More Judgements

Home

More Judgements

2026-VIL-1837-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise - Denial of CENVAT credit availed prematurely on capital goods by an under-construction unit and transferred to another unit under Rule 12A of CENVAT Credit Rules, 2004 - Appellant, a Large Taxpayer Unit, had a manufacturing unit under construction which availed CENVAT credit on imported capital goods before receiving them in its factory and availed one hundred per cent credit in the same financial year, and transferred the credit by challan to its other unit, which utilised it for payment of duty - Revenue alleged that the credit was taken without receipt of capital goods, that the restriction under Rule 12A(4) as amended was wilfully violated, and that the recipient unit did not ensure eligibility, and the demand was confirmed against both units - Appellant contended that the lapse was an unintended oversight, that the recipient unit had reversed the credit before the SCN and informed the Department, and that the demand amounted to recovery twice - Whether the demand confirmed in the impugned order is in accordance with law - HELD - The recipient unit had reversed the transferred credit much before the SCN on being informed of its ineligibility, and the transferor unit, though eligible, did not take credit of the disputed amount, so the total denial of credit in its hands is not in accordance with law. Upon commencement of production the transferor unit was eligible for the credit, and at the most there was premature availment prior to receipt of the capital goods, which is a procedural lapse that cannot take away a substantive right where eligibility is not in dispute, as held by this Bench and other Benches of the Tribunal. As regards availment of full credit in the first year instead of fifty per cent, the Hon'ble Bombay High Court has held that where the balance credit wrongly taken is not utilised before the subsequent financial year commences, no prejudice is caused to Revenue. The Commissioner himself admitted that the Appellant is eligible for the balance credit in subsequent financial years, and the other grounds raised became academic - The denial of CENVAT credit and the confirmed demand cannot be sustained, the impugned order is set aside and the appeal is allowed [Read less]

2026-VIL-1835-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Export of service - Commission received in foreign exchange for procurement of orders for foreign suppliers' goods sold in India - Appellant procured orders and enquiries from customers in India, assisted with liaisoning, documents, tenders and complaints, and received commission in convertible foreign exchange from foreign suppliers who exported goods directly to Indian customers, claiming the activity as export of service - Department alleged that the activity was Business Auxiliary Service consumed in the taxable territory, that the place of provision condition under Rule 6A(d) of the Service Tax Rules was not satisfied after 01.07.2012, and confirmed the demand for July 2012 to March 2013 with interest and penalty - Appellant contended that it had no privity of contract with Indian customers and that its foreign clients were the recipients - Whether the commission received from foreign suppliers is taxable or amounts to export of service under Rule 6A - HELD - The only condition alleged to be violated was that the place of provision must be outside India. Under Rule 3 of the Place of Provision of Services Rules, the place of provision is the location of the recipient, being the person on whose instructions the service is provided, who is obliged to pay and whose need is satisfied by the service. The destination of service is decided by the place of consumption and not the place of performance, and a third party served at the behest of the recipient is not the consumer. The foreign suppliers engaged the Appellant, paid commission in convertible foreign exchange and were the recipients, while the Department produced no evidence that the Appellant had any role towards Indian customers - The activity amounts to export of service, violation of Rule 6A(d) was wrongly alleged, and the demand of service tax is set aside - Invocation of extended period of limitation on commission income claimed as export of service - SCN invoked the extended period for July 2012 to March 2013, whereas Appellant regularly filed returns declaring the activity as export of service under a bona fide belief that it was exempt - Whether the extended period was rightly invoked on the allegation of suppression - HELD - Appellant declared its activity as export of service in its returns, so suppression cannot be alleged. Mere failure to declare does not amount to wilful suppression, as a positive act with intent to evade tax is required, and the Department produced no evidence of any such act - The extended period was wrongly invoked, the demand is barred by limitation, the impugned order is set aside and the appeal is allowed. [Read less]

2026-VIL-1836-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Inclusion of value of air tickets sold by tour operator in taxable value of Tour Operator Service - Appellant, registered as a tour operator, booked and sold air tickets to its clients under invoices showing the amount as sale of air tickets, and the Department held that booking air tickets was a taxable service and that the amount collected was includible in the taxable value, as the value adopted by Appellant for payment of service tax varied from the invoice value - The demand was confirmed with interest and penalty under Section 76 of the Finance Act, 1994, and upheld by FAA - Appellant contended that the dispute pertained only to trading in air tickets bought from travel agents and sold to customers with or without profit, and that the issue was settled in its favour by the Tribunal in its own earlier cases - Whether Appellant is liable to include the value of air tickets in the taxable value of the services rendered by it - HELD - The issue stands decided in favour of Appellant by several Final Orders of this Tribunal in its own case, which held that where the activity is mere trading in air tickets bought from travel agents and sold to customers, with other activities admittedly taxed and paid, there being no allegation that Appellant was a member or agent of the air transport association or earned commission from airlines, and nothing in the definition of tour operator service suggesting that trading in air tickets per se attracts service tax, the demand on consideration for booking of tickets is not a taxable event. Revenue has not shown that the earlier Final Order has not attained finality, and where the dispute regarding the nature of the transaction and its exigibility to service tax between the same parties has attained finality, and there is no allegation or evidence that the present transactions are of a different nature, that is another compelling reason to decide in favour of Appellant - Following the coordinate Bench Final Orders, the impugned order is set aside and the appeal is allowed [Read less]

2026-VIL-1834-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Taxability of secondment of expatriate personnel by foreign group companies to Indian entity as Manpower Recruitment or Supply Agency Service - Appellant received personnel deputed by foreign group companies under an International Mobility Agreement and made payments towards their remuneration without discharging service tax - Department held the activity taxable as Manpower Supply Agency Service up to June 2012 and as a declared service under Section 65B(44) from July 2012, with liability on Appellant under reverse charge - Appellant contended that a genuine employer-employee relationship existed as salary was paid through its payroll, TDS was deducted and the personnel worked under its exclusive control, and that the Hon'ble Supreme Court decision was distinguishable as no mark-up was charged, relying on a High Court decision under the GST regime - Whether the secondment constituted supply of manpower by the foreign group companies, taxable under Section 65(68) and 65(105)(k) up to 30.06.2012 and under Section 65B(44) thereafter - HELD - The nature of a secondment arrangement must be determined from the agreements and the substance of the transaction and not from its nomenclature. The International Mobility Agreement preserves the continuing employment with the Home Unit, which prevails in case of conflict, the assignment is temporary, and the reference salary, social security, pension, governing law and termination entitlements remain tied to the foreign unit. Operational control, payment through the Indian payroll and TDS deduction cannot be considered in isolation, since the question is whether in substance the foreign group company made its personnel available to the Appellant. The Hon'ble Supreme Court has held on similar facts that the overseas entity provides manpower supply service, which has been followed by this Tribunal and a Larger Bench. Absence of a mark-up on salary reimbursements does not by itself negate the service or the consideration. The decision under the GST regime relates to a different statutory context and cannot displace the binding decision governing the service tax regime. From 01.07.2012 the supervision of secondees by the Appellant does not bring the underlying supply by the foreign group companies within the exclusion for services provided by an employee to an employer under Section 65B(44) - The arrangement is held to be supply of manpower, and the finding of taxability and classification in the impugned order are upheld - Invocation of extended period of limitation and penalty under Section 78 of Finance Act, 1994 in respect of secondment of personnel - Revenue alleged suppression with intent to evade tax for the period from July 2012 onwards, while Appellant contended that the issue was interpretational and became clear only after the decision of the Hon'ble Supreme Court, and Revenue contended that revenue neutrality is untenable as reverse charge tax must be paid in cash - Whether the extended period under the proviso to Section 73(1) is invocable, whether penalty under Section 78 is sustainable, and whether revenue neutrality is tenable - HELD - Mere non-payment of duty, without fraud, suppression or wilful misstatement, does not justify the extended period, and wilful default requires a positive act revealing intent to evade duty. The dispute is interpretational, the period in dispute precedes the decision of the Hon'ble Supreme Court which itself restricted the demand to the normal period, and this principle has been followed by this Tribunal and the Larger Bench, which also set aside the penalties. Revenue has not demonstrated any deliberate attempt to evade tax. Entitlement to CENVAT credit does not extinguish the reverse charge liability payable in cash, but revenue neutrality is relevant to intent to evade tax and supports setting aside the extended period and penalty - The extended period is not invocable, the demand from July 2012 is restricted to the normal period, and the matter is remanded solely for verification and re-quantification of the demand and interest. The penalty under Section 78 is set aside, interest under Section 75 is payable on the surviving tax, the claim for refund of the amount paid under protest is to be considered after verification, and the Appellant's appeal is partly allowed - Departmental appeal against dropping of demand for the period prior to July 2012 on secondment of personnel - Adjudicating authority dropped the demand for the period up to June 2012, and Revenue contended that the temporary deputation constituted Manpower Recruitment or Supply Agency Service and that the Board Circular was not considered - Whether the demand dropped for the period prior to July 2012 can be restored - HELD - Although the secondment was taxable as Manpower Recruitment or Supply Agency Service even prior to 01.07.2012, the departmental appeal cannot succeed unless the demand survives the normal period of limitation. The SCN was issued on 14.10.2014 and the extended period cannot be invoked, so the demand for the period prior to July 2012 falls beyond the normal period - The demand dropped cannot be restored and the Department's appeal is dismissed. [Read less]

2026-VIL-268-GSTAT-DEL | Tribunal SGST

GST - Maintainability of Revenue appeal - Revenue challenge to computation of extended due date under Notification No. 13/2022-Central Tax as travelling beyond the SCN and the Order-in-Original - Department appeal against an Order-in-Appeal that annulled an Order-in-Original rejecting a refund claim of excess tax paid on an advance solely on limitation - SCN and Order-in-Original had both proceeded on the ground that the claim was time-barred under Section 54 - Respondent contended that the Department raised for the first time before the Tribunal a case on the computation of the extended due date, which was never put to it at the show cause or adjudication stage - Whether the challenge to the computation of the extended due date renders the appeal and the review order not maintainable - HELD - A show cause notice is the foundation of the Department's case. The principle restrains the introduction of a new charge, classification or basis of demand never put to the assessee. It does not preclude the Department from correcting in appeal the arithmetic underlying a ground of rejection that was in issue throughout - Limitation under Section 54 was the ground of rejection in the SCN and the Order-in-Original, and the computation under the Notification was placed on record by the Respondent itself in its reply to the SCN - Rule 112 and Rule 45 restrict production of additional evidence and not legal argument on facts already on record and undisputed between the parties - The maintainability objection is rejected - Validity of annulment of Order-in-Original by the FAA - Order-in-Appeal annulling the Order-in-Original solely for violation of natural justice without recording any finding on limitation - Adjudicating authority had disposed of the reply to the SCN in a single sentence as not admissible and extracted the Notification on limitation without applying it, and the appellate authority annulled the order for non-consideration of the reply without deciding the limitation question or giving reasons - Whether the Order-in-Appeal is sustainable in annulling the Order-in-Original solely on natural justice without recording any finding on limitation - HELD - A quasi-judicial authority is required to pass a reasoned and speaking order dealing with the submissions made, and recording of reasons is itself a requirement of natural justice. The Order-in-Original was vitiated by non-consideration of the reply, to which extent the appellate authority was right. The Order-in-Appeal, however, did not record whether the Notification applied, did not compute the period of limitation, did not decide the relevant date for the original and re-filed applications and recorded no conclusion on whether the claim was within time -Where limitation depends on undisputed dates and a notification, the appellate authority was bound to decide it under Section 107(11) and (12), and the absence of the Department at the hearings did not relieve it of that duty - An annulment made so that the original authority looks at the matter again is a remand in substance, which Section 107(11) forbids - The Order-in-Appeal is not a speaking order and does not conform to Section 107(11) and (12), the annulment was justified in principle but the manner of disposal required improvement - Limitation for refund under Section 54(1) read with Notification No. 13/2022-Central Tax and effect of deficiency memos - Refund of excess tax paid on advance - Relevant date being the date of payment of tax, which fell within the period from 01.03.2020 to 28.02.2022 excluded by the Notification - Respondent first computed the extension by counting days from the date of receipt of the advance, then claimed before the Tribunal that the full two-year period commenced afresh on 01.03.2022, while the Department contended that only the days from the relevant date to the end of the excluded window stood added, making the original application one day late - Whether the original application was within time on a correct computation, and what effect the deficiency memos have on limitation - HELD - Estoppel does not operate against a statute or the Tribunal, and the shifting stand of the Respondent neither advances nor defeats its case. The correct computation being a pure question of law on admitted facts - Where limitation would have expired within the window, the Supreme Court gave 90 days from 01.03.2022, but that direction does not apply where the normal two-year period did not expire within the window. Since the relevant date fell within the excluded window and no part of the two years had run, the entire period stood excluded and the two years were to be reckoned afresh from 01.03.2022 - Applying Section 9 of the General Clauses Act, 1897, the last date for filing was 29.02.2024, which was corroborated by the later computation of the adjudicating authority itself - The doctrine of relation-back, under which a rectified application after a deficiency memo is a continuation of the original, operates only where the original application was itself within time, and since the original application was filed on the last day, the re-filed applications relate back to it and the deficiency memos have no independent bearing on limitation - Original refund application held filed within the period prescribed under Section 54(1) as extended, and the question of limitation for the later applications does not survive - Characterisation of GST paid on advance as deposit under mistake of law - Respondent contended that the unadjusted portion of the advance, against which no supply materialised, was a deposit paid under a mistake of law and not tax, so that the limitation in Section 54 did not apply - Whether such amount can be treated as a deposit falling outside the limitation under Section 54(1) - HELD - GST on the advance was discharged through the return as tax properly leviable on receipt of the advance, and it became refundable only on a subsequent event, namely non-materialisation of supply against a part of the advance. Section 54(1) covers any tax paid and any other amount paid, and is the exclusive gateway for refund within the same two-year period, so re-characterisation of the claim as a deposit would render the words any other amount otiose - The amount does not fall outside Section 54 merely because it is described as a deposit, and this finding does not affect the outcome since the claim was within the statutory period - Nature of the two-year period under Section 54(1) - Respondent contended that the two-year period is procedural and capable of relaxation - Whether the two-year period is a procedural requirement capable of relaxation or a substantive condition for refund - HELD - The two-year period is not a rule of practice governing the manner of exercising an available right but a substantive statutory condition of eligibility for refund. The Circular speaks only to minor procedural lapses or non-substantive errors and does not extend to substantive compliance such as limitation - The submission does not assist the Respondent on limitation, and in view of the findings on the other issues the appeal of the Department is dismissed, the annulment is upheld for the reasons recorded by the Tribunal, and the refund application is held filed within the period of limitation prescribed under Section 54(1) as extended - The appeal filed by the appellant/ department is dismissed. [Read less]

2026-VIL-263-GSTAT-PUN | Tribunal SGST

GST - Refund of excess tax paid at a higher rate than the concessional rate applicable to supply to a Government entity - Relevant date for limitation under Section 54(1) of the CGST Act, 2017 - Appellant supplied goods under a composite contract to a Government department and inadvertently charged tax at a higher rate instead of the concessional rate - The mistake came to notice years later when the final settlement invoice applied the concessional rate – Rejection of refund solely on limitation, treating the supply as continuous supply of goods and the date of filing of the return as the relevant date - Appellant contended that in cases of excess payment under mistake the right to refund arises only on discovery of the mistake - Whether the date of filing of the return was rightly determined as the relevant date - HELD - Section 54(1) permits an application before expiry of two years from the relevant date, and the Explanation provides that in any other case the relevant date is the date of payment of tax. The tax having been reported and paid through the return, the relevant date is the date of filing that return - Section 54 does not provide for computing limitation from the date of discovery of a mistake in excess payment of tax. The contention cannot be accepted in the absence of a specific statutory provision - The relevant date was rightly determined - Rejection of refund claim filed beyond two years - Power of the proper officer and the Appellate Authority to sanction refund beyond limitation under Section 54(1) of the CGST Act, 2017 - Appellant contended that excess tax retained by the Department is tax collected without authority of law, so that limitation under Section 54 cannot bar the refund - Whether the refund claim is barred by limitation and whether the proper officer or the Appellate Authority can sanction refund beyond the prescribed period - HELD - The jurisdiction under Articles 226 and 32 does not by itself dispense with statutory restrictions, so it does not support an exception to the limitation under Section 54 - The decision of the Single Bench of the Hon'ble High Court at Karnataka holding the period directory was reversed by the Division Bench, which held that the two year period is mandatory as the Act confers no power to condone delay and the proper officer has no discretion to entertain a belated claim, and that the remedy of a person who misses the period lies under Article 226 with consequential extension of time for action under Sections 73 and 74. Applying that view, neither the proper officer nor the Appellate Authority under the CGST or State Act is empowered to sanction refund beyond the prescribed period, even where the tax paid exceeds the amount legally payable - The refund claim is barred by limitation and the order of the FAA is upheld and the appeal is dismissed - Section 54(8) of the CGST Act - Whether absence of unjust enrichment can overcome the bar of limitation on a refund claim - Appellant contended, relying on a Chartered Accountant certificate, that the incidence of the excess tax was not passed on to any person and that the exceptions in Section 54(8) entitled it to refund - Whether proof that incidence was not passed on can sustain a time-barred refund claim - HELD - Section 54(8) specifies the circumstances in which the refundable amount is paid to the applicant instead of being credited to the Consumer Welfare Fund, and thus distinguishes sanction of refund from the manner of its disbursal. It applies only where a refund is otherwise admissible, does not independently create a right to refund, and does not dispense with the conditions governing admissibility, including limitation under Section 54(1). Even if the Appellant establishes that the incidence was not passed on and that the claim is not hit by unjust enrichment, that circumstance cannot overcome the bar of limitation - The contention is rejected. [Read less]

