present case, the SCN itself acknowledges that no commission, interest, or fees were charged by the appellant for providing the corporate guarantee. The appellant is neither a banking company nor a financial institution, and the activity of providing guarantee without any consideration does not fall within the definition of banking and other financial services - The reliance on non-monetary benefits cannot extend to ascertainment of service as such benefits are relevant only for determining assessable value, not for determining whether a service exists. Since no consideration flows from the beneficiary to the guarantor, the essential element required to constitute a taxable service is absent - The demand for service tax on corporate guarantee is quashed and the appeal is allowed [Read less]

Service Tax - Invocation of extended period of limitation based on suppression of facts when a similar show cause notice has already been issued for an earlier period on identical grounds - Whether the extended period of limitation can be invoked to issue a second show cause notice based on suppression of facts when an earlier show cause notice on the same issue and grounds has already been issued to the assessee for a preceding period, with both notices containing identical or similar factual foundations – HELD - The extended period of limitation cannot be invoked to issue the second show cause notice. When the relevant... [Read more]

Service Tax - Invocation of extended period of limitation based on suppression of facts when a similar show cause notice has already been issued for an earlier period on identical grounds - Whether the extended period of limitation can be invoked to issue a second show cause notice based on suppression of facts when an earlier show cause notice on the same issue and grounds has already been issued to the assessee for a preceding period, with both notices containing identical or similar factual foundations – HELD - The extended period of limitation cannot be invoked to issue the second show cause notice. When the relevant facts came into the knowledge of the Department at the time of issuing the first SCN, the Department could not subsequently issue another SCN invoking the extended period of limitation on the same or similar facts, as this would amount to treating the facts as suppressed by the assessee when they were already in the knowledge of the authorities - The comparison of the computation tables in both notices revealed that the demand was identically made on the basis of similar documents, thereby negating any element of fresh suppression. Since there was no suppression of facts, the penalty imposed under Sections 77(1)(c) and 78 of the Finance Act, 1994, could not be sustained either - The impugned order is set aside, and the show cause notice issued invoking the extended period of limitation is quashed - The appeal is allowed [Read less]

Service Tax on Gold Bullion Consignment - Profit Margin as Taxable Value - Appellant imports gold bullion on consignment basis pursuant to RBI Master Circular, retains the gold in its vaults, and sells it at a later date, settling with the supplier based on the difference between the sales price and import price, which constitutes the bank's profit margin - Whether the profit margin earned by the bank from the sale of imported gold bullion can be subjected to service tax on the ground that the bank acts as a consignment agent to the foreign supplier – HELD - No service is being rendered by the bank to the supplier; rathe... [Read more]

Service Tax on Gold Bullion Consignment - Profit Margin as Taxable Value - Appellant imports gold bullion on consignment basis pursuant to RBI Master Circular, retains the gold in its vaults, and sells it at a later date, settling with the supplier based on the difference between the sales price and import price, which constitutes the bank's profit margin - Whether the profit margin earned by the bank from the sale of imported gold bullion can be subjected to service tax on the ground that the bank acts as a consignment agent to the foreign supplier – HELD - No service is being rendered by the bank to the supplier; rather, the bank purchases and sells the gold bullion and after sale settles with the supplier based on the payment terms stipulated in the consignment agreement - Under the consignment arrangement, the gold remains in the possession and ownership of the supplier until the gold is purchased and paid for by the bank, and the bank merely earns a profit margin on the resale of the gold coins - Although the definition of 'Clearing and Forwarding Agency' includes consignment agent, in the instant case no such service is being rendered by the bank to the supplier and no consideration is being received from the supplier for any service. Therefore, the profit margin cannot be considered as the taxable value as there is no service being rendered by the bank as a consignment agent - The impugned order levying service tax on the profit margin is set aside and the appeal is allowed [Read less]

Service Tax - Taxability of Complimentary accommodation services provided to employees without consideration – Audit observed that the appellant provided complimentary rooms to staff members who were staying at the hotel but not paying service tax on the accommodation services provided free of cost to staff members - Whether service tax is payable on complimentary rooms provided by a hotel to its employees during their duty period – Demand for reversal of input tax credit for inputs used in providing such complimentary services – HELD - Since no consideration is received by the hotel for providing complimentary accom... [Read more]

