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Service Tax - Supply of tangible goods for use service - Liberalized Wagon Investment Scheme - Investment in railway wagons and freight concession - Appellant procured privately owned railway wagons under LWIS Scheme - Department entertained view that by permitting Railways to attach wagons to railway engines appellant supplied tangible goods for use to Railways and freight concession received represented consideration for taxable service - Whether the appellant can be said to have rendered any taxable service to the Railways merely because it invested in railway wagons under LWIS and received freight concession - HELD - A... [Read more]

Service Tax - Supply of tangible goods for use service - Liberalized Wagon Investment Scheme - Investment in railway wagons and freight concession - Appellant procured privately owned railway wagons under LWIS Scheme - Department entertained view that by permitting Railways to attach wagons to railway engines appellant supplied tangible goods for use to Railways and freight concession received represented consideration for taxable service - Whether the appellant can be said to have rendered any taxable service to the Railways merely because it invested in railway wagons under LWIS and received freight concession - HELD - Appellant procured wagons entirely at own cost only for facilitating transportation of own goods. Railways neither hired wagons for independent commercial exploitation nor acquired unrestricted right to use them - Wagons remained dedicated to appellant's traffic and could not be deployed by Railways for third-party transportation except in accordance with scheme terms - The Railways merely attached the appellant’s wagons to their locomotives and transported the appellant’s goods on payment of freight. Therefore, the actual transportation service admittedly flowed from the Railways to the appellant. The appellant remained the recipient of transportation service and not the provider of any service - The freight concession granted under the scheme is only an incentive intended to encourage private investment in wagon capacity and such concession merely reduces the freight otherwise payable by the appellant. A reduction in price or grant of rebate under policy cannot automatically assume the character of consideration for a taxable service unless there exists an independent service transaction supported by reciprocal obligations - Department's attempt to split one composite commercial element into two independent transactions viz. transportation service by Railways and supply of wagons by appellant not sustainable - Agreement when read as whole discloses only one commercial objective viz. transportation of appellant's own goods through wagons procured under policy incentive scheme – The operation control exercised by Railways while transporting appellant's goods does not convert transportation contract into contract of hiring of wagons – The appellant has not rendered any taxable service to Indian Railways under LWIS – The impugned orders confirmed demand of service tax interest and penalties are not sustainable in law and set aside – The appeals are allowed [Read less]

Service Tax - CENVAT credit on the basis of running account bills - Requirement of mandatory documents under Rule 9(1) CCR 2004 - Whether credit can be availed on running account bills containing substantial particulars even though not in prescribed form - HELD – The Rule 4A of Service Tax Rules 1994 and Rule 9 of CCR 2004 require documents such as invoice bill or challan evidencing payment of service tax containing name address and registration of service provider and receiver description and value of taxable service - Proviso to Rule 9(2) mandates that even if document does not contain all particulars but contains deta... [Read more]

Service Tax - CENVAT credit on the basis of running account bills - Requirement of mandatory documents under Rule 9(1) CCR 2004 - Whether credit can be availed on running account bills containing substantial particulars even though not in prescribed form - HELD – The Rule 4A of Service Tax Rules 1994 and Rule 9 of CCR 2004 require documents such as invoice bill or challan evidencing payment of service tax containing name address and registration of service provider and receiver description and value of taxable service - Proviso to Rule 9(2) mandates that even if document does not contain all particulars but contains details of duty or service tax payable description of goods or taxable service assessable value central excise or service tax registration number name and address of factory or warehouse the authorized officer may allow CENVAT credit – The crux of matter is authority needs to be satisfied about relevant details and particulars not form of document - In present case appellant receiver of contract service and being liable to pay service tax under reverse charge deposited service tax. Credit taken on service tax and service tax payment challan is proper document to claim credit under RCM - Appellant taken credit in books of account and claimed credit in ST-3 Returns on basis of documents. Running account bills read with payment orders contain name and address of service provider service recipient description of service tax registration and service tax amount - Substantial particulars as required under Rule 9(2) CCR 2004 read with Rule 4A of STR 1994 available and requirement fulfilled, hence, appellant cannot be denied benefit of CENVAT credit - Impugned order is set aside and the appeal is allowed [Read less]

Customs - Classification of “Chinlon Knitted Bonded Fabrics” and “Bonded Fabrics in bracket (Eva Lycra)” - Knitted or crocheted fabrics – Eligibility to exemption under Notification No. 82/2017-Customs - Appellant imported goods declared as Chinlon Knitted Bonded Fabrics and Bonded Fabrics (Eva Lycra) classifying under CTH 60069000 claiming benefit of concessional rate under Notification No. 82/2017-Customs dated 27.10.2017 Sl. Number 169 - Revenue later took view that classification claimed did not appear proper and concessional rate availed not applicable - Show-cause notice invoking extended period to reclassi... [Read more]

Customs - Classification of “Chinlon Knitted Bonded Fabrics” and “Bonded Fabrics in bracket (Eva Lycra)” - Knitted or crocheted fabrics – Eligibility to exemption under Notification No. 82/2017-Customs - Appellant imported goods declared as Chinlon Knitted Bonded Fabrics and Bonded Fabrics (Eva Lycra) classifying under CTH 60069000 claiming benefit of concessional rate under Notification No. 82/2017-Customs dated 27.10.2017 Sl. Number 169 - Revenue later took view that classification claimed did not appear proper and concessional rate availed not applicable - Show-cause notice invoking extended period to reclassify items under CTH 60063100, 60063200, 60063300 or 60063400 - Whether goods were appropriately reclassified and exemption benefit properly denied - HELD – The Adjudicating authority arrived at decision on basis of voluntary statement by appellant wherein stated that fabrics are synthetic in nature and bleached and dyed. However, from examining statement recorded during investigation it is nowhere has appellant stated that fabrics are bleached and dyed – The importer summoned under Section 108 stated that Chinlon Knitted Fabric Chinlon Bonded Fabric and Bonded Fabric (Eva Lycra) are all different types with different uses and all these fabrics are synthetic in nature. The statement does not indicate fabrics are bleached and dyed - Adjudicating authority went on wrong premise and arbitrarily recorded that statement indicates bleached and dyed without adducing any evidence – The benefit of exemption notification cannot be denied in absence of any test report - No merit found in impugned order and same is set aside. The appeal is allowed [Read less]

GST - Seizure of Goods - Release of Perishable Goods - Distinction Between Release Under Section 129(1)(a) and Section 129(1)(b) of the CGST Act - Goods were seized by CGST authorities and the appellant, who had made a statement before the Anti-Evasion Section that he was not the consignor and was a painter by profession, approached the court for release claiming to be the owner - The adjudicating authority found that the appellant was not the owner and the actual owner could not be traced. The ld. Single Judge directed the CGST authorities to auction the goods and directed the appellant to participate in such auction. The... [Read more]

GST - Seizure of Goods - Release of Perishable Goods - Distinction Between Release Under Section 129(1)(a) and Section 129(1)(b) of the CGST Act - Goods were seized by CGST authorities and the appellant, who had made a statement before the Anti-Evasion Section that he was not the consignor and was a painter by profession, approached the court for release claiming to be the owner - The adjudicating authority found that the appellant was not the owner and the actual owner could not be traced. The ld. Single Judge directed the CGST authorities to auction the goods and directed the appellant to participate in such auction. The appellant contends that he should be given release as the owner of the goods and that the direction to auction was erroneous - Whether a person, in respect of whom a finding has been recorded that he is not the owner of seized goods, is entitled to release of goods under Section 129(1)(a) of the CGST Act,2017 when goods are perishable in nature and the actual owner cannot be traced - HELD - The appellant, in respect of whom a specific finding had been recorded by the adjudicating authority that he was not the owner and the true owner could not be traced, is not entitled to release of goods under Section 129(1)(a) of the CGST Act. However, as the goods are perishable in nature, a non-owner is entitled to seek release in terms of Section 129(1)(b) of the CGST Act, which provides for release of perishable goods on specified conditions - The learned Single Judge erred in directing the authority to auction the goods and in further directing the appellant to participate in such auction process. The direction to auction is set aside and the appellant may approach the authority for release of goods under Section 129(1)(b) of the CGST Act, subject to the final decision in the writ petition - The direction of the learned Single Judge for release of vehicle in favour of the registered owner is upheld – Ordered accordingly [Read less]

Central Excise – CENVAT credit on capital goods installed in Captive Power Plant – Appellant installed a Captive Power Plant within its factory premises where electricity was generated using bagasse as fuel; the electricity generated was substantially consumed within the factory for manufacture of dutiable final products while surplus electricity was supplied to State Electricity Board - Department denied CENVAT credit on capital goods installed in the Captive Power Plant on the ground that electricity is exempted goods and the capital goods were used for generation of exempted goods – Whether capital goods installed... [Read more]