2026-VIL-265-GSTAT-BLR | Tribunal SGST

GST - Penalty under Section 122(1)(x) of the CGST Act, 2017 for producing fake accounts or documents with intention to evade tax - Effect of the Board Circular No. 171/3/2022 - GST dated 06.07.2022 on fake invoice transactions – Appellant-Department, challenged the order of the FAA which deleted the penalty imposed on the Respondent - The adjudicating authority dropped the demand of tax in line with the Circular but imposed penalties under Sections 122(1)(vii) and 122(1)(x) - The FAA deleted the penalty under clause (x) holding that it was contrary to the Circular, which allowed penal action only under Sections 122(1)(ii) and 122(1)(vii) - Whether deletion of penalty under Section 122(1)(x) was just and valid - HELD - Section 122(1)(x) applies where a taxable person falsifies financial records, produces fake accounts or documents or furnishes false information or return with intention to evade tax. The Circular states that where credit is claimed and invoices are issued without actual receipt or supply of goods, no demand can be made under Section 73 or 74 and the taxpayer is liable for penal action under Sections 122(1)(ii) and 122(1)(vii). The adjudicating authority acted in accordance with the Circular in dropping the tax demand - A Circular cannot be read contrary to the statute or restrictively so as to curtail the proper officer's power to invoke the sub-clauses of Section 122(1). The Respondent had given contradictory statements, admitted issuing and receiving bills without supply of goods, and the invoices were dated after cancellation of the registrations of the suppliers and recipients. The adjudicating authority specifically recorded that the Respondent created fake accounts and documents and filed returns without underlying supply of goods - The reasoning that the nature of the offence was not specified is incorrect, and the deletion of penalty under Section 122(1)(x) is improper and unjustified – The Order-in-appeal is set aside. The penalties under Section 122(1)(vii) and 122(1)(x) imposed are restored – The appeal is allowed - Penalty under Section 122(1)(vii) of the CGST Act, 2017 for taking and utilising ITC without actual receipt of goods - Evidentiary value of statements recorded under Section 70 - Burden of proof under Section 155 and Section 16(2) - Appellant contended that the adjudicating authority had examined the inward suppliers and outward recipients and found them non-existent, and that voluntary statements which were never retracted can be relied upon - Whether deletion of penalty under Section 122(1)(vii) was just and valid - HELD - The Respondent had admitted that the premises were used for fake transactions, that fake invoices were provided to traders, and that the same invoices and e-way bills were used for two consignments - Under the Act, the burden is on the taxpayer to prove eligibility for input tax credit. The taxpayer was required to prove that he had received the goods under Section 16(2)(b) and the supplier had paid tax under Section 16(2)(c), to claim the benefit of ITC. The taxpayer did not prove that he received the goods. He also has not proved that the suppliers paid tax to the Government. The taxpayer did not furnish documents to prove the genuineness of his dealings. The taxpayer admitted that he had provided fake invoices to various traders, who used them to pay GST liability - The deletion of penalty under Section 122(1)(vii) is invalid. [Read less]

2026-VIL-262-GSTAT-PUN | Tribunal SGST

GST - Denial of Input Tax Credit on invoices of a supplier whose registration was cancelled with retrospective effect - Burden of proof under Section 155 of the CGST Act, 2017 - Appellant availed Input Tax Credit on invoices of a supplier whose registration stood cancelled with retrospective effect - The SCN under Section 73(1) proposed recovery on the footing that the tax charged may not have been paid to the Government, so that Section 16(2)(c) was not satisfied - The FAA upheld the demand as the Appellant produced no tax invoices, proof of payment or supplier's certificate - Whether denial of Input Tax Credit with interest calls for interference - HELD - Section 155 casts the burden of proving eligibility for Input Tax Credit on the person claiming it. The ground was pleaded as a bare assertion, and no invoice, record of payment to the supplier, evidence of transport or receipt of goods or ledger of the supplier was filed even at the hearing. The Appellant had since paid the tax and on this record had not discharged the burden. The Tribunal therefore did not decide whether retrospective cancellation of a supplier's registration can by itself justify denial of credit - Denial of credit with interest is upheld - Interest on Input Tax Credit where the supplier is not paid within 180 days - Second proviso to Section 16(2) of the CGST Act, 2017 and Rule 37 of the CGST Rules, 2017 as they stood for 2018-19 - The SCN proposed recovery of interest on Input Tax Credit relating to supplies for which the suppliers were not paid within 180 days, which was confirmed under Section 50(3) and upheld by the FAA - Whether the Appellant is liable to interest for not paying its suppliers within one hundred and eighty days - HELD - The authorities quoted the proviso and the Rule in their amended forms, which do not apply to the period, that does not, however, assist the Appellant. The SCN set out the provisions as they stood for that period. Under them, where a recipient did not pay the supplier within one hundred and eighty days, an amount equal to the credit was to be added to its output tax liability, with interest - The liability to interest arises under the Act itself, which provides that an amount equal to the credit shall be added to output tax liability along with interest, leaving only the manner to the Rules. Non-operation of Form GSTR-2 affected only the mode of reporting, since returns were furnished in Form GSTR-3B which provided for reversal of credit, and any amount due could be paid voluntarily under Section 73(5) with intimation in Form GST DRC-03. The Appellant did not attempt to reverse the credit or pay the interest, so the maxim that law does not compel the impossible has no application - Reading Rule 37(3) to extinguish interest where the amount was never added would let a recipient benefit from its own default, as the sub-rule runs interest from the date of availing credit and assumes compliance with sub-rules (1) and (2). Subsequent payment to suppliers does not assist, since the failure contemplated is failure to pay within one hundred and eighty days and the third proviso permits re-availment of credit on payment. The period is fixed by the proviso and cannot be enlarged by agreement between supplier and recipient - The interest is payable and the demand is upheld. [Read less]

2026-VIL-264-GSTAT-PYG | Tribunal SGST

GST - Validity of Order of the FAA passed ex parte without addressing the core claim in the appeal - Requirement of a reasoned order under Section 107(12) of the CGST/UPGST Act, 2017 - Ex parte order confirmed demand on the mismatch between Input Tax Credit in Form GSTR-3B and Form GSTR-2A and on short payment of output tax - The FAA dismissed the appeal as the Appellant did not appear for the hearings and filed only self-prepared charts - Whether the FAA erred in dismissing the appeal on non-appearance contrary to Section 107(12) - HELD - Section 107(11) and (12) require the order of the Appellate Authority to be in writing and to state the points for determination, the decision thereon and the reasons. The FAA had perused the adjudication order and the portal comparison chart but did not deal anywhere with the claim regarding preceding year credit, which goes to the root of the matter - The appellate authority cannot dismiss an appeal merely because the appellant did not appear and must examine the grounds in the appeal memo and pass a reasoned order. Though Section 113(1) empowers the Tribunal to remand, the demand related to a single financial year, the entire material was on record and the only ground of demand was the mismatch, so the Tribunal proceeded to decide on merits - The order of the FAA is a non-speaking order and cannot be sustained in law - Applicability of the CBIC Circular on Input Tax Credit discrepancies between Form GSTR-2A and Form GSTR-3B for the earlier financial years - Requirement of Chartered Accountant or supplier certificates - The FAA relied on the Circular to hold that credit claimed in excess of Form GSTR-2A can be allowed only after verification of tax payment and that certificates were required - HELD - The Circular is a limited relaxation applicable to discrepancies pertaining to two earlier financial years arising from supplier-side failures, such as filing Form GSTR-3B but not Form GSTR-1, omitting an invoice, reporting a business to business supply as business to consumer or entering a wrong GSTIN. The comparison in the present case was between Form GSTR-3B and Form GSTR-2A of one later year alone. There was no supplier reporting error since the suppliers had uploaded the invoices and the credit of the preceding year was fully reflected in Form GSTR-2A - The difference arose because the Appellant as recipient availed omitted credit of the earlier year within the permitted time, which is not a supplier mismatch of the kind covered by the Circular. Even if the Circular were applied, the entire disputed amount across all suppliers was below the threshold above which a Chartered Accountant certificate is required - The FAA erred in relying on the Circular and in treating a recipient's claim of earlier year credit as a supplier default - Demand based solely on mismatch between Form GSTR-2A and Form GSTR-3B - Availment in a later year of Input Tax Credit omitted earlier, within the time allowed by Sections 16(4) and 39(9) of the CGST Act, 2017 - The demand rested only on the difference between the auto-populated Form GSTR-2A and Form GSTR-3B of a single year, while the Appellant contended that credit of the preceding year omitted earlier was claimed in the returns of the later year - Whether the Input Tax Credit claimed is a valid availment of omitted credit of the earlier year - HELD - The CBIC Press Release clarified that Form GSTR-2A is a taxpayer facilitation and does not affect the ability to avail credit on self-assessment in accordance with Section 16. The requirement of reflection of the invoice in the recipient's statement under Section 16(2)(aa) was inserted only with effect from 01.01.2022 and does not apply to the period. A demand founded only on such a mismatch without verifying the taxpayer's explanation cannot be sustained - The apparent excess arose only because the returns of one year were compared with Form GSTR-2A of that year alone. The SCN made no allegation of ineligibility under Section 16(2) or Section 17(5) or of suppression - The claim is a valid availment of omitted credit, the order of the FAA and the adjudication order are set aside to the extent of the credit demand, the tax, interest and penalty thereon are quashed - The output tax accepted and paid is not disturbed - The appeal is partly allowed [Read less]

2026-VIL-267-GSTAT-BLR | Tribunal SGST

GST - Applicability of Section 76 of the CGST Act, 2017 to registered supplier who collected tax under valid invoices but filed nil or no returns – Respondent-assessee supplied taxable services to a Government recipient for about three years, issued tax invoices charging GST, collected the tax and filed nil or no GSTR-3B returns, which was detected on cross-verification of returns filed by the recipient - SCN under Section 76 was followed by an order confirming tax, interest and equal penalty - Respondent having paid the admitted tax through voluntary DRC-03 challans during adjudication - FAA corrected the appropriation but set aside the penalty holding that Section 76 does not apply to registered suppliers who default on admitted tax collections - Whether Section 76 applies to a registered supplier who collected tax under valid invoices and did not remit it, so that the penalty under Section 76 is sustainable - HELD - Section 76(1) applies to every person who has collected any amount as representing the tax and has not paid it to the Government, irrespective of whether the supplies are taxable or not. The expression ‘any amount’ is of the widest amplitude and includes tax collected by a registered person under valid invoices and withheld by non-remittance through returns. Reading it to exclude registered suppliers would create an anomalous immunity for registered defaulters over unregistered ones – Term ‘every person’ in Section 76 includes both unregistered persons and registered taxpayers who collected tax and did not remit it - An assessee collecting tax does so in a fiduciary capacity as custodian for the State, and retaining such collections while filing nil returns breaches that trust - The finding of the FAA that Section 76 excludes registered suppliers is legally unsustainable. The portion of the Order-in-Appeal setting aside the penalty is set aside, the penalty equal to the tax under Section 76 is restored and confirmed - The appeal of the Department is allowed [Read less]

2026-VIL-266-GSTAT-CTT | Tribunal SGST

GST – Filing of return and payment of tax after enforcement action, Invocation of Section 74 for delayed filing of returns - Determination of tax by reason of fraud, wilful misstatement or suppression of facts – Appellant-Department contended that filing returns and paying tax only after enforcement action establishes suppression and intent to evade - Whether Section 74 can be invoked on the ground of delayed filing of returns and payment of tax after inspection - HELD - Section 74 can be invoked only where tax is not paid by reason of fraud, wilful misstatement or suppression of facts with intent to evade tax, and the... [Read more]

2026-VIL-1840-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Invocation of extended period of limitation under Section 28(4) of Customs Act, 1962 for denial of preferential duty exemption on the ground of non-authentic Certificate of Origin - Appellant imported miscellaneous articles claiming exemption under the notification implementing the India-Malaysia Comprehensive Economic Cooperation Agreement, and the goods were examined, assessed after verification of the certificate and cleared - On an alert issued in 2021 regarding non-authentic certificates, the Department issued SCN invoking Section 28(4) alleging wilful suppression, and the demand, confiscation, redemption fine and penalty under Section 114A were confirmed and upheld by FAA - Appellant contended that there was no evidence of its knowledge of the alleged non-authenticity and that verification was not completed within six months as prescribed in Clause 9(4) of Annexure III of the Rules of Origin - Whether the extended period of limitation can be invoked - HELD - The goods were examined and cleared with the benefit of the notification, and the Rules of Origin require verification of the certificate within six months, which was not done. There was no allegation that Appellant was aware of the alleged nature of the certificate or had connived with the overseas supplier, and no evidence of collusion, wilful mis-statement or suppression. The goods were cleared in February 2018, the investigation began only in May 2021 and the SCN was issued in February 2023 - The SCN is highly time-barred and the extended period is not invocable - Rejection of Certificate of Origin issued by the competent authority of the exporting country and consequent denial of preferential exemption - Revenue discarded the certificate on goods consisting mainly of aluminium pipes and fittings relying on the alert and on emails from the issuing authority and the Board stating that no application was received from the supplier - Appellant contended that the emails and alert were not supplied to it or relied upon in the SCN, that the alert related to steel products, and that there was no finding that the certificate was forged - Whether the Certificate of Origin can be discarded - HELD - The alert related to other products and is not applicable to the goods imported. The emails relied on by the Adjudicating Authority were not the subject matter of the SCN and were not provided to Appellant for explanation, so an allegation based on them is not sustainable. The issuing authority has not disowned the issuance of the certificate in this case, and Revenue brought no evidence to that effect - The Certificate of Origin cannot be discarded, and the confirmation of demand of duty and penalty is not sustainable - Redemption fine under Section 125 of Customs Act, 1962 where imported goods are not available for confiscation - Goods were held liable to confiscation under Section 111(m) and 111(o) and redemption fine was imposed, while Appellant contended that the goods were cleared on payment of duty and sold in due course - Whether redemption fine is imposable when the goods are not available - HELD - It is admitted that the goods are not available, and in such circumstances redemption fine is not sustainable, as held by the Larger Bench of this Tribunal and affirmed by the High Court - The goods cannot be held liable to confiscation, no redemption fine is imposable, the impugned order is set aside and the appeal is allowed. [Read less]

2026-VIL-1833-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Denial of preferential rate of Basic Customs Duty under the ASEAN-India Free Trade Agreement on the ground of incorrect Regional Value Content - Notification No. 46/2011-Cus. dated 01.06.2011 - Appellant imported silver bangles from Thailand and claimed nil rate of duty under the Notification, supported by Country of Origin Certificate issued by the Government of Thailand and declaration in Form-I setting out the production process and Regional Value Content - Goods were examined, assayed and seized by DRI, and provisionally released - SCN proposed enhancement of value, denial of the Notification benefit, differential duty and penalties, which was confirmed by the adjudicating authority - Revenue alleged that the RVC claimed was inflated since the supplier showed silver loss in production far above the maximum wastage permitted by a DGFT Public Notice, so that the actual RVC was below the prescribed threshold - Appellant contended that the Country of Origin Certificate was not disproved and that Revenue applied its own computation without evidence - Whether the preferential rate can be denied by recomputing the RVC on the basis of the DGFT Public Notice - HELD - The DGFT Public Notice applies to manufacturers of silver jewellery located in India and is not applicable to foreign manufacturers. Revenue did not allege that the Country of Origin Certificate was not genuine or was fabricated, and the certificate issued by the competent authority of the exporting country is an admissible document. In the absence of corroborative evidence to the contrary, the benefit cannot be denied on assumptions and presumptions or on the basis of the Public Notice - The benefit of the Notification is available to the Appellant and the appeal is allowed on this issuernrn rnrnIssue 2: Rejection of declared value and enhancement of assessable value of imported goods - Assayer valued the imported silver bangles at a lower figure on the basis of silver market rate, exchange rate and estimated making charges, though the Chemical Examiner confirmed that the silver content was consistent with the grade declared - Adjudicating authority rejected the declared value and confirmed differential duty - Appellant contended that the burden of displacing the declared value lies on Revenue through positive evidence - Whether the charge of undervaluation and the consequent demand of differential duty are sustainable - HELD - The denial of the Notification benefit having been held unsustainable, the charge of undervaluation, which was founded on the same allegation, is liable to be discarded - The enhancement of value and consequent demand of differential duty are not sustainable in law.rnrn rnrnIssue 3: Confiscation, redemption fine and penalties under Sections 111(m), 111(q), 112(a), 112(b) and 114AA of the Customs Act, 1962 - Goods were held liable to confiscation, redemption fine was imposed and penalties were levied on the Appellant as a consequence of denial of the Notification benefit and rejection of declared value - Whether the goods are liable to confiscation and whether redemption fine and penalties are imposable - HELD - Since the denial of the preferential rate and the enhancement of value have not been sustained, the foundation for confiscation does not survive and the goods are not liable to confiscation - The redemption fine and penalties are unwarranted, the impugned order is set aside and the appeal is allowed. [Read less]

2026-VIL-1841-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax - Taxability of transportation of goods by road by a transporter who issued no consignment notes - Negative list regime - Appellant provided transportation services to companies and firms and, under a bona fide belief that the liability rested on service recipients under reverse charge, neither obtained registration nor filed returns for the relevant year - On third-party information from the Income Tax Department, SCN proposed demand on gross receipts by best judgment under Section 72, and the demand was confirmed with interest and penalties, the Adjudicating Authority holding that the services were not GTA services in the absence of consignment notes, yet confirming tax under forward charge - Appellant contended that once the services are held not to be GTA services, transportation of goods by road falls in the negative list under Section 66D(p)(i) - Whether transportation services rendered without consignment notes are leviable to service tax - HELD - Section 66D(p)(i) excluded transportation of goods by road from the levy except where undertaken by a GTA or courier agency, and mere transportation of goods by road does not attract tax. The Adjudicating Authority itself held that the services cannot be construed as GTA services by any stretch of imagination, and was required to examine the applicability of Section 66D(p)(i), which was not done. In the absence of consignment notes the services cannot be considered GTA services, as held in earlier decisions of the Tribunal - The transportation services are not leviable to service tax, and the demand on gross receipts is set aside - Demand on entire receipts reflected in Income Tax data without identification of taxable service and invocation of extended period of limitation - SCN demanded tax on the entire receipts reflected in the third-party data without specifying the taxable service, and invoked the extended period on the ground that Appellant failed to obtain registration and declare the value in returns - Appellant contended that the burden lay on the Department and that no suppression was shown - Whether the demand on gross receipts can be sustained and whether the extended period was validly invoked - HELD - The burden of establishing that the receipts represent consideration for a taxable service rests on the Department. Reflection of receipts in Income Tax records may furnish a basis for inquiry but cannot by itself establish the taxable character of the receipts or the nature of the services. Where the demand is raised mechanically on third-party data without independent investigation, there is no basis for the extended period, as the Tribunal has held earlier. The receipts were available in records accessible to the Department, no independent investigation showed deliberate concealment or intent to evade tax, and the failure to obtain registration and file returns arose from a bona fide belief supported by documents produced in adjudication - The extended period was not validly invoked, the entire demand is barred by limitation, the penalties are set aside, and the appeal is allowed. [Read less]

2026-VIL-1226-ALH | High Court SGST

GST - Remand by the FAA to the proper officer for fresh determination under Section 73(9) after recording findings in favour of the Petitioner-purchaser - Denial of Input Tax Credit under Section 16(2)(c) for non-deposit of tax by suppliers - Petitioner claimed Input Tax Credit on inward supplies from registered suppliers who had nil credit in the return and had not deposited the tax - Proper officer denied the credit by an order under Section 74(9) raising tax, interest and penalty - FAA recorded that the Petitioner produced tax invoices, e-way bills, bilties, kanta parchi, purchase ledger and banking channel payment proof, that the supplies were reflected in the returns and that both suppliers were effectively registered on the dates of supply, but still disallowed credit on two supplies and directed the proper officer to proceed under Section 73(9) - Petitioner contended that the FAA has no power of remand under Section 107(11) and cannot mechanically direct action under a particular provision - Whether the direction to determine tax, interest and penalty afresh under Section 73(9) can stand and the manner in which the proper officer is to decide the matter - HELD - The purchaser had discharged his obligation by paying the tax and filing returns, while the suppliers submitted returns but did not deposit the tax. The FAA, after evaluating the evidence, found in favour of the Petitioner and found no element of fraud, so there was no occasion to proceed under Section 74 - Section 16(2)(c) cannot be invoked as a standalone provision or in a routine and mechanical manner, and the proper officer must independently apply his mind to the facts of each case. Counsel for the Petitioner had no objection to adjudication by the proper officer if undertaken with independent application of mind and the Standing Counsel accepted that the exercise should not be mechanical - The findings of the FAA in favour of the Petitioner are not interfered with, the order of the FAA is modified so that the proper officer decides the issue strictly in accordance with law by a reasoned and speaking order after hearing the parties - The writ petition is disposed of [Read less]

2026-VIL-261-GSTAT-CHD | Tribunal SGST

GST - Validity of a combined Show Cause Notice and Order-in-Original covering multiple financial years - Appellant was issued an SCN following audit and Final Audit Report covering several financial years, which was adjudicated by a consolidated Order-in-Original, and the Appellate Authority rejected the appeals filed for each financial year - Appellant contended that a separate SCN was required for each financial year and that the impugned proceedings were liable to be quashed, relying on a decision of the Hon'ble High Court at Bombay - Whether issuance of a combined SCN and Order-in-Original covering multiple financial years is legally permissible - HELD - The issue had already been dealt with at length by the Bench in an earlier order, and following that decision the contention of the Appellant is rejected - Issuance of a combined or consolidated SCN and Order-in-Original covering multiple financial years is legally valid and permissible. The proceedings are not liable to be quashed on that ground - Territorial jurisdiction of the GST authorities over tax on rental income from immovable property situated in another State - Sections 2(71) of the CGST Act, 2017 and 2(15) and 12(3) of the IGST Act, 2017 - Appellant, registered in one State, received rent for immovable property situated in another State, and a demand of GST was raised on such rental income - Appellant contended that under Section 12(3) of the IGST Act the place of supply of immovable property is the location of the property, so that the GST authorities where it is registered had no jurisdiction - Whether the demand of GST on rental income can be struck down for want of territorial jurisdiction because the property is located in another State - HELD - The location of the property determines the place of supply, but for the purpose of jurisdiction of the GST authorities it is the location of the supplier of services that is relevant. Under clause (a) of Section 2(71) of the CGST Act and Section 2(15) of the IGST Act, where a supply is made from a place of business for which registration has been obtained, the location of the supplier is the location of such place of business - The service of renting was therefore made from the Appellant's registered place of business, and the fact that the place of supply is in another State only makes the supply an inter-State supply attracting IGST without taking away the jurisdiction of the authorities with whom the Appellant is registered - The findings of the Appellate Authority are upheld and the demand cannot be struck down for want of territorial jurisdiction - Invocation of Section 74 of the CGST Act, 2017 - Appellant contested the demands on the ground that there was no fraud, wilful misstatement or suppression of facts - The SCN sought to invoke Section 74 for the freight demand, for the difference between ITC availed in Form GSTR-3B and credit available in Form GSTR-2A, and for blocked credit - Whether Section 74 could be invoked for demand of tax, recovery of credit and imposition of penalty - HELD - The foundational facts leading to the inference of fraud, wilful misrepresentation or suppression must be evident from the notice itself, and the words cannot be mechanically recited to enable recovery outside the normal limitation. The SCN contained no allegation showing how the Appellant committed fraud, made wilful misstatement or suppressed facts with intent to evade tax, since the relevant amounts were duly declared in the statutory returns on the basis of which the audit was conducted - The difference between the two returns was always apparent in the statutory returns, and the Department did not allege that the credit was availed with intent to evade tax. The Adjudicating Authority had itself recorded that the availment of credit was revenue neutral, and was therefore not justified in invoking Section 74 - Invocation of Section 74 and imposition of penalty on non-declared rental income - Explanation 2 to Section 74 of the CGST Act, 2017 - Appellant received rental income which was detected by the audit team from the Income Tax Forms and was not declared in the GST returns - Whether Section 74 is justified for demand of tax and penalty on rental income not declared in the GST returns - HELD - As per Explanation 2 to Section 74, suppression means non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under the Act or the Rules. The Appellant had not even claimed that the rental income was declared in its GST returns. The non-declaration of the receipt amounts to suppression of facts attracting Section 74 - The demand of tax and imposition of equal penalty under Section 74 are upheld, and the Appellant is liable to pay interest under Section 50 of the CGST Act - Denial of Input Tax Credit merely because invoices are not reflected in Form GSTR-2A and reversal of blocked credit - Appellant contended that the excess credit had been reversed through Form DRC-03 while filing the Annual Return, that credit cannot be denied merely because invoices are not reflected in Form GSTR-2A - The Adjudicating Authority recorded that only the integrated tax along with interest was deposited through Form DRC-03 and had appropriated it, and had made no findings on the subsequently produced invoice - HELD - ITC should be allowed if the conditions of Section 16 are fulfilled, regardless of whether it is reflected in Form GSTR-2A. The ground that credit cannot be denied where the supplier has not paid tax need not be addressed, since the SCN made no such allegation and the Adjudicating Authority did not deny the credit on that ground. There being no findings of the Adjudicating Authority on the subsequently produced invoice, the claim has to be considered on merits - The matter regarding the alleged ineligible or excess credit and the alleged blocked credit is referred back to the Adjudicating Authority to decide the admissibility of Input Tax Credit afresh. [Read less]

2026-VIL-259-GSTAT-CHD | Tribunal SGST

GST - Refund of accumulated Input Tax Credit on export of goods without payment of tax under Rule 89(4) of the CGST Rules, 2017 - Admissibility of refund in respect of invoices issued during the relevant period relevant period i.e. June - September 2020 for goods exported after the relevant period - Department appeal against the excess refund - Whether refund is inadmissible in respect of invoices issued during the relevant period where the goods covered by them were actually exported after the relevant period - HELD - Under Rule 89(4), the refund is the portion of Net ITC in the ratio of turnover of zero-rated supply of g... [Read more]

2026-VIL-250-GSTAT-LCK | Tribunal SGST

GST - Eligibility to Input Tax Credit on the strength of invoices, e-way bills, transport documents, weighment slips, stock ledger and banking channel payments - Actual receipt of goods under Section 16(2)(b) and burden of proof under Section 155 of the CGST Act, 2017 - Appellant availed and utilised Input Tax Credit on invoices of two suppliers - Respondent relied on physical verification showing that the suppliers were non-existent - Appellant contended that the documents and banking channel payments established genuine transactions and that the invoices were reflected in GSTR-2A - Whether the documents furnished are sufficient to allow the buyer Input Tax Credit when physical movement and receipt of goods are in doubt - HELD - The issue is whether goods actually travelled and were received, and filing of returns and payment of money are secondary. The conditions of Section 16(2) are cumulative, and the issue of actual receipt under clause (b) is distinct from payment of tax under clause (c), which cannot be treated as a substitute - Section 155 places the burden of proving eligibility on the person claiming credit. Mere production of invoices, e-way bills or proof of payment is not sufficient. The claimant must prove actual physical movement by furnishing vehicle details, freight payment and acknowledgement of delivery – In the present case, the reports showed vehicles not traceable in the records, a vehicle with carrying capacity far below the weight declared, vehicles without valid permit, insurance or fitness - The suppliers having been held bogus and non-existent, the preponderance of probability showed that there was no physical supply, so that the supporting documents are fudged papers giving a legitimate colour to fake transactions. Appearance of invoices in GSTR-2A, a system generated statement, does not establish supply - The Appellant failed to discharge the burden, the Input Tax Credit is not admissible - The appeal against the demand is rejected - Invocation of Section 74 of the CGST Act, 2017 on the basis of investigation material against suppliers - Applicability of decisions denying Input Tax Credit denial to bona fide purchasers for supplier default - Appellant contended that Section 74 cannot be invoked on an intelligence report, suspicion or adverse information on suppliers without establishing fraud, wilful misstatement or suppression with intent to evade tax - Whether the transactions are fraudulent so as to sustain the invocation of Section 74 and whether the decisions relied upon assist the Appellant - HELD - The Department did not proceed merely on the ground that the suppliers were later unavailable or their registrations cancelled, but on specific verification of transport particulars and other tangible material establishing that the suppliers were bogus and non-existent and that the goods never travelled. Once goods have not travelled, the entire exercise is a paper transaction undertaken to avail Input Tax Credit, which is a fraudulent scheme to deprive the Government of revenue - Input Tax Credit is a conditional statutory benefit and not a vested right and the concession must be availed in strict compliance with the statutory conditions - The case stems from fraudulent transactions where goods never travelled and the suppliers were proven bogus - The contentions on Section 74 are rejected, and the issues raised is answered against the Appellant - Leviability of penalty under Section 122 read with Section 74 of the CGST Act, 2017 and enhancement of penalty by the FAA - Section 75(13) and Circular No. 171/03/2022-GST - Adjudicating authority imposed penalty, and the FAA enhanced it to an amount equal to the Input Tax Credit wrongly availed without discussing the reasons - Appellant contended that penalty under Section 122 cannot survive without establishing the specific contravention and without reasonable opportunity of hearing - Whether penalty under Section 122 can be sustained when Section 74 was invoked - HELD - The FAA enhanced the penalty without following the principles of natural justice. Neither the order of the adjudicating authority nor that of the FAA discussed why penalty under Section 122 is imposed when Section 74 was invoked. Section 75(13) provides that where penalty is imposed under Section 73 or Section 74, no penalty for the same act or omission shall be imposed on the same person under any other provision of the Act - The authorities should have spelt out reasons for the penalty, and in the absence of cogent reasons, the imposition of penalty under Section 122 read with Section 74 cannot be sustained - The penalty imposed in both orders is set aside, and the matter is remanded to the adjudicating authority for redetermination of the penalty keeping in view Section 75(13). [Read less]

2026-VIL-1839-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Authority of proper officer to determine an undeclared retail sale price for levy of additional duty of customs under Section 3 of Customs Tariff Act, 1975 - Respondent imported notebook computers for a State Government free distribution scheme, which were notified goods for assessment on retail sale price basis under Section 4A of the Central Excise Act, 1944, declared no retail sale price and self-assessed the additional duty on transaction value - Appellant-Revenue issued SCN alleging suppression and proposing differential duty by adopting the contract price with the implementing agency, inclusive of tax, as the retail sale price - The Adjudicating Authority dropped the proceedings, and Revenue appealed after review under Section 129D - Whether the proper officer had authority in law to assess the duty on an undeclared retail sale price by adopting the contract price - HELD - The point is a pure question of law arising on the face of the SCN, and Respondent can support the order on it. The proviso to Section 3(2) operates only where the retail sale price is required to be declared on the package, borrows from Section 4A only the list of notified goods and the abatement, and deems the value to be the retail sale price declared, being silent on cases where none is declared. The power to ascertain the retail sale price in the prescribed manner exists only under the Central Excise Act and the Determination of Retail Sale Price Rules, which Section 3 of the Tariff Act does not borrow, and the Customs Act and Valuation Rules provide no method for it. The Larger Bench has held that ascertainment otherwise than in the prescribed manner is without authority of law, and the Tribunal has consistently held that no differential duty can be demanded on undeclared retail sale price for want of machinery, including a coordinate Bench on the same scheme, which binds this Bench. The dismissal without reasons of civil appeals by the Hon'ble Supreme Court is not a declaration of law. The measure of a levy is part of the charging scheme, a deeming fiction cannot be pressed beyond its purpose, and a substantive power enlarging the burden cannot be implied. The decisions relied on by Revenue concern regulatory powers, machinery expressly incorporated by statute, or declared prices, and are distinguishable. The SCN cited no provision empowering the valuation and adopted a composite contract price including items not imported and local tax, a defect going to the root of jurisdiction - The proper officer had no authority to assess the duty on an undeclared retail sale price, and the demand cannot be sustained on this ground alone - Requirement of declaration of retail sale price on packages of laptops meant exclusively for free distribution under Legal Metrology Act, 2009 and Packaged Commodities Rules, 2011 - Packages were printed as being for supply to the State Government only and not for retail sale, and were paid for by the implementing agency from State funds and given to students free - Appellant-Revenue contended that Section 18(1) of the Legal Metrology Act prohibited import for sale without declarations, that distribution through an instrumentality is itself retail sale, and that the opinion of the central authority prevailed over that of the State Controller - Whether the packages were required to bear a declaration of retail sale price so as to attract the proviso to Section 3(2) of the Tariff Act - HELD - Section 18(1) requires only the prescribed declarations, and the requirement to declare retail sale price arises under the Chapter of the Rules dealing with packages intended for retail sale. The Hon'ble Supreme Court has held that where there is no requirement to declare the price, Section 4A does not apply, and without an element of sale of the package to the ultimate consumer, free distribution through another party is not retail sale even where the goods were sold to that party for a price. The paragraphs concerning telephones rested on the admitted fact that the same packages were sold in the retail market. The Hon'ble Supreme Court has since held that a consumer is the final consumer and not an intermediary, and that no mandate to declare the price exists for bulk supplies to intermediaries for distribution. The Board Circular, binding on the Department, directs valuation under Section 4 of goods not required to carry a retail sale price, including free and bulk supplies to Government. The decisions relied on by Revenue involved assessees who had declared the price and turned on whether the buyer was an institutional consumer, without considering whether the package was intended for retail sale, and the decision on adhesive tapes involved retail sales and rested on a premise set aside by the Hon'ble Supreme Court. The SCN did not allege retail sale or diversion, a voluntary declaration by other importers creates no legal requirement, and the opinions of the metrology authorities were not conclusive - Revenue failed to establish any requirement to declare the retail sale price, the proviso to Section 3(2) was not attracted, and this is an independent ground for setting aside the demand - Extended period of limitation under Section 28(4) of Customs Act, 1962 and alleged suppression of sale price - SCN alleged intentional suppression of the sale price, whereas the Bills of Entry showed that no retail sale price was declared and duty was self-assessed on transaction value, and Respondent disclosed the contract, price and composition of supply and asserted its legal position from the outset - Whether the extended period was available to Revenue - HELD - The omission was apparent on the face of the Bills of Entry, the price said to be suppressed was in the purchase order and invoices produced by Respondent, and the SCN relied on the very statement disclosing it. The authorities under the Legal Metrology Act gave conflicting opinions on Revenue's own reference, so the dispute was one of interpretation. Suppression connotes deliberate withholding of facts with intent to evade duty, and mere non-payment does not amount to it, as held by the Hon'ble Supreme Court and by this Bench on similar facts arising from the same scheme - The allegation of suppression fails and the extended period was not available - Confiscation under Section 111(d) and 111(o), interest under Section 28AA, penalty under Section 114A, and finalisation of provisional assessments - Revenue proposed confiscation on the premise that import without retail sale price contravened the Legal Metrology Act, and the goods were provisionally assessed and released on bond with the special additional duty retained as security - Whether the goods were liable to confiscation, whether interest and penalty were attracted, and what follows for the provisional assessments - HELD - Since there was no legal requirement to declare the retail sale price, the premise for confiscation under Section 111(d) fails, and Section 111(o) was invoked without any allegation of an unobserved exemption condition. With no short levy and no suppression, interest and penalty have no basis, and this Bench has earlier held, following the High Court decision affirmed by the Hon'ble Supreme Court, that Section 3 of the Tariff Act as it then stood did not borrow the Customs Act provisions on interest, penalty and confiscation for additional duty. The provisional assessments must be finalised under Section 18 on the value under the main part of Section 3(2), on which duty has been paid, so that no deficiency arises - The goods are not liable to confiscation, no interest or penalty is attracted, the appeal of Revenue is dismissed and the order of the Adjudicating Authority is upheld, with direction to finalise the provisional assessments within three months, deal with the security under Section 18(2), discharge the bond and grant consequential relief. [Read less]

2026-VIL-1838-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Dismissal of appeals by FAA for want of pre-deposit under Section 129E of Customs Act, 1962 without notice of deficiency or hearing - Appellant imported machinery, paid Special Additional Duty and was sanctioned refund under the exemption notification as the subsequent sale bore nil rate of value added tax - The refund orders were set aside on review under Section 129D in the Department's appeals, and demand notices were confirmed for recovery of the refund under Section 28 - Appellant filed appeals before FAA on the last day of the condonable period through the Sevottam counter without pre-deposit, and FAA dismissed them as incomplete without notice or hearing, citing the time limit - Whether appeals presented within time but without the statutory deposit could be dismissed in this manner - HELD - Section 129E requires a deposit of seven and a half per cent before FAA and ten per cent before the Tribunal, which are distinct obligations, so the deposit made before the Tribunal is not compliance before FAA, and as the discretion to dispense with the deposit has been withdrawn, FAA cannot entertain an appeal without it. However, an appeal presented in time without the deposit is a defective appeal and not a nullity, as the embargo is only on entertaining it, and the High Courts have held that the power to recall a dismissal exists inherently since procedure is the handmaid of justice. Presenting an appeal on the last day is the exercise of a statutory right, an assessee cannot be penalised for using the Sevottam facility created by the Department, and Section 128A(1) obliges FAA to afford a hearing, so the curable defect ought to have been pointed out before dismissal - The dismissal without notice of the deficiency and without hearing is not sustainable, though the contention that Section 129E stood complied with before FAA is rejected - Power of Tribunal to finally dispose of appeals against an order of FAA which did not decide the merits, and whether remand is warranted - FAA dismissed the appeals only for want of pre-deposit, and Appellant sought final decision as the dispute had run for over a decade, while the earlier decision of the Hon'ble Supreme Court had cautioned against the Tribunal deciding the merits of such an appeal - Whether the Tribunal may dispose of the appeals finally or must remit them - HELD - That decision belongs to a regime in which the appellate authority could dispense with the deposit and the relief granted was a remand upon waiver, whereas under Section 129E as substituted there is no discretion, and neither the premise nor the remedy survives. The demands under challenge were expressly founded on orders of FAA and of this Tribunal which have since been set aside or recalled, and holding that a demand falls with the order on which it rests is working out the consequences of the Tribunal's own orders and not adjudicating the merits afresh. The subsequent Final Orders were promptly brought to notice, the Revenue had opportunity to respond, and they bear materially on relief. Remand should not be routine, particularly in revenue matters, and a remand whose outcome is foreclosed by the Tribunal's own final orders is an empty formality - The Tribunal is competent to dispose of the appeals finally and no remand is warranted - Invocation of Section 28 to recover refund sanctioned on adjudication while the Department's appeals against the refund orders were pending - Appellant contended that an order sanctioning refund under Section 27 can be undone only by appeal under Section 128 or review under Section 129D, relying on decisions of the jurisdictional High Court and Tribunal, and that two proceedings on the identical ground and sums were impermissible - Whether SCNs under Section 28 could be issued while the Department's appeals were pending - HELD - The Hon'ble Supreme Court has held that the recovery provision confers a right to issue an SCN where duty has been erroneously refunded, that it operates in a field different from the review provision, and that where the refund order is set aside on review no separate notice is required. The jurisdictional High Court has followed this view, and the Tribunal is bound under Article 141 to apply such decisions even if not cited, so the broad proposition that Section 28 can never be invoked to recover a refund sanctioned on adjudication cannot be accepted. The coordinate Bench decision relied on is distinguishable as the refund order there was never reviewed or challenged. The notices served to protect limitation, as the one-year period ran from the date of refund and the date of decision of the appeals was uncertain, and a precaution rendered unnecessary in law is not an abuse of power. The notices were adjudicated only after the appellate orders and confirmed solely on them, so they operated in aid of the Department's appeals, though they should have stated their basis - The SCNs were open to the Department to issue and stood or fell with the appellate orders, and the contention of Appellant is rejected - Survival of confirmed demands for recovery of refund of Special Additional Duty in light of Tribunal's final orders - Each demand was confirmed solely on an order of FAA or an ex parte Tribunal order, of which the former was set aside and the latter recalled and the appeal allowed, following the decision that a nil rate of value added tax is itself the appropriate rate and payment at that rate satisfies the notification condition - Whether anything survives of the demands - HELD - Each demand was expressly consequential upon an order since set aside or recalled, and a demand cannot outlive the order on which it is founded. The SCNs were not adjudicated on any independent assessment of the refund claims, and the only ground on which the refunds were said to be erroneous was rejected in Appellant's own case on these very refund orders by Final Orders which have attained finality and bind the parties - No foundation survives for the demands, the order of FAA, the confirmed demands and the proceedings under the SCNs are set aside, and the appeals are allowed with consequential relief, including refund of the deposit under Section 129E and any amount recovered in enforcement of the demands. [Read less]

2026-VIL-252-GSTAT-BLR | Tribunal SGST

GST - Detention of goods in transit under Section 129 of CGST Act, 2017 - Effect of applying pre-amended Section 129(1)(a) requiring tax and penalty instead of the amended penalty only - Order held not void ab initio - Goods were intercepted in January 2024, and the proper officer demanded tax and penalty at equal amounts under the provision as it stood before 01.01.2022, whereas the amended provision requires payment of penalty equal to two hundred percent of the tax - Appellant contended that the order was void ab initio since the pre-amended provision was not in existence on the date of interception, relying on decisions on retrospective operation of substituted provisions - Whether the entire proceedings are void ab initio because the pre-amended provision was applied - HELD – The Section 129 addresses violations by a person transporting or storing goods in transit, and the amendment only changed the quantum of amount payable for release of goods and conveyance, without taking away the power of the proper officer to detain goods and examine whether the Act or rules are violated. The substantive portion of the Section was not changed. The officer committed a mistake in demanding tax and penalty under the pre-amended law, but the application of the old law does not invalidate the order - The order cannot be set aside as void ab initio on the ground that the pre-amended law was applied - Invocation of Section 129 of CGST Act, 2017 on consignment sent for job work with e-way bill and delivery challan - Section 143 and Rule 55 of CGST Rules, 2017 - Appellant sent PP woven fabric, wastage and scrap to its principal in another State, and the proper officer detained the consignment on the ground that the goods were not capital goods and IGST was not charged on inter-State transportation - Whether invocation of Section 129 is just and proper on the facts - HELD - The e-way bill recorded the movement as outward job work and the consignment was accompanied by a delivery challan, which required the proper officer to examine the transaction in the light of the provisions governing job work. The mere absence of IGST on the delivery challan could not establish a contravention without identifying the applicable charging provision and the nature of the alleged taxable supply - Section 143 permits a registered person to send inputs or capital goods to a job worker without payment of tax and to receive the finished goods within the prescribed period, so the reasoning that IGST was not charged is incorrect, and the Section applies to both inputs and capital goods - The FAA did not examine Section 143 read with Rule 55 and repeated the reasoning of the proper officer verbatim. Both documents contained the information required under Rules 55 and 138 of the CGST Rules, and no provision of the Act or rules was violated - Imposition of tax and penalty under Section 129 set aside, the appeal allowed - Maintainability of additional grounds raised for the first time before the Appellate Tribunal - Appellant raised additional grounds before the Tribunal - Whether the additional grounds are maintainable before the Tribunal - HELD - A question of law arising from facts already on record can be allowed to be raised where it is necessary to consider it for correctly determining the liability. The additional ground raised is a pure question of law - The additional grounds are held maintainable before the Tribunal [Read less]

2026-VIL-251-GSTAT-CHD | Tribunal SGST

GST - Concessional rate of tax on supply of goods to registered recipients for export under Notification No. 41/2017 – Benefit of Integrated Tax (Rate) dated 23.10.2017 - Mandatory nature of condition (vi) requiring direct movement of goods - Appellant supplied HDPE drums at the concessional rate to registered recipients, and the drums were moved from the Appellant's premises to third-party distillery premises where they were filled with Extra Neutral Alcohol before export - Respondent denied the benefit as the goods neither moved directly to the Port, ICD, Airport or LCS of export nor directly to a registered warehouse - Whether the benefit of the Notification was correctly denied on merits - HELD - The concessional rate is granted subject to fulfilment of the conditions enumerated in the Notification, and condition (vi) allows only two options of movement, namely directly to the port of export or directly to a registered warehouse. The word ‘directly’ in both clauses shows that indirect movement through the premises of a third party is not permitted, and the word shall indicates that the condition is mandatory - The Hon'ble Karnataka High Court in M/s Time Technoplast on identical facts held that the Notification contemplates only the registered supplier and the registered recipient and must be complied with strictly - An exemption notification is to be construed strictly, the burden of proving its applicability lies on the assessee, and if any condition is not fulfilled the party is not entitled to the benefit - The Appellant is not entitled to the concessional rate and the denial is sustained - Invocation of Section 74 of CGST Act, 2017 for demand of tax and penalty on wrongful availment of concessional rate - SCN alleged mis-declaration with intent to evade tax since the goods finally exported were Extra Neutral Alcohol and not drums - Whether invocation of Section 74 for demand of tax and penalty is justified - HELD - The letters on record disclosed that the supplies were under the Notification and that the goods would be dispatched to the distilleries, so the Department was aware of the facts. The grounds in the SCN are specious, as alcohol being a liquid can only be exported in containers such as drums, and the shipping bills mention the drums along with the Appellant's invoice numbers. Incorrect availment of an exemption notification cannot by itself be equated with an attempt to evade tax unless fraud, wilful misstatement or suppression of facts is established - The burden of proving mala fide lies on the one alleging it, and the foundational facts leading to such inference must be evident from the notice itself and cannot be mechanically recited. For the supply where the Appellant admittedly filed no intimation, invoking Section 74 is justified - Demand and penalty under Section 74 set aside for the supplies to the two recipients and the demand and penalty upheld for the supply where no intimation was filed - Non-speaking order of the FAA - Failure to deal with submissions on ingredients of Section 74 - Appellant contended that the order of the FAA was non-speaking and violated natural justice as no finding was given on its submissions - Whether the order of the FAA is liable to be set aside as a non-speaking order - HELD - The FAA had discussed the admissibility of the concessional rate and recorded reasons, noting that the goods were moved to the premises of third parties, so the contention fails to that extent. The contention has some force only to the extent that the order is devoid of any discussion or finding on whether invoking Section 74 was warranted, as the submissions that the ingredients of Section 74 were not satisfied were not dealt with - The plea of non-speaking order is rejected on the issue of admissibility of the concessional rate and accepted only in respect of the invocation of Section 74 - Interest under Section 50 and penalty under Section 73(9) of CGST Act, 2017 on tax determined as payable - Consequence of setting aside Section 74 proceedings for part of the supplies - Appellant contended that the demand of interest and the imposition of penalty are not sustainable - Whether interest and penalty are payable on the tax determined - HELD - Section 50 requires every person liable to pay tax who fails to pay it within the prescribed period to pay interest for the period for which the tax remains unpaid. Interest is compensatory in character and is geared to the amount of tax withheld and the extent of delay - Section 73 applies where tax is unpaid for any reason other than fraud, wilful misstatement or suppression of facts, so that a penalty of ten percent of the tax under Section 73(9) is attracted if tax is determined as payable for the supplies where Section 74 was held not sustainable - Interest under Section 50 is payable on the tax determined, and penalty is payable under Section 73 for the supplies where Section 74 was set aside, in place of the penalty under Section 74 - Cum-tax benefit under Section 15(2) of CGST Act, 2017 read with Rule 35 of CGST Rules, 2017 on denial of concessional rate - Appellant contended that it is entitled to the cum-tax benefit in computing the tax payable after denial of the concessional rate - Whether the Appellant is entitled to the cum-tax benefit - HELD - The Appellant is entitled to the cum-tax benefit in terms of Section 15(2) of the CGST Act read with Rule 35 of the CGST Rules, 2017, and the amount of tax payable is liable to be re-determined accordingly - The Appellant is held entitled to cum-tax benefit and the tax payable is to be re-determined, and the appeal is partly allowed. [Read less]

2026-VIL-253-GSTAT-BLR | Tribunal SGST

GST - Imposition of penalty under Section 74 of CGST Act, 2017 where tax was paid with interest before the SCN on supplies not declared in return - Meaning of suppression under Explanation 2 - The authorities held that non-disclosure of the value of supplies in the return amounted to suppression and that payment made only after audit verification justified penalty - Whether imposition of penalty under Section 74 is justified - HELD - Section 73 applies to non-payment for reasons other than fraud, wilful misstatement or suppression, while Section 74 applies only where these elements exist, and Sections 73(5) and 74(5) permi... [Read more]

2026-VIL-256-GSTAT-CHD | Tribunal SGST

GST - Transitional credit - Availment of entire credit of duty paid on capital goods through TRAN-1 where no CENVAT credit was taken under the existing law - Section 140(2) of the CGST Act, 2017 - Appellant received capital goods before the appointed day, but CENVAT credit was not availed due to pending inspection of the goods, and the Appellant availed the entire credit through TRAN-1 - SCN proposed disallowance of the credit with interest and penalty - Appellant contended that the section allows credit of unavailed CENVAT credit not carried forward in a return, does not restrict the quantum to a part of the credit, and that the Board Circular cannot override the statute - Whether the entire credit of duty paid on capital goods can be availed through TRAN-1 under Section 140(2) where no credit was taken under the existing law - HELD - Section 140(2) allows credit of unavailed CENVAT credit on capital goods not carried forward in a return under the existing law, subject to the conditions that the person is not opting for composition levy, that the credit was not carried forward and that it is admissible under both the existing law and the GST law - The Explanation defines unavailed CENVAT credit as the amount remaining after subtracting the credit already availed from the aggregate credit to which the person was entitled, and Rule 117(2)(a) of the CGST Rules does not provide that the credit availed or utilised cannot be nil. The section does not specify that only a part of the credit can be transitioned, so that credit not carried forward in a return can be transitioned through TRAN-1 whether it is a part or the whole. The Guidance Note in the Circular, which itself advises reference to the full text of law, cannot restrict the statutory entitlement - The Appellant has fulfilled the conditions for transitional credit. The impugned order is set aside to that extent and the Appellant is entitled to avail the entire credit of duty paid on capital goods - GST - Transitional credit claimed against a single invoice containing an annexure of multiple invoices - Section 140(2) of the CGST Act, 2017 - Part of the credit was denied on the ground that credit relating to multiple invoices detailed in an annexure was claimed against a single invoice - Appellant contended that only the first invoice number was entered in TRAN-1 due to clerical oversight leaving out details of the remaining invoices, that all the invoices were available and were produced with the appeal - Whether the credit can be denied on the ground that it was claimed against a single invoice - HELD - The authorities below themselves observed that the single invoice contained an annexure detailing the multiple invoices, and the Appellant admitted that the details of the remaining invoices were not apparent in TRAN-1 due to oversight. Since the Appellant submitted that all the invoices were available, it must be given an opportunity to produce them before the original authority, which shall verify them and allow the credit if otherwise in order - The matter is remitted to the original authority to this extent. [Read less]

2026-VIL-254-GSTAT-CTT | Tribunal SGST

GST - Denial of input tax credit solely on retrospective cancellation of the supplier's registration - Section 29 of CGST Act, 2017 – Appellant availed input tax credit on invoices of a supplier whose registration was cancelled retrospectively after a report of the enforcement wing found the supplier non-existent - ITC was disallowed under Section 74 on the allegation of supply without goods - Whether input tax credit can be denied solely because the registration of the supplier was cancelled retrospectively on the ground of non-existence - HELD - Section 29(2) empowers the proper officer to cancel registration with retrospective effect, but this does not mean that every consequence can be imposed on every recipient who purchased from that supplier. The supplier had held valid registration for over a decade, issued invoices and filed returns, and retrospective cancellation does not without further examination establish that the goods were not received – The ITC cannot be denied on this sole ground without examining the genuineness of the transaction and the movement of goods - Retrospective cancellation of the supplier's registration alone cannot be treated as sufficient proof to deny credit without examination of the underlying transactions and the applicable conditions – Ordered accordingly - Conditions for input tax credit under Section 16(2) and burden of proof under Section 155 of CGST Act, 2017 - Duty of the Department to examine evidence of genuineness of supply - Whether credit can be denied without independently examining the genuineness of the supplies and compliance with Section 16 - HELD - Credit is not an absolute right, and the entitlement depends on strict compliance with the conditions in Section 16(2), including possession of the tax invoice, receipt of goods, payment of tax to the Government and filing of returns, with the burden under Section 155 lying on the recipient. This does not permit the Department to reject a claim merely by citing Section 155 and the retrospective cancellation without examining the evidence. Once the recipient produces proof of genuineness and receipt of goods, the burden shifts to the Department to verify and either allow or disallow the credit - The decisions relied upon by the Respondent are distinguishable as the documents there were dubious or absent, and here the authorities denied credit on the basis of a report of non-existence without verification, and did not even supply a copy of the report - The non-speaking orders of the adjudicating authority and the FAA cannot be sustained in law and set aside - Denial of cross-examination in adjudication where the case rests on a report of non-existence of the supplier - Principles of natural justice under Section 75(4) of CGST Act, 2017 - Appellant contended that its request for cross-examination of the officers who found the supplier untraceable was denied, while the Respondent denied that any specific request was made - Whether denial of cross-examination violates natural justice and vitiates the proceedings - HELD - The Act does not provide for cross-examination during adjudication, as Section 75(4) provides only for an opportunity of hearing and Section 136 deals with relevancy of statements, and the right has been shaped by judicial pronouncements - Where the allegation is that credit was availed without genuine supply, it can be countered by producing documents such as invoices, e-way bills and transportation records, and mere denial of cross-examination does not vitiate the proceedings,. The dispute being capable of resolution by independent documentary proof, cross-examination is not a substitute for proving receipt of genuine supplies through primary records - The contention that denial of cross-examination violated natural justice is rejected - Validity of SCN under Section 74 of CGST Act, 2017 without foundational facts of fraud, wilful misstatement or suppression - Whether the notice under Section 74 is valid in the absence of foundational facts and proof of fraud or suppression - HELD - The SCN stated only that since the supplier was non-existent the credit was fake, and Section 74 was invoked mechanically without indicating grounds or any effort to ascertain deliberateness on the part of the Appellant - Mala fide intent must be proved on actual evidence and not on presumption, and the onus lies on the Respondent to lay out facts and cogent reasoning. The allegations leading to the inference of fraud or suppression must emanate from the notice itself and the words cannot be mechanically use - The SCN was vague, mechanical and uncorroborated, and the authorities passed orders mechanically - The entire proceedings under Section 74 are unsustainable and the orders are quashed - Deeming of SCN under Section 74(1) as issued under Section 73(1) by virtue of Section 75(2) of CGST Act, 2017 - Respondent prayed that if the notice under Section 74 fails, the tax liability be determined as if the notice were issued under Section 73 - The invoices related to the financial year 2017-18, and the SCN was issued before the extended due date under Section 73(2) read with the notifications extending the time limit under Section 73(10) - Whether Section 75(2) is attracted to deem the notice as issued under Section 73(1) - HELD - Section 75(2) applies where the Tribunal concludes that the charge of fraud, wilful misstatement or suppression is not established, and the proper officer then determines the tax as if the notice were issued under Section 73(1). Since the notice must be within the limit prescribed under Section 73(2) read with the extension notifications, and the notice was issued well before the extended date, the SCN falls within limitation for deeming under Section 73 - The SCN is deemed to be issued under Section 73(1), and the proper officer shall determine the eligibility of credit after considering all evidence including the additional evidence on genuineness of transaction, giving an opportunity of hearing, without treating retrospective cancellation as conclusive proof of non-receipt of goods. [Read less]

2026-VIL-1832-CESTAT-DEL-CU | CESTAT CUSTOMS

Customs - Revocation of Customs Broker licence for alleged violation of Regulation 10(d) of the Customs Brokers Licensing Regulations, 2018 on account of failure to advise client on correct classification - Appellant, a Customs Broker, filed Bills of Entry for import of boiled betelnuts classified under CTI 2106 90 30, and the goods were cleared - After about a year, SCN proposed reclassification under CTI 0802 80, whereupon the Commissioner initiated proceedings under the Regulations and revoked the licence, forfeited the security deposit and imposed penalty - Appellant contended that classification is a matter of interpretation to which no mala fide can be attributed, that the goods were cleared on self-assessment which the proper officer could re-assess, and that the Out of Charge officer was also satisfied with the classification - Respondent contended that the Appellant failed to advise the importer on the correct classification - Whether the Appellant violated Regulation 10(d) by failing to advise the client to comply with the Act and Rules - HELD - Classification is part of assessment to be done by the importer through self-assessment under Section 17, and Section 17(4) itself provides for re-assessment by the proper officer as a remedy for wrong self-assessment. While correct facts such as nature, quantity and value of goods must be stated, classification involves an opinion according to the understanding of the importer or Customs Broker. The Act does not require them to anticipate whether the proper officer will accept the classification or what classification the adjudicating authority will decide after clearance, and such foresight is humanly impossible. Both competing entries were plausible, and a difference of view between the Customs Broker and the adjudicating authority does not prove any wrongdoing - Regulation 10(d) was not violated, the impugned order is set aside and the appeal is allowed with consequential relief, and the Commissioner is directed to enable the Appellant to file documents on the ICEGATE portal immediately.rnrn rnrnIssue 2: Violation of Regulation 10(e) of the Customs Brokers Licensing Regulations, 2018 - Duty of Customs Broker to exercise due diligence to ascertain the correctness of information imparted to client - Appellant, a Customs Broker, classified imported boiled betelnuts under one tariff item as per its understanding, and the licence was revoked on the ground that due diligence was not exercised in advising the client on classification - Whether the Appellant violated Regulation 10(e) - HELD - A Customs Broker has only the documents with him and no power to inspect the goods, and action is warranted only where there is evidence of connivance in mis-declaration or awareness of mis-declaration not brought to the notice of the officers. No such case was made out, and the finding that the Appellant did not fail to advise on classification also answers the question under Regulation 10(e) in the negative - Regulation 10(e) was not violated and the licence revocation, forfeiture of security and penalty cannot be sustained. [Read less]

2026-VIL-1831-CESTAT-AHM-CU | CESTAT CUSTOMS

Customs - Quantum of redemption fine under Section 125 and penalties under Sections 114(i) and 114AA of the Customs Act, 1962 for attempted export of restricted goods by misdeclaration - Appellant filed shipping bills for export of goods declared as Refractory Bed Material under CTH 69021090, which on testing were found to be Natural Garnet under CTH 25132030, export of which is permissible only through the canalizing agency under the DGFT Notification - Adjudicating authority rejected the declared description, classification and value, ordered confiscation, allowed redemption on payment of fine and imposed penalties under Sections 114(i) and 114AA, which was upheld by the Commissioner (Appeals) - Appellant contended that the fine and penalties are excessive, that penalty is not imposable absent deliberate or dishonest conduct, that the ingredients of Section 114AA were not established, and that redemption fine must be linked to market price and margin of profit - Whether the redemption fine and penalties require interference - HELD - The allegations being misdeclaration and misclassification of goods, the redemption fine, which works out to a reasonable proportion of the redetermined value, cannot be termed excessive in view of the seriousness of the allegations. The penalties under Sections 114AA and 114(i) are commensurate with the grave nature of the attempt to export Natural Garnet by misdeclaring its description. Fine and penalty being matters of discretion, an appellate body should not interfere merely because another view is possible, except on grounds of mala fides or extreme arbitrariness, none of which exists - The impugned order is upheld and the appeal is rejected on this issue.rnrn rnrnIssue 2: Imposability of redemption fine where goods are to be re-exported - Section 125 of the Customs Act, 1962 - Appellant contended that no redemption fine is imposable on goods which are to be re-exported - Respondent relied on the Larger Bench decision holding that redemption fine and penalty may be imposed even when permission for re-export is granted - Whether redemption fine is imposable on the ground that the goods are intended for re-export - HELD - The contention cannot be accepted since the case relates to attempted export of restricted goods by misdeclaring the description and classification, and is not a case of re-export of imported goods. The proper officer allowed redemption of the confiscated goods subject to conditions in exercise of discretionary jurisdiction, and the impugned order cannot be held to be against law - The contention is rejected.rnrn rnrnIssue 3: Disposal of confiscated goods by e-auction during pendency of appeal - Section 110(1A) of the Customs Act, 1962 - High Court authorised the Tribunal to examine the issue of e-auction of the confiscated goods and restrained the Respondent from conducting e-auction till then - Whether the e-auction of the confiscated goods is without authority of law or impermissible during pendency of the appeal - HELD - The Customs authorities initiated the e-auction under Section 110(1A) read with the relevant notifications, and it cannot be said that the e-auction is without authority of law. The appeal being finally disposed of by this order, the e-auction cannot be said to be undertaken during pendency of the appeal - The Respondent may proceed with the e-auction after issuing proper notice to the Appellant inviting objections within at least thirty days, in accordance with the Board instructions and after compliance with the relevant provisions of the Customs Act and applicable Circulars. [Read less]

2026-VIL-1830-CESTAT-AHM-CE | CESTAT CENTRAL EXCISE

Central Excise - Whether assembly of bought-out components in a box and sale as LPG/CNG conversion kit amounts to manufacture under Section 2(f) of the Central Excise Act, 1944 - Appellant procured imported as well as indigenous duty paid and non-duty paid parts, packed them in a box with brand name, printed MRP and car model, and sold the same as LPG/CNG kit, with tank and tank stand supplied separately - SCN proposed classification of the kits under CTH 8409, recovery of duty with interest and penalty, which was confirmed by the Commissioner - The Tribunal earlier remanded the matter only for re-quantification, which the High Court set aside, directing fresh decision on merits - Appellant contended that mere packing of duty paid parts into a kit is not manufacture and that payment of duty on clearances to vehicle manufacturers is no evidence of manufacture - Respondent contended that the kit has a distinct name, character, use and marketability, being a complete system selected for a specific car model - Whether putting bought-out items in a box and selling them as LPG/CNG kit amounts to manufacture and is leviable to central excise duty - HELD - Excisability requires a cumulative two-fold test, namely that a distinct commercial product with new identity, character or use emerges indicating transformation and that the transformed goods are marketable, the burden of establishing marketability lying on Revenue. Goods that retain their substantial identity after processing are processed and not manufactured. The bought-out items did not undergo any processing and retained their individual character, and though the kit is known as a distinct commodity in trade parlance, the goods fail the transformation test and remain a mere assembly of bought-out items. The decisions relied upon by Revenue are not applicable since there was some transformation of the bought-out items in those cases. The identical activity of packing imported and indigenous components as CNG kit was held not to be manufacture by a coordinate Bench, upheld by the Hon'ble Supreme Court, so that the issue is no longer res integra - The impugned order confirming duty demand is set aside and the appeal is allowedrnrn rnrnIssue 2: Penalty on authorised signatory of the company under Rule 26 of the Central Excise Rules, 2002 - Penalty was imposed under Rule 26 on the authorised signatory, an employee of the appellant company, in the same proceedings in which duty demand was confirmed against the company - Whether penalty under Rule 26 can be sustained on the employee when excise duty is held not leviable on the company - HELD - Since the activity of the company does not amount to manufacture and excise duty is not leviable, the employee cannot be faulted, and the charges against him of violation of the Central Excise Rules, 2002 are not sustainable - The penalty imposed on him is set aside and his appeal is allowed. [Read less]

2026-VIL-247-GSTAT-GZB | Tribunal SGST

GST - Validity of demand under Section 73 of the CGST Act, 2017 raised on aggregate return mismatch without particulars in the SCN – Appellant initially treated supplies made in the earlier year as inter-State and paid tax under IGST, later found them to be intra-State and amended the invoices in GSTR-1 of the following year - On comparison of GSTR-1 and GSTR-3B, the Department issued an SCN alleging short payment of tax and excess Input Tax Credit invoking Section 16(2)(c) without disclosing the essential facts supporting the demand - Whether the SCN disclosed the essential facts supporting the demand and whether the later order, reply or appeal could cure the omission - HELD - Section 73 requires a meaningful SCN before an adverse determination, which must tell the taxpayer what factual case is proposed and why the stated amount is recoverable. The Sections 75(6) and 75(7) bar an order from supplying a case or grounds not specified in the notice - The SCN contained only a comparison of returns and general conclusions of short payment, improper passing of credit and non-payment by suppliers, without identifying disputed invoices, dates, suppliers, recipients or supplies. Mere reference to Section 16(2)(c) cannot replace such particulars - The SCN is the foundation of the departmental case and vague allegations lacking necessary details deny a proper opportunity to answer - Department cannot travel beyond the SCN or convert an aggregate mismatch into an unnotified case of fictitious invoices or non-receipt of supplies. Knowledge of the amount sought does not amount to knowledge of the case to be met, although no inflexible rule is laid down that every mismatch notice must reproduce every invoice - The defect being substantial and not cured by the reply, adjudication or appeal. The demand is set aside and the appeal is allowed - Appropriation of IGST paid on supplies later held to be intra-State towards CGST and SGST liability - Sections 77 of the CGST Act and 19 of the IGST Act - Appellant sought appropriation of IGST already paid on the disputed supplies towards the corresponding CGST and SGST - Revenue contended that tax must be paid under the correct head followed by a refund claim - Whether the earlier IGST payment can be appropriated towards CGST and SGST without insisting on a second deposit - HELD - Section 77(2) of the CGST Act and Section 19 of the IGST Act recognise the obligation to correct a mistaken classification but do not confer an unrestricted right of unilateral cross-head adjustment, and payment of one levy does not automatically discharge another. However, the Revenue cannot ignore an established payment that has discharged the liability, and the right to correct clerical or arithmetical mistakes flows from the right to do business - The taxpayer must establish the identity and availability of the payment, while the competent authorities must carry out the correction with separate accounting of any excess or shortfall. Revenue neutrality must be demonstrated by matching the disputed supplies, their value, rate, original payment and later liability, and by confirming that the amount has not been refunded, restored to the ledger or adjusted elsewhere, and once established, collecting the same amount again serves no purpose and offends proportionality – The jurisdictional proper officer shall arrange appropriation of the IGST already paid on the disputed supplies towards the corresponding CGST and SGST through reconciliation of accounts between the Centre and the State - Leviability of consequential penalty under Section 73 of the CGST Act, 2017 where the demand proceeding lacks a sufficient SCN - Whether the penalty can survive when the demand fails - HELD - Section 73 applies to cases not involving fraud, but the absence of fraud does not automatically exclude a penalty, and the provision does not impose a penalty on every corrective entry. If the finding of tax short paid or credit wrongly availed fails, a penalty based on it cannot survive independently. The penalty cannot be maintained on a demand proceeding that lacks a sufficient SCN - The penalty is set aside, the relief already granted from interest and the dropping of the Input Tax Credit proposal are maintained, and the appeal is allowed. [Read less]

2026-VIL-249-GSTAT-HYD | Tribunal SGST

GST - Non-speaking order, Validity of orders of the adjudicating authority and FAA confirming demand under Section 73 without considering evidence placed on record - Whether the orders rejecting the claim in a cryptic and non-speaking manner on the ground that no documentary evidence was produced can be sustained - HELD - The record, including written submissions bearing acknowledgement stamps of receipt, shows that the Appellant had submitted documents in support of its claim. The contention of the adjudicating authority and the FAA that no evidence was produced is not correct. The statement of the Respondent that no documentary evidence was produced is untrue and devoid of merit. Passing a non-speaking order without reasons or discussion on the evidence produced is unfair and against the basic canons of judicial process – The findings in the impugned order were arrived at without considering the evidence produced by the Appellant, and such an order cannot be sustained. The orders passed without considering the reply and lacking application of mind is quashed – The appeal is disposed of - Entitlement to claim exemption under Serial No. 20 of Notification No. 12/2017-Central Tax (Rate) for transportation of agricultural produce by rail at a later stage - HELD - The sample parcel way bills show that the goods transported were hatching eggs. The Railway Board circular clarifies that fresh eggs in shell on which no further processing is done are covered under agricultural produce, so the exemption appears to be available. The Notification exempts unconditionally the services by way of transportation of agricultural produce by rail from one place in India to another - Even if an applicant does not claim the benefit under a particular Notification at the initial stage, it is not debarred from claiming such benefit at a later stage. The GST authorities had themselves granted the benefit of the same exemption to the Appellant for a later year - The Appellant deserves a chance to claim the benefit of the exemption Notification if otherwise eligible, the impugned order is set aside, and the matter is remitted to the original adjudicating authority to pass a fresh order. [Read less]

2026-VIL-248-GSTAT-HYD | Tribunal SGST

GST - Refund of unutilised Input Tax Credit accumulated on account of inverted duty structure - Applicability of restriction under Notification No. 09/2022-Central Tax (Rate) read with Circular No. 181/13/2022-GST to refund applications filed on or after 18.07.2022 - Appellant, a manufacturer of edible oils, filed a refund application for refund of accumulated Input Tax Credit on 18.06.2022, withdrew it, and filed a fresh application on 25.03.2023 for the same period - Rejection of refund solely because it was filed after 18.07.2022 - Whether the refund of ITC accumulated before 18.07.2022 can be denied solely because the ... [Read more]

2026-VIL-1223-BOM | High Court SGST

GST - Pre-deposit for appeal against disputed interest alone - Sections 107(6) and 112(8) of the CGST Act, 2017 - SCN for interest under Section 50 on the delayed payment - Respondent contended that interest is compensatory, that it arises automatically on admitted self-assessed tax paid late - Whether the percentage-based pre-deposit under Section 112(8)(b) is required where only interest is in dispute and the entire tax has been paid - HELD - Section 107(6) and Section 112(8) require deposit in full of the admitted amount of tax, interest, fine, fee and penalty and a sum equal to ten per cent. of the remaining amount of tax in dispute. The provisions make no mention of any deposit towards interest where interest alone is under challenge. There is therefore no requirement of pre-deposit of interest when the entire amount of tax has been paid - The FAA did not insist on any pre-deposit of interest, and the Tribunal accepted the appeal and issued an acknowledgment without such pre-deposit, given the undisputed fact that the entire tax had been deposited. The merits of the interest demands, including the tax base, payment dates and computation, remain for decision in the pending appeals, and the contentions on payment under protest and on refund are kept open - The percentage-based pre-deposit under Section 112(8)(b) does not extend to disputed interest alone where the entire tax has been paid - The writ petitions are allowed - Recovery of disputed interest during pendency of appeal before the Tribunal - Sections 79(1)(c), 107(7) and 112(9) of the CGST Act, 2017 - Petitioner contended that upon compliance with Section 112(8), recovery of the balance amount is deemed stayed under Section 112(9) until disposal of the appeal, and that the recovery and the restrictions on its bank accounts hampered its business - Respondent supported the recovery on the ground that the interest arose on admitted self-assessed tax paid late and was recoverable under Section 75(12) read with Section 79 - Whether recovery of the disputed interest by bank notices is permissible while the appeal is pending before the Tribunal - HELD - Once the appellant has made the statutorily required pre-deposit, recovery proceedings for the balance amount are deemed to be stayed under Section 107(7) at the first appeal stage and under Section 112(9) until disposal of the appeal before the Tribunal. Since no pre-deposit of interest is required where the entire tax is paid and only interest is in dispute, the Petitioner is entitled to the protection of Section 112(9) - The recovery initiated is in the teeth of Section 112(9), the recovery communications and the bank notices are quashed insofar as they seek recovery of the interest covered by the pending appeals - The Respondent is directed to withdraw the bank notices, communicate the withdrawal to the banks and lift the debit restrictions imposed solely pursuant to them. [Read less]

2026-VIL-258-GSTAT-BLR | Tribunal SGST

GST - Status of para-wise remarks filed by the officer who passed the order-in-original - Appellant challenged an order-in-appeal upholding a demand under Section 73 of the CGST Act, 2017 and named the Commercial Tax Officer who passed the order-in-original as a respondent - The para-wise remarks were filed by that officer, and the Appellant contended that he was an interested party who could not speak for the other respondents, that the remarks defended the order-in-original rather than the order under appeal, and that they appeared to have been prepared with an AI tool - Whether the para-wise remarks can be read as the stand of the Revenue - HELD - The Appellant himself named the officer as a respondent in Form GST APL-05, and a party to an appeal is entitled to answer it. The officer has no personal stake in the result and acts for the Revenue, whose interest is that the tax lawfully due, and no more, is collected. The remarks gain no added weight because they come from the officer who passed the order, and they lose none. The objection that he could not speak for the other respondents does not survive, as the State Representative filed written submissions for all the respondents - Where an appellate authority affirms the decision under appeal, that decision merges in the appellate decision, so the Revenue may support the demand on the reasons given in either order. How a party prepares its pleadings is its own choice, since the content must rest on the record and the law, and the substance of pleadings is to be considered rather than their form. Read for their substance, the remarks state the Revenue's answer to each ground, and the Appellant met that answer in his rejoinder - The para-wise remarks are taken as the stand of the Revenue, and the issue is answered in favour of the Revenue - Natural justice - Opportunity of hearing before the adjudicating authority and the FAA - Appellant received an intimation in Form GST DRC-01A and an SCN, filed a reply to the SCN, did not attend any of the four hearings fixed by the adjudicating authority, and was heard by the FAA - Whether the principles of natural justice were followed in the proceedings below - HELD - The record shows that an opportunity of hearing was given at every stage - A person who is given an opportunity and does not use it cannot later say that he was denied it, and the Appellant pointed to no document relied on but not supplied and no request for a hearing that was refused. Section 160(2) protects the service of a notice or order from a belated challenge and does not answer the Appellant's grievance, as service was not disputed. Natural justice, however, requires more than fixing dates of hearing, since the noticee must be told the case he has to meet and his reply must be considered before a decision is taken against him - The grievances that the explanation was rejected for a reason never put to the Appellant and that the documents produced in appeal were not considered concern the treatment of the explanation and are examined on merits - The Appellant was given an opportunity of hearing at every stage, and the issue is answered against the Appellant on this limited aspect - Jurisdiction - Whether scrutiny of returns under Section 61 with a notice in Form GST ASMT-10, or an audit under Section 65 ending in Form GST ADT-02, is a condition precedent to a notice under Section 73 of the CGST Act, 2017 - HELD - The Act rests on self-assessment, and scrutiny, audit and adjudication occupy different fields. Section 61 and Section 65 are mechanisms of verification which end in an intimation of discrepancies or in findings, and neither has any power to determine tax. Section 73 is a self-contained machinery of determination with its own trigger, pre-notice intimation, SCN, reply, hearing and appealable order - Section 61(3) and Section 65(7) point to Section 73, whereas Section 73 points back to neither and speaks only of where it appears to the proper officer, which requires material on record and not suspicion - Where the only material is a discrepancy in the registered person's own returns, fairness calls for him to be told of it and allowed to explain it, and that purpose was served by the intimation in Form GST DRC-01A. The words correctness of returns and discrepancies are not peculiar to Section 61 and do not identify the power used. Section 160(1) cures a mistake of form and cannot supply jurisdiction, but jurisdiction was not absent - The absence of Form GST ASMT-10 and Form GST ADT-02 does not by itself invalidate the proceedings, and the challenge to jurisdiction fails - Effect of findings in scrutiny or audit on the adjudicating authority - Section 61(2) and Section 65 of the CGST Act, 2017 read with Section 73(9) - Appellant contended that a discrepancy noticed in a scrutiny or an audit binds the officer who later adjudicates under Section 73 - Whether findings of a scrutiny or an audit bind the adjudicating authority - HELD - A scrutiny ends in an intimation and an audit ends in findings, and neither determines a liability, so there is nothing to bind. Res judicata and estoppel do not operate in this manner in tax proceedings, and an intimation processes a return without assessing it. The closure under Section 61(2) bars further action only in this regard, which covers the discrepancy explained on the material then before the officer and is not a determination of tax - Section 73(9) casts a quasi-judicial duty of determination on the proper officer after considering the representation of the noticee, who must come to the SCN with an open mind. An authority that treats an audit finding as settling the matter adopts the judgment of the auditor and turns the hearing into a formality - The rule works both ways, since the registered person is not bound by the discrepancies reported against him and the Revenue is not bound by a favourable audit or a closed scrutiny when it acts under Section 73 on other material - Findings of a scrutiny or an audit do not bind the adjudicating authority for or against the registered person, and the issue is decided accordingly - Competence of an officer of the Audit wing to proceed under Section 73 without an audit - Whether Section 65(7) bars an officer of the Audit wing from proceeding under Section 73 without an audit - HELD - Section 73 confers its power on the proper officer, and the power attaches to the function assigned and not to a designation. The assignment issued by the Joint Commissioner authorised action under Section 73, nothing was shown to the contrary, and a word in a designation cannot take away a function assigned by law - The maxim expressio unius est exclusio alterius cannot be applied, since it would make Section 61(3) and Section 65(7) exclude each other, and the rule that a special provision prevails over a general one resolves a conflict that does not exist here. The reading urged would require a full audit to examine a difference visible on the common portal and would lead to absurdity - The Board's instructions and circulars on scrutiny and audit selection cannot impose a restriction on a statutory power which the Act does not contain - Section 65(7) enables action under Section 73 on the results of an audit and neither confers nor confines the power, the officer to whom the function was assigned had jurisdiction, and the objection fails - Demand under Section 73 on difference between GSTR-1 and GSTR-3B - Burden of proof and treatment of the explanation of duplicate reporting - Whether the Appellant has shown that the excess of tax in GSTR-1 over GSTR-3B is one supply reported twice, on whom the burden lay - HELD - Tax is charged on a supply, and a return reports a supply but cannot by itself create one. A difference between GSTR-1 and GSTR-3B is legitimate material and a lawful foundation for the notice, but it is not conclusive proof of a further taxable supply. The burden moves in stages, as the Revenue discharge [Read less]

2026-VIL-257-GSTAT-BLR | Tribunal SGST

GST - Compensation Cess - Measurement of ground clearance under Entry 52B of Notification No. 01/2017-Compensation Cess (Rate) for supplies made before 26.07.2023 – Appellant sold three models of vehicles on which cess was charged at 20% under Entry 52A - Respondent alleged that they fell under Entry 52B attracting 22% as their unladen ground clearance exceeded 170 mm, relying on the Explanation added by Notification No. 03/2023 - Whether, for supplies made before 26.07.2023, ground clearance under Entry 52B was to be measured in laden or in unladen condition - HELD - Entry 52B applied only when all four conditions were met, and a vehicle failing any one fell in Entry 52A. Neither the Cess Act nor the Rate Notification defined ground clearance, and a vehicle has no single ground clearance until the law says how it is to be measured - A word left undefined in a fiscal entry is read in the sense understood by those who deal in the goods, and ground clearance is a technical term of automobile engineering whose measurement is fixed by the standard under which vehicles are type-approved. No Indian standard measures ground clearance in unladen condition, and the Respondent's own SCN recorded that the certified figure is the laden figure - The distinction between minimum ground clearance and ground clearance is not supported by Clause 5.8, as the word minimum points to the place where the distance is taken and the load is dealt with separately - For supplies made before 26.07.2023, ground clearance under Entry 52B was to be measured in laden condition - The orders of the FAA and the adjudicating authority are set aside, and the appeal is allowed - Prospective operation of the substituted Entry 52B and its Explanation on unladen ground clearance - Notification No. 03/2023-Compensation Cess (Rate) and Circular No. 247/04/2025-GST - Notification substituted Entry 52B to cover all utility vehicles by whatever name called and added an Explanation that ground clearance means ground clearance in unladen condition - Whether the substituted entry with its Explanation operates retrospectively for supplies made before the amendment - HELD - The notification did more than add an Explanation, as it substituted the whole entry, widened the class of vehicles and fixed the unladen measure, thereby bringing into the entry vehicles that were outside it and enlarging the burden of cess, which is a change in the law and not a clarification - A provision that imposes a new burden or enlarges an existing one is presumed to be prospective unless it provides otherwise expressly or by necessary implication - An Explanation which changes the law does not operate retrospectively merely because it is so called - The Board's Circular issued under Section 168(1) clarifies that the amendment applies on or after 26.07.2023, such circulars bind the Department - The substituted entry with its Explanation operates only from 26.07.2023 and does not apply to earlier supplies - The issue is decided in favour of the Appellant - Evidence of ground clearance and burden of proof - Appellant produced certificates issued by the Automotive Research Association of India for the three models recording laden ground clearance below 170 mm - Respondent relied on the website of a foreign subsidiary of the manufacturer - Whether the Respondent proved that the vehicles had ground clearance of 170 mm and above in the applicable measure - HELD - The certificates are issued after statutory testing of the very models sold in India - The foreign figures relate to vehicles made for another market, nothing shows that they share the specifications of the Indian variants. The burden of proving that goods fall under the entry invoked lies on the Revenue, and both authorities erred in placing it on the Appellant by faulting it for not proving the unladen figure - The Respondent had the power under Section 70(1) to summon the manufacturer for declared specifications and to obtain test reports from the certifying agency but used neither, and no vehicle was examined on the only contested condition. A computer printout may be admissible under Section 145, but admissibility is not proof, and a finding resting on suspicion, conjecture or surmise cannot stand - Where the rate turns on a physical measurement, the Revenue must prove it by evidence that can be tested. Even if the unladen figures were correct they would not matter for earlier supplies, and payment at the higher rate after the amendment shows only that the new entry was obeyed and cannot corroborate a demand for the earlier period - The certificates are the reliable evidence, the vehicles did not satisfy the fourth condition of Entry 52B during the disputed period - The issue is decided in favour of the Appellant - Demand, interest and penalty under Sections 50 and 73(9) of the CGST Act, 2017 read with Section 11 of the Cess Act - SCN covered supplies up to 31.07.2023, which includes supplies after 26.07.2023 to which the substituted entry applies - Appellant contended that with no short payment there can be no interest, and that a penalty cannot rest on a failed demand - Respondent accepted that a penalty resting solely on a demand that finally fails ordinarily cannot survive - Whether the demand, interest and penalty can be sustained - HELD - The demand rests on reading the unladen measure into the period before 26.07.2023, and that reading fails. For supplies from 26.07.2023 the Respondent did not separate them, did not quantify any short payment and did not show that cess was charged at the lower rate, as its own notice and submissions record that the higher rate was charged after the amendment, and a demand must rest on proof of short payment. The figures in the SCN also do not reconcile, as the computation did not match the stated taxable value and the amount confirmed did not match the computation on which it rested - Interest is compensatory and geared to the tax actually withheld, so with no tax unpaid no interest is due. A penalty under Section 73(9) can be imposed only on a person from whom tax is determined to be due, so it falls with the demand, and the reference to Section 122(2)(a) does not arise as the penalty was imposed under Section 73(9) alone - The demand of differential Compensation Cess, the interest and the penalty are set aside. [Read less]

2026-VIL-255-GSTAT-BLR | Tribunal SGST

GST - Validity of adjudication initiated by a summary in Form GST DRC-01 without an SCN under Section 73(1) of CGST Act, 2017 - Appellant contended that no SCN was issued and that the summary did not disclose the taxable value, factual basis or reasoning - Whether service of a summary in Form GST DRC-01 without an SCN validly initiates adjudication - HELD - Rule 142(1) requires the summary to be served along with the notice issued under Section 73, so the summary accompanies the notice and does not replace it. The SCN is the foundation of adjudication and a mandatory precondition for raising a demand. The High Courts of Guwahati and Jharkhand have held that a summary cannot substitute the notice under Section 73(1) - Section 65(7) provides that even after an audit the action must be initiated under Section 73 or Section 74, and the final audit report is not such a notice. Section 160 does not help the Respondent, as absence of the notice is not a mere defect, the summary stating no grounds is not in substance a notice, and the Appellant raised the objection at every stage - The adjudication order and the order of the FAA are not sustainable as the adjudication without an SCN is without authority of law and contrary to natural justice – The impugned order is set aside and the appeal is allowed - Adverse adjudication order passed without personal hearing - Section 75(4) of CGST Act, 2017 and natural justice - The adjudication order was passed confirming the demand in the summary, without any date of hearing being communicated, and two days before the Appellant's reply was sent, so that the reply was never considered - Whether an order passed without an opportunity of hearing violates Section 75(4) and natural justice - HELD - Delay in filing the reply does not take away the right of hearing before an adverse order. Section 75(4) makes it mandatory to grant an opportunity of hearing where any adverse decision is contemplated, even if no request is made - The failure to afford a personal hearing vitiates the proceedings. The principle that a reasonable opportunity does not automatically mean an oral hearing applies only where the statute is silent - Failure to give a personal hearing completely vitiates the proceedings, and the adjudication order and the order of the FAA cannot be sustained on this ground also - Absence of Document Identification Number or Reference Number on Form GST DRC-01 and adjudication order - Whether the communications are invalid for want of DIN or RFN - HELD - The CBIC circulars requiring DIN were issued to implement the decision for communications by officers of the Board and bind only those officers, and the State Department issued no corresponding circular during the relevant period - The Circular of the State Department instructing generation of RFN for physically generated communications was issued only in 2023, after the initiation of the matter - For the relevant period the Tribunal is not inclined to hold that the summary and the adjudication order communicated through electronic mode without DIN or RFN are invalid, and the issue is decided against the Appellant - Confirmation of demand by the FAA on grounds not set out in the adjudication order - Appellant was held liable on the heads of hiring charges and loan documentation charges under reverse charge in the adjudication order, whereas the FAA held that the amounts related to services from an unregistered outdoor caterer taxable under reverse charge or to meal charges collected from employees - Whether the FAA could sustain the demand on grounds not set out in the adjudication order - HELD - The adjudication order did not discuss these points, and the FAA gave findings on new grounds. If the FAA found merit in a demand on account of services from the caterer under reverse charge or on recoveries from employees under forward charge, the Appellant should have been put on notice and its submissions obtained. A point raised by the Appellant in its defence does not become a charge against it - The FAA could not confirm the demand on a new legal basis never put to the Appellant in any notice, and the issue is answered in favour of the Appellant - Liability to pay tax under reverse charge on expenses towards office meals under Section 9(3) and Section 9(4) of CGST Act, 2017 - Notification No. 13/2017-Central Tax (Rate) - Two line items of office meals remained unresolved in audit, while two similar line items were closed on the ground that services were procured from registered dealers, and the authorities demanded tax on the whole year - Whether the Appellant was liable to pay tax under reverse charge on these expenses and whether interest and penalty are sustainable - HELD - Section 9(3) applies to notified categories of supply and outdoor catering is not among them, while Section 9(4) liability on supplies from unregistered persons operated only from 01.07.2017 to 12.10.2017 and intra-State supplies up to the daily limit were exempt during that period. The record does not show under which provision the demand was raised, and none of the authorities identified the correct provision and notification. The supplies in the relevant period or the supplies within the exemption - Tax cannot be demanded on assumptions or presumptions, an audit cannot create a confirmed demand without determination under Section 73 or 74, and wrong citation of a section can be ignored only where the notice sets out clear factual grounds, which was not so here. The amount appeared under the expenses head and not under receipts, and tax is levied on a supply, which, together with its value and the person liable, was not established - The Respondent failed to establish liability under Section 9(3) or Section 9(4), the demand fails on merits, and as the tax fails the interest and penalty also fall, so that the orders are set aside, the appeal is allowed. [Read less]

2026-VIL-1220-HP | High Court VAT

Himachal Pradesh VAT Act, 2005 - Maintainability of civil revision before the High Court against order of Tribunal rejecting rectification application under Section 47(1) of the HP VAT Act, 2005 - Petitioner's appeal was dismissed by the Appellate Authority, and its civil revision before the High Court under Section 48 was withdrawn with liberty to file an appropriate application or review before the Tribunal - Petitioner thereafter filed a rectification application under Section 47(1), which was rejected as no mistake apparent from the record was found, and Petitioner approached the High Court again seeking quashing of th... [Read more]

2026-VIL-1819-CESTAT-CHE-CU | CESTAT CUSTOMS

Customs - Penalty under Sections 112(a) and 114AA of the Customs Act, 1962 on a freight forwarder's employee - Facilitation of import of imitation stones by undervaluation through misuse of Importer Exporter Code obtained on rent - DRI investigation revealed an alleged scheme of importing branded glass chatons by gross undervaluation using Importer Exporter Codes obtained for consideration - Appellant, Assistant Manager of a logistics company, was alleged in his statements to have introduced the importer to a Customs clearing agent at Chennai and provided a contact who could arrange Importer Exporter Codes on rent - Commis... [Read more]

2026-VIL-1217-AP | High Court SGST

GST - Cancellation of bail granted in alleged fake Input Tax Credit racket involving fictitious firms - Challenge to the order granting regular bail as perverse - Section 132(1)(i) of the CGST Act, 2017 - Petitioner, the investigating agency, sought under Sections 483(3) and 528 of the BNSS to set aside the order of the Special Judge granting regular bail to Respondent No.2, alleged to be the mastermind of a syndicate that created shell entities and generated bogus invoices - Respondent No.2 contended that bail once granted should not be cancelled mechanically - Whether the order granting bail is perverse, illegal or unjust so as to be set aside - HELD - The law draws a clear distinction between an appeal-like challenge to an order of bail as perverse, illegal or unjust and cancellation of bail on account of supervening circumstances, and the power to cancel bail must be exercised sparingly as it results in loss of liberty already enjoyed. The Special Judge noted the gravity of the allegations, correctly observed that economic offences must be viewed seriously, and applied the established considerations including the nature of the offence, the punishment prescribed, the period of custody, the stage of investigation, the documentary and electronic nature of the evidence and the fact that custodial interrogation was not contended to be required - The decisions relied on by the Petitioner hold that economic offences are a distinct class but do not lay down that bail must be refused in every such case, and seriousness of the allegation is one factor to be balanced against the object of bail, which is to secure the presence of the accused and not to impose pre-trial punishment. The finding on completion of investigation was confined to seizure of records and collection of material and is borne out by the record, and remaining verification and tracing can proceed without custody of Respondent No.2. The plea of parity was not the foundation of the order – Further, an accused is entitled to remain silent and cannot be compelled to furnish self-incriminating material. Failure to produce records within the time sought is a matter for the Department to pursue through lawful process, and it does not by itself justify cancellation - There is no perversity, illegality or non-application of mind in the order granting bail, and the Criminal Petition is dismissed [Read less]

2026-VIL-245-GSTAT-DHR | Tribunal SGST

GST - Refund of tax paid on cancelled booking of flat - Limitation for refund claim filed by unregistered buyer under Section 54(1) of the CGST Act, 2017 – Appellant booked a flat in a residential project under a tripartite agreement with a construction-linked payment plan and paid the basic value along with CGST and SGST, which the developer deposited with the Government - On cancellation of the agreement the developer refunded the amount paid except the GST, since the time limit for issuing a credit note under Section 34 had lapsed - Appellant filed the refund claim, which was rejected as time barred by the adjudicating authority and the FAA - Whether the refund claim filed on 09.03.2023 was barred by limitation - HELD - Prior to cancellation the agreement was subsisting, so no cause of action accrued to the Appellant to seek refund of the GST before that date. The Circular No. 188/20/2022-GST, dated 27.12.2022, could not have been complied with before it was issued, it nowhere provides for retrospective application and it cannot be operated retrospectively to prejudice the rights of the Appellant, who acted vigilantly and promptly in pursuing her claim through the CM Helpline - Notification No. 13/2022-Central Tax, deemed to be in force from 01.03.2020, excludes the period from 01.03.2020 to 28.02.2022 for computation of limitation for filing refund application under Section 54 or Section 55. After excluding that period, the claim was filed within the two year period prescribed, and both authorities below failed to consider the legal implications of the Notification, causing manifest injustice to the Appellant - The refund claim is held not barred by limitation - Admissibility of refund of GST borne by buyer of flat on cancellation of agreement, unjust enrichment and interest - Appellant had borne the CGST and SGST deposited by the developer with the Government, and the developer on cancellation refunded the amount paid except the GST - Whether the refund is admissible on merits, whether it is hit by unjust enrichment and whether interest is payable - HELD - The ledger account of the Appellant maintained by the developer shows that GST was paid, the information required in Statement 8 is on record, and all substantive conditions of Rule 89(2) of the CGST Rules stand satisfied. It is admitted that the developer deposited the full amount of tax and that the tax was borne by the Appellant. The CBIC Circular dated 27.12.2022, which lays down the manner of filing refund claims by buyers of flats in similar circumstances, squarely applies since the Appellant bore the incidence of tax, and it is binding on the Department and its officers. The Appellant being a buyer of a residential flat and the ultimate consumer, there is no question of unjust enrichment - The order of the adjudicating authority and the order of the FAA are set aside, the appeal is allowed. [Read less]

2026-VIL-190-AAR | Advance Ruling Authority SGST

GST – Tamil Nadu AAR – Classification of supply, erection, testing and commissioning of fire protection system is a composite supply under Section 2(30) of the CGST Act, 2017 - Applicant, engaged in supply, installation, testing and commissioning of fire protection systems comprising pumps, pipes, valves, hydrants, compressors and allied equipment to private industries and Government institutions, sought a ruling on the nature of the supply - Sample work order showed the Applicant was required to supply the listed items and also to undertake erection, testing and commissioning - Whether the supply of goods together with erection, testing and commissioning constitutes a composite supply - HELD - Section 2(30) defines composite supply as two or more taxable supplies that are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. In the contract for the fire protection system, the supply of goods and the erection, testing and commissioning services are naturally bundled and supplied in conjunction with each other - The supply is held to be a composite supply as defined under Section 2(30) of the CGST Act – Ordered accordingly - Whether fire protection system is movable or immovable property for the purpose of levy of GST - Applicant contended that the system is equipment mounted on an existing civil structure, not permanently attached to the earth and capable of being dismantled and reassembled - Work order required the Applicant to clear the site, build RCC pedestals or platforms, do electric wiring, install pipes, valves and gauges, connect the whole system and carry out testing and commissioning - Whether the fire protection system is to be regarded as movable or immovable property - HELD - The components supplied and installed at the building or premises are intended to provide a permanent fire-protection infrastructure for the facility, and are not meant to be removed and relocated without substantial dismantling. The completed system therefore assumes the character of immovable property for the purpose of levy of GST - The fire protection system is held to be immovable property - Works contract under Section 2(119) of the CGST Act, 2017, classification under SAC 9954 and applicable rate of tax on contract for supply, erection, testing and commissioning of fire protection system - Applicant claimed that the contract is a works contract covered under SAC 9954 and chargeable at 12%, and that the concessional rate for works contract involving predominantly earth work provided to Government is available - Whether the contract qualifies as a works contract under Section 2(119), is covered under SAC 9954 and is chargeable at 12% - HELD - The fire protection system involves transfer of property in goods and erection, testing and commissioning of an immovable property, so the contract assumes the character of a composite supply of works contract under Section 2(119) and is treated as a supply of services under para 6 of Schedule II - Heading 9954 covers construction services, and the electrical installation work falls under SAC 995461 while the firefighting water piping, sprinkler and hydrant network installation falls under SAC 995462 as per the Scheme of Classification of Services. The sample work order requires excavation and backfilling, which are part of earth work, but the charges for the same are a minuscule portion of the total contract amount. The works contract services to Government therefore do not get covered under the entry for works contract involving predominantly earth work, being more than 75 per cent of the contract value, and the 6% rate for intra-State supply sought by the Applicant is not applicable - The contract is held to be a works contract covered under SAC 9954 but not chargeable at 12%. [Read less]

2026-VIL-244-GSTAT-KLK | Tribunal SGST

GST - Refund of accumulated Input Tax Credit due to inverted duty structure under Section 54(3)(ii) of the CGST Act, 2017 where inputs and output supplies are the same - Respondent, a trader of tea, purchased bulk tea and packing materials and supplied packaged tea at 5%, whereas packing materials attracted 18% - Refund claim was rejected by the Refund Sanctioning Authority on the ground that inward and outward supplies are the same commodity attracting the same rate of tax - Whether the Respondent-assessee is eligible for refund of accumulated Input Tax Credit under Section 54(3)(ii) - HELD - The issue is squarely covered... [Read more]

2026-VIL-1225-ALH | High Court SGST

GST - Service of SCN only through the Common Portal after cancellation of registration - Ex parte adjudication and penalty orders - Petitioner's registration was cancelled and SCNs were issued only electronically through the Common Portal more than three years thereafter - Whether the ex parte orders can be sustained where notices were served only through the Common Portal after cancellation of registration - HELD - A Circular of the Commissioner issued binding instructions to subordinate authorities to ensure service of physical notice on noticees facing adjudication proceedings initiated after cancellation of registratio... [Read more]

2026-VIL-1218-DEL | High Court SGST

GST - Maintainability of writ petition against order confirming demand of Input Tax Credit - Recovery of Input Tax Credit availed on invoices of non-existent suppliers with interest and penalties – Petitioner sought to read down Section 155 on the ground that the Department had not returned certain seized records, which prevented them from establishing eligibility for credit - Whether the Court should entertain the challenge in writ jurisdiction and read down Section 155 - HELD - Section 155 places the burden of establishing eligibility for Input Tax Credit upon the person claiming it, and the grievance concerning unavailable records can be examined without reading down that provision, as the statutory allocation of the burden and the effect of the absence of particular documents are distinct questions. It is necessary to examine which records remain unavailable, their relevance to the disputed transactions, the prejudice occasioned by their absence and whether the material supplied or reconstructed was duly considered, and these questions require examination of the record and can appropriately be addressed in appeal - The Department's recorded inability to furnish the seized documents must form part of that consideration when assessing whether the statutory burden has been discharged - The Court is not inclined to entertain the challenge in writ jurisdiction. The petitioners are relegated to the statutory appeal under Section 107 – The petition is disposed of - Demand reflected in Form GST DRC-07 exceeding the demand confirmed by the order and the SCN - Section 75(7) of the CGST Act, 2017 - Petitioners contended that the demand reflected in Form GST DRC-07 exceeded the amount specified in the SCN and confirmed by the impugned order, contrary to Section 75(7) - Respondents produced a communication stating that steps were being taken to rectify the error, and acknowledged in the counter-affidavit that multiple summaries had been generated owing to a technical glitch in the GST portal - Whether the Respondents are to rectify the erroneous repetition of the demand in the Forms GST DRC-07 and how the pre-deposit for appeal is to be determined - HELD - In view of the stand taken by the Respondents, the erroneous repetition of the demand in the summaries is to be rectified, the corrected summaries must faithfully reflect the demand confirmed by the impugned order, and the necessary consequential corrections must be made on the common portal and communicated to the Petitioners - For the purpose of availing the appellate remedy, any statutory pre-deposit shall be determined in accordance with the applicable provisions on the basis of the demand actually confirmed by the impugned order, without giving effect to the erroneous repetition in the summaries - The Respondents are directed to rectify the Forms GST DRC-07 - The petition is disposed of [Read less]

2026-VIL-1224-GUJ | High Court VAT

Gujarat VAT Act, 2003 - Set-off of tax payable under the VAT Act against available Input Tax Credit, Remedy against excess credit carried forward through TRAN-1 - Respondent had Input Tax Credit disallowed by the Assessing Officer for the period prior to GST, without adjusting the tax liability – Dept-Appellant contended that excess credit was wrongly availed in TRAN-1 contrary to the GST Act - Whether the Tribunal erred in permitting set-off of the VAT liability against the available credit and directing recalculation, despite the excess credit carried forward in TRAN-1 - HELD - It is not in dispute that the available c... [Read more]

2026-VIL-1216-GUJ | High Court VAT

Gujarat VAT Act, 2003 - Set off of available Input Tax Credit against tax liability under the VAT Act and CST Act before carry forward through GST TRAN-1 – Respondent was assessed to a CST demand for failure to produce C Forms, and its appeal before the FAA was dismissed for non-payment of pre-deposit - Tribunal in second appeal held that the available surplus ITC under the GVAT Act was first to be adjusted against the tax liability under the VAT Act and CST Act, leaving carry forward ITC lower than claimed in TRAN-1 and dispensed with pre-deposit and remanded the matter - Whether the Tribunal was justified in directing that the available ITC be adjusted against the tax liability under the VAT Act and CST Act and the balance alone be carried forward - HELD - It is not in dispute that surplus ITC was available for adjustment against the tax liability under the GVAT Act and CST Act. The Tribunal was therefore justified in directing the FAA to adjust the available ITC against the tax liability and to determine the balance ITC available to be carried forward - The decisions cited by the State, though accepted as correct, do not apply on the facts, since the question here is entitlement to set off under the VAT Act - The Tribunal was justified under the provisions of the VAT Act in holding that the assessee was entitled to set off of the tax payable against the available ITC - The Revenue appeal is dismissed - Remedy of the VAT Department where ITC carried forward in TRAN-1 exceeds the credit actually available - Rule 117 and Rule 121 of the GST Rules, 2017 - State contended that the Assessing Officer was justified in considering the ITC carried forward in TRAN-1 to deny set off and to tax the differential amount which was not available for carry forward - Tribunal observed that it was open to the Government to take remedial steps - Whether the VAT authorities can tax the differential amount on the ground of excess credit carried forward in TRAN-1 - HELD - Under Rule 117(3) the amount of credit specified in TRAN-1 can be credited to the electronic credit ledger, and under Rule 121 the GST Department may verify the amount so credited and initiate proceedings under Section 73 or Section 74 of the GST Act in respect of any credit wrongly availed, wholly or partly. The Assessing Officer ought to have informed the concerned GST Department of the amount of credit not available to the assessee, since the available ITC was required to be adjusted against the tax liability under the GVAT Act and CST Act and only the balance was available for carry forward - It is for the GST Department to take action under Rule 121 for any wrong ITC availed through TRAN-1, and the only remedy available to the VAT Department is to inform the concerned GST officer of such facts coming to its knowledge - The contention of the State is not accepted and the order of the Tribunal is sustained. [Read less]

2026-VIL-1827-CESTAT-MUM-CE | CESTAT CENTRAL EXCISE

Central Excise - Eligibility to CENVAT credit on steel materials used for fabrication of spares, accessories and supporting structures of sugar manufacturing machinery under Rule 2(a) of CENVAT Credit Rules, 2004 - Appellant, a manufacturer of sugar and molasses, availed CENVAT credit of duty paid on steel materials such as beams, angles, channels and plates, and declared the same in its records and ER-1 returns - The Department sought reversal of the credit on the ground that these goods are not capital goods, and an SCN invoking the extended period proposed recovery with interest and equal penalty, which was confirmed by the adjudicating authority and the FAA - Appellant contended that the issue is covered by Tribunal decisions including that of the Larger Bench, whereas Revenue relied on the Supreme Court decision holding that such steel structures were not components of capital goods for MODVAT credit - Whether CENVAT credit is admissible on steel materials used for fabrication of spares, accessories and supporting structures of sugar manufacturing machinery - HELD - Capital goods under Rule 2(a) include components, spares and accessories of the specified goods falling under the listed Chapters of the First Schedule to the Central Excise Tariff Act. The major part of the steel materials was used for fabrication of spares, parts and accessories of sugar manufacturing machinery, and the rest for supporting structures. The Larger Bench has clarified that accessories of capital goods are eligible for CENVAT credit, so the Supreme Court decision, rendered for MODVAT credit, cannot be applied. As regards supporting structures, the High Court decision, more consistently followed, holds that machinery cannot be suspended in mid-air and must be suitably supported, so that structural items used for such supporting structures are covered as components, spares and accessories of capital goods - The denial of CENVAT credit is not sustainable, the order of the FAA is set aside and the appeal is allowed [Read less]

2026-VIL-1818-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax - Taxability of commission received after the date on which commission agent service became taxable under Business Auxiliary Service for services rendered before that date - Appellant rendered service of transferring a licence to a third party and raised debit notes for the commission before 09.07.2004, while the commission was received between 09.07.2004 and 31.03.2005 - SCN alleged non-payment of service tax under BAS on the commission received during that period, and the demand was confirmed with interest and penalty and upheld by the FAA on the ground that the commission was received after 09.07.2004 - Appe... [Read more]

2026-VIL-246-GSTAT-SRT | Tribunal SGST

GST - Leviability of GST on assignment of leasehold rights in industrial plot allotted by an industrial development corporation - Binding effect of jurisdictional High Court judgment - Respondent transferred its leasehold rights in an industrial plot to a third party for consideration and initially treated the transaction as non-taxable, but later issued a tax invoice and paid GST with interest through return and Form DRC-03 before issue of SCN - SCN invoked Section 74(1) alleging supply of service classifiable as other miscellaneous services, and the adjudicating authority confirmed the demand with penalties - FAA reclassified the demand under Section 73(1), set aside the penalties under Sections 74 and 122 - Whether GST is leviable on such assignment of leasehold rights and whether the penalties sought by the Revenue can be restored or enhanced - HELD - The case is squarely covered by the judgment of the jurisdictional High Court, which held that assignment of leasehold rights of a plot allotted by the industrial development corporation to a third party for consideration is a transfer of benefits arising out of immovable property and is not subject to levy of GST. The Bombay High Court agreed with that view and held that such an assignment cannot be classified as other miscellaneous services - The jurisdictional High Court judgment holds the field and binds the Tribunal, and the Revenue's intention to seek review does not dilute its binding effect in the absence of any order staying or recalling it. The Respondent having paid tax that was not payable at all, restoring or enhancing the penalty does not arise. The Respondent had not challenged the order of the FAA, so confirmation of tax, interest and the penalty under Section 73 is not before the Tribunal - The appeal filed by the Revenue is dismissed - Invocation of Section 74 and penalty - Whether intent to evade tax is established where taxpayer held a bona fide belief that the transaction was not taxable - Revenue's case rested on a delay of about six months in issuing the tax invoice and a further delay of one month in paying the tax after the invoice was issued - Whether the facts establish suppression with intent to evade tax so as to sustain invocation of Section 74 and the penalties sought - HELD - Where a taxpayer held a genuine and reasonable belief that no tax was payable, the element of intent to evade is absent, and an opinion founded on plausible interpretation of law supports the taxpayer's bona fides. The initial view of non-taxability later found support in the judgments of High Courts - Mere non-payment of tax is not suppression, and suppression alone is not sufficient to invoke Section 74, since it must be a deliberate act of non-disclosure aimed at evading tax. Following the Supreme Court, mere failure or negligence where there was scope for doubt as to whether goods or services were taxable does not attract the penal provisions, and penal provisions are meant to deter deliberate contravention and not to penalise bona fide taxpayers - The facts do not establish any intent to evade tax, and the appeal filed by the Revenue is dismissed. [Read less]

2026-VIL-1823-CESTAT-BLR-CE | CESTAT CENTRAL EXCISE

Central Excise - Valuation of chewing tobacco for National Calamity Contingent Duty under Section 4A of the Central Excise Act, 1944 for the period after introduction of GST - Appellants, manufacturers of chewing tobacco, cleared the goods on payment of National Calamity Contingent Duty by adopting valuation under Section 4 - Revenue alleged short payment on the ground that valuation should be on retail sale price after abatement under Section 4A read with Notification No. 49/2008-CE (N.T.) - Whether the demand of differential duty on the basis of valuation under Section 4A is sustainable - HELD - The dispute is not about ... [Read more]

2026-VIL-1817-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Clandestine removal alleged on shortage of input found in stock verification - Appellant, a manufacturer of TMT bars, was found on verification of stock to have a shortage of MS ingots on which CENVAT credit was taken, and SCN demanded duty on the ground that the shortage represented removal without accounting - Appellant submitted that the material had been issued to the factory area but not properly recorded in the record book, and that Revenue produced no corroborative evidence - The adjudicating authority and the Commissioner (Appeals) confirmed the demand - Whether mere shortage of input on verificati... [Read more]

2026-VIL-1822-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Demand and extended period of limitation where exemption was claimed but the notification was amended - Section 73(1) of the Finance Act, 1994 - Appellant, on scrutiny of ST-3 returns against Form 26AS and books of account, was found to have short paid service tax on services rendered to a public authority, Government and sister concerns - Demand was reduced by the adjudicating authority and the Commissioner (Appeals) to the extent of admissible exemption and abatement - Whether the demand confirmed beyond the normal period can be sustained when the Appellant pleaded ignorance of the amendment to the exemptio... [Read more]

2026-VIL-1826-CESTAT-MUM-CE | CESTAT CENTRAL EXCISE

Central Excise - Rejection of appeal by Commissioner (Appeals) on the ground of limitation under Section 35(1) of Central Excise Act, 1944 - Computation of limitation where Appellant pursued its grievance with the original authority - The original authority sanctioned the rebate and allowed re-credit in the CENVAT account, after which the Appellant sought cash refund owing to implementation of the GST Act and the Department advised it to file an appeal if aggrieved - The Appellant filed the appeal within the stipulated period from the Joint Commissioner's letter directing it to prefer an appeal - The Commissioner (Appeals)... [Read more]

2026-VIL-1824-CESTAT-MUM-ST | CESTAT SERVICE TAX

Service Tax - Rejection of appeal by Commissioner (Appeals) for want of proof of mandatory pre-deposit under Section 35F of Central Excise Act, 1944 - Appellant sought out-of-turn hearing of its appeal against an order of the Commissioner (Appeals), who rejected the appeal on the ground that the Appellant did not furnish valid proof of the mandatory pre-deposit - The Appellant contended that the impugned order itself recorded that the appeal was filed after making the pre-deposit vide an e-receipt - Whether the appeal could be rejected for want of proof of pre-deposit when the making of the pre-deposit stood recorded in the impugned order - HELD - The application for early hearing is allowed and, with the consent of both sides, the appeal is taken up for hearing since the impugned order was passed without going into the merits. The impugned order categorically records that the requisite pre-deposit had been made, yet the appeal was rejected principally for want of proof thereof. Once the appellate authority had noticed the pre-deposit, rejection on the ground of non-production of its proof was not warranted. If there was any doubt regarding the payment or the supporting document, the Appellant ought to have been afforded an opportunity to clarify - The impugned order is set aside without going into the merits and the matter is remanded to the Commissioner (Appeals) for fresh decision on merits after affording the Appellant a reasonable opportunity of being heard, and the appeal is allowed by way of remand - Rejection of appeal for failure to produce authorization letter - Procedural lapse - The Commissioner (Appeals) rejected the appeal on the additional ground that the Appellant had failed to produce the requisite authorization letter - The Appellant submitted that the letter had in fact been furnished before the Commissioner (Appeals), who failed to look into it - Whether an otherwise maintainable appeal can be dismissed for a procedural deficiency in producing the authorization letter without an opportunity to rectify it - HELD - A procedural deficiency of this nature, particularly when the appeal is otherwise maintainable, cannot ordinarily furnish a ground for dismissal without affording an opportunity to rectify the same. It is settled law that merely on the ground of some procedural lapse the appeal itself cannot be rejected. One more opportunity is appropriate to produce the authorization letter - The impugned order is set aside and the matter is remanded to the Commissioner (Appeals) with a direction to afford the Appellant a reasonable opportunity of being heard and to produce the requisite documents including the authorization letter, and the appeal is allowed by way of remand. [Read less]

2026-VIL-1825-CESTAT-ALH-ST | CESTAT SERVICE TAX

Service Tax - Invocation of extended period of limitation in a subsequent SCN issued on the basis of Form 26AS where the Department had knowledge of the facts from an earlier SCN - Statement of Demand was issued for the later period on the basis of the Form 26AS statement, following an earlier SCN issued for the preceding period - The Appellant had been regularly filing ST-3 returns - The adjudicating authority reduced the proposed demand, and the FAA upheld it, observing that the SCN was issued within a reasonable time after the Appellant furnished the documents sought through repeated letters - Appellant contended that t... [Read more]

2026-VIL-1821-CESTAT-MUM-ST | CESTAT SERVICE TAX

Service Tax - Rejection of appeal by Commissioner (Appeals) as time barred - Service of adjudication order under Section 37C of the Central Excise Act, 1944 made applicable to service tax - Appellant's appeal was rejected on the ground that it was filed beyond the condonable period of 90 days from the adjudication order, and the Commissioner (Appeals) held that he cannot condone further delay under Section 35A - Whether the appeal was rightly rejected as time barred in view of non-service of the order in the manner required by Section 37C - HELD - The Appellant was not available at the address mentioned in the appeal memor... [Read more]

High Court Judgement | High Court SGST

GST - Invocation of Section 74 of the CGST Act, 2017 for demand based on the 70:30 split of goods and services for Solar Power Generating System in respect of a period prior to introduction of the Explanation to entry no. 234 of Notification no. 24/2018-Central Tax (Rate) dated 31.12.2018 - Petitioner, engaged in supply and installation of Solar Power Generating System under composite contracts, discharged tax at the rate applicable to goods under Serial No. 234 for the financial year 2018-19 - Respondent issued SCN alleging that the value of supply was required to be apportioned in the ratio of 70:30 towards goods and services - Petitioner contended that the Explanation was introduced only with effect from 01.01.2019, that the invoices showed goods and services separately in line with the binding Circular dated 08.06.2018 - Whether the SCN and order invoking Section 74 for the financial year 2018-19 on the basis of the 70:30 ratio can be sustained - HELD - The 70:30 splitting of tax on composite supply of goods and services for Solar Power projects was introduced for the first time by the Notification no. 24/2018-CT(Rate) dated 31.12.2018 with effect from 01.01.2019. When the Petitioner raised the invoices and paid the taxes for the financial year 2018-19, there was no suggestion in the form of an Explanation to pay tax in the 70:30 ratio - The Respondent did not allege in the SCN or the order that the Petitioner violated the tax payable as prescribed at the introduction of GST and as clarified in the earlier notification - The ingredients of Section 74, namely fraud, misrepresentation or suppression of facts invocable in the extended period of limitation, are not attracted to a tax liability which existed prior to the introduction of the Explanation - The retrospective application of the 70:30 ratio through the Explanation and the Circular dated 06.10.2021 does not by itself establish fraud, suppression or deliberate intention to evade tax. These attributes must be evaluated on the regulatory framework in place at the relevant time and cannot be inferred from a subsequent levy imposed with retrospective effect - The action of the Respondent in invoking Section 74 demands interference, the impugned SCN and order are quashed and set aside – The petition is allowed [Read less]

2026-VIL-1820-CESTAT-HYD-ST | CESTAT SERVICE TAX

Service Tax - Inclusion of wages paid to labourers in taxable value of Manpower Recruitment or Supply Agency Service - Appellant supplied manpower to a service recipient and raised separate invoices towards wages payable to labourers and towards service charges or commission - Department demanded service tax on the entire amount including wages - Whether wages are includible in the taxable value or service tax is payable only on the commission retained by the Appellant - HELD - Only the amount representing consideration for the service can be taxed under Section 67, and reimbursement of expenditure cannot become taxable merely because it flows through the service provider. The controversy does not depend entirely on whether every condition of Rule 5(2) is satisfied, since the fundamental question is whether the reimbursement of wages is itself consideration for the service. Following the orders of Hon'ble High Court and the Larger Bench of the Tribunal, wages separately identifiable and passing through the contractor without any element of profit cannot be treated as its income. The Hon'ble Supreme Court has held that taxability depends on the substance of the arrangement and not on nomenclature, and consolidated invoices do not alter this distinction. The Department produced no material to show that any portion of wages was retained as consideration - The order is set aside to the extent it includes wages in the assessable value, and the matter is remanded for limited re-quantification of tax on the commission actually retained - The essential facts were available from the contractual documents themselves, and the allegation of deliberate suppression is not sustainable. The issue relates to interpretation of valuation provisions on which divergent judicial views existed during the relevant period, so that the extended period is not justified, and once it fails the penalties cannot survive - The demand for the extended period and the penalties are set aside and the appeal is allowed by way of remand [Read less]

More Judgements Home More Judgements