More Judgements

1. Home
2. More Judgements

GST - Refund of Pre-deposit to the extent of dropped demand - Finality of Appellate Proceedings - Scope of Circular No. 125/44/2019-GST - The Adjudicating Authority assessed tax liability which was challenged before the First Appellate Authority who partly allowed the appeal and dropped demand to the extent of 64 percent - Petitioner filed a refund application seeking refund of pre-deposit to the extent of demand dropped - Refund Authority relied on Circular No. 125/44/2019-GST dated 18.11.2019 and rejected the refund application on the ground that the appellate proceedings have not attained finality as the petitioner had ... [Read more]

GST - Refund of Pre-deposit to the extent of dropped demand - Finality of Appellate Proceedings - Scope of Circular No. 125/44/2019-GST - The Adjudicating Authority assessed tax liability which was challenged before the First Appellate Authority who partly allowed the appeal and dropped demand to the extent of 64 percent - Petitioner filed a refund application seeking refund of pre-deposit to the extent of demand dropped - Refund Authority relied on Circular No. 125/44/2019-GST dated 18.11.2019 and rejected the refund application on the ground that the appellate proceedings have not attained finality as the petitioner had expressed intention to challenge the appellate order before the GST Appellate Tribunal – Whether the Petitioner is entitled to refund of pre-deposit to the extent of demand dropped when the Petitioner proposes to challenge only the part of order which has gone against it and proceedings have attained finality to the extent of dropped demand - HELD - The reasoning in the impugned order that proceedings have not attained finality is erroneous as proceedings have attained finality to the extent of the demand dropped. The authority ought to have kept in mind that the petitioner proposes to challenge only that part of the order which has gone against it and to the extent of dropped demand the proceedings have attained finality. The reasoning that proceedings have not attained finality merely because the Petitioner proposes to challenge the part which has gone against it is fallacious - The Petitioner would be squarely covered by Circular dated 18th November, 2019 as refund of pre-deposit is admissible in respect of the dropped demand which has attained finality. Once the demand stood set aside a statutory right accrued in favour of the Petitioner to receive refund of the amount paid towards pre-deposit - The Order-in-Appeal is binding on the Respondent under Section 107(16) of the CGST Act, 2017 and therefore Respondent cannot refuse consequential refund of pre-deposit attributable to the demand set aside - The continued retention of such amount is wholly unauthorized and offends Article 265 of the Constitution - Pre-deposit bears the character only of a security deposit being a statutory condition precedent for hearing of the appeal and needs to be returned to the appellant whether the appellant succeeds fully or partly. The impugned order is quashed and set aside with direction to process the refund application expeditiously – The writ petition is allowed [Read less]

GST - Classification of Input Tax Credit and allocation between tax heads - ITC available under IGST availed under the CGST and SGST heads - Show cause notice issued alleging excess availment of ITC due to differences in allocation between IGST, CGST and SGST heads - Whether the discrepancy in classification of ITC between different tax heads constitutes excess availment when the aggregate eligible ITC claimed is within the eligible entitlement and no revenue loss is caused - HELD - Department has not established that the Appellant availed ITC in excess of its aggregate eligible entitlement. The discrepancy is essentially ... [Read more]

GST - Classification of Input Tax Credit and allocation between tax heads - ITC available under IGST availed under the CGST and SGST heads - Show cause notice issued alleging excess availment of ITC due to differences in allocation between IGST, CGST and SGST heads - Whether the discrepancy in classification of ITC between different tax heads constitutes excess availment when the aggregate eligible ITC claimed is within the eligible entitlement and no revenue loss is caused - HELD - Department has not established that the Appellant availed ITC in excess of its aggregate eligible entitlement. The discrepancy is essentially attributable to reporting and classification of ITC under different tax heads and the eligibility of underlying credit has not been shown to be disputed on substantive grounds – The ITC available in the electronic credit ledger should be considered as a pool of funds designated for different types of taxes such as IGST, CGST and SGST and while determining interest under Rule 88B of the CGST Rules, the entire wallet has to be taken into consideration and not just individual compartments - If the total balance combining IGST, CGST and SGST does not fall below the amount of wrongly availed credit, there is no interest liability - Once the principal demand of alleged excess ITC is found unsustainable, the consequential levy of interest and penalty cannot independently survive - The authorities shall verify that the appellant had sufficient eligible ITC available under the IGST head and upon such verification, the revenue demand shall be dropped if ITC under IGST head stands unclaimed by the appellant. The appellant shall be entitled to all consequential relief including restoration or adjustment of ITC if any, in accordance with law – The appeal is allowed [Read less]