Central Excise – CENVAT credit on capital goods installed in Captive Power Plant – Appellant installed a Captive Power Plant within its factory premises where electricity was generated using bagasse as fuel; the electricity generated was substantially consumed within the factory for manufacture of dutiable final products while surplus electricity was supplied to State Electricity Board - Department denied CENVAT credit on capital goods installed in the Captive Power Plant on the ground that electricity is exempted goods and the capital goods were used for generation of exempted goods – Whether capital goods installed in a Captive Power Plant qualify for CENVAT credit where electricity generated is predominantly consumed in manufacture of dutiable goods but surplus is supplied outside the factory – HELD – Rule 6(4) of CENVAT Credit Rules, 2004 prohibits availment of CENVAT credit only where capital goods are used exclusively in manufacture of exempted goods, thus, the statutory embargo requires exclusive use to the exclusion of dutiable final products. In the present case, the admitted factual position is that electricity was predominantly consumed in manufacture of dutiable final products and only surplus was supplied outside the factory. Once the admitted position is that the Captive Power Plant formed an integral part of the respondent’s manufacturing unit and the electricity generated therein was substantially utilized in the manufacture of dutiable final products, the requirement of exclusive use contemplated under Rule 6(4) cannot be said to have been satisfied - The Circular No. 665/56/2002-CX dated 25.09.2002 clarifies that CENVAT credit on capital goods used in manufacture of exempt intermediate goods cannot be denied where such intermediate goods are captively consumed in manufacture of final products chargeable to duty. The Tribunal was justified in holding that denial of CENVAT credit was unsustainable – The Revenue appeal is dismissed and the CESTAT order allowing CENVAT credit on capital goods is affirmed - Central Excise – CENVAT credit on specified taxable services under Rule 6(5) – Appellant availed CENVAT credit on seventeen specified taxable services covered under Rule 6(5) of CENVAT Credit Rules, 2004 in relation to Captive Power Plant - Department denied credit on ground that services were related to generation of electricity which was partly supplied as exempted goods outside the factory – Whether specified taxable services qualify for CENVAT credit where electricity generated is part captively consumed in dutiable manufacturing – HELD – Rule 6(5) of CENVAT Credit Rules, 2004 carves out exception in respect of specified taxable services and permits availment of full credit unless such services are used exclusively for manufacture of exempted goods or provision of exempted services; the legislative intent recognizes that certain common input services are incapable of precise segregation between dutiable and exempted activities - The admitted factual position is that electricity generated was substantially consumed in manufacture of dutiable products and only surplus was supplied outside; it cannot be held that specified services were used exclusively for exempted goods; the finding recorded by Tribunal is consistent with plain language of Rule, CBEC circulars and admitted facts – CENVAT credit on specified input services is admissible - Central Excise – CENVAT credit on iron and steel items used for repair and maintenance – Department denied CENVAT credit on iron and steel items such as M.S. angles, channels, joists and plates on ground that after amendment with effect from 07.07.2009 such goods ceased to be eligible for credit as they were used for fabrication of supporting structures and did not qualify as capital goods or inputs – Whether iron and steel items qualify for CENVAT credit where used for repair and maintenance of existing plant and machinery – HELD – Admissibility of CENVAT credit on iron and steel items depends upon purpose for which goods have been used and not merely nomenclature; where used for construction of buildings or fabrication of immovable supporting structures credit is ordinarily unavailable; where established to have been used in repair, replacement or maintenance of existing plant and machinery directly connected with manufacturing process, claim is required to be examined in light of actual use - Tribunal recorded categorical finding of fact that items were used for repair and maintenance of existing capital goods forming part of manufacturing unit. Revenue failed to demonstrate that finding is either unsupported by evidence or suffers from perversity. The actual use of goods constitutes determinative test while examining admissibility of credit – Denial of credit on iron and steel items is set aside - Central Excise – Duty liability on waste and scrap arising from capital goods – Department confirmed demand for duty on waste and scrap arising from capital goods on premise that Appellant cleared such waste and scrap and under Rule 3(5) of CENVAT Credit Rules, 2004 is liable to discharge duty – Whether waste and scrap arising from capital goods attract duty liability – HELD – Revenue failed to point out any specific statutory provision or material on record demonstrating that finding suffers from legal infirmity; appeal under Section 35G of Central Excise Act, 1944 lies only on substantial question of law; where Tribunal upon appreciation of evidence records findings of fact which are neither shown to be perverse nor contrary to statutory provisions, Court would be slow to interfere merely because another view is possible. The jurisdiction under Section 35G is confined to examination of substantial questions of law and does not extend to fresh re-appreciation of factual issues – Demand for duty on waste and scrap is set aside. [Read less]

Service Tax – Applicability of extended period of limitation based on third-party Income Tax data – Appellant received services income for the year 2014-15 as per Income Tax data but failed to file service tax returns or deposit tax; Department issued notice on basis of third-party data received from Income Tax Department alleging suppression of facts and invoked extended period of limitation demanding recovery of service tax - Commissioner (Appeals) dropped demand for period April 2014 to September 2014 as time-barred but sustained demand for October 2014 to March 2015 by invoking extended period – Whether extended ... [Read more]

Service Tax – Applicability of extended period of limitation based on third-party Income Tax data – Appellant received services income for the year 2014-15 as per Income Tax data but failed to file service tax returns or deposit tax; Department issued notice on basis of third-party data received from Income Tax Department alleging suppression of facts and invoked extended period of limitation demanding recovery of service tax - Commissioner (Appeals) dropped demand for period April 2014 to September 2014 as time-barred but sustained demand for October 2014 to March 2015 by invoking extended period – Whether extended period of limitation can be invoked based merely on third-party Income Tax data without positive evidence of suppression, mis-statement or fraud – HELD – Every non-payment or non-levy of tax does not attract extended period of limitation; there must be some positive action which betrays negative intention of willful default; intention to deliberately default is mandatory prerequisite and inadvertent non-payment does not attract extended period - The burden of proving mala fide lies on Department alleging it and assessee cannot be asked to substantiate bona fide conduct. The demand raised by Department by invoking extended period entirely on basis of third-party information and data obtained from Income Tax Department is not sustainable without evidence of suppression, mis-statement, fraud or collusion - The conclusion that mere non-payment of tax is equivalent to collusion or willful misstatement is untenable; absence of corroborative evidence of intentional concealment cannot justify extending limitation period – The appeal is allowed on grounds of limitation and the demand is set aside [Read less]

GST – Constitutional validity of Section 16(2)(c) of the CGST Act, 2017 – HELD - The Section 16(2)(c) is neither unconstitutional nor liable to be read down. The purchasing dealer is not entitled to ITC unless the tax has actually been paid by the supplier - There is no possibility of drawing parity between the provisions of Delhi Value Added Tax Act, 2004 and the Central Goods and Services Tax Act, 2017, so as to treat a purchasing dealer under the CGST Act on par with a purported bonafide purchasing dealer under the Delhi VAT Act in relation to ITC, when the supplier-dealer fails to pay the requisite tax - The Gujara... [Read more]

GST – Constitutional validity of Section 16(2)(c) of the CGST Act, 2017 – HELD - The Section 16(2)(c) is neither unconstitutional nor liable to be read down. The purchasing dealer is not entitled to ITC unless the tax has actually been paid by the supplier - There is no possibility of drawing parity between the provisions of Delhi Value Added Tax Act, 2004 and the Central Goods and Services Tax Act, 2017, so as to treat a purchasing dealer under the CGST Act on par with a purported bonafide purchasing dealer under the Delhi VAT Act in relation to ITC, when the supplier-dealer fails to pay the requisite tax - The Gujarat High Court judgement in the case of Maruti Enterprise is upheld and the Special Leave Petitions are dismissed [Read less]

GST – Validity of service of notices through GST portal only when registration is cancelled - Petitioner's registration was cancelled on 12.08.2021 effective from 31.07.2021 and thereafter show-cause notice and adjudication order were sought to be served only by uploading on GST portal - Whether service through portal alone is valid service under Section 169 CGST Act when registration is cancelled – HELD - Section 169 of the CGST Act prescribes multiple modes for valid service of notice including direct tender, registered post or courier, email, making available on common portal and affixation in newspaper if other mod... [Read more]

GST – Validity of service of notices through GST portal only when registration is cancelled - Petitioner's registration was cancelled on 12.08.2021 effective from 31.07.2021 and thereafter show-cause notice and adjudication order were sought to be served only by uploading on GST portal - Whether service through portal alone is valid service under Section 169 CGST Act when registration is cancelled – HELD - Section 169 of the CGST Act prescribes multiple modes for valid service of notice including direct tender, registered post or courier, email, making available on common portal and affixation in newspaper if other modes not practicable. Legislative intent is clear that making notice available on common portal is one permissible method but not exclusive method - Department is duty-bound to ensure effective service in manner that actually communicates notice to assessee - Since petitioner's registration stood cancelled before issuance of show-cause notice, insistence by Department that portal-based service alone sufficed amounts to imposing duty on unregistered person which law does not contemplate - Department failed to effect valid service of notices and statutory requirement of service under Section 169 not satisfied - The Adjudication order and order of Appellate Authority are quashed and the matter is remitted to Revenue to proceed from stage of show-cause notice – The petition is disposed of [Read less]