Service Tax - Taxability of Complimentary accommodation services provided to employees without consideration – Audit observed that the appellant provided complimentary rooms to staff members who were staying at the hotel but not paying service tax on the accommodation services provided free of cost to staff members - Whether service tax is payable on complimentary rooms provided by a hotel to its employees during their duty period – Demand for reversal of input tax credit for inputs used in providing such complimentary services – HELD - Since no consideration is received by the hotel for providing complimentary accommodation services, no service tax is payable - The adjudicating authority has taken a contradictory stance by holding that no consideration has been received and therefore no service tax is payable, while simultaneously holding that the service is an exempted service and requiring reversal of input tax credit - A service must have consideration to be taxable or exempt, and since there is no consideration received for the complimentary accommodation, the service cannot be classified as either taxable or exempted. The revenue cannot place itself in two boats simultaneously by denying taxation on the ground of no consideration while demanding reversal of input tax credit on the basis of exemption. Therefore, the question of reversal of input tax credit does not arise, and the demand for recovery of input tax credit from the assessee is not sustainable - The impugned order is set aside to the extent it required reversal of input tax credit - The appeal filed by the assessee is allowed and the appeal filed by the revenue is dismissed [Read less]

GST - Transitional input tax credit - Procedural defect – Denial of transitional input tax credit claimed under Section 140 of the CGST Act on physical stock available as on 30.06.2017 - Demand without considering the petitioner's replies submitted on multiple occasions. The order was uploaded of which the petitioner remained unaware. The respondent authority froze the petitioner's bank account through an attachment notice – HELD - The assessment order cannot be sustained in its present form as the respondent authority has not carried out the requisite exercise of substantiating the availability and liquidation of stoc... [Read more]

GST - Transitional input tax credit - Procedural defect – Denial of transitional input tax credit claimed under Section 140 of the CGST Act on physical stock available as on 30.06.2017 - Demand without considering the petitioner's replies submitted on multiple occasions. The order was uploaded of which the petitioner remained unaware. The respondent authority froze the petitioner's bank account through an attachment notice – HELD - The assessment order cannot be sustained in its present form as the respondent authority has not carried out the requisite exercise of substantiating the availability and liquidation of stock as on 30.06.2017 through proper documentary evidence and comparison with subsequent return filings. The petitioner had already availed input tax credit that was transitioned under section 140 of the GST enactments, and the blanket denial without forensic examination represents a procedural defect - A proper examination should have compared the stock position on 30.06.2017 with GSTR-2A filings for succeeding months to determine the correctness of the transitional credit claim. The authority's failure to consider the petitioner's detailed replies submitted during the proceedings further vitiates the order - The writ petition is disposed of by remitting the case back to the respondent authority for fresh consideration and de novo adjudication on merits [Read less]

GST - Jurisdiction of State Tax Authority to initiate enforcement action against Central GST registered taxpayer – Petitioner, registered under Central GST authorities was subjected to an enforcement inspection by State Tax authorities on the place of business, following which assessment orders were passed under Section 74 of the CGST Act - Whether State Tax authorities have the jurisdiction to initiate enforcement action against a taxpayer who is registered under Central GST authorities despite the taxpayer's registration being with Central authorities – HELD - The intelligence-based enforcement action can be initiate... [Read more]

GST - Jurisdiction of State Tax Authority to initiate enforcement action against Central GST registered taxpayer – Petitioner, registered under Central GST authorities was subjected to an enforcement inspection by State Tax authorities on the place of business, following which assessment orders were passed under Section 74 of the CGST Act - Whether State Tax authorities have the jurisdiction to initiate enforcement action against a taxpayer who is registered under Central GST authorities despite the taxpayer's registration being with Central authorities – HELD - The intelligence-based enforcement action can be initiated by either Central or State Tax administrations notwithstanding the taxpayer's assignment to the other administration. In view of Supreme Court judgment in Armour Security (India) Limited, there exists no error in the State authorities initiating action as they are well within their jurisdiction to do so - Where disputed questions of facts are involved, the issue of classification cannot be adjudicated under writ jurisdiction. The remedy available to an aggrieved taxpayer is to file an appeal before the appellate authority and raise all grounds, including the question of jurisdiction before the appellate authority - The writ appeals are dismissed [Read less]

GST – Imposition of Late fee and Penalty for non-filing of Annual Returns withing prescribed time limit - Imposition of General Penalty under Section 125 of the CGST Act, 2017 – Non-response to Show Cause Notice – Petitioner was assessed for non-filing of annual GST returns within the prescribed timeline – Imposition of both General Penalty under Section 125 and Late Fee under Section 47(2) of the CGST Act - Whether the Proper Officer is justified in imposing General Penalty under Section 125 of the GST Act alongside Late Fee for failure to file GSTR-9 and GSTR-9C within the prescribed period - HELD - The impositi... [Read more]

GST – Imposition of Late fee and Penalty for non-filing of Annual Returns withing prescribed time limit - Imposition of General Penalty under Section 125 of the CGST Act, 2017 – Non-response to Show Cause Notice – Petitioner was assessed for non-filing of annual GST returns within the prescribed timeline – Imposition of both General Penalty under Section 125 and Late Fee under Section 47(2) of the CGST Act - Whether the Proper Officer is justified in imposing General Penalty under Section 125 of the GST Act alongside Late Fee for failure to file GSTR-9 and GSTR-9C within the prescribed period - HELD - The imposition of General Penalty under Section 125 cannot be countenanced in view of the statutory provision that General Penalty can be imposed only in the absence of any other penalty under the GST Act - Since the assessee is liable to pay Late Fee under Section 47(2) of the Act, the conditions for imposing General Penalty cease to exist. Once a Late Fee is levied, the imposition of General Penalty becomes statutorily impermissible - The General Penalty imposed under Section 125 is set aside. The assessee is directed to pay only the Late Fee - The writ petition is partly allowed [Read less]

GST - Cancellation of Registration on the ground of violation of Rule 10A (Bank details) read with Rule 21(d) of the CGST Rules, 2017 - The show-cause notice issued with only seven working days to respond, and the petitioner was not provided with a specific date and place for appearance. Subsequently, without waiting for the response period to expire, the Proper Officer passes an order of cancellation – HELD - Where there is a contravention of Rule 10A by a registered person, the specific statutory procedure prescribed under Rule 21A(2A)(b) of the CGST Rules must be followed. This procedure mandates that the registration... [Read more]

GST - Cancellation of Registration on the ground of violation of Rule 10A (Bank details) read with Rule 21(d) of the CGST Rules, 2017 - The show-cause notice issued with only seven working days to respond, and the petitioner was not provided with a specific date and place for appearance. Subsequently, without waiting for the response period to expire, the Proper Officer passes an order of cancellation – HELD - Where there is a contravention of Rule 10A by a registered person, the specific statutory procedure prescribed under Rule 21A(2A)(b) of the CGST Rules must be followed. This procedure mandates that the registration shall first be suspended and the registered person shall be intimated in Form GST REG-31, not Form GST REG-17, electronically or on the common portal or by email, and allowing thirty days time to respond - When the manner of doing a particular act when specifically prescribed under statute, must be done in that manner only and in no other manner. The show-cause notice in the present case is in Form GST REG-17, which is the general form for cancellation under Rule 22, and provides only seven working days instead of the thirty days mandated for Rule 10A violations - Additionally, the impugned order of cancellation is passed before the expiry of thirty days from the date of the SCN. By not affording the statutorily prescribed thirty-day period in the correct form, the Proper Officer deprives the petitioner of an effective and reasonable opportunity of being heard and violates both Section 29 of the CGST Act and Rule 10A read with Rule 21A(2A)(b) of the CGST Rules, 2017 - The respondent authorities are directed to restore the GST registration of the petitioner - The writ petition stands allowed [Read less]

GST – Maharashtra AAR – Classification of supply of warehoused goods to vessels as ship stores – Applicant, a bonded warehouse operator, imports goods storing them in its bonded warehouse under Section 58A of the Customs Act, 1962 and supplies these warehoused goods to foreign-going merchant vessels on foreign run, Indian Navy ships, and Indian Coast Guard ships, against an intent to purchase or purchase order, with physical transfer occurring within Indian ports and territorial waters - Whether the outward supplies of warehoused goods made from the bonded warehouse to ocean-going merchant vessels on foreign run, Ind... [Read more]

GST – Maharashtra AAR – Classification of supply of warehoused goods to vessels as ship stores – Applicant, a bonded warehouse operator, imports goods storing them in its bonded warehouse under Section 58A of the Customs Act, 1962 and supplies these warehoused goods to foreign-going merchant vessels on foreign run, Indian Navy ships, and Indian Coast Guard ships, against an intent to purchase or purchase order, with physical transfer occurring within Indian ports and territorial waters - Whether the outward supplies of warehoused goods made from the bonded warehouse to ocean-going merchant vessels on foreign run, Indian Navy ships, and Indian Coast Guard ships qualify as "export of goods" under Section 2(5) of the IGST Act, 2017 and thereby as a zero-rated supply under Section 16 of the IGST Act – HELD - To qualify as export of goods under Section 2(5) of the IGST Act, the provision requires a destination-based test of taking goods out of India to a place outside India. Since the recipient vessels are located within the territory of India (including territorial waters and exclusive economic zone as defined in Section 2(56) of the CGST Act, 2017) at the time of supply, and the physical transfer of goods occurs within India, the statutory definition of export is not satisfied - A supply that takes place on Indian soil or in Indian waters does not amount to taking goods out of India to a place outside India. Further, such transactions are covered under paragraph 8(a) of Schedule III to the CGST Act, 2017, read with Section 7(2)(a) thereof, which provides that supply of warehoused goods to any person before clearance for home consumption shall be treated neither as a supply of goods nor as a supply of services. Consequently, these transactions are entirely out of the field of supply upon which the GST levy is founded, and the question of zero-rating does not arise as zero-rating presupposes a supply – The instant transactions do not qualify as export of goods or zero-rated supplies under Section 16 of the IGST Act, 2017, however it is treated as neither a supply of goods nor a supply of services under paragraph 8(a) of Schedule III to the CGST Act read with Section 7(2)(a) thereof – Ordered accordingly [Read less]

GST – Maharashtra AAR - Works contract service - Taxability of construction and transfer of inclusive housing flats reserved under Statutory mandate - Under a statutory resolution mandating inclusive housing, the applicant-developer is obligated to reserve twenty percent of the net plot area for economically weaker sections and lower income group beneficiaries. In exchange for this obligation undertaken at the plan approval stage, the developer receives additional FSI from the local authority. The occupancy certificate for the project is obtained, following which the housing authority identifies allottees through a lotte... [Read more]

GST – Maharashtra AAR - Works contract service - Taxability of construction and transfer of inclusive housing flats reserved under Statutory mandate - Under a statutory resolution mandating inclusive housing, the applicant-developer is obligated to reserve twenty percent of the net plot area for economically weaker sections and lower income group beneficiaries. In exchange for this obligation undertaken at the plan approval stage, the developer receives additional FSI from the local authority. The occupancy certificate for the project is obtained, following which the housing authority identifies allottees through a lottery system and sale agreements are executed at the prescribed rates post-occupancy certificate - Whether the supply of inclusive housing flats to housing authority-identified customers after issuance of the OC constitutes an exempt sale of immovable property or a taxable supply of Works Contract service – HELD - The consideration for the supply comprises two inter-linked limbs: the non-monetary consideration in the form of additional FSI received at the commencement certificate stage and the monetary consideration receivable from allottees post-occupancy certificate - The statutory exception to the classification of construction as a supply of service operates only where entire consideration is received after issuance of the OC. Since a component of consideration, namely the additional FSI, is received at the inception stage and not after the occupancy certificate, the exception is not satisfied – The obligation to construct the inclusive housing flats originates at the plan sanction stage as a statutory pre-condition for project approval and represents a bilateral exchange or quid pro quo arrangement. The execution of sale agreements post-occupancy certificate is merely the final documentation of a transaction whose legal character was fixed at inception. The substance of the transaction must prevail over its form, and a construction obligation undertaken at inception cannot shed its character merely because final documentation occurs later - The additional FSI constitutes valuable development rights flowing from the local authority in respect of and for inducement of the developer's undertaking to construct and transfer the designated flats. The identification of individual allottees through administrative lottery mechanisms does not affect the character of the supply as Works Contract service - The supply of inclusive housing flats to housing authority-identified allottees is a taxable supply of works contract service under Section 2(119) read with schedule II paragraph 5(b) of the CGST Act, 2017, and is not excluded by Schedule III paragraph 5 or by the exception to Schedule II paragraph 5(b) – Ordered accordinglyrnrn rnrnValuation of inclusive Housing Flats - Open market value versus administered price - Whether the value of supply should be determined with reference to the Government-prescribed administered price for inclusive housing flats or the open market value of comparable flats sold to non-inclusive housing customers – HELD – The Section 15(1) of the CGST Act which recognizes transaction value where price is the sole consideration, is not applicable because the consideration comprises two limbs. Consequently, valuation proceeds under Section 15(4) read with Rule 27 of the CGST Rules, 2017, which applies where consideration is not wholly in money - The subsidy exclusion under section 15(2)(e) does not apply because no disbursement or amount is paid to the developer in the nature of a subsidy, the additional FSI is granted by the local authority and not the State government as required by the statute. The floor space index constitutes consideration paid in exchange for the developer's obligation and not a subsidy - The value of supply is to be determined under Rule 27(a) as the open market value being the price at which comparable flats are sold by the developer to non-inclusive housing buyers in the same project on an arms-length basis and not the housing authority-prescribed administered price. [Read less]