GST - Return of own machinery from project site, Movement of goods without e-Way Bill – Violation of Rule 138 of CGST Rules, 2017 - The Appellant claimed that an excavator was being returned from a project work site to its registered place of business with a Delivery Challan and that the movement was not a taxable supply as it was return of own machinery used for job work - Department treated the transportation of goods without valid e-Way Bill as a violation of Rule 138 and imposed penalty under Section 129 - Whether movement of machinery without e-Way Bill, when claimed to be return of own goods from job work site with... [Read more]

GST - Return of own machinery from project site, Movement of goods without e-Way Bill – Violation of Rule 138 of CGST Rules, 2017 - The Appellant claimed that an excavator was being returned from a project work site to its registered place of business with a Delivery Challan and that the movement was not a taxable supply as it was return of own machinery used for job work - Department treated the transportation of goods without valid e-Way Bill as a violation of Rule 138 and imposed penalty under Section 129 - Whether movement of machinery without e-Way Bill, when claimed to be return of own goods from job work site with only a Delivery Challan, constitutes a violation of Rule 138 warranting penalty under Section 129(3) of the CGST Act, 2017 - HELD - The machinery belonging to the appellant and being returned from the project site does not by itself exempt the appellant from complying with statutory requirements relating to transportation of goods under Rule 138. Under Section 68 of the CGST Act read with Rule 138 of the CGST Rules, the prescribed documents including e-Way Bill are required for movement of goods including movement for reasons other than supply, subject to specified exemptions - The Appellant has failed to satisfactorily establish the tax treatment of consideration received for use of the machinery at the project site and though stated to be operated on hourly basis, no sufficient evidence regarding hours of operation, consideration charged and corresponding discharge of GST has been produced. The contention regarding alleged 20-kilometre exemption cannot be accepted in the absence of satisfactory evidence establishing that the present movement was specifically covered by applicable statutory exemption under Rule 138(14) or any relevant notification - The absence of e-Way Bill coupled with non-disclosure of tax treatment of consideration gives rise to reasonable inference of intention to evade tax and cannot be treated as a mere technical lapse - The judicial precedents relied upon are distinguishable on facts and circumstances. The appeal is rejected and the orders of both the original adjudicating authority and First Appellate Authority are upheld – The appeal is dismissed [Read less]

GST - Movement of goods with valid e-Way Bill - Presumption of reuse of e-Way Bill - Appellant was transporting goods with valid tax documents including invoice, e-invoice and e-Way Bill. The Department intercepted the goods and presumed that the e-Way Bill was being reused based on earlier verification of the e-Way Bill at one location and subsequent location of the vehicle at another place on the same day, without producing any independent and cogent evidence that the same goods had already completed an earlier journey - Whether goods in compliance with GST provisions can be detained and penalized on the basis of presum... [Read more]

GST - Movement of goods with valid e-Way Bill - Presumption of reuse of e-Way Bill - Appellant was transporting goods with valid tax documents including invoice, e-invoice and e-Way Bill. The Department intercepted the goods and presumed that the e-Way Bill was being reused based on earlier verification of the e-Way Bill at one location and subsequent location of the vehicle at another place on the same day, without producing any independent and cogent evidence that the same goods had already completed an earlier journey - Whether goods in compliance with GST provisions can be detained and penalized on the basis of presumption or inference without producing cogent material evidence that the e-Way Bill was actually being reused - HELD - The material placed on record does not establish any discrepancy in description, quantity, value or ownership of the goods. The goods were accompanied by relevant tax documents including invoice, e-invoice and e-Way Bill - The finding that goods were re-transported is based principally on inference from earlier verification or location of the e-Way Bill and no independent and cogent evidence has been produced to establish that the same goods had already completed an earlier journey and had been delivered - If movement of goods is in compliance with provisions of GST Act, the same cannot be detained on basis of presumptions and assumptions. Presumption cannot take the place of evidence and strong suspicion, strange coincidences and grave doubt cannot take place of legal proof. Intention cannot be presumed merely from suspicion and presumption of tax evasion cannot take place of proof - The appeal is allowed and the appellate order and original order are set aside [Read less]

GST - Procedural Due Process - Notice of Hearing - Petitioner received show-cause notice and filed reply, but last three notices for dates fixed for personal hearing namely 27.01.2026, 16.03.2026 and 25.03.2026 were not uploaded on Common Portal and Petitioner had no knowledge of proceedings; ex-parte order passed without affording opportunity of personal hearing – Whether order can be sustained when petitioner was not intimated about last three dates of hearing in violation of Section 75(4) of CGST Act, 2017 – HELD - The failure to upload notices on Common Portal and absence of intimation to Petitioner about last thre... [Read more]

GST - Procedural Due Process - Notice of Hearing - Petitioner received show-cause notice and filed reply, but last three notices for dates fixed for personal hearing namely 27.01.2026, 16.03.2026 and 25.03.2026 were not uploaded on Common Portal and Petitioner had no knowledge of proceedings; ex-parte order passed without affording opportunity of personal hearing – Whether order can be sustained when petitioner was not intimated about last three dates of hearing in violation of Section 75(4) of CGST Act, 2017 – HELD - The failure to upload notices on Common Portal and absence of intimation to Petitioner about last three dates of proceedings is a violation of principles of natural justice. Every taxpayer has fundamental right to be heard before an order adverse to Petitioner is passed. Where notices of hearing are not uploaded on portal and Petitioner has no knowledge about proceedings, the resulting ex-parte order is vitiated and cannot be sustained – The requirement of Section 75(4) of CGST Act, 2017 has been flouted. The impugned order is set aside; matter remitted to authority concerned to pass fresh order after giving fresh opportunity of hearing to Petitioner with advance notice of at least 15 days – the present writ petitions are disposed of [Read less]

Central Excise - Place of Removal and Assessable Value - FOR Sales versus Ex-Factory Sales - Transportation and Loading Charges - Department alleged that the place of removal in respect of sales made by the respondent is the customer's premises and hence, exclusion of transportation and loading charges from the assessable value was not in conformity with Section 4 of the Central Excise Act, 1944 - Whether the supply should be treated as FOR basis including transportation charges in assessable value or as ex-factory sale excluding such charges - HELD - The classification of sales as FOR basis or ex-factory basis depends on ... [Read more]

Central Excise - Place of Removal and Assessable Value - FOR Sales versus Ex-Factory Sales - Transportation and Loading Charges - Department alleged that the place of removal in respect of sales made by the respondent is the customer's premises and hence, exclusion of transportation and loading charges from the assessable value was not in conformity with Section 4 of the Central Excise Act, 1944 - Whether the supply should be treated as FOR basis including transportation charges in assessable value or as ex-factory sale excluding such charges - HELD - The classification of sales as FOR basis or ex-factory basis depends on examination of purchase orders and terms and conditions of sale applicable to each buyer. The adjudicating authority examined the relied upon purchase orders and appropriately distinguished them into two categories viz. those where sales are on FOR basis and those treated as ex-factory sales based on whether freight charges were integral to the price or separately mentioned - Where purchase orders indicate freight charges separately and material is inspected after receipt at buyer's premises, the sale is treated as ex-factory sale and not on FOR basis - The criteria for FOR sales as decided in CCE Versus Roofit Industries Ltd were met only in respect of certain customers where price was consolidated and inclusive of freight - The Department failed to examine all purchase orders and relied only on sample purchase orders specifically mentioned in the SCN and therefore the adjudicating authority was justified in examining only those relied upon documents – The impugned order is upheld and the appeal filed by the department is dismissed - Invocation of extended period - Regarding invocation of extended period, the department was aware of the fact relating to transportation and inclusion or exclusion of charges from assessable value in view of repeated audit visits. The entire issue of whether transportation cost can be included and whether place of removal can be buyer's premises was subject matter of conflicting judgments and differing interpretations of law - Due to conflicting views and alternative interpretations available before the relevant date, extended period could not have been invoked. The CBIC Circular No. 1065/4/2015-CX dated 08.06.2018 clarified that extended period should not be invoked in cases where an alternative interpretation was taken by the assessee before the date of Supreme Court judgment as the issue is in the nature of interpretation of law. Since extended period could not be invoked, penalty under Section 11AC was also not imposable. [Read less]

GST - Show Cause Notice under Section 74 of CGST Act, 2017 - Requirement of Fraud or Willful Misrepresentation or Suppression - Foundational Facts for Invoking Extended Period - Department sought to invoke extended period of five years under Section 74 by alleging fraud, willful misstatement or suppression of facts - Appellant contended that there was no allegation of fraud, willful misstatement or suppression of facts and SCN was issued as protective measure after Assessing Officer kept matter under call book pending disposal of audit objection before Public Accounts Committee - Whether SCN can be sustained under extended... [Read more]

GST - Show Cause Notice under Section 74 of CGST Act, 2017 - Requirement of Fraud or Willful Misrepresentation or Suppression - Foundational Facts for Invoking Extended Period - Department sought to invoke extended period of five years under Section 74 by alleging fraud, willful misstatement or suppression of facts - Appellant contended that there was no allegation of fraud, willful misstatement or suppression of facts and SCN was issued as protective measure after Assessing Officer kept matter under call book pending disposal of audit objection before Public Accounts Committee - Whether SCN can be sustained under extended period of Section 74 without establishing foundational facts constituting fraud, willful misrepresentation or suppression - HELD – The proceedings under Section 73 and 74 can be initiated only on satisfaction of Assessing Officer. For notice under Section 74, satisfaction of Assessing Officer should be not only that mismatch of input tax credit and short payment of tax has occurred but also that fraud or willful misrepresentation or suppression had led to such mismatch or short payment. Mere employment of words indicating fraud, willful misrepresentation or suppression in notice without establishing foundational facts would not suffice - Foundational facts which led to inference of fraud, willful misrepresentation or suppression should be evident from notice itself. It is not mere lip service to provisions when extended limitation period is provided for recovery of excess benefit availed, short payment or excess refund - In present case, SCN did not contain any foundational facts to validate allegation of suppression except for bland statement of availing ITC without documentary evidence and suppression of facts. Mere statement that proceedings were initiated prior to expiry of limitation under Section 73 would not justify invocation of extended period under Section 74 - The fact that Department took up audit objections with Public Accounts Committee itself indicates absence of satisfaction on part of Department as to mismatch or short fall of payment of tax – Further, the annual returns for financial years 2018-2019 to 2020-2021 were required to be filed respectively on 31.12.2020, 31.03.2021 and 28.02.2022. Due to COVID-19 pandemic, limitation period was extended by excluding period between 15.03.2020 to 28.02.2022. Accordingly, limitation expired on 28.02.2025 for all three financial years and SCN issued on 13.06.2025 was past extended limitation period under Section 73 – The SCN and consequential Order-in-Original are set aside. However, extended period of two years from expiration of normal limitation period is not yet over. The Department may, if thought fit, initiate appropriate proceeding under Section 74 with foundational facts coming out from notice itself and order being passed before 28.02.2027 - The appeal stands allowed [Read less]

Central Excise - Cenvat Credit on the basis of Photocopies of Invoices - Documentary Evidence and Substantive Entitlement - During audit respondent was found to have availed Cenvat Credit on strength of photocopies and xerox copies of invoices and upon objection during audit respondent reversed the entire amount and subsequently filed refund claim - Whether refund of Cenvat Credit earlier reversed can be denied solely on ground that original invoices were not available and credit was supported by photocopies instead of prescribed original documents - HELD - Rule 9 of Cenvat Credit Rules, 2004 prescribes documents on basis ... [Read more]

Central Excise - Cenvat Credit on the basis of Photocopies of Invoices - Documentary Evidence and Substantive Entitlement - During audit respondent was found to have availed Cenvat Credit on strength of photocopies and xerox copies of invoices and upon objection during audit respondent reversed the entire amount and subsequently filed refund claim - Whether refund of Cenvat Credit earlier reversed can be denied solely on ground that original invoices were not available and credit was supported by photocopies instead of prescribed original documents - HELD - Rule 9 of Cenvat Credit Rules, 2004 prescribes documents on basis of which Cenvat Credit can be taken and documentary conditions under Cenvat scheme have important purpose namely to establish payment of duty, receipt of goods or services, identity of recipient and to guard against duplicate or fraudulent availment - Question whether non-production of original document necessarily results in denial of substantive credit cannot be decided in abstract - Nature of defect, reason for non-production, availability of secondary evidence and most importantly whether essential conditions for availment of credit are independently established are relevant considerations - Once duty-paid nature of capital goods, their receipt, use and respondent's eligibility to credit are not in dispute and when there is no allegation of fraud, duplicate credit or manipulation of documents, denial of credit only because original invoices could not be produced would elevate documentary requirement above substantive entitlement itself - Judicial decisions on Cenvat Credit have recognized that credit may, depending upon facts, be allowed on copy of prescribed document when its authenticity and underlying transaction stand satisfactorily verified - Department has not disputed that capital goods covered by invoice were actually received, duty had been paid on such goods, goods were used and respondent was otherwise entitled to Cenvat Credit - No allegation or evidence that credit in respect of same invoices had been availed by any other unit or person and no finding that photocopies were fabricated, manipulated or otherwise unreliable - Competent authority examined respondent's explanation regarding loss and non-availability of invoices and sanctioned refund after holding that respondent was entitled to credit - No sufficient ground to interfere with impugned order – The impugned order is upheld and the Revenue's appeal is dismissed [Read less]

Customs - Tariff Classification of imported goods declared as "Mixed Lot of Polyester Knitted Fabric” - Tariff Item No. 6006 9000 versus 6006 3200 - The appellant imported polyester knitted fabrics declared as Mixed Lot of Polyester Knitted Fabric and classified under Customs Tariff Item No. 6006 9000, claiming benefit of concessional Basic Customs Duty under Notification No. 82/2017-Customs. The Revenue reclassified the goods under Customs Tariff Item No. 6006 3200 as knitted fabrics of synthetic fibres, attracting duty at 20% rate and demanded differential duty along with interest and penalty - Whether the goods merite... [Read more]

Customs - Tariff Classification of imported goods declared as "Mixed Lot of Polyester Knitted Fabric” - Tariff Item No. 6006 9000 versus 6006 3200 - The appellant imported polyester knitted fabrics declared as Mixed Lot of Polyester Knitted Fabric and classified under Customs Tariff Item No. 6006 9000, claiming benefit of concessional Basic Customs Duty under Notification No. 82/2017-Customs. The Revenue reclassified the goods under Customs Tariff Item No. 6006 3200 as knitted fabrics of synthetic fibres, attracting duty at 20% rate and demanded differential duty along with interest and penalty - Whether the goods merited classification under Customs Tariff Item No. 6006 9000 as claimed by the Appellant or under Customs Tariff Item No. 6006 3200 as re-determined by the Revenue - HELD - Once the Proper Officer has assessed the Bills of Entry and allowed the classification claimed therein, the same cannot be departed from merely on the basis of a subsequent change of opinion without establishing any mala fides or wilful suppression on the part of the importer - The material composition of textile goods, particularly mixed textile materials, cannot be determined merely from the invoice, packing list or visual examination. The Department had the statutory powers to examine goods, subject them to physical examination or draw representative samples for testing at the time of original assessment but the record does not disclose that any such laboratory testing was undertaken. Without affirmative evidence establishing that the goods in their actual composition necessarily merited classification under Customs Tariff Item No. 6006 3200, a subsequent change in the classification cannot furnish a sufficient basis for unsettling the assessment originally accepted by the proper officer - The fact that the Department had raised queries and enhanced the declared assessable value cannot obviate the necessity of establishing the correct tariff classification by appropriate evidence. The contemporaneous practice of accepting the classification under Customs Tariff Item No. 6006 9000 in respect of identical goods imported by other importers constitutes a relevant circumstance to be taken into consideration. The reclassification under Customs Tariff Item No. 6006 3200 is set aside and the classification of the goods under Customs Tariff Item No. 6006 9000 is upheld - The demand of differential Customs Duty together with applicable interest is set aside. The penalty imposed under Section 114A of the Customs Act, 1962 is set aside - The appeal is allowed [Read less]

Customs – Deliberate change in Classification with intent to evade duty – Classification of Balloons - CTH 9503 versus CTH 4016 versus CTH 9505 - Functional and Specific Classification versus Material-Based Classification - Appellants imported balloons made of natural rubber latex declared as Decorative or Festival Balloons and classified under CTH 40169590 and 95059090, availing concessional rate of duty under Notification No. 50/2018-Customs. Prior investigations and prior imports by the appellants indicated classification under CTH 95030090 - Department alleged that goods were toy balloons correctly classifiable und... [Read more]

Customs – Deliberate change in Classification with intent to evade duty – Classification of Balloons - CTH 9503 versus CTH 4016 versus CTH 9505 - Functional and Specific Classification versus Material-Based Classification - Appellants imported balloons made of natural rubber latex declared as Decorative or Festival Balloons and classified under CTH 40169590 and 95059090, availing concessional rate of duty under Notification No. 50/2018-Customs. Prior investigations and prior imports by the appellants indicated classification under CTH 95030090 - Department alleged that goods were toy balloons correctly classifiable under CTH 95030090 attracting Basic Customs Duty at 60% - Whether natural rubber latex balloons are classifiable as toy balloons under CTH 9503 or as other articles of vulcanised rubber under CTH 4016 9590 or as festive decoration articles under CTH 9505 9090 - HELD - Once toy balloons are specifically covered under CTH 9503 as per HSN Explanatory Notes, there is no reason to resort to any general or residual entry. HSN Explanatory Notes constitute a safe and internationally accepted guide for interpretation of tariff entries and have consistently been relied upon - Rule 1 of General Rules of Interpretation provides that classification shall be determined according to terms of headings and any relative section or chapter notes. Where tariff itself provides an unambiguous appropriate entry, resorting to interpretative rules does not arise - Classification under Chapter 40 is material-based classification whereas Chapter 95 provides specific functional classification for toys. Functional and specific classification prevails over material-based residual classification. Since imported goods are specifically recognised as toy balloons under Chapter 95, classification under Chapter 40 is not acceptable – Further, the HSN Explanatory Notes to heading 9505 nowhere include toy balloons made of natural rubber latex. Explanation to CTH 40169590 and 40169990 inserted vide Notification No.02/2021-Customs dated 1-2-2021 provides that this entry does not include toy balloons made of natural rubber latex as toy balloons are classified under Customs tariff heading 9503. Once a product is specifically covered under a specific heading, recourse to a general heading is not permitted - Change in classification from CTH 9503 to CTH 4016 was carried out with intent to avoid BIS compliance and avail exemption and pay lower duty. Such actions reveal malafide intent. Prior imports classified under CTH 95030090 establishing deliberate change from correct to incorrect classification with intent to evade duty. Statements under Section 108 coupled with conduct establishing clear malafide intent justifying penal consequences – The classification under CTH 95030090 is upheld and classification under CTH 4016 9590 is rejected - The impugned orders are upheld and the appeals stand dismissed [Read less]

GST - Transportation of goods without E-Way Bill - Substantive non-compliance versus procedural lapse - During transportation of iron goods under tax invoice, the vehicle was intercepted by Mobile Squad. As E-Way Bill was not available with the driver at that time, tax and an equal penalty were imposed under Section 129(3) of CGST Act - Whether the absence of E-Way Bill at the time of interception constitutes substantive non-compliance establishing intention to evade tax, or whether it is merely a procedural lapse that can be cured by subsequent production of E-Way Bill - HELD - It is an admitted fact that no E-Way accompa... [Read more]

GST - Transportation of goods without E-Way Bill - Substantive non-compliance versus procedural lapse - During transportation of iron goods under tax invoice, the vehicle was intercepted by Mobile Squad. As E-Way Bill was not available with the driver at that time, tax and an equal penalty were imposed under Section 129(3) of CGST Act - Whether the absence of E-Way Bill at the time of interception constitutes substantive non-compliance establishing intention to evade tax, or whether it is merely a procedural lapse that can be cured by subsequent production of E-Way Bill - HELD - It is an admitted fact that no E-Way accompanied the goods at the time of transportation. The requirement of carrying an E-Way Bill during transportation is mandatory under Rule 138(1) of the GST Rules. The E-Way Bill is an integral part of the statutory mechanism for monitoring movement of taxable goods. The non-generation of an E-Way Bill leaves scope for subsequent manipulation of the books of accounts at the convenience of the taxpayer - The E-way bill generation is an online process, whereas the tax-invoice is issued manually by the taxpayer. If the trader generated the E-way bill online, it would have appeared in his outward supply records preventing him from manipulating his books of accounts at his convenience. This fact established the trader's intention to evade tax - Transportation of goods without an E-Way Bill constitutes substantive non-compliance and establishes an intention to evade tax - The original order passed under Section 129(3) imposing tax and penalty is restored - The appeal filed by the revenue is allowed [Read less]

GST - Interlocutory Applications for early hearing of appeals - The appellants filed 21 appeals before the Tribunal claiming refund involving a huge sum of money. The appellants contended that the pendency of such appeals is likely to prejudice their financial interest and urged the tribunal to hear those appeals on priority basis for ends of justice - HELD - Each of the 21 interlocutory applications have been supported by affidavit sworn by the authorized signatory of the appellants and the applications include all the information prescribed in GSTAT FORM-01. The appellants have contended that if their appeals claiming re... [Read more]

GST - Interlocutory Applications for early hearing of appeals - The appellants filed 21 appeals before the Tribunal claiming refund involving a huge sum of money. The appellants contended that the pendency of such appeals is likely to prejudice their financial interest and urged the tribunal to hear those appeals on priority basis for ends of justice - HELD - Each of the 21 interlocutory applications have been supported by affidavit sworn by the authorized signatory of the appellants and the applications include all the information prescribed in GSTAT FORM-01. The appellants have contended that if their appeals claiming refund are not heard on priority basis, they are likely to suffer from huge financial loss - All the 21 appeals are listed together after three weeks for hearing. The interlocutory applications for early hearing are allowed [Read less]

GST – Allegation of reuse of e-Way Bill based on presumption - Reuse of E-Way Bills - During transportation of goods by vehicle, the goods were checked at 01:27 p.m. and again at the same location at 09:52 p.m. on the same day. The officer of Mobile Squad drew inference that the papers were being reused for another transaction to evade tax. A demand including penalties was created - Whether goods can be presumed to be re-transported and liable to penalty on the sole basis of an inference drawn from earlier verification of E-Way Bill without cogent evidence of actual re-transportation - HELD - The finding that the goods w... [Read more]

GST – Allegation of reuse of e-Way Bill based on presumption - Reuse of E-Way Bills - During transportation of goods by vehicle, the goods were checked at 01:27 p.m. and again at the same location at 09:52 p.m. on the same day. The officer of Mobile Squad drew inference that the papers were being reused for another transaction to evade tax. A demand including penalties was created - Whether goods can be presumed to be re-transported and liable to penalty on the sole basis of an inference drawn from earlier verification of E-Way Bill without cogent evidence of actual re-transportation - HELD - The finding that the goods were being “re-transported” is based principally on an inference from the earlier verification of the E-Way Bill. No independent and cogent evidence has been produced to establish that the same goods had already completed an earlier journey and had been delivered - The facts on record do not establish any discrepancy in description, quantity, value or ownership of goods. The goods were accompanied by relevant tax documents including invoice, e-invoice and E-Way Bill. It is settled law that presumption cannot take the place of evidence - Department has not established any cogent material such as crossing of a toll plaza during course of transportation that goods actually underwent an earlier completed transportation or that same goods were being re-transported. The respondent failed to establish that the bill for repairing the concerned vehicle is fake or forged - The appellate order and the original order passed under Section 129 are set aside. The amount deposited by the appellant is refunded in accordance with law – The appeal is allowed [Read less]

Service Tax - Sovereign and Statutory Functions - Certification of SOFTEX Forms and Issuance of No-Objection Certificates - Public Authority Performing Government Functions – Appellant collected charges for certification of SOFTEX forms and issuance of No-Objection Certificates to STP and software exporting units - Whether activities of certification and issuance of No-Objection Certificates are sovereign or public authority functions outside scope of Service Tax or constitute taxable Business Support Services - HELD - Mere fact that activity is regulated by law or that organisation has been authorised by Government to p... [Read more]

Service Tax - Sovereign and Statutory Functions - Certification of SOFTEX Forms and Issuance of No-Objection Certificates - Public Authority Performing Government Functions – Appellant collected charges for certification of SOFTEX forms and issuance of No-Objection Certificates to STP and software exporting units - Whether activities of certification and issuance of No-Objection Certificates are sovereign or public authority functions outside scope of Service Tax or constitute taxable Business Support Services - HELD - Mere fact that activity is regulated by law or that organisation has been authorised by Government to perform activity does not by itself convert every such activity into sovereign function. Distinction must be maintained between activity which can only be performed by State in exercise of sovereign authority and service rendered by autonomous body for facilitating business operations of its clients or members - Certification of SOFTEX forms, issuance of No-Objection Certificates and assistance rendered to STP units are intrinsically connected with business activities of software exporters. Such certification and approvals facilitate their exports, foreign exchange realisