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GST - Power to conduct audit under Section 65 of the CGST Act, 2017 for a period after the date from which registration was subsequently cancelled with retrospective effect - Petitioner was registered in 2017 and applied for cancellation of registration on closure of business with effect from 31.12.2019, but the application remained pending. While it was pending, the Respondent issued notice in Form GST ADT-01 under Section 65 proposing audit for the period from 01.07.2017 to 31.03.2021 - The registration was later cancelled with effect from 31.12.2019 - Whether the subsequent retrospective cancellation of registration pre... [Read more]

GST - Power to conduct audit under Section 65 of the CGST Act, 2017 for a period after the date from which registration was subsequently cancelled with retrospective effect - Petitioner was registered in 2017 and applied for cancellation of registration on closure of business with effect from 31.12.2019, but the application remained pending. While it was pending, the Respondent issued notice in Form GST ADT-01 under Section 65 proposing audit for the period from 01.07.2017 to 31.03.2021 - The registration was later cancelled with effect from 31.12.2019 - Whether the subsequent retrospective cancellation of registration prevents the Respondent from proceeding with the audit notice, either altogether or for the period after the effective date of cancellation - HELD - An application for cancellation does not bring the registration to an end, as under Rule 21A the registration is deemed to be suspended pending completion of the proceedings, and the person continues to be described as a registered person. The expression registered person in Section 65 must be read in the context of Section 2(13), since an audit looks backwards and examines records maintained, returns furnished, credits availed and refunds claimed under a registration. It cannot be confined to a person whose registration continues to be effective when the examination takes place - A period covered by a registration which had been granted and was not cancelled when the audit was proposed is distinct from a period in which no registration existed, and cancellation determines the legal effectiveness of the registration but does not erase the historical fact that it was granted or the acts undertaken under it - Where registration had been granted and not yet cancelled during the period proposed for audit, that factual nexus satisfies Section 65 even if the registration is later cancelled retrospectively - The treatment of the returns as void and non-est does not place the underlying records beyond examination. The audit does not itself determine liability, and nothing permits the Respondent to treat the returns after the effective date of cancellation as valid or to assume that taxable supplies were made - The contention that retrospective cancellation renders the notice without jurisdiction, wholly or for the later portion of the period, is rejected - The Writ Petition is dismissed - Denial of discretionary relief in a writ petition for non-disclosure of a pending audit notice in the earlier writ petition under which cancellation of registration was obtained - The Petitioner had filed an earlier writ petition seeking directions for cancellation of registration with effect from 31.12.2019 without disclosing the audit notice, although it had replied to the notice a day before the order in the earlier petition and was aware of it. The Petitioner then relied on the directions obtained to seek quashing of the very notice. The Respondent contended that the Petitioner did not approach the Court with clean hands - Whether the Petitioner is entitled to discretionary relief - HELD - The Petitioner's general denial did not specifically state that the notice was disclosed, and the reliance on the delay of the Department in processing the application does not answer the allegation of non-disclosure. The pending audit was material to the relief sought in the earlier petition, and the delay of the Department did not absolve the Petitioner of its obligation to disclose the notice. Having failed to do so, the Petitioner cannot rely on the directions obtained in those proceedings to seek quashing of that very notice. [Read less]

Central Excise - Clandestine removal of TMT rods/bars alleged on the basis of private records - Demand of duty and penalties on the Appellant company and its Managing Director - Appellant manufactured sponge iron, MS ingots and TMT rods, and the demand was confirmed on the basis of an Executive Diary, a made-up file and a duplicate book seized from the factory, along with statements of employees and the Managing Director, alleging that short accounted MS ingots were used to manufacture TMT rods that were cleared without payment of duty - Whether clandestine removal is established, and the demand and penalties sustainable, ... [Read more]

Central Excise - Clandestine removal of TMT rods/bars alleged on the basis of private records - Demand of duty and penalties on the Appellant company and its Managing Director - Appellant manufactured sponge iron, MS ingots and TMT rods, and the demand was confirmed on the basis of an Executive Diary, a made-up file and a duplicate book seized from the factory, along with statements of employees and the Managing Director, alleging that short accounted MS ingots were used to manufacture TMT rods that were cleared without payment of duty - Whether clandestine removal is established, and the demand and penalties sustainable, on the basis of private records and statements without corroborative evidence - HELD - The Executive Diary showed entries without customer name, date or invoice number, which the Revenue treated as clandestine removal, but there was no evidence on record regarding electricity consumption, transport details, dispatch details or the customers to whom the goods were sold. The short accountal related to MS ingots, which are not final products and were admittedly consumed captively, and the allegation that these were used to manufacture TMT rods was imaginary without corroborative evidence. Neither the Executive Diary nor the made-up file nor the statements of the employees and the Managing Director were corroborated with other evidence to prove clandestine removal. The burden to prove clandestine manufacture and removal lies heavily on the Revenue, and conjectures and surmises cannot be the basis of proof as positive evidence is required - The Revenue has not discharged the burden, and the impugned order is set aside along with the penalties imposed on the Appellant company and the Managing Director, and the appeals are allowed [Read less]

GST - Imposition of penalty under Section 122(1) of the CGST Act, 2017 for issuing and availing invoices without actual supply of goods, where the declared place of business was found vacant and stockless - Respondent-taxpayer was found on inspection to have closed premises with a notice of vacancy and no stock - Proper Officer passed the order ex parte, held that the Respondent had merely obtained and issued invoices without actual purchases and sales and imposed penalty - The FAA set aside the penalty - Whether the Respondent carried on genuine trading activities or the transactions were mere paper entries - HELD - The c... [Read more]

GST - Imposition of penalty under Section 122(1) of the CGST Act, 2017 for issuing and availing invoices without actual supply of goods, where the declared place of business was found vacant and stockless - Respondent-taxpayer was found on inspection to have closed premises with a notice of vacancy and no stock - Proper Officer passed the order ex parte, held that the Respondent had merely obtained and issued invoices without actual purchases and sales and imposed penalty - The FAA set aside the penalty - Whether the Respondent carried on genuine trading activities or the transactions were mere paper entries - HELD - The closed premises, the notice of vacancy and the absence of stock on the date of inspection cannot by themselves conclusively establish that no genuine business was carried on earlier. The mere assertion that business was conducted and stock disposed of is also insufficient. The genuineness of the transactions requires examination of contemporaneous records collectively, such as invoices, registers, transport documents, weighment slips, freight payments, records of machinery and operational expenses, bank statements and e-way bills, and the absence of one document is not conclusive proof of fictitious transactions - The subsequent cancellation of a supplier's registration does not by itself establish that earlier supplies were fictitious, and the alleged discrepancies in e-way bills must be examined on the material - The FAA did not verify these records, and the Proper Officer passed the original order ex parte without an effective opportunity of hearing - The orders of the Proper Officer and the FAA are set aside, the appeal of the Department is partly allowed and the matter is remanded for fresh adjudication after affording a personal hearing - The departmental appeal stands disposed of [Read less]

GST - Dismissal of appeal by the FAA on the ground of multiplicity of litigation - Adjudicating Authority confirmed a demand of tax, interest and penalty on account of non-reversal of ITC on exempt supplies and difference between GSTR-1 and GSTR-9, rejected the rectification application of the Appellant under Section 161. The Appellant filed an appeal against the demand and another against the rejection of rectification, and the FAA took up both together but dismissed the appeal against the rectification order only on the ground that it was multiplicity of litigation on the same issue - Whether the FAA was justified in dis... [Read more]

GST - Dismissal of appeal by the FAA on the ground of multiplicity of litigation - Adjudicating Authority confirmed a demand of tax, interest and penalty on account of non-reversal of ITC on exempt supplies and difference between GSTR-1 and GSTR-9, rejected the rectification application of the Appellant under Section 161. The Appellant filed an appeal against the demand and another against the rejection of rectification, and the FAA took up both together but dismissed the appeal against the rectification order only on the ground that it was multiplicity of litigation on the same issue - Whether the FAA was justified in dismissing the appeal on that ground without deciding the appeals on merits - HELD - An appeal under Section 107 has to be disposed of by an order under Section 107(11) confirming, modifying or annulling the order appealed against. Having decided to take up both appeals together, the FAA should have disposed of both by suitable orders - The impugned order contains no finding on the appeal against the demand of tax, interest and penalty, and the FAA did not deal with the principal grounds against the rejection of the rectification application. In the absence of such findings, the Tribunal cannot decide the merits of the demand in the present appeal - The impugned order is quashed and the matter is referred back to the FAA to pass fresh orders on both appeals, dealing with the principal grounds and affording a reasonable opportunity including personal hearing – The appeal is disposed of [Read less]

GST - Remand for fresh consideration of the dispute on Input Tax Credit claimed in excess of the amount available in GSTR-2A for FY 2017-18 in light of Circular No. 183/15/2022-GST - Appellant contended that the supplier had wrongly mentioned another taxpayer's GSTIN while filing GSTR-1, which resulted in the absence of the invoices from GSTR-2A - HELD - The dispute pertaining to FY 2017-18 is squarely covered by the Circular, which applies to cases for FY 2017-18 and 2018-19 where adjudication or appeal proceedings are still pending. However, the Circular was issued after the conclusion of the adjudication and first appea... [Read more]

GST - Remand for fresh consideration of the dispute on Input Tax Credit claimed in excess of the amount available in GSTR-2A for FY 2017-18 in light of Circular No. 183/15/2022-GST - Appellant contended that the supplier had wrongly mentioned another taxpayer's GSTIN while filing GSTR-1, which resulted in the absence of the invoices from GSTR-2A - HELD - The dispute pertaining to FY 2017-18 is squarely covered by the Circular, which applies to cases for FY 2017-18 and 2018-19 where adjudication or appeal proceedings are still pending. However, the Circular was issued after the conclusion of the adjudication and first appeal proceedings, so its benefit could not be extended in those proceedings. As both parties consented to the matter being examined de novo, it is fit to remand the matter to the FAA with a limited remit - The order of the FAA is set aside and the appeal is allowed by way of remand with a direction to consider the matter afresh in terms of the Circular and the documentary evidence and pass suitable orders after following the principles of natural justice - the appeal is allowed by way of remand [Read less]

GST - Demand of tax and interest on ITC availed on invoices of suppliers who had not filed GSTR-3B, where the Revenue conceded the claim after verification of documents - Adjudicating Authority confirmed a demand of ineligible ITC with interest and penalty under Section 73(9), and the FAA granted partial relief and confirmed the balance demand - Appellant contended that the disputed IGST pertained to invoices reflected in GSTR-2A for FY 2017-18 but the goods were received and the credit availed in FY 2018-19 - On verification, the jurisdictional authorities confirmed that the invoices and the Chartered Accountant certifica... [Read more]

GST - Demand of tax and interest on ITC availed on invoices of suppliers who had not filed GSTR-3B, where the Revenue conceded the claim after verification of documents - Adjudicating Authority confirmed a demand of ineligible ITC with interest and penalty under Section 73(9), and the FAA granted partial relief and confirmed the balance demand - Appellant contended that the disputed IGST pertained to invoices reflected in GSTR-2A for FY 2017-18 but the goods were received and the credit availed in FY 2018-19 - On verification, the jurisdictional authorities confirmed that the invoices and the Chartered Accountant certificate supported the disputed ITC and that the amount paid exceeded the amount appropriated - Whether the demand of tax and interest confirmed by the FAA is sustainable - HELD - The Revenue itself conceded, on verification of documents, that the demand of IGST is not sustainable. The balance demand of CGST and SGST arose purely from incomplete appropriation of the amounts already paid, and the remaining amount is appropriated from the sum already paid. As no tax is due from the Appellant, the demand of interest is also not sustainable - The demand of tax and interest confirmed by the FAA is set aside and the appeal is allowed - Penalty under Section 73(9) of the CGST Act, 2017 where tax and interest were paid within thirty days of the notice under Section 73(8) - The Appellant contended that the tax and interest attributable to the demand were paid within thirty days of the notice, and the Revenue accepted that the penalties under CGST and SGST are not sustainable, while remaining silent on the penalty under IGST - Whether the penalty is sustainable - HELD - Under Section 73(8), no penalty is leviable where tax with interest is paid within the prescribed period. Accordingly, the penalties under CGST and SGST are not sustainable. On the same logic the penalty under IGST is also not sustainable - The penalties imposed are set aside. [Read less]

GST - Determination of suppressed outward supplies on the basis of entries in diaries seized during inspection by the Special Investigation Branch - Adjudicating Authority treated transactions recorded in seized diaries as unaccounted outward supplies and imposed tax with equal penalty - FAA reduced the suppressed turnover and sustained a smaller tax and penalty after accepting the explanation in respect of 85 B2B invoices produced at the appellate stage and part of the hand pumps - Revenue contended that the invoices were an afterthought and that the explanation of the Respondent-taxpayer was accepted without verification... [Read more]

GST - Determination of suppressed outward supplies on the basis of entries in diaries seized during inspection by the Special Investigation Branch - Adjudicating Authority treated transactions recorded in seized diaries as unaccounted outward supplies and imposed tax with equal penalty - FAA reduced the suppressed turnover and sustained a smaller tax and penalty after accepting the explanation in respect of 85 B2B invoices produced at the appellate stage and part of the hand pumps - Revenue contended that the invoices were an afterthought and that the explanation of the Respondent-taxpayer was accepted without verification - Whether the entries in the seized diaries establish suppressed outward supplies and whether the orders contain adequate findings and reasoned analysis - HELD - A finding of suppressed turnover must be founded on clear identification and examination of the relevant transactions and supporting material. An inference of suppression cannot be sustained merely on an aggregate figure without a demonstrable factual basis for its computation - The Adjudicating Authority did not identify the entries relied upon, the basis on which the alleged sale of hand pumps was quantified or the reasons for rejecting the explanation, and the absence of regular books at the premises does not dispense with the requirement of establishing the suppressed turnover. The mere non-production of invoices during investigation does not conclusively establish suppression, nor can the subsequent production of invoices and the assertion of disclosure in GSTR-1 be accepted without verification - The FAA also did not identify the entries found unverifiable or provide a computation of the reduced turnover. A quasi-judicial order must disclose the material considered, the reasoning adopted and the basis of the conclusions - The orders of the Adjudicating Authority and the FAA are set aside, the appeal of the Revenue is partly allowed and the matter is remanded for fresh adjudication with entry-wise examination, reconciliation with the books and returns, verification of the invoices - The Revenue appeal is partly allowed [Read less]

GST - Violation of principles of natural justice by passing an adjudication order without personal hearing under Section 75(4) of the CGST Act, 2017 - The Adjudicating Authority confirmed a demand of excess ITC availed in GSTR-3B as compared to GSTR-9 for FY 2018-19, with interest and penalty, without a personal hearing - Whether the order passed without a personal hearing is in breach of Section 75(4) - HELD - Section 75(4) makes it mandatory to grant an opportunity of hearing where any adverse decision is contemplated, and an order confirming the demand in the SCN is an adverse order. The hearing is a separate right, and... [Read more]

GST - Violation of principles of natural justice by passing an adjudication order without personal hearing under Section 75(4) of the CGST Act, 2017 - The Adjudicating Authority confirmed a demand of excess ITC availed in GSTR-3B as compared to GSTR-9 for FY 2018-19, with interest and penalty, without a personal hearing - Whether the order passed without a personal hearing is in breach of Section 75(4) - HELD - Section 75(4) makes it mandatory to grant an opportunity of hearing where any adverse decision is contemplated, and an order confirming the demand in the SCN is an adverse order. The hearing is a separate right, and a written reply does not take its place – Further, the defect was not cured in the first appeal, as the FAA did not examine the GSTR-9C, the books or the reconciliation of the Appellant but adopted the figures of the Department - The adjudication order and the order of the FAA cannot be sustained on this ground - Excess availment of ITC on the basis of mismatch between GSTR-3B and GSTR-9 for FY 2018-19 - Burden of proof under Section 155 of the CGST Act, 2017 - Department computed the excess ITC by comparing GSTR-3B, after deducting reverse charge credit said to be reported in Table 4(A)(5), with GSTR-9 - Appellant denied the excess claim, contended that the figures in GSTR-9 were a bona fide mistake and offered its books of account to prove the credit - Whether the finding that the Appellant availed excess ITC is sustainable on the material on record - HELD - The adjudication order suffers from three infirmities, namely that it assumed the reverse charge credit was included in Table 4(A)(5) without verifying the returns, that it recorded an admission of excess credit which the record does not show, and that it rejected the plea of mistake in GSTR-9 without examining the books - A mismatch between two returns is a reason to examine the records and is not by itself proof that credit was availed in excess. Neither Section 44 nor Rule 80 provides for rectification of GSTR-9 once filed, and a genuine and inadvertent error in a return must be recognised as such - The burden of proving the claim to credit lies on the Appellant under Section 155, and it must discharge the burden with its books and invoices, for which the authority should give an opportunity - The orders are set aside and the matter is remanded to the Adjudicating Authority for fresh adjudication confined to the SCN, with the Appellant to produce its books and returns - the demand of tax, interest and penalty stands set aside - The matter is remanded to the Adjudicating Authority for fresh adjudication. [Read less]

GST - Applicable rate of tax on general construction services provided to Indian Railways, Eligibility to the concessional rate for composite supply of works contract under Sr. No. 3(v)(a) of Notification No. 11/2017-Central Tax (Rate) - The Respondent-taxpayer, a joint venture, provided construction services to Indian Railways and paid GST at the concessional rate. The SCN under Section 74 alleged short payment as the services were general construction services taxable at the standard rate - The FAA set aside the demand on the view that the services were works contract services to Railways - Whether the general constructi... [Read more]

GST - Applicable rate of tax on general construction services provided to Indian Railways, Eligibility to the concessional rate for composite supply of works contract under Sr. No. 3(v)(a) of Notification No. 11/2017-Central Tax (Rate) - The Respondent-taxpayer, a joint venture, provided construction services to Indian Railways and paid GST at the concessional rate. The SCN under Section 74 alleged short payment as the services were general construction services taxable at the standard rate - The FAA set aside the demand on the view that the services were works contract services to Railways - Whether the general construction services provided to Indian Railways are covered as composite supply of works contract to Railways attracting the concessional rate - HELD - The concessional rate under Sr. No. 3(v)(a) is available only for a composite supply of works contract provided to Railways, and any other composite supply of works contract attracts the standard rate. The invoices raised by the taxpayer described the services as general construction services - The taxpayer did not demonstrate, with structural proofs and billing breakups, that the services were construction services in relation to immovable property forming a composite supply of works contract. The finding of the FAA that all railway construction services fall under works contract services at the concessional rate is legally untenable - The order of the FAA is set aside, the Order-in-Original is restored and the appeal of the Department is allowed [Read less]

Customs - Rejection of appeal by First Appellate Authority as time-barred - Limitation computed from the date of Order-in-Original instead of the date of service - Appellant's appeal against rejection of refund claim was dismissed by FAA as filed belatedly with a delay of 05 days - Whether FAA was justified in rejecting the appeal as time-barred when limitation was reckoned from the date of the Order-in-Original and not from the date of service - HELD - FAA decided without sufficient reasons that the appeal was filed with a delay of 05 days, yet held it to be time-barred. Limitation was calculated from the date of Order-in... [Read more]

Customs - Rejection of appeal by First Appellate Authority as time-barred - Limitation computed from the date of Order-in-Original instead of the date of service - Appellant's appeal against rejection of refund claim was dismissed by FAA as filed belatedly with a delay of 05 days - Whether FAA was justified in rejecting the appeal as time-barred when limitation was reckoned from the date of the Order-in-Original and not from the date of service - HELD - FAA decided without sufficient reasons that the appeal was filed with a delay of 05 days, yet held it to be time-barred. Limitation was calculated from the date of Order-in-Original and not from the date of service. Even otherwise, the delay was within the condonable period of 60 + 30 days. If there was any delay, FAA ought to have called for an explanation as to the date of service, which was not done. The track consignment issued by the postal authorities demonstrated the actual date of receipt, and reckoned from the date of service, the appeal was filed within the prescribed period - The rejection of the appeal as time-barred is unsustainable. The impugned order is set aside. The matter is remitted to the file of Commissioner (Appeals) who shall pass a de-novo order on merits without going into the limitation – The appeal is disposed of [Read less]

Customs - Penalty under Section 112(b) of the Customs Act, 1962 on local purchaser of imported machinery - Alleged misdeclaration and wrongful availment of exemption by the importer - Appellant, a local purchaser of computerized embroidery machine imported by another person claiming exemption, was issued SCN proposing penalty on the ground that the machine appeared liable to confiscation under Section 111(m) - Whether penalty under Section 112(b) can be imposed on a domestic purchaser merely on the basis of the purchase when there is no evidence of knowledge, reason to believe or participation in the importer's misdeclarat... [Read more]

Customs - Penalty under Section 112(b) of the Customs Act, 1962 on local purchaser of imported machinery - Alleged misdeclaration and wrongful availment of exemption by the importer - Appellant, a local purchaser of computerized embroidery machine imported by another person claiming exemption, was issued SCN proposing penalty on the ground that the machine appeared liable to confiscation under Section 111(m) - Whether penalty under Section 112(b) can be imposed on a domestic purchaser merely on the basis of the purchase when there is no evidence of knowledge, reason to believe or participation in the importer's misdeclaration - HELD - The Appellant purchased the machinery under domestic invoices, which described the goods merely as computerized embroidery machines without representing any customs exemption, and paid the invoiced price including applicable taxes without claiming the exemption. The misdeclaration related to the import transaction, and no material was shown to establish the Appellant's participation or knowledge. The Appellant is not responsible for independently proving every aspect of the upstream seller's tax compliance, when there is no allegation of collusion with the importer. Section 112(b) requires knowledge or reason to believe that the goods are liable to confiscation, and knowledge that goods are imported cannot by itself be equated with such knowledge. The principle of caveat emptor does not dispense with the Department's burden to establish the statutory ingredients of the contravention - Revenue has not discharged its burden, and the penalty imposed on the Appellant is set aside - The appeal is disposed of [Read less]

Customs - Penalty on exporter company and its Director for attempted export of prohibited red sanders concealed in export container - Substitution of declared goods during transit - Appellant exported steel wire in a container loaded and sealed in the presence of Central Excise Officers, which was intercepted by DRI and found to contain red sanders wood logs in place of a part of the declared goods - Whether penalty under Section 114(i) of the Customs Act, 1962 can be imposed on the Appellant company and its Director when their connivance or involvement in the attempted export of red sanders is not established - HELD - The... [Read more]

Customs - Penalty on exporter company and its Director for attempted export of prohibited red sanders concealed in export container - Substitution of declared goods during transit - Appellant exported steel wire in a container loaded and sealed in the presence of Central Excise Officers, which was intercepted by DRI and found to contain red sanders wood logs in place of a part of the declared goods - Whether penalty under Section 114(i) of the Customs Act, 1962 can be imposed on the Appellant company and its Director when their connivance or involvement in the attempted export of red sanders is not established - HELD - The goods were loaded and the container was sealed in the presence of the officers, and the substitution of steel wire by red sanders wooden logs happened during transport from the factory to the port, with the connivance of the driver, after the seal was broken in between. No evidence was brought on record to show that the Appellant company or its Director was involved in the offence in any manner, and the investigation did not establish their connivance. The findings of the Adjudicating Authority themselves recorded that the container was sealed by officers, that the perpetrators replaced the goods at some point, that the export order was procured by false assurance from the middleman, and that the Appellants filed a complaint against the fraudsters. These findings established the bona fides of the Appellant company, which as a bonafide exporter believed the person who cheated it - The penalty imposed on the Appellant company and its Director is not legally sustainable and set aside - Confiscation of export goods and redemption fine - Goods exported under supervision of Central Excise Officers - Declared steel wire was recovered along with red sanders wood logs from the sealed export container and was confiscated, with redemption fine imposed in lieu of confiscation - Whether the declared export goods are liable to confiscation and redemption fine is sustainable when the Appellant company is not held responsible for the attempted export of red sanders - HELD - The steel wire manufactured by the Appellant company was exported under proper supervision in the presence of the Central Excise Officer, and the Appellant company was not responsible for the attempted export of red sanders - The goods are not liable for confiscation and the redemption fine imposed in lieu of confiscation is not sustainable and is set aside - Penalty under Section 114(i) of the Customs Act, 1962 on Customs Broker's Manager and Business Developer who acted as middlemen in export consignment - Alleged facilitation of attempted smuggling of red sanders - Adjudicating Authority held the Appellants to have acted as middlemen in collusion with the main perpetrator and imposed penalty, whereas the Appellants contended that their role was limited to clearance work and introducing the concerned persons to each other - Whether penalty under Section 114(i) can be imposed on the Appellants when there is no evidence to show that they were knowingly involved in the attempted smuggling - HELD - The role played by the Appellants as recorded in the impugned order reveals only that they were middlemen who acted in connection with the export of steel wire. There is no evidence on record to show that they were knowingly involved in the attempted smuggling of red sanders, were part of the smuggling syndicate or facilitated the attempted smuggling - The penalties imposed on the Appellants under Section 114(i) are not sustainable and are set aside. [Read less]

GST - Eligibility of Input Tax Credit under Section 16(2) of the CGST Act, 2017 for the period July 2017 to March 2018, Denial of credit on account of the mismatch - Burden of proof under Section 155 and effect of mismatch between Form GSTR-3B and Form GSTR-2A - Department alleged a mismatch between the ITC availed in Form GSTR-3B and the figures in Form GSTR-9 - Respondent contended that the requirement of Section 16(2)(c) is absolute and that, upon a mismatch, the burden under Section 155 lies on the Appellant to prove payment of tax by its suppliers - Whether the conditions of Section 16(2) stood satisfied and whether t... [Read more]

GST - Eligibility of Input Tax Credit under Section 16(2) of the CGST Act, 2017 for the period July 2017 to March 2018, Denial of credit on account of the mismatch - Burden of proof under Section 155 and effect of mismatch between Form GSTR-3B and Form GSTR-2A - Department alleged a mismatch between the ITC availed in Form GSTR-3B and the figures in Form GSTR-9 - Respondent contended that the requirement of Section 16(2)(c) is absolute and that, upon a mismatch, the burden under Section 155 lies on the Appellant to prove payment of tax by its suppliers - Whether the conditions of Section 16(2) stood satisfied and whether the burden under Section 155 was discharged - HELD - The condition (c) being the only point of contest, the burden lay on the Appellant under Section 155. The Appellant pointed to the reflection of the IGST on the invoices in Form GSTR-2A, the payment of the full consideration inclusive of tax as evidenced by bank statements, and its reconciliation, whereas the Respondent placed no material to show that the supplier had not paid the tax. The burden cast by Section 155 was therefore discharged on the record. Form GSTR-2A is only a facilitator for self-assessment and a difference between Form GSTR-3B and Form GSTR-2A may justify verification but cannot, without more, be treated as proof that Section 16(2)(c) has not been satisfied - The Appellant having discharged the burden, the mismatch by itself could not sustain the denial of credit – The appeal is allowed - Requirement of certificates under the Board Circular dated 27.12.2022 on difference between ITC availed in Form GSTR-3B and available in Form GSTR-2A for the Financial Years 2017-18 and 2018-19 - Demand was confirmed and the appeal was dismissed by the FAA solely on the ground that the Appellant did not produce the Chartered Accountant's certificate or the supplier's certificate contemplated by the Circular - Whether credit can be denied solely for non-production of the certificates contemplated by the Circular - HELD - The Circular requires the proper officer first to seek from the registered person the details of all invoices on which ITC was availed but not reflected in Form GSTR-2A, and then to ascertain the fulfilment of the conditions of Section 16 before seeking the certificates as a means of verifying Section 16(2)(c). The record did not disclose that the proper officer took this first step - The certificate is a means of verification and not a further condition of eligibility, and the Circular nowhere provides that the unmatched credit must be disallowed in its absence. Non-furnishing of the certificates may be relevant to the verification process but does not dispense with determination of the actual ITC liability by reference to the substantive statutory provisions applicable to the relevant period - The difference in the present case arose not from any failure of the suppliers to report the supplies but from the head under which the credit was availed - Denial of credit by the FAA solely for want of the certificates contemplated by the Circular cannot be sustained and set aside - Availment of credit of IGST charged on inter-State supply by an SEZ unit as CGST and SGST - Appellant availed credit equally under CGST and SGST on two invoices raised by an SEZ unit, though IGST was discharged on the supply and stood reflected in Form GSTR-2A - Respondent contended that CGST, SGST and IGST are distinct levies, that supplies by an SEZ unit are deemed inter-State supplies under Section 7(5)(b) of the IGST Act so that availment of CGST and SGST is a substantive contravention - Whether the credit equally availed under CGST and SGST on the inter-State supply is input tax credit wrongly availed so as to sustain the demand - HELD - By virtue of Section 7(5)(b) the supply was an inter-State supply and the tax chargeable was integrated tax, and the objection of the Respondent is directed to the head under which credit was availed and not to the absence of a supply or an invoice. The Hon'ble High Court of Kerala, on materially similar facts where IGST was reflected in Form GSTR-2A but the credit was availed under CGST and SGST, held that there was no wrong availment of credit and that the mistake was inadvertent and technical. The status of the supplier as an SEZ unit does not distinguish the case, as Section 7(5)(b) only fixes the inter-State character of the supply and leaves unaffected the fact that the tax charged was IGST. The decision binds the Tribunal, the High Court being a higher judicial forum - The contention that the High Court overlooked loss of revenue is unfounded since the concern was before it and was addressed by a direction to the GST Council - The credit equally availed under CGST and SGST is not ITC wrongly availed within the meaning of Section 73, the inadvertent error in the head of credit being an error of reporting and not an availment of credit to which the Appellant was not entitled - The denial of credit by the FAA is not sustainable and set aside - As that demand of tax does not survive, the interest and penalty confirmed on it cannot survive independently – The impugned order is set aside and the appeal is allowed [Read less]

GST - Jurisdiction of Principal Bench of the GSTAT under proviso to Section 109(5) of the CGST Act, 2017 where the dispute is whether services are intermediary services or export of services - Appellant, a subsidiary of an overseas group, rendered services to its overseas group entities, treated them as export of services, and filed refund claims of unutilised Input Tax Credit – Rejection of refund on the ground that the services were intermediary services - Revenue objected that the dispute was whether the Appellant is an intermediary or whether the conditions of export are satisfied, and not one relating to place of su... [Read more]

GST - Jurisdiction of Principal Bench of the GSTAT under proviso to Section 109(5) of the CGST Act, 2017 where the dispute is whether services are intermediary services or export of services - Appellant, a subsidiary of an overseas group, rendered services to its overseas group entities, treated them as export of services, and filed refund claims of unutilised Input Tax Credit – Rejection of refund on the ground that the services were intermediary services - Revenue objected that the dispute was whether the Appellant is an intermediary or whether the conditions of export are satisfied, and not one relating to place of supply, so that the Principal Bench lacked jurisdiction - Appellant contended that the essential question is the place of supply since it determines the incidence of GST - Whether the case involves an issue relating to place of supply so as to fall within the exclusive jurisdiction of the Principal Bench - HELD - Section 109(5) provides that cases in which any one of the issues involved relates to the place of supply shall be heard only by the Principal Bench. Place of supply is defined by reference to Chapter V of the IGST Act, and under Section 13(8)(b), as it stood before its omission, the place of supply of intermediary services was the location of the supplier of services, which here is India. If the Appellant is an intermediary, the place of supply is in India, whereas if it is not an intermediary, the services are exported and the place of supply is outside India, so that no GST is leviable. The refund can therefore be decided only after determining whether the supply is made in India or outside India. Though the main issue is whether the services are intermediary services or export, it necessarily involves the question of place of supply - The contention of Revenue that the case does not fall within the jurisdiction of the Principal Bench is not accepted and the objection is rejected - Classification of support services and software development services rendered to overseas group entities as export of services or intermediary services under Sections 2(6) and 2(13) of the IGST Act, 2017 - Appellant provided contract software development services and support services to its overseas parent and group companies on a cost plus mark-up basis, under agreements - Appellant treated the services as export of services without payment of tax and claimed refund of unutilised Input Tax Credit, which was rejected by the adjudicating authority and the FAA treating it as intermediary service - Whether the services qualify as export of services or fall within the definition of intermediary services - HELD - An intermediary under Section 2(13) is a broker, an agent or any other person who arranges or facilitates the supply of goods or services or securities between two or more persons, but does not include a person who supplies such goods or services on his own account. The Board Circular clarifies that the concept requires a minimum of three parties and two distinct supplies, namely the main supply between the principals and the ancillary supply of facilitation, that a person involved in the main supply on a principal-to-principal basis is not an intermediary, and that sub-contracting for a service is not an intermediary service - The expression ‘any other person’ has to be read in the light of the doctrine of ejusdem generis and cannot include a person who is unable to bind the foreign principal with an obligation or duty or to act on its behalf. The Appellant and its parent entered into agreements on a principal-to-principal basis, there is no agency or brokerage, and no provision of the agreements creates any obligation on the foreign company to be undertaken by the Appellant. The contract is strictly between the Appellant and the foreign company, there is no privity of contract between the Appellant and the customers of the foreign company, and the Appellant supplies the services on its own account - The conditions of Section 2(6) are satisfied, since the supplier is located in India, the recipient is located outside India, the place of supply is outside India, and payment is received in convertible foreign exchange - The services are not intermediary services but export of services. The impugned orders are set aside, and the Respondent is directed to refund the unutilised Input Tax Credit along with interest as per Section 56 of the CGST Act - The appeals are allowed - Rejection of refund claim on grounds beyond the SCN and violation of natural justice - Refund of unutilised Input Tax Credit on export of services - The SCN and the adjudication order in one of the appeals additionally rejected the claim on the grounds of mismatch between the BRC and export invoices, invoices not appearing in GSTR-2A and lack of nexus of certain inputs with the business - Whether the refund claim could be rejected on such additional grounds when the SCN did not specify them and the FAA recorded no findings thereon - HELD - The SCN did not specify the alleged deficiencies. The FAA ignored the issue and recorded no clear finding supported by reasoning, and there is hardly any discussion of these grounds in the orders below. The SCN was not a proper as the grounds for rejecting the refund application were not elaborated and their particulars were not communicated to the Appellant - The orders travel beyond the scope of the SCN and violate the principles of natural justice, and are therefore not sustainable. [Read less]

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 12... [Read more]

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]

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... [Read more]

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]

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... [Read more]

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]

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 w... [Read more]

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]

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... [Read more]

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]

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 conte... [Read more]

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]

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 inter... [Read more]

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]

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 writi... [Read more]

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]

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... [Read more]

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]

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 ... [Read more]

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]

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]

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 these ingredients must be brought on record. Under Explanation 2, suppression means non-declaration of facts or information required to be declared in the return, statement, report or document furnished, so a case of suppression arises only after the filing of returns and only if material information is not declared - The turnover and liability declared in the returns were accepted, which negates mis-statement and suppression. The statutory scheme of Section 39, notice under Section 46 and best judgement assessment was not followed, and inspection was preferred instead. The deposit of the estimated cash liability before the inspection and the payment of interest before commencement of proceedings indicate compliant conduct, subject to verification of payment records - Mere failure to file monthly returns in time, without evidence of the statutory ingredients, cannot sustain invocation of Section 74 - The order of the FAA is upheld to the extent it holds that Section 74 is not legally invocable against the Respondent - The matter is remanded to the original adjudicating authority for determination of liability, if any, under Section 73, subject to the statutory limit - The appeal is disposed of [Read less]

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 fi... [Read more]

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]

Central Excise - Compounded Levy Scheme - Survival of duty demand after omission of Section 3A of the Central Excise Act, 1944 without saving clause - Appellant, an independent processor of man-made fabrics, was issued SCNs demanding duty under the Compounded Levy Scheme on the basis of the number of hot air stenter chambers, and the Commissioner confirmed the demand in remand proceedings - Whether proceedings for recovery of duty can continue after omission of Section 3A by the Finance Act, 2001 without any saving clause - HELD - The Supreme Court held that omission is nothing but a particular form of words evincing an in... [Read more]

Central Excise - Compounded Levy Scheme - Survival of duty demand after omission of Section 3A of the Central Excise Act, 1944 without saving clause - Appellant, an independent processor of man-made fabrics, was issued SCNs demanding duty under the Compounded Levy Scheme on the basis of the number of hot air stenter chambers, and the Commissioner confirmed the demand in remand proceedings - Whether proceedings for recovery of duty can continue after omission of Section 3A by the Finance Act, 2001 without any saving clause - HELD - The Supreme Court held that omission is nothing but a particular form of words evincing an intention to abrogate an enactment or portion thereof, that omission and deletion are used interchangeably, and that omission is a form of repeal to which Section 6 of the General Clauses Act, 1897 applies, since repeal under Section 6 refers also to any provision contained in any Act. The earlier view that omission does not amount to repeal was clarified by the Supreme Court as not the correct legal position. The Bombay High Court and the Rajasthan High Court, following this decision, upheld the duty demand while quashing interest. The contrary view of the Gujarat High Court was rendered without the benefit of this principle - Following the Supreme Court, the duty demand confirmed by the Commissioner after omission of Section 3A survives, and the order is upheld to the extent of confirmation of central excise duty - Interest and penalty under Rule 96ZQ(5) of the Central Excise Rules, 1944 - Compounded Levy Scheme - Commissioner confirmed duty demand with interest and imposed penalty under Rule 96ZQ(5) - Whether interest and penalty under Rule 96ZQ can be sustained - HELD - The Supreme Court declared that the interest and penalty provisions under Rules 96ZO, 96ZP and 96ZQ are invalid, as Section 3A, which provides a separate scheme for the compounded levy, does not itself provide for levy of interest, and the Rules cannot do so - The demand of interest and penalty is set aside, and the appeal is partly allowed. [Read less]

Central Excise - Exemption to waste and scrap arising in manufacture of railway coaches cleared at concessional rate - Meaning of exempted goods in Sl.No.17 of Notification No.62/95-CE - Appellant, a factory belonging to the Central Government under the Ministry of Railways, cleared coaches at 1% under Notification No.1/2011-CE and cleared waste and scrap without payment of duty, treating it as covered by Notification No.27/2011-CE, and on audit objection paid duty on the scrap and claimed refund - Whether waste and scrap arising in the manufacture of coaches cleared at 1% under Notification No.1/2011-CE is exempt under Sl... [Read more]

Central Excise - Exemption to waste and scrap arising in manufacture of railway coaches cleared at concessional rate - Meaning of exempted goods in Sl.No.17 of Notification No.62/95-CE - Appellant, a factory belonging to the Central Government under the Ministry of Railways, cleared coaches at 1% under Notification No.1/2011-CE and cleared waste and scrap without payment of duty, treating it as covered by Notification No.27/2011-CE, and on audit objection paid duty on the scrap and claimed refund - Whether waste and scrap arising in the manufacture of coaches cleared at 1% under Notification No.1/2011-CE is exempt under Sl.No.17 of Notification No.62/95-CE - HELD - Sl.No.17 exempts waste and scrap arising in the course of manufacture of exempted goods in a factory belonging to the Indian Railways. Section 5A(1) empowers the Central Government to exempt goods from the whole or any part of the duty, and Notification No.1/2011-CE itself exempts the coaches from so much of the duty as is in excess of 1%, so that they are exempted goods though not exempted from the whole of the duty. Sl.No.17 does not qualify the expression, whereas an earlier notification expressly defined exempted goods as goods chargeable to nil rate or exempted from the whole of the duty, and the restriction cannot be supplied by interpretation. Strict construction means fidelity to the words used and does not permit addition of words. The amendment to Rule 2(d) of the CENVAT Credit Rules, 2004 shows that the Central Government itself treated goods under Notification No.1/2011-CE as exempted goods. Citation of an inapplicable notification at the time of clearance cannot extinguish an exemption conferred by law - Waste and scrap was exempt under Sl.No.17, the rejection of refund cannot stand, and the demand fails on merits - Extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 - Show cause notice issued after the Department had itself unearthed and collected the duty on audit - Appellant paid the duty on audit objection and claimed refund, which was adjudicated by the Assistant Commissioner, whereafter SCN was issued alleging suppression of facts - Whether the extended period under Section 11A(4) could be invoked against the Appellant - HELD - Section 11A(4) is attracted only where duty is not paid by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade payment of duty, and mere failure to declare is not wilful suppression. The facts alleged to be suppressed were ascertained by the Department's own audit, collected, and made the subject of the refund claim adjudicated earlier, and facts known to the authorities cannot be treated as suppressed in a later notice. The SCN merely echoed the statutory words without particulars of any positive act. The Appellant, a factory of the Union of India, whose liability was ascertained and paid at the instance of the Department in a dispute of pure construction, cannot be attributed with intent to evade - The extended period was not invokable, and the demand is barred by limitation in its entirety - Interest under Section 11AA and penalty under Section 11AC of the Central Excise Act, 1944 - Consequential to demand of duty on waste and scrap - Whether interest and penalty are tenable when the demand fails on merits and on limitation - HELD - Interest under Section 11AA is consequential and cannot survive when the demand fails. Penalty under Section 11AC presupposes fraud, suppression or intent to evade, which were found to be absent - Interest and penalty are set aside, both appeals are allowed, the refund of the duty paid on waste and scrap is held admissible with interest as admissible in law, the amount appropriated shall be refunded only once, and the original authority shall process the refund after verification within ninety days from the date of receipt of the order. [Read less]

Service Tax - Invocability of extended period of limitation and imposition of penalty where short-payment was pointed out during audit under the proviso to Section 73(1) of the Finance Act, 1994 - Works Contract Service - During audit, the Department alleged short-payment of service tax on the ground that tax was payable upon credit or debit of consideration in the books of account of an associated enterprise under the Explanation to the third proviso to Rule 6(1) of the Service Tax Rules, 1994. The SCN invoked the extended period of limitation - The Respondent contended that the extended period was invocable due to non-di... [Read more]

Service Tax - Invocability of extended period of limitation and imposition of penalty where short-payment was pointed out during audit under the proviso to Section 73(1) of the Finance Act, 1994 - Works Contract Service - During audit, the Department alleged short-payment of service tax on the ground that tax was payable upon credit or debit of consideration in the books of account of an associated enterprise under the Explanation to the third proviso to Rule 6(1) of the Service Tax Rules, 1994. The SCN invoked the extended period of limitation - The Respondent contended that the extended period was invocable due to non-disclosure of relevant facts and failure to file ST-3 returns until detection by audit - Whether the extended period of limitation was invocable and the penalties sustainable - HELD - Mere non-payment of duty or failure to obtain registration, in the absence of fraud, suppression or wilful misstatement, is insufficient to attract the extended period of limitation, and invocation of the extended period requires a positive act indicative of wilful default - Apart from the fact that the short-payment was pointed out during audit, there was nothing to establish a deliberate attempt to evade payment of service tax. The extended period of limitation is therefore not invocable. The penalties imposed on the basis of the alleged suppression or wilful default cannot be sustained - The penalties are set aside. The amounts of service tax already paid shall be appropriated towards the corresponding liability, and no further recovery of the tax so paid shall be made. Any remaining demand that is barred by limitation is set aside. The penalties imposed are also set aside - The appeal is disposed of - Confirmation of demand for want of proof of payment despite audit annexure recording payment under Rule 6(1) of the Service Tax Rules, 1994 - The Adjudicating Authority accepted that the Explanation to the third proviso to Rule 6(1) was inapplicable where consideration was actually received. It nevertheless confirmed the demand on the ground that the Appellant had not produced evidence of receipt of consideration and payment of tax - Whether the demand could be confirmed when the record showed that the tax had been paid after the short-payment was pointed out by audit - HELD - Once the Adjudicating Authority held that the Explanation to Rule 6(1) did not apply where consideration was actually received, the decisive question was whether the Appellant had received the consideration and discharged the tax. The annexure to the audit report, enclosed with the appeal memorandum, recorded the service tax as paid before issuance of the SCN, and the Order-in-Original also recorded a further payment appropriated towards the demand. The record therefore supported the claim of the Appellant that the amounts had been paid before issuance of the SCN - The amounts are required to be treated as accepted and paid to the extent established by the records. With no evidence of fraud, no SCN should have been issued and the payments should have been accepted as settling the matter - The service tax and interest already paid are appropriated towards the corresponding liability and no further recovery of the amounts so paid shall be made - Effect of limitation on enforcement of remaining tax demand and voluntary payment of time-barred liability - The entire demand pertained to the extended period, which was held not invocable. The Appellant had paid amounts towards the liability after audit objections - Whether a demand falling beyond the normal period of limitation can be sustained - HELD - Limitation ordinarily bars the remedy for enforcing a liability but does not necessarily extinguish the underlying tax liability - A debt does not cease to exist merely because the remedy for its enforcement is barred by limitation. An assessee may voluntarily pay an amount towards an outstanding liability even where the remedy for compulsory recovery is barred. Such payment may discharge the liability to the extent paid but does not by itself revive a time-barred remedy for recovery of the unpaid balance, unless provided for in law. The sustainability of any remaining demand, including the normal period, must be independently examined, and since the extended period is not invocable, any demand falling beyond the normal period is unsustainable - The impugned order is modified, the remaining demand barred by limitation is set aside. [Read less]

Service Tax - Classification of tool management services under Business Support Service for April and May 2009 - Under a Tool Management Agreement the Appellant undertook procurement, stocking, regrinding, coating, handling and management of production tools along with provision of manpower for the client. From April 2009 the Appellant split its invoices into tool hire charges, on which VAT was paid, and tool service charges, on which service tax was paid. The SCN proposed service tax on the tool hire charges under Business Support Service - Whether the services rendered during April and May 2009 are classifiable under Bus... [Read more]

Service Tax - Classification of tool management services under Business Support Service for April and May 2009 - Under a Tool Management Agreement the Appellant undertook procurement, stocking, regrinding, coating, handling and management of production tools along with provision of manpower for the client. From April 2009 the Appellant split its invoices into tool hire charges, on which VAT was paid, and tool service charges, on which service tax was paid. The SCN proposed service tax on the tool hire charges under Business Support Service - Whether the services rendered during April and May 2009 are classifiable under Business Support Service - HELD - Classification of a taxable service must be determined with reference to the terms of the contract, the actual activities undertaken and the statutory definition applicable during the relevant period. The manner in which invoices are raised cannot by itself determine classification, and the existence of a composite contractual arrangement does not justify classification of the entire consideration under BAS without establishing that the activities satisfy the statutory definition. The expression "operational or administrative assistance in any manner" was substituted only with effect from 01.05.2011, and an amendment enlarging the scope of a taxable entry cannot be applied retrospectively in the absence of express statutory authority - An activity does not become Business Support Service merely because it supports the business operations of the recipient. The activities under the agreement relate to tool management and manufacturing operations and have no apparent nexus with marketing. The Revenue cannot rely on the composite nature of the agreement or on a subsequent enlargement of the definition - The classification of the entire consideration under Business Support Service cannot be sustained and the demand is set aside – The appeal is allowed - Remand for fresh classification under an alternative taxable service where the SCN proposed classification only under BAS - The SCN proposed classification of the services under Business Support Service and did not propose any alternative classification. The Appellant contended that a remand for fresh classification would enlarge the scope of the SCN and prejudice the Appellant - HELD - Adjudication must remain within the allegations and grounds set out in the SCN. In the absence of an alternative classification proposed in the SCN, the proceedings cannot be used to introduce a new classification at the appellate stage to sustain the demand - No remand for fresh classification under an alternative taxable service is warranted - CENVAT Credit - Reversal of credit on capital goods removed as such, including capital goods exported under bond/LUT, under Rule 3(5) of the CENVAT Credit Rules, 2004 - During audit it was noticed that the Appellant had removed CENVAT credit availed capital goods, in one month and also for export in two other months, without reversing the credit availed thereon - Whether CENVAT credit availed on capital goods removed as such, including those exported under bond/LUT, is liable to be reversed under Rule 3(5) - HELD - The issue is not whether export under bond is permitted but whether it triggers reversal of credit taken under Rule 3(5). Credit is a statutory benefit subject to the conditions and restrictions prescribed by the Act and Rules, and is not an absolute right - The Apex Court held that the proviso to Rule 3(5) providing for reduction of credit on removal of used capital goods is clarificatory and retrospective, which entitles the assessee to make the adjustment as per the proviso and later claim rebate. The judgment supporting reversal also recognises the eligibility of the goods for rebate, and since export under bond without payment of duty is also permissible, the matter is revenue neutral. Although statutory procedures must ordinarily be followed, considering the small tax amount involved, the export incentives intended to ensure that taxes are not exported and the long lapse of time, remand would serve no useful purpose - The demand relating to capital goods removed as such is set aside on revenue neutrality and considering the facts of the case - Invocation of extended period of limitation - Whether the extended period of limitation and the penalty under Section 78 are sustainable - HELD - Invocation of the extended period requires satisfaction of the statutory conditions applicable to the relevant provision. A dispute involving interpretation of law does not by itself establish suppression, just as the discovery of a discrepancy during audit does not by itself exclude suppression. The penalty under Section 78 must be considered in accordance with its statutory requirements and cannot be imposed mechanically merely because a demand has been confirmed. The burden of proving suppression has not been discharged by the Revenue - The impugned order is set aside. [Read less]

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 se... [Read more]

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]

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 proo... [Read more]

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]

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 y... [Read more]

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]

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]

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 goods to adjusted total turnover, and all three figures must relate to the same relevant period - Under Section 12 read with Section 31 of the CGST Act, 2017, a tax invoice must be issued before or at the time of removal of goods, so that supply of export goods takes place at the time of removal and preparation of the tax invoice, even though the goods are treated as exported only when they leave India. The turnover of zero-rated supply of goods is therefore calculated from tax invoices issued for goods intended to be exported, and invoices issued during the relevant period are included in it regardless of whether the goods were actually exported during that period. Refund can be granted only after the exporter establishes that the goods have actually been exported - There was no dispute that the invoices covered by the three shipping bills were prepared during the relevant period or that the goods were in fact exported - The issue stood covered by an earlier decision of the same Bench. The contention of the Department is not tenable - The impugned Order is upheld and the appeal is rejected [Read less]

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 t... [Read more]

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]

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 dismi... [Read more]

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]

GST - Detention of goods in transit - Validity of documents produced after interception under Section 68 of the CGST Act, 2017 read with Rule 138 of the CGST Rules, 2017 - The conveyance of the Appellant transporter was intercepted - Driver produced transport documents relating to different suppliers and different commodities, none of which was physically found in the vehicle. The vehicle was found loaded with a large quantity of textile materials and readymade apparel for which no tax invoice, delivery challan or e-way bill was available. The Appellant contended that the booking clerk had handed over a wrong bundle of doc... [Read more]

GST - Detention of goods in transit - Validity of documents produced after interception under Section 68 of the CGST Act, 2017 read with Rule 138 of the CGST Rules, 2017 - The conveyance of the Appellant transporter was intercepted - Driver produced transport documents relating to different suppliers and different commodities, none of which was physically found in the vehicle. The vehicle was found loaded with a large quantity of textile materials and readymade apparel for which no tax invoice, delivery challan or e-way bill was available. The Appellant contended that the booking clerk had handed over a wrong bundle of documents and subsequently produced tax invoices of registered suppliers matching the goods - Whether transport of goods accompanied by mismatched tax documents, followed by submission of invoices after detention without e-way bills, satisfies the requirements of Section 68 read with Rule 138 - HELD - Section 68 mandates that the person in charge of a conveyance must carry the prescribed documents, and the presence of valid documentation during actual transit is a strict requirement. The explanation of an accidental exchange of documents was an unsubstantiated oral statement, as the Appellant, a professional logistics firm, produced no transport manifest, dispatch logs, tracking data or registration details of the alleged second vehicle - The invoices submitted by email after the seizure cannot cure the illegal nature of the transit, since the law does not permit retrospective validation. The invoices were issued only to unregistered buyers with Aadhaar numbers and no e-way bill was generated for any of them. The documents were therefore artificially structured after detention - The requirements of Section 68 and Rule 138 were not satisfied - The penalty under Section 129(3) is upheld and the appeal is dismissed - Proceedings against transporter as a ‘person other than the owner’ under Section 129(1)(b) of the CGST Act, 2017 where the suppliers claimed ownership after detention - Whether the proper officer was justified in treating the Appellant as a person other than the owner and imposing penalty under Section 129(3) - HELD - The rejection of ownership by the Revenue was based on verifiable facts, namely that the cargo was completely unmanifested, the documents carried related to goods not found in the vehicle, and the invoices produced later had no e-way bills - At the time of interception no owner was identifiable for the recovered cargo. ‘Coming forward’ under Section 129(1)(b) means stepping forward with valid, pre-existing and compliant documents at the threshold of interception, and the contrary view would render Section 68 and Rule 138 a dead letter - The valuation adopted on objective parameters such as quality and prevalent wholesale market averages was a fair and sound mechanism - The proper officer committed no error in treating the Appellant under Section 129(1)(b). [Read less]

Central Excise - Availment of proportionate CENVAT credit on common inputs used in the manufacture of dutiable final products and exempted by-products - Liability to pay an amount under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - The Respondent-assessee manufactured dutiable and non-dutiable products and used common inputs in the manufacture, but availed CENVAT credit only in proportion to the dutiable products on the basis of a chartered accountant certificate - The Adjudicating Authority held that the methodology was not compatible with Rule 6 and confirmed the demand of ten per cent of the price of the exempted by-p... [Read more]

Central Excise - Availment of proportionate CENVAT credit on common inputs used in the manufacture of dutiable final products and exempted by-products - Liability to pay an amount under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - The Respondent-assessee manufactured dutiable and non-dutiable products and used common inputs in the manufacture, but availed CENVAT credit only in proportion to the dutiable products on the basis of a chartered accountant certificate - The Adjudicating Authority held that the methodology was not compatible with Rule 6 and confirmed the demand of ten per cent of the price of the exempted by-products under Rule 6(3)(b) read with Rule 14 - The CESTAT allowed the appeal, holding that taking credit proportionate to the dutiable products amounts to not taking credit - Whether an Respondent-assessee is entitled to follow a system different from the system provided under the Rules - HELD - The issue is squarely covered in favour of the assessee by the decision of the Apex Court, which held that the requirement of separate records does not apply where the by-product emerges as a technological necessity and no part of the input can be traced in the by-product - Under Rule 6(1), CENVAT credit is admissible on inputs used in the manufacture of dutiable goods and inadmissible on the quantity used in the manufacture of exempted goods. Where the entire quantity of input is used in the manufacture of the final product, the mere fact that a by-product emerges does not bring the by-product within Rule 6 so as to call for separate accounts or payment of an amount on the exempted goods - Where the assessee has taken credit only on the quantity of input intended for use in the manufacture of dutiable goods, the question of invoking Rule 6 does not arise. It is immaterial whether the Rules of 2002 and 2004 contain provisions akin to the earlier rules. Although the CESTAT has not given elaborate reasons, it has arrived at a conclusion as per the settled legal position - The questions are answered in favour of the assessee and the Revenue appeal is dismissed [Read less]

GST - Jurisdiction of the State Bench of the Tribunal to examine the validity of an Advance Ruling under Section 95 of the CGST Act, 2017 which was never challenged before Appellate Authority for Advance Ruling - The Respondent obtained an advance ruling holding that the licensing service for the right to use minerals attracted tax at the same rate as on supply of like goods for the period 01.07.2017 to 31.12.2018, and the ruling was not challenged by the Revenue under Section 100 - Whether the Tribunal, that too a State Bench, can go into the jurisdiction of the Authority when the ruling has not been challenged at any sta... [Read more]

GST - Jurisdiction of the State Bench of the Tribunal to examine the validity of an Advance Ruling under Section 95 of the CGST Act, 2017 which was never challenged before Appellate Authority for Advance Ruling - The Respondent obtained an advance ruling holding that the licensing service for the right to use minerals attracted tax at the same rate as on supply of like goods for the period 01.07.2017 to 31.12.2018, and the ruling was not challenged by the Revenue under Section 100 - Whether the Tribunal, that too a State Bench, can go into the jurisdiction of the Authority when the ruling has not been challenged at any stage - HELD – The Revenue has challenged the maintainability of the advance ruling itself on the ground that the said ruling was without jurisdiction for the reason it could only be given on matters having prospective application and not on completed past transactions - The scheme of Chapter XVII governing the landscape of Advance Ruling, provides a hierarchy of appeal against the ruling before the Appellate Authority and the National Appellate Authority, and the Ruling was neither rectified under Section 102 nor alleged to be void under Section 104. In view of Section 109(4), the State Bench does not have jurisdiction to decide the validity of the order of the Authority - The Tribunal cannot decide the jurisdiction of the Authority in rendering the ruling - The appeals filed by the revenue against the impugned orders-in-appeal lack merit and dismissed - Binding nature of an Advance Ruling under Section 103 of the CGST Act, 2017 - Whether a Board circular constitutes a change in law, facts or circumstances under Section 103(2) - The Revenue contended that the Advance Ruling ceased to bind it on issuance of a Board circular nearly two years later, which clarified that the service attracted the higher rate from 01.07.2017 - Whether the advance ruling is binding on the Department vis-a-vis the Respondent or the Department can resile from it under Section 103(2) - HELD - Under Section 103(1), the Ruling is binding on the applicant and on the concerned or jurisdictional officer in respect of that applicant, and as it was not appealed against, it attained finality. A Circular is an executive instruction under Section 168 and is binding on the Departmental officers but not on the assessee or the courts, whereas the Ruling is a quasi-judicial order. The expression change in law under Section 103(2) means a change in the Act, Rules or rate notification and not a Circular. A Circular adverse to the assessee cannot be applied retrospectively to nullify a quasi-judicial order in his favour. As there was no change in facts, circumstances or law, the Revenue cannot resile from the ruling - The Revenue was bound by the Ruling and the refund sanctioned in accordance with it was in accordance with law - Determination of the rate of tax on licensing service for the right to use minerals for the period 01.07.2017 to 31.12.2018 on the basis of a Board circular - Whether the rate of tax can be determined on the basis of Circular No.164/20/2021-GST - HELD - Under Section 9(1), the rate of tax is to be notified by the Government on the recommendation of the Council through a notification, and a circular issued under Section 168 can only clarify the law and can never create a levy. In terms of Article 265 of the Constitution, no tax can be levied or collected except by authority of law, which means the Act, notifications and Rules and not a Circular - The Revenue could not point out any notification or entry prescribing the higher rate for the period, and the demand resting solely on the Circular is without the authority of law - The Revenue is not justified in relying on the Circular to hold that the rate during the period was the higher rate - Recovery of erroneous refund under Section 73 of the CGST Act, 2017 where the refund of excess tax paid was sanctioned in accordance with an advance ruling, and grounds raised beyond the SCN - The refund of the difference between the tax paid and the tax payable under the ruling was sanctioned under Section 54 with a Chartered Accountant certificate and reversal of the corresponding credit in the electronic credit ledger - Revenue contended in the second appeal that the refund could be claimed only by the service provider and that the Respondent was unjustly enriched - Whether the refund can be said to be erroneous and whether the new grounds can be agitated - HELD - The Ruling held the field when the refund was sanctioned and was neither challenged, rectified nor alleged to be obtained by fraud. A subsequent Circular holding a contrary view cannot make the refund erroneous. The proceedings under Section 73 on the basis of the Circular are void ab initio - The grounds of refund being available only to the service provider and of unjust enrichment were not taken in the SCN or the Order-in-Original, and under Section 75(7) they cannot be raised at the stage of the second appeal - In any case, the recipient who has borne the incidence of tax is entitled to claim refund, and the Respondent discharged the onus under Section 54(8)(e) and Rule 89(2)(m) by the CA certificate and the reversal of credit, which the Revenue did not dispute. The question whether Section 73 can be invoked independently without challenging the refund order in appeal or revision need not be decided - The orders of the FAA setting aside the demand, penalty and interest are confirmed. [Read less]

Service Tax - Refund of Swachh Bharat Cess and Krishi Kalyan Cess paid on input services used for export of goods under Notification No. 41/2012-ST - Whether the Appellants are entitled to refund of SBC and KKC paid on input services used for export of goods - HELD - Notification No. 41/2012-ST grants refund of service tax paid on services used for export of goods, and Section 119(2) of the Finance Act, 2015 and Section 161(2) of the Finance Act, 2016 stipulate SBC and KKC as service tax. Sub-section (5) of Section 119 of the Finance Act, 2015 and sub-section (5) of Section 161 of the Finance Act, 2016 provide that all pro... [Read more]

Service Tax - Refund of Swachh Bharat Cess and Krishi Kalyan Cess paid on input services used for export of goods under Notification No. 41/2012-ST - Whether the Appellants are entitled to refund of SBC and KKC paid on input services used for export of goods - HELD - Notification No. 41/2012-ST grants refund of service tax paid on services used for export of goods, and Section 119(2) of the Finance Act, 2015 and Section 161(2) of the Finance Act, 2016 stipulate SBC and KKC as service tax. Sub-section (5) of Section 119 of the Finance Act, 2015 and sub-section (5) of Section 161 of the Finance Act, 2016 provide that all provisions relating to refund of service tax under the Finance Act, 1994 shall apply to refund of SBC and KKC. SBC and KKC, though called cess, have been given the status of service tax, and the rebate of SBC and KKC is therefore allowable under Notification No. 41/2012-ST - Following the ratio of the earlier decision of the Bench, which stands conceded by the Revenue, the issue is squarely covered in favour of the Appellants - The impugned orders are set aside and the appeals are allowed [Read less]

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]

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 registration. The Circular is founded on sound common sense, since once registration is cancelled a person may remain disabled or may not be obligated to work on the Common Portal and may remain unaware of proceedings instituted against him - The Adjudication orders and the penalty order set aside, the Petitioner permitted to file its final reply to the SCNs – The petition is disposed of [Read less]

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]

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 credit recorded by the Assessing Officer exceeded the tax payable under the VAT Act, so the Tribunal was justified in permitting set-off and directing the balance credit to be carried forward - Rule 117(3) of the GST Rules allows the credit specified in TRAN-1 to be credited to the electronic credit ledger. Rule 121 provides that where the credit so credited is found to be wrongly availed, proceedings under Section 73 or Section 74 of the GST Act may be initiated in respect of the credit wrongly availed, wholly or partly. The Assessing Officer ought to have informed the concerned GST Department of the credit not available to the Respondent - The Respondent was entitled to the credit only to the extent recorded by the Tribunal. The decisions relied upon by the Dept, though accepted, do not apply on these facts, since it is for the GST Department to act under Rule 121 for wrong credit availed through TRAN-1, and the only remedy of the VAT Department is to inform the GST Officer of such facts - Tribunal justified under the VAT Act in allowing set-off of tax payable against available credit, no infirmity in its order - The appeal is dismissed [Read less]

Customs - Confiscation of export goods and imposition of penalties on alleged diversion of rice declared for export to one country to a different country - Respondent exported rice under shipping bills declared for Iran, and the Department alleged on investigation that the consignments had been delivered to the UAE in violation of Paras 2.40 and 2.53 of the Foreign Trade Policy - Adjudicating Authority held the goods liable to confiscation under Sections 113(i) and 113(d) and imposed penalties under Sections 114 and 114AA - CESTAT set aside the orders after noting that the documents were in the name of the buyers in Iran, ... [Read more]

Customs - Confiscation of export goods and imposition of penalties on alleged diversion of rice declared for export to one country to a different country - Respondent exported rice under shipping bills declared for Iran, and the Department alleged on investigation that the consignments had been delivered to the UAE in violation of Paras 2.40 and 2.53 of the Foreign Trade Policy - Adjudicating Authority held the goods liable to confiscation under Sections 113(i) and 113(d) and imposed penalties under Sections 114 and 114AA - CESTAT set aside the orders after noting that the documents were in the name of the buyers in Iran, that re-export documents, phytosanitary certificates and bank remittances were produced, and that no evidence showed that the documents were amended or fabricated - Whether the CESTAT was justified in setting aside the confiscation and penalties - HELD - At first blush the diversion of goods intended for export to Iran appeared to be a grave offence. The CESTAT, however, recorded a categorical finding of fact that the goods were intended for export to Iran, as the phytosanitary certificates placed on record contained the registration number, the name of the exporter, the name of the consignee in Iran, the number of bags and the quantities, and the Adjudicating Authority and the FAA neither pointed out any discrepancy nor made any allegation supported by evidence that the certificates were amended to facilitate clearance in another country - Once the goods are permitted to be exported by the issuance of a Let Export Order, ownership is transferred to the buyer as soon as the ship carrying the goods crosses the territorial waters of India, as per the CBEC Circular and the decision of the Apex Court. None of the buyers in Iran claimed short shipment or non-receipt, the remittance receipts were not objected to by the banks or alleged to be non-genuine, and under the RBI regulations payment can be received only from the consignee named in the export documents, so the contention of third-party payment had no basis. The conclusion that the goods were exported to the UAE was based merely on assumptions and presumptions - in the absence of evidence the CESTAT was justified in setting aside the confiscation and penalties - The Revenue appeal is dismissed - Jurisdiction of Customs authorities to confiscate goods and impose penalties for alleged violation of the Foreign Trade Policy relating to receipt of export proceeds in freely convertible foreign exchange - The entire basis of the decision of the Adjudicating Authority was the alleged violation of Para 2.53 of the Foreign Trade Policy, on the ground that goods actually exported to the UAE required payment in freely convertible foreign exchange, and the SCN invoked Sections 113(d) and 113(i) of the Customs Act. - Whether the Customs authorities could confiscate the goods and impose penalties on the allegation of violation relating to receipt of foreign exchange for the exported goods - HELD - No proceedings had been initiated against the Respondents for any violation relating to the receipt of foreign exchange for the exported goods, and no allegation was made or SCN issued under the Foreign Exchange Management Act or the Customs Act in this regard. The CESTAT rightly arrived at the finding that there was no violation of the Customs Act in any manner, as there was no dispute regarding the description, quantity or value of the goods, and the export of rice was neither prohibited nor restricted at the relevant time - The appeals of the Revenue are dismissed [Read less]

Central Excise - Eligibility to CENVAT Credit on input services of maintenance and repair of wind farm situated away from the factory under Rule 2(l) of the CENVAT Credit Rules, 2004 - Appellant established a wind farm about 225 kilometres from its factory for captive generation, and the electricity generated was supplied to the electricity board, which supplied electricity to the factory after adjustment and deduction of wheeling charges - Appellant availed CENVAT credit of service tax paid on maintenance and repair services received at the wind farm - Whether the Tribunal was justified in holding that the Appellant is no... [Read more]

Central Excise - Eligibility to CENVAT Credit on input services of maintenance and repair of wind farm situated away from the factory under Rule 2(l) of the CENVAT Credit Rules, 2004 - Appellant established a wind farm about 225 kilometres from its factory for captive generation, and the electricity generated was supplied to the electricity board, which supplied electricity to the factory after adjustment and deduction of wheeling charges - Appellant availed CENVAT credit of service tax paid on maintenance and repair services received at the wind farm - Whether the Tribunal was justified in holding that the Appellant is not entitled to avail and utilize CENVAT credit on service tax paid on manufacture and repair of the wind farm/mills - HELD - The definition of input service in Rule 2(l) covers any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products, and has to be widely construed. The words "within the factory of production" are absent in Rule 2(l), and the only stipulation is that the input service should be received by the manufacturer of the final product. There is no provision in the Rules which requires that input services received by the manufacturer must be received at the factory premises - The Appellant utilised the electricity supplied by the electricity board against the electricity generated by the wind mills, and the maintenance and repair services of the wind mills were therefore used in relation to the manufacturing activity and fall within input service. The Tribunal was not justified in denying the credit - The question of law is answered in favour of the Appellant and against the Respondent and the appeal is allowed [Read less]