GST - Fixing date of hearing prior to reply submission date - Section 75(4) and (5) CGST Act – The Show-cause notice issued on 21.12.2023 granting time to submit reply by 21.01.2024 but date of personal hearing was fixed for 29.12.2023 which was prior to reply submission deadline – Whether fixing hearing date before reply submission date is lawful and compliant with statutory scheme – HELD – The conjunctive reading of Sections 73, 74 and 75 makes it apparent that approach adopted by authority was contrary to scheme of CGST Act – The scheme of Act enables assessee to seek adjournment not in excess of three times a... [Read more]

GST - Fixing date of hearing prior to reply submission date - Section 75(4) and (5) CGST Act – The Show-cause notice issued on 21.12.2023 granting time to submit reply by 21.01.2024 but date of personal hearing was fixed for 29.12.2023 which was prior to reply submission deadline – Whether fixing hearing date before reply submission date is lawful and compliant with statutory scheme – HELD – The conjunctive reading of Sections 73, 74 and 75 makes it apparent that approach adopted by authority was contrary to scheme of CGST Act – The scheme of Act enables assessee to seek adjournment not in excess of three times and sub-section 5 succeeds sub-section 4 of Section 75 which enables assessee to seek personal hearing. If statute stipulates matter to be performed in particular manner same shall be performed in that manner only - Since date for personal hearing was fixed prior to date of submission of reply, personal hearing allegedly afforded was not effective and resulted in breach of principles of natural justice - Assessment order cannot sustain and quashed - Matter is remitted back to Assessing Officer to proceed from stage of show-cause notice and grant opportunity to petitioner to file reply and thereafter fix date for personal hearing - The writ petition stands disposed of [Read less]

Customs AAR – Eligibility to exemption in terms under Sl. No. 39 of Notification No. 24/2005-Cus dated 01.03.2005 to spare parts of the capital goods used in the manufacture of Printed Circuit Boards – HELD - The SI. No. 39 of the said notification is intended to cover goods having a direct nexus with the manufacture of the specified products, namely consumables, raw materials, components, and other inputs that are consumed in, or incorporated into, the final products covered under SI. Nos. 1 to 38 - Further, the capital goods, spare parts of which are proposed to be imported duty free under this notification are not b... [Read more]

Customs AAR – Eligibility to exemption in terms under Sl. No. 39 of Notification No. 24/2005-Cus dated 01.03.2005 to spare parts of the capital goods used in the manufacture of Printed Circuit Boards – HELD - The SI. No. 39 of the said notification is intended to cover goods having a direct nexus with the manufacture of the specified products, namely consumables, raw materials, components, and other inputs that are consumed in, or incorporated into, the final products covered under SI. Nos. 1 to 38 - Further, the capital goods, spare parts of which are proposed to be imported duty free under this notification are not being imported with exemption under notification no. 24/2005-Cus rather they are being imported duty free under EPCG scheme. Therefore, it is amply clear that the capital goods are not covered under sr. no. 39 of the notification no. 24/2005-Cus and consequently, the benefit of the said entry cannot be extended to the import of spare parts intended for such capital goods - The spare parts of the capital goods used in the manufacture of Printed Circuit Boards (PCBs) are not eligible for duty exemption in terms of sl. No. 39 of the notification no. 24/2005-Cus dated 01.03.2005 – Ordered accordingly [Read less]

Service Tax – Taxability of shelters and facilities provided by local authority to bus operators – Appellant-Nagar Panchayat, provided shelters and facilities with toilets to bus operators at bus stop and collected Adda Fees for maintenance of the facilities - Department contended that Adda Fees collected constituted consideration for Business Support Services rendered and demanded service tax along with interest and penalty – Whether facilities provided by local authority for public use and Adda Fees collected constitute taxable services under Business Support Services – HELD – Appellant is a statutory body perf... [Read more]

Service Tax – Taxability of shelters and facilities provided by local authority to bus operators – Appellant-Nagar Panchayat, provided shelters and facilities with toilets to bus operators at bus stop and collected Adda Fees for maintenance of the facilities - Department contended that Adda Fees collected constituted consideration for Business Support Services rendered and demanded service tax along with interest and penalty – Whether facilities provided by local authority for public use and Adda Fees collected constitute taxable services under Business Support Services – HELD – Appellant is a statutory body performing functions in terms of Article 243W of the Constitution of India. Facilities provided by Nagar Panchayat are created in public interest and cannot be said to be created to support business of bus operators - Before 01.07.2012, CBEC Circular No.96/7/2007-ST clarified that activities assigned to and performed by sovereign or public authorities are statutory duties and fee charged for same is not liable to service tax - For period after 01.07.2012, under Negative List Regime, Notification No.30/2012 dated 20.06.2012 exempts services provided by government or local authority by way of support services and service tax if any is required to be paid by recipient of service and not by appellant - The appellant not liable to pay service tax on facilities created for common public use even if Adda Fee collected from bus operators for maintenance of facility – The demand is set aside and the appeal is allowed [Read less]

Central Excise – Classification of Minute Maid Nimbu Fresh beverage product – Appellant, a contract packaging/bottling company manufacturing and clearing 'Minute Maid Nimbu Fresh' (MMNF) declared classification of Central Excise Tariff Heading 22029020 as 'Fruit pulp' or 'Fruit juice based drink' – Department alleged that MMNF should be classified under CETH 22021020 as 'Lemonade' and therefore abatement under Section 4A of Central Excise Act would not be available – Demand of differential Central Excise duty on ground that tax payable on Section 4 value was not paid – Whether MMNF containing lemon juice concentr... [Read more]

Central Excise – Classification of Minute Maid Nimbu Fresh beverage product – Appellant, a contract packaging/bottling company manufacturing and clearing 'Minute Maid Nimbu Fresh' (MMNF) declared classification of Central Excise Tariff Heading 22029020 as 'Fruit pulp' or 'Fruit juice based drink' – Department alleged that MMNF should be classified under CETH 22021020 as 'Lemonade' and therefore abatement under Section 4A of Central Excise Act would not be available – Demand of differential Central Excise duty on ground that tax payable on Section 4 value was not paid – Whether MMNF containing lemon juice concentrate of 1% and total soluble solids of 5.7% should be classified as 'Lemonade' under CETH 22021020 or as 'Fruit juice based drink' under CETH 22029020 – HELD – Larger Bench of Tribunal in Brindavan Beverages Pvt. Ltd. has settled this issue. The product qualifies as fruit juice based drink under CETH 22029020 where fruit content of lemon or lime juice is not less than 5%. Where such fruit content is less than 5%, product would classify as lemonade; both common parlance test and supporting legislation test under Regulations 2.3.10 and 2.3.30 regarding non-carbonated and carbonated fruit beverages respectively support classification as fruit juice based drinks when fruit juice content meets specified minimum threshold - MMNF with lemon juice concentrate of 5% and Total Soluble Solids of 10% satisfies definition of fruit juice based drinks; Department's reclassification as lemonade is not justified - The demand of differential Central Excise duty is set aside and appellant's declared classification under CETH 22029020 is upheld – The appeal is allowed [Read less]

Service Tax – Taxability of Commercial Training and Coaching services – Appellant provided training in construction activities to candidates referred by manpower agencies; upon completion, candidates cleared competency tests conducted by Government of Singapore and were sent to Singapore for employment - Department issued show cause notice invoking extended period of limitation, alleging short-payment of service tax as the services fell under Commercial Training or Coaching Service – Whether services provided by training institute qualify for exemption under Notification 24/2004 as Vocational Training and whether ext... [Read more]

Service Tax – Taxability of Commercial Training and Coaching services – Appellant provided training in construction activities to candidates referred by manpower agencies; upon completion, candidates cleared competency tests conducted by Government of Singapore and were sent to Singapore for employment - Department issued show cause notice invoking extended period of limitation, alleging short-payment of service tax as the services fell under Commercial Training or Coaching Service – Whether services provided by training institute qualify for exemption under Notification 24/2004 as Vocational Training and whether extended period of limitation can be invoked – HELD – An institute providing vocational training that imparts skills to enable trainee to seek employment or undertake self-employment directly after training or coaching is covered under definition of Vocational Training Institute - By virtue of CBEC Notification 24/2004-ST, services provided by Vocational Training Institute in relation to commercial training or coaching are exempt from service tax. The certificate issued by appellant, once accepted by Indian Government and Singapore Government, constitutes a recognized qualification – The appellant is entitled to benefit of exemption as Vocational Training Institute at least up to 27.02.2010; Revenue failed to make out case of fraud, collusion or willful misstatement; no element of mens rea established - Appellant had voluntarily paid service tax in December 2008 before issuance of show cause notice; extended period of limitation cannot be invoked without evidence of suppression of facts with intent to evade tax; only demand for normal period can be sustained – Demand is restricted to normal period; penalties under Sections 76, 77 and 78 are deleted - The appeal is partly allowed [Read less]

GST - Violation of Natural Justice and Procedural Non-Compliance - Lack of Reasoned Order and Denial of Hearing – Disposal of by way of a cryptic order containing merely a one-line rejection stated to be "Incorrect declaration of Order issuing Authority by Taxpayer" without any reasons in support of such conclusion - Whether an appeal order can be sustained when it is bereft of reasons and has been passed without affording a hearing to the taxpayer in violation of principles of natural justice - HELD - The principles of natural justice require that a taxpayer must be given an opportunity to be heard before disposal of an... [Read more]

GST - Violation of Natural Justice and Procedural Non-Compliance - Lack of Reasoned Order and Denial of Hearing – Disposal of by way of a cryptic order containing merely a one-line rejection stated to be "Incorrect declaration of Order issuing Authority by Taxpayer" without any reasons in support of such conclusion - Whether an appeal order can be sustained when it is bereft of reasons and has been passed without affording a hearing to the taxpayer in violation of principles of natural justice - HELD - The principles of natural justice require that a taxpayer must be given an opportunity to be heard before disposal of an appeal and that any order rejecting an appeal must contain reasoned findings in support of the conclusion. A bare, cryptic rejection without any reasons or findings is indicative of a non-speaking order and is clearly contrary to the well-settled principles of natural justice - The legislature has mandated that orders be passed in prescribed forms with requisite details and reasons. An order which merely records the rejection in one line without any substantive application of mind and reasoning violates the foundational principles of administrative law and the rights of a taxpayer to know the grounds on which his appeal has been rejected. The Impugned Order is quashed and set aside and the matter is remanded to the respondent for de novo consideration and hearing on merits in accordance with law - The petition is disposed of [Read less]

Central Excise – Invocation of extended period of limitation where Department had contemporaneous knowledge of facts – Appellant suffered loss of finished goods, inputs, and capital goods due to industrial violence and fire in factory - The appellant provided complete documentation including daily stock account, finished goods statements, and inventory details which were physically verified by Department - Department issued first SCN dated 08.02.2013 based on this material demanding duty on finished goods lost; thereafter, in February 2017, more than three years later, Department issued another SCN invoking extended pe... [Read more]

Central Excise – Invocation of extended period of limitation where Department had contemporaneous knowledge of facts – Appellant suffered loss of finished goods, inputs, and capital goods due to industrial violence and fire in factory - The appellant provided complete documentation including daily stock account, finished goods statements, and inventory details which were physically verified by Department - Department issued first SCN dated 08.02.2013 based on this material demanding duty on finished goods lost; thereafter, in February 2017, more than three years later, Department issued another SCN invoking extended period of limitation to recover CENVAT credit allegedly available on lost inputs and capital goods – Whether extended period of limitation can be invoked when Department had complete and contemporaneous knowledge of facts and had already issued proceedings based on those very facts – HELD – When Department had complete knowledge of occurrence of fire, destruction of finished goods, inputs and capital goods, and loss of records, and had issued first show cause notice based on such knowledge, Department could not thereafter invoke extended period of limitation by issuing a second notice for the same incident - The facts regarding destruction were fully within Department's knowledge and acted upon by it contemporaneously. Once demand is found to be barred by limitation, proceedings should be disposed on that ground alone and merits should not be examined – The demand for CENVAT credit recovery is wholly unsustainable. When entire demand is set aside as time-barred, consequential demands of interest and penalty also become untenable – The appeal is allowed [Read less]

Customs - Classification of Interactive Flat Panel Display Assembly - Distinction between Automatic Data Processing Machine and Monitor - CTH 8471 vs CTH 8528 - Appellant imported Display Assembly 75 inch for clearance under CTH 84733099 claiming nil rate of BCD - Department classified goods under CTH 8528 attracting 10 percent BCD - Whether goods are classifiable under CTH 8471 as ADPM or CTH 8528 as monitor – HELD – The subject goods satisfy all four conditions of Chapter Note 5(A) to Chapter 84 for automatic data processing machines namely storing processing programme and data, being freely programmed according to u... [Read more]

Customs - Classification of Interactive Flat Panel Display Assembly - Distinction between Automatic Data Processing Machine and Monitor - CTH 8471 vs CTH 8528 - Appellant imported Display Assembly 75 inch for clearance under CTH 84733099 claiming nil rate of BCD - Department classified goods under CTH 8528 attracting 10 percent BCD - Whether goods are classifiable under CTH 8471 as ADPM or CTH 8528 as monitor – HELD – The subject goods satisfy all four conditions of Chapter Note 5(A) to Chapter 84 for automatic data processing machines namely storing processing programme and data, being freely programmed according to user requirements, performing arithmetical computations specified by user and executing processing program without human intervention - Interactive Flat Panel display goods contain central processing unit and operate on software that functions independently from monitors of CTH 8528 – The CTH 8528 covers monitors capable of receiving and displaying signals when attached to ADPM or other devices and not capable of functioning independently or processing data. The HSN Explanatory Notes to CTH 8528 mention viewable image sizes not generally exceeding 30 inches and monitors usually cannot be operated by remote control – The goods in present case are 65 inches and 86 inches and have remote control. Such goods do not merit classification under CTH 8528 - Classification is determined according to terms of headings and relevant Section or Chapter Notes and Chapter Note rules of interpretation prevail over General Rules of Interpretation - Tribunal decision in Ingram Micro India Private Limited held that goods are ADPM capable of working standalone and satisfying conditions of Chapter Note 5(A). The Board Circular dated 07.04.2025 issued by Technical Officer TRU cannot be construed as Circular issued by CBIC in terms of Section 151A and has no sanctity in law - Reliance on proposals in Finance Bill 2025 and Board Circular dated 07.04.2025 is unsustainable in law – The subject goods are classifiable under CTH 8471 41 90 as ADPM – The order under challenge is set aside and the appeal is allowed [Read less]

GST - Continued Transit after Expiry of E-Way Bill, Release of goods pending appeal - Petitioner transported goods from Mumbai to Nepal under valid export documents and a valid E-Way Bill with statutory validity period, but the physical movement of taxable goods continued after the statutory validity of the e-way bill had expired when the vehicle was intercepted – Imposition of penalty after rejecting the reasons given by the driver - The petitioner sought quashing of both the penalty order and the appellate order and interim relief for release of the goods and vehicle - Whether the penalty imposed for continued transit ... [Read more]

GST - Continued Transit after Expiry of E-Way Bill, Release of goods pending appeal - Petitioner transported goods from Mumbai to Nepal under valid export documents and a valid E-Way Bill with statutory validity period, but the physical movement of taxable goods continued after the statutory validity of the e-way bill had expired when the vehicle was intercepted – Imposition of penalty after rejecting the reasons given by the driver - The petitioner sought quashing of both the penalty order and the appellate order and interim relief for release of the goods and vehicle - Whether the penalty imposed for continued transit after e-way bill expiry can be quashed and whether interim relief for release of goods and vehicle can be granted without adjudication on merits - HELD - The appellate order could be challenged before the Tribunal which had been constituted and was likely to become functional soon and the petitioner would not be deprived of remedy. However, the vehicle and goods were of perishable nature and substantial damage would be caused during rainy season if the goods and vehicle were not released, and that the petitioner was willing to furnish a bank guarantee for the remaining penalty amount - While the appellate remedy remains available, interim relief could be granted on furnishing appropriate security when goods are at risk of damage due to weather conditions. The writ petition is disposed granting interim relief with liberty to file an appeal before the Tribunal and directing that the goods and vehicle shall be released upon furnishing a bank guarantee – The petition is disposed of [Read less]

Punjab Value Added Tax Act, 2005 - Penalty for alleged tax evasion - Requirement of intent under Section 51(7) PVAT Act - Stock transfer of mobile phones with accessories - Petitioner challenged order imposing penalty under Section 51(7)(c) PVAT Act for alleged attempt to evade tax on mobile phone accessories which carried higher tax rate of 8% compared to mobile phones at 5% - Whether penalty can be imposed at check-post when classification of goods was not settled and there was bonafide belief regarding tax liability - HELD - Section 51(7) of PVAT Act categorically specifies that for levy of penalty there has to be inten... [Read more]

Punjab Value Added Tax Act, 2005 - Penalty for alleged tax evasion - Requirement of intent under Section 51(7) PVAT Act - Stock transfer of mobile phones with accessories - Petitioner challenged order imposing penalty under Section 51(7)(c) PVAT Act for alleged attempt to evade tax on mobile phone accessories which carried higher tax rate of 8% compared to mobile phones at 5% - Whether penalty can be imposed at check-post when classification of goods was not settled and there was bonafide belief regarding tax liability - HELD - Section 51(7) of PVAT Act categorically specifies that for levy of penalty there has to be intent to evade tax on part of assessee – For exercise of power at check-post to be valid must have reasonable nexus with attempt at evasion - Where relevant documents duly produced but bonafide plea against taxability is raised and there is neither mis-declaration nor concealment, exercise of power of imposing penalty at check-post on ground of attempt at evasion not intended - The Supreme Court held in Nokia India Pvt. Ltd. that accessory of mobile phone would have to be taxed separately. This by itself would not lead to inference of intent on part of appellant to evade payment of tax - Accessories were clearly specified as being part of mobile phone in Stock Transfer Invoice which would point to fact that there was no intent to suppress that mobiles in transit were not accompanied by accessories – The material available with check-post authorities was insufficient to infer intent to evade tax and absence of such intent makes levy of penalty itself bad in law – The impugned order is set aside and the appeal is allowed [Read less]

GST - Cancellation of GST Registration - Violation of Principles of Natural Justice - Denial of Personal Hearing as Mandated by Section 75(4) of the CGST Act, 2017 – Rejection of appeal for revocation of cancellation on the ground of Limitation - Whether the cancellation of registration can be sustained when no personal hearing was afforded to the taxpayer in violation of the principles of natural justice - HELD - The cancellation is liable to be set aside on the ground of violation of the principles of natural justice as embodied in Section 75(4) of the Act, which casts a duty upon the respondent authorities to give per... [Read more]

GST - Cancellation of GST Registration - Violation of Principles of Natural Justice - Denial of Personal Hearing as Mandated by Section 75(4) of the CGST Act, 2017 – Rejection of appeal for revocation of cancellation on the ground of Limitation - Whether the cancellation of registration can be sustained when no personal hearing was afforded to the taxpayer in violation of the principles of natural justice - HELD - The cancellation is liable to be set aside on the ground of violation of the principles of natural justice as embodied in Section 75(4) of the Act, which casts a duty upon the respondent authorities to give personal hearing to the taxpayer. It is settled law that at least three dates are required to be fixed for personal hearing before passing an order of cancellation. In the present case, the respondent authorities had not issued any separate notice giving the petitioner an opportunity of personal hearing and had proceeded to cancel the registration based only on the show cause notice without following the statutory procedure – Further, the impugned orders are liable to be set aside on the ground that it has been issued by the authority whose name and designation is not shown and at the relevant time even as it was mandatory to provide DIN Number - The Appellate Authority though dismissed the appeal on the ground of limitation but on the face of the conclusion, the respondent authorities have committed jurisdictional error which has an adverse consequence in form of affecting the livelihood of the petitioner - The order of cancellation is set aside and the respondent authorities are directed to restore the registration of the petitioner forthwith - The writ application stands allowed with cost to Respondent [Read less]

Central Excise – Recovery of sanctioned refund - Doctrine of unjust enrichment - Recovery of refund already sanctioned on the assumption that the said refunds were erroneously granted - Credit notes issued for duty paid in excess - Whether refunds already sanctioned based on final appellate orders can be recovered merely on ground of unjust enrichment without considering that duty burden was not passed on to customers – HELD - The Bangalore Bench of the Tribunal specifically observed in final order that there is no unjust enrichment as appellant assessee had not passed on incidence of duty to any other person. The Benc... [Read more]

Central Excise – Recovery of sanctioned refund - Doctrine of unjust enrichment - Recovery of refund already sanctioned on the assumption that the said refunds were erroneously granted - Credit notes issued for duty paid in excess - Whether refunds already sanctioned based on final appellate orders can be recovered merely on ground of unjust enrichment without considering that duty burden was not passed on to customers – HELD - The Bangalore Bench of the Tribunal specifically observed in final order that there is no unjust enrichment as appellant assessee had not passed on incidence of duty to any other person. The Bench noted findings of Commissioner (Appeals) that price had not been fixed in view of fluctuating market prices and appellant had not collected extra amount - Appellant had taken back incidence of duty initially passed on by crediting buyer's accounts at end of every month with disputed amount of duty - Appellant duly submitted Chartered Accountant's certificate stating duty burden not passed on to customers - Supreme Court in Addison & Co. Ltd. observed that when assessee has duly submitted CA certificate to effect that duty burden not passed the assessee should not be denied claim of refund – The bar of unjust enrichment not applicable where duty amount initially charged has been returned back by assessee by issuing credit notes - Maxims require no man should be vexed twice for same cause and there must be end to litigation otherwise rights of persons would be in endless confusion. The earlier judgment cannot be reopened or reviewed on basis of subsequent judgment - When there is no case of unjust enrichment entire basis of raising demand on grounds of unjust enrichment cannot be sustained - Impugned orders are set aside and the appeals are allowed [Read less]

Customs - Interest under Section 61(2) Customs Act for Capital goods transferred to MOOWR warehouse cleared for home consumption - Difference between intended for use and actual use - Appellant imported cooler (gearbox) under MOOWR licensed warehouse with intention to use in manufacturing process but subsequently cleared for home consumption due to operational and commercial considerations - Show Cause Notice issued demanding interest along with deferred duty and levy of interest - Whether interest is payable on capital goods cleared for home consumption from Section 65 warehouse when such goods were imported with intentio... [Read more]

Customs - Interest under Section 61(2) Customs Act for Capital goods transferred to MOOWR warehouse cleared for home consumption - Difference between intended for use and actual use - Appellant imported cooler (gearbox) under MOOWR licensed warehouse with intention to use in manufacturing process but subsequently cleared for home consumption due to operational and commercial considerations - Show Cause Notice issued demanding interest along with deferred duty and levy of interest - Whether interest is payable on capital goods cleared for home consumption from Section 65 warehouse when such goods were imported with intention to use but not actually used - HELD - The statutory requirement contained in Section 61(1)(a) is that capital goods must be intended for use in warehouse where manufacturing operations permitted under Section 65. Provision does not stipulate that goods must necessarily be installed or actually used before qualifying for benefit of deferred payment of customs duty without interest. When the Notification speaks of ‘intended for use’ simpliciter, the same cannot be read to adduce the meaning that the Notification calls for actual ‘usage’ of the capital goods within the warehoused premises - In present case imported Cooler (Gear Box) was covered under MOOWR license application as goods permitted to be imported for use in manufacturing operations. Appellant imported subject goods with intention to use in process of manufacturing which is evident from application made to CBIC under MOOWR Scheme. The subject goods were subsequently cleared for home consumption due to operational and commercial considerations - Demand of interest based on ground that capital goods have not been used and cleared for home consumption - Clarifications issued by Customs authorities through public notices and trade facilitation advisories stated that no interest is leviable on ex-bond bills of entry filed for clearance of goods for home consumption from Section 65 warehouse - CBIC issued updated FAQ dated 27.10.2020 clarifying that capital goods can be cleared for home consumption as per Section 68 read with Section 61 of Customs Act on payment of applicable duty without interest – The impugned order stands set aside and the appeal is allowed [Read less]

GST - Interest on Delayed Filing of Returns - Liability when tax already deposited in Electronic Cash Ledger - Scope of Section 50 of CGST Act, 2017 and Proviso to Rule 88B of CGST Rules, 2017 - Petitioner filed belated returns for certain months and deposited the full amount of tax in the Electronic Cash Ledger before the due date for filing returns. Subsequently, an audit objection was raised regarding the interest computed and a notice was issued demanding interest on the basis of belated filing of returns - Rejection of refund application by claiming prospective application of proviso to Rule 88B - Whether interest can... [Read more]

GST - Interest on Delayed Filing of Returns - Liability when tax already deposited in Electronic Cash Ledger - Scope of Section 50 of CGST Act, 2017 and Proviso to Rule 88B of CGST Rules, 2017 - Petitioner filed belated returns for certain months and deposited the full amount of tax in the Electronic Cash Ledger before the due date for filing returns. Subsequently, an audit objection was raised regarding the interest computed and a notice was issued demanding interest on the basis of belated filing of returns - Rejection of refund application by claiming prospective application of proviso to Rule 88B - Whether interest can be levied on tax already deposited in the Electronic Cash Ledger for the period between the date of deposit and the date of filing of belated return – HELD - The interest on delayed payment of tax can only be levied from the due date of payment of tax till the deposit of such tax in the electronic cash ledger. When an amount has been deposited in the Electronic Cash Ledger on or before the due date for filing of the return and is later debited for payment of tax while filing the return after the due date, the deposited amount shall not be taken into consideration while calculating interest for the delayed period. The principle laid down in the judgment of this Court in Arya Cotton Industries case established that the amount lying in the electronic cash ledger represents advance tax already paid and cannot be subject to interest for the period after deposit – Secondly, the Proviso to Rule 88B of the CGST Rules was introduced by the GST Council in its 53rd meeting dated 22.06.2024 specifically to implement the ratio of this Court's judgment in Arya Cotton Industries. The respondent authority acted arbitrarily and with total non-application of mind by denying the refund application on the sole ground of prospective application of the Rule amendment, while ignoring the Court's decision which had already decided the issue in favor of the taxpayer - The impugned order rejecting the refund application is arbitrary and suffers from non-application of mind – The impugned order and the recovery notice is quashed and set aside. The respondent is directed to grant refund of excess amount of interest in terms of the refund application filed by the petitioner along with statutory interest – The petition is allowed [Read less]

Customs - Verification Procedure Under Rules of Origin under Free Trade Agreement - Country of origin certificates for jewellery - The Appellant imported diamond-studded gold jewellery from the exporting country and filed bills of entry claiming benefit under Notifications dated 31.08.2004 read with notification (NT) dated 31.08.2004 for goods under CTH 711319. The goods were duly assessed and cleared by the customs authority without any query. Subsequently, the department's investigation wing conducted an investigation alleging that the Certificates of Country of Origin were improper as they showed inflated local value co... [Read more]

Customs - Verification Procedure Under Rules of Origin under Free Trade Agreement - Country of origin certificates for jewellery - The Appellant imported diamond-studded gold jewellery from the exporting country and filed bills of entry claiming benefit under Notifications dated 31.08.2004 read with notification (NT) dated 31.08.2004 for goods under CTH 711319. The goods were duly assessed and cleared by the customs authority without any query. Subsequently, the department's investigation wing conducted an investigation alleging that the Certificates of Country of Origin were improper as they showed inflated local value content and that the Appellant had wrongly availed the benefit of the free trade agreement - Whether the benefit of a notification based on country of origin certificates can be denied based on investigations conducted within the importing country without following the prescribed procedure for verification with the issuing authority of the exporting country - HELD - The Interim Rules of Origin notified by the Central Government prescribe a specific mechanism for handling doubts regarding country of origin certificates. Rule 14 requires certificates to be issued by a government authority designated by the exporting party and notified to the importing party. Rule 15 provides the procedure for retroactive verification when there is reasonable doubt. The importing party must request a retroactive check from the issuing authority of the exporting country, specifying the reasons and additional information suggesting inaccuracy. The issuing authority must respond within three months - The proper procedure when there was reasonable doubt about the value addition in the certificates should have been to take up the matter with the issuing authority of the certificates in the exporting country as per Rule 15. Instead, the department recorded statements of various persons and obtained a letter from another jeweller and based on these investigations conducted within the country, denied the benefit of the notification. This procedure was contrary to the law. The impugned proceedings and demand based on a procedure contrary to the prescribed law cannot be sustained. The benefit of the notification cannot be denied. The demand is dropped and no penalty is imposable on the Appellant – The appeal is allowed [Read less]

Central Excise - Clandestine removal of MS ingots - Appellant, Managing Director of a steel manufacturing company, along with related companies and individuals, was accused of causing clandestine removal of MS ingots to four buyers. During the course of investigation, statements were recorded from the CEO and Managing Director of the company. The noticees initially did not file a formal reply to the SCN but during the personal hearing in March 2016, they sought cross-examination of the persons whose statements were recorded in the SCN, claiming the statements were not voluntary and obtained under duress. The adjudicating a... [Read more]

Central Excise - Clandestine removal of MS ingots - Appellant, Managing Director of a steel manufacturing company, along with related companies and individuals, was accused of causing clandestine removal of MS ingots to four buyers. During the course of investigation, statements were recorded from the CEO and Managing Director of the company. The noticees initially did not file a formal reply to the SCN but during the personal hearing in March 2016, they sought cross-examination of the persons whose statements were recorded in the SCN, claiming the statements were not voluntary and obtained under duress. The adjudicating authority rejected the request for cross-examination without providing satisfactory reasons and proceeded to decide the case solely on the basis of the allegations in the SCN without affording the noticees an opportunity to file a final reply on merits - Whether the allegation of clandestine removal can be upheld when the adjudicating authority violates the principles of natural justice by denying cross-examination and refusing to afford a proper opportunity to defend - HELD - The order has been passed in serious violation of the principles of natural justice, specifically the principle of Audi Alteram Partem. When the adjudicating authority itself observes that the reply filed was interim, the officer is obligated to communicate the rejection of cross-examination to the parties and give them an opportunity to file a final reply on merits. There is no precedent supporting the proposition that no such second opportunity should be afforded when a request for cross-examination is rejected - Further, there are two ways of denying an admission under statement: one is to retract it entirely and the second is to seek cross-examination of the person giving the statement. The mere fact that statements were not retracted does not become conclusive or the end of the matter when cross-examination was properly sought. The adjudication proceedings were conducted as mere formality without substantive consideration. The allegation of clandestine removal stands not proved. The individual penalties under Section 26 of the Central Excise Rules 2002 imposed on the contesting Appellants also cannot be sustained as they have not been given reasonable opportunities to put forth their defence. The impugned order is set aside and the appeals are allowed [Read less]

Maharashtra Value Added Tax Act, 2002 - Priority of Dues - Secured Creditors v/s State Revenue Authorities - Whether secured creditors registered under the SARFAESI Act and RDDB Act have statutory priority in realization of dues from sale of secured assets over and above State revenue dues including tax, penalty, interest and other statutory dues – Whether State tax authorities can record charges or seek recovery from secured assets already subject to prior security interests - HELD - The secured creditors registered under Section 26E of the SARFAESI Act and Section 31B of the RDDB Act have statutory priority in realizat... [Read more]

Maharashtra Value Added Tax Act, 2002 - Priority of Dues - Secured Creditors v/s State Revenue Authorities - Whether secured creditors registered under the SARFAESI Act and RDDB Act have statutory priority in realization of dues from sale of secured assets over and above State revenue dues including tax, penalty, interest and other statutory dues – Whether State tax authorities can record charges or seek recovery from secured assets already subject to prior security interests - HELD - The secured creditors registered under Section 26E of the SARFAESI Act and Section 31B of the RDDB Act have statutory priority in realization of dues from the sale of secured assets over and above all other debts including government revenues, taxes, cesses and rates payable to the Central Government or State Government or local authority - The term priority means the right to enforce a claim in preference to others and shall override any charge created under State laws creating first charge, in view of the express subordination of State enactments to Central legislation. For dues arising prior to the amendment to the SARFAESI Act dated 24.01.2020, the State must demonstrate compliance with all statutory procedures including attachment in accordance with law and due proclamation thereof before the property is sold - Merely issuing an attachment order without following prescribed procedures is insufficient to create any charge or priority over secured assets. The mere recording of boja or encumbrance in revenue records against secured assets after enforcement of security interests is not justified and such encumbrances must be removed. Auction purchasers who have purchased secured assets in auction sales conducted by secured creditors and paid full consideration and obtained sale certificates are entitled to enjoy the fruits of the purchase and are not liable to be burdened with charges or encumbrances recorded by State tax authorities - The State cannot chase the same asset in the hands of purchaser to realise its dues after the secured creditor has already enforced its security interest and sold the asset. The attachment orders and intimation notices issued by the State tax authorities are quashed and set aside - The petitioners are allowed [Read less]

Service Tax - Exemption for Reinsurance of Weather-Based Crop Insurance - Applicability to reinsurers - Appellant, an insurance company, was denied the benefit of Exemption Notification 58/2010 and 25/2012-ST which provide exemptions for reinsurers related to general insurance business in weather-based crop insurance or modified agricultural schemes approved by the Government of India - Whether the exemption notifications applicable to reinsurers engaged in weather-based crop insurance can be denied without proper application of the notification terms - HELD - This issue has been settled by a prior decision of the Tribunal... [Read more]

Service Tax - Exemption for Reinsurance of Weather-Based Crop Insurance - Applicability to reinsurers - Appellant, an insurance company, was denied the benefit of Exemption Notification 58/2010 and 25/2012-ST which provide exemptions for reinsurers related to general insurance business in weather-based crop insurance or modified agricultural schemes approved by the Government of India - Whether the exemption notifications applicable to reinsurers engaged in weather-based crop insurance can be denied without proper application of the notification terms - HELD - This issue has been settled by a prior decision of the Tribunal bench in favor of the Appellant for a subsequent period wherein the Tribunal held that the levy of Service Tax on reinsurance services provided by the appellant to Agricultural Insurance Corporation of India (AICIL) under Weather Based Crop Insurance or Modified National Agricultural Insurance Scheme untenable due to retrospective exemption provided by Section 135 of the Finance Act, 2025. The ratio of that decision is squarely applicable to the present case. The denial of the exemption is unsustainable and the exemption benefit is allowed - Service Tax - CENVAT Credit Reversal - Reversal Cannot Be Based on Total Credit - Rule 6 reversal - The Revenue demanded a reversal of CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004, by calculating the reversal on the entire total CENVAT credit availed by the Appellant - Whether a reversal of CENVAT credit under Rule 6 can be sustained when it is calculated on the total CENVAT credit rather than on the credit specifically attributable to exempted services or deemed supplies - HELD - This issue is settled by established precedents including Toshiba JSW Power Systems and Lotte India Corporation Ltd. The law is clear that demands for reversal of CENVAT credit must be based on the specific credit attributable to the exempted or deemed supply. A reversal calculated on the total CENVAT credit availed by the entity is not sustainable in law. The demand for reversal on total credit is set aside - Service Tax - CENVAT Credit for Specific Input Services - Remand for Production of Evidence - The Appellant availed CENVAT credit for various input services including air travel agency services, rail travel agency services, club membership fees, group insurance for employees, rent-a-cab services and catering services. The lower authorities denied the credit primarily on the ground that supporting documentary evidence was not provided - Whether CENVAT credit on the specified input services is admissible and whether the Appellant should be given an opportunity to substantiate the claims with evidence - HELD - While various judicial precedents establish that the specified services are eligible for CENVAT credit, the denial by the lower authorities was fundamentally based on the lack of supporting documentary evidence. To ensure that substantive justice is done, the Appellant should be given a fair opportunity to produce the requisite records and documentation. The matter is remanded to the Original Authority for fresh adjudication on the merits after the Appellant furnishes the supporting evidence - Service Tax - CENVAT Credit on Tax Paid Under Reverse Charge Mechanism - The Appellant availed CENVAT credit for service tax paid under the reverse charge mechanism on insurance auxiliary services provided by unregistered vendors. The Revenue alleged that the Appellant had availed excess credit compared to the actual entitlement. The Appellant contended that since the entire tax was paid under the reverse charge mechanism, it was legally entitled to the full credit and that no excess was availed - Whether CENVAT credit can be denied or reduced when tax has been properly paid under the reverse charge mechanism - HELD - The matter requires verification of the actual documents and a detailed speaking order examining the tax paid and the credit availed. The claim cannot be rejected without affording the Appellant an adequate opportunity to present evidence regarding the tax liability and payment. The matter is remanded to the Original Authority for verification of documentary evidence and for passing a detailed reasoned order - Service Tax - Re-credit of Previously Reversed CENVAT Entry - The Appellant had availed CENVAT credit for motor vehicle repair services. This credit was initially denied by the lower authority but subsequently allowed by the Commissioner (Appeals) in 2011. When the Appellant sought to re-credit the previously reversed amount in 2013, the Revenue rejected it as time-barred under Section 11B of the Central Excise Act, 1944 which provides a one-year limitation for refund claims - Whether the one-year limitation period under Section 11B applies to the re-credit or reversal of a CENVAT credit entry that was previously reversed but subsequently restored - HELD - The Madras High Court decision in ICMC Corporation Ltd. establishes that re-credit of a previously reversed entry is merely an accounting adjustment and does not involve an outflow of funds from the exchequer. Therefore it is not a refund of duty within the meaning of Section 11B. The one-year limitation period under Section 11B does not apply to such re-credit entries. The rejection of the re-credit claim as time-barred is set aside and the Appellant is entitled to the re-credit of the amount - Service Tax - CENVAT Credit on Capital Goods - Statutory Limitation on Timing of Availment - Capital goods - 50 percent restriction in first year - The Appellant availed 100 percent of the CENVAT credit on capital goods within a single financial year, despite the statutory provisions which restrict the availment to 50 percent in the first year with the balance to be availed in subsequent years. The Appellant contended that there was no express statutory bar preventing the entire credit from being taken in the first year - Whether the statutory restriction of capital goods credit to 50 percent in the first year is mandatory or merely a preference that can be bypassed - HELD - The statute explicitly provides that only 50 percent of the CENVAT credit on capital goods can be availed in the first year, with the remaining 50 percent to be availed in subsequent years. This is a mandatory statutory restriction and not merely a guideline. The fact that there is no express language stating one cannot take the entire amount does not override the affirmative statutory provision. The Appellant cannot claim 100 percent of the capital goods credit in a single year. The claim for full credit in the first year is dismissed - Service Tax - CENVAT Credit for Repair Services - Invoice to Insured Party - Insurance company repair services - The Revenue appealed against the allowance of CENVAT credit for repair services availed by the insurance company. The Revenue contended that the credit was ineligible because the service invoices were issued in the name of the insured party rather than in the name of the insurance company, even though the insurance company paid the service provider and bore the entire service tax cost - Whether an insurance company is entitled to CENVAT credit for repair services when the invoices are technically in the name of the insured party but the insurance company is the actual payer and bears the tax incidence - HELD - This issue is squarely covered by prior decisions of this Tribunal bench in favor of insurance companies in similar circumstances. An insurance company is entitled to CENVAT credit on repair services provided to the insured even if the invoice is nominally issued to the insured party, provided the insurance company actually pays the service provider and bears the full service tax cost. The Revenue's appeal is dismissed and the credit is upheld. [Read less]

Service Tax – Demand invoking Extended Period of Limitation – Appellant-EOU providing business auxiliary services, sub-contracted data capturing and data processing services to its wholly owned subsidiary. The Department issued a Show Cause Notice on July 24, 2009, for the period 2004-05 to 2006-07, demanding service tax on the basis that the subcontracted activities constituted taxable business auxiliary services - Whether the extended period of limitation under Section 73(1) can be invoked when the Appellant did not file returns or register for the service and the activity was sought to be taxed based on the Appellan... [Read more]

Service Tax – Demand invoking Extended Period of Limitation – Appellant-EOU providing business auxiliary services, sub-contracted data capturing and data processing services to its wholly owned subsidiary. The Department issued a Show Cause Notice on July 24, 2009, for the period 2004-05 to 2006-07, demanding service tax on the basis that the subcontracted activities constituted taxable business auxiliary services - Whether the extended period of limitation under Section 73(1) can be invoked when the Appellant did not file returns or register for the service and the activity was sought to be taxed based on the Appellant's own books of account with no suppression of facts - HELD - Limitation is a jurisdictional issue that goes to the root of the authority's power to issue the notice and decide on the merits. The extended period can be invoked only upon establishing willful and deliberate intent to evade payment of service tax. Mere non-registration, non-filing of returns or failure to disclose an activity does not automatically constitute suppression if the Appellant held a bona fide belief that the activity was not taxable under the law - In the present case the Appellant did not suppress facts as the disputed activity was recorded in its own books of account. The evidence did not establish a willful and deliberate intent on the part of the Appellant to evade the tax. The Show Cause Notice issued after the expiry of the normal limitation period is without jurisdiction and void. The demand is time-barred and unsustainable - The impugned order is void, and a nullity in the eye of law – The appeal is allowed [Read less]

GST – Challenge to Constitutional Validity of Health Security and National Security Cess Act, 2025 - Levy of Cess on Machine Ownership instead of Actual Production - Deemed Production versus Actual Quantity Manufactured - Petitioners challenged the constitutional validity of the HSNS Cess Act which levies a cess on machines installed or processes undertaken for the manufacture or production of specified goods, particularly pan masala, contending that the Act was beyond the legislative power conferred under the Constitution and violated Articles 246A and 271 - The Respondents submitted that the impugned Act was a constitu... [Read more]

GST – Challenge to Constitutional Validity of Health Security and National Security Cess Act, 2025 - Levy of Cess on Machine Ownership instead of Actual Production - Deemed Production versus Actual Quantity Manufactured - Petitioners challenged the constitutional validity of the HSNS Cess Act which levies a cess on machines installed or processes undertaken for the manufacture or production of specified goods, particularly pan masala, contending that the Act was beyond the legislative power conferred under the Constitution and violated Articles 246A and 271 - The Respondents submitted that the impugned Act was a constitutionally valid piece of fiscal legislation enacted in public interest to regulate a sector notorious for tax evasion - Whether the Health Security and National Security Cess Act, 2025 and the Rules or the Notifications made in furtherance of the impugned Act and the Rules would fall foul of certain tenets of the Constitution of India - HELD - Article 246A of the Constitution provides for the imposition of GST. The taxable event in terms of the impugned Act being the ownership or possession of the installed machine and not on the supply of goods and services which is a taxable event under the GST, Article 246A is not applicable - The Parliament has the exclusive legislative power to make laws with respect to matters enumerated in List I of the Seventh Schedule and possesses residuary power under Entry 97 of List I to legislate on any matter not enumerated in List II or List III, including power to impose any tax not mentioned in either of those Lists, and therefore the contention that Parliament lacked the legislative competence to enact the impugned legislations is without merit. However, the manner in which the HSNS Cess Act and the HSNS Cess Rules levy the cess is unreasonable and vague, as it is based on assumption of quantity manufactured instead of actual quantity manufactured, thereby failing the tenets of Article 14 of the Constitution of India - The Act imposes a restriction by demanding cess on the deemed production and not on actual production, which attracts arbitrariness as obtaining under Article 14 of the Constitution of India - The imposition of cess on machinery presuming it would produce at maximum capacity when the actual production capacity falls significantly below that threshold, lacks any rational basis and rational classification, thereby rendering the Act and the Rules unconstitutional. The Health Security and National Security Cess Act, 2025 is held to be unconstitutional insofar as it seeks to impose upon the same class of property, persons, or transactions a burden that results in manifest inequality. The power of the Union Government to promulgate a law to levy cess is upheld, but the Act and the Rules are held to be unconstitutional and obliterated - The Notifications dated 16-12-2025, 31-12-2025, 01-01-2026 and 30-01-2026 stand obliterated. However, liberty is reserved to the Union to bring in the enactment, bearing in mind the observations made in the course of the order - The writ petitions are partly allowedrnrn^Challenge to Rule 15 of Health Security and National Security Cess Rules, 2025 - Abatement of Cess - Minimum Period of Continuous Non-operation of Fifteen Days - Arbitrariness and Violation of Article 14 of the Constitution - Petitioners challenged Rule 15(a) of the Health Security and National Security Cess Rules, 2026, which provides for abatement of cess only in cases where the manufacturing activity remains suspended continuously for a minimum period of fifteen days, contending that the Rule operated arbitrarily and violated Article 14 of the Constitution - Whether the prescription of a minimum threshold of fifteen continuous days for grant of abatement was arbitrary and violative of Article 14 of the Constitution - HELD - Rule 15(a) operates arbitrarily and is violative of Article 14 of the Constitution. The Rule fails to account for genuine hardship faced by assessees, for whom the Rules provide no alternative remedy. Further, the prescription of a minimum period of fifteen days proceeds solely on the presumption that assessees are likely to indulge in tax evasion and administrative difficulties in preventing tax evasion cannot, by themselves, justify the prescription of such an arbitrary threshold under the Rules - The contention of the Respondent that the prescription of a minimum threshold of fifteen continuous days for grant of abatement is a deliberate anti-evasion policy, intended to eliminate bogus claims for shorter periods, and that only a period of suspension extending to fifteen continuous days establishes the genuineness of the claim, cannot be accepted. Even where manufacturing activity is suspended for periods shorter than fifteen days due to genuine reasons, the Petitioners remain liable to pay cess, thereby incurring further losses in addition to those already suffered on account of the suspension of manufacturing activity. The Rule, therefore, operates arbitrarily and is violative of Article 14 of the Constitution of India. The Rules are held to be unconstitutional and obliterated. [Read less]

Service Tax - Works Contract Service - Personal Use Exclusion - Residential quarters for government employees - The Respondent constructed residential quarters for the Gujarat State Police Housing Corporation Limited and other government departments to house their staff. The Revenue classified the construction as a taxable works contract service relating to a residential complex - Whether construction of residential staff quarters for government bodies for use by their employees falls within the definition of a taxable residential complex or is excluded from service tax - HELD – The Section 65(91a) of Finance Act, 1994 d... [Read more]

Service Tax - Works Contract Service - Personal Use Exclusion - Residential quarters for government employees - The Respondent constructed residential quarters for the Gujarat State Police Housing Corporation Limited and other government departments to house their staff. The Revenue classified the construction as a taxable works contract service relating to a residential complex - Whether construction of residential staff quarters for government bodies for use by their employees falls within the definition of a taxable residential complex or is excluded from service tax - HELD – The Section 65(91a) of Finance Act, 1994 defines a residential complex and specifically excludes complexes constructed for personal use. The explanation clarifies that personal use includes permitting the complex to be used as a residence by another person on rent or without consideration. Established precedents including Khurana Engineering Ltd. and Nitesh Estates Ltd. have consistently held that when government bodies construct quarters for their own employees, such construction falls under the personal use exclusion and is not taxable. The construction of residential staff quarters by government agencies for their employees is not liable to service tax as it does not constitute a residential complex in the taxable sense – Ordered accordingly - Service Tax - Exemption - Services relating to electricity transmission - The Respondent provided construction services to the Gujarat Energy Transmission Corporation Limited for electricity transmission infrastructure. The Revenue classified this as a taxable works contract service - Whether construction services provided to electricity transmission corporations fall within the scope of service tax or are specifically exempted - HELD - Services provided in relation to the transmission and distribution of electricity are specifically exempted from payment of service tax pursuant to Notification 11/2010-ST and Notification 45/2010-ST. This position has been consistently upheld in prior Tribunal decisions including Vraj Construction. Construction services relating to electricity transmission are exempt from service tax liability - Service Tax - Works Contract Service - Construction of APMC facilities - The Respondent constructed shops, platforms and godowns for the Agricultural Produce Market Committee. The Respondent contended these were for civic amenities and non-commercial government functions. The Revenue contended these structures were used for commercial leasing to traders - Whether construction of shops and commercial facilities for APMC constitutes a taxable works contract service or falls outside the scope of service tax - HELD - The Supreme Court decision in Krishi Upaj Mandi Samiti vs. Commissioner of C.Ex. and S.T., Alwar establishes that APMCs do not perform mandatory sovereign or statutory functions when they lease shops or land to traders for a fee. Rather these are discretionary commercial activities undertaken by APMC. Consequently the construction of such commercial buildings and facilities for APMC falls within the taxable ambit of Works Contract Services. Construction services for APMC facilities are taxable as works contract services. However the Respondent is entitled to the benefit of the Works Contract Composition Scheme 2007 and cum-tax benefit under Section 67. The matter is remanded to the Adjudicating Authority for fresh computation of the tax amount after applying the available benefits - Service Tax - Extended period of limitation - Invocation when facts suppressed - The Respondent had not registered for service tax nor filed any returns disclosing their works contract activities to the Revenue for the relevant financial years 2008-09 to 2011-12. The Revenue issued a SCN invoking the five-year extended period of limitation alleging suppression of facts with intent to evade tax - Whether failure to register and file returns when providing taxable services justifies the invocation of the extended period of limitation - HELD - The Respondent failed to fulfill statutory obligations including registration, assessment and filing returns. The Show Cause Notice established that the Respondent did not bring the facts of their taxable services to the knowledge of the Department. This conduct constitutes suppression with an intent to evade tax particularly regarding the taxable works contract services for APMC and other bodies. The invocation of the extended period of limitation was held to be valid and justified in law when the assessee remained unregistered and made no disclosure of taxable services despite legal obligations to do so - Service Tax - Goods Transport Agency Service - Reverse charge - The Show Cause Notice proposed a demand regarding GTA services used by the Respondent under reverse charge mechanism. The Adjudicating Authority in the original order dropped this demand - Whether the GTA demand can be upheld when the Revenue does not specifically challenge this finding in its appeal - HELD – The Revenue had challenged only the dropping of the Works Contract Service demand and had not specifically contested the findings regarding the GTA service demand. Since the Revenue did not appeal against this portion of the original order, the decision to drop the GTA demand became final and cannot be disturbed and the demand stands dropped. [Read less]

Customs AAR - Admissibility of duty exemption u/s 65 of Customs Act, 1962 read with Manufacture and Other Operations in Warehouse Regulations, 2019 (MOOWR Scheme) - Whether export of only by products (resultant product from the manufacturing) such as Palm Fatty Acid Distillate, Refined Palm Stearin, Sunflower Acid Oil, and Sunflower Distilled Fatty Acid would qualify as “export of manufactured goods” under Section 65 of the Customs Act, 1962 read with MOOWR, 2019 – HELD - Export of by-products such as Palm Fatty Acid Distillate, Refined Palm Stearin, Sunflower Acid Oil, and Sunflower Distilled Fatty Acid qualifies as... [Read more]

Customs AAR - Admissibility of duty exemption u/s 65 of Customs Act, 1962 read with Manufacture and Other Operations in Warehouse Regulations, 2019 (MOOWR Scheme) - Whether export of only by products (resultant product from the manufacturing) such as Palm Fatty Acid Distillate, Refined Palm Stearin, Sunflower Acid Oil, and Sunflower Distilled Fatty Acid would qualify as “export of manufactured goods” under Section 65 of the Customs Act, 1962 read with MOOWR, 2019 – HELD - Export of by-products such as Palm Fatty Acid Distillate, Refined Palm Stearin, Sunflower Acid Oil, and Sunflower Distilled Fatty Acid qualifies as export of “resultant goods” and consequently as export of manufactured goods under Section 65 of the Customs Act, 1962 read with the MOOWR, 2019 - Where such resultant goods are exported, they are eligible for remission of duty on the imported crude input oils contained therein, even where main products such as Refined Palmolein and Refined Sunflower Oil are cleared for home consumption - Accordingly, where by-products alone are exported while main products are sold domestically, proportionate duty exemption is admissible on the quantity of crude input oils attributable to such exported by-products, in terms of Section 69 of the Customs Act, 1962 read with Clause 7 of Circular No. 34/2019-Customs dated 01.10.2019 - The MOOWR Scheme permits duty-free import of crude oils to the extent they are contained in resultant goods exported from the bonded warehouse and does not restrict such benefit only to principal products, including where only by-products are exported – Ordered accordingly [Read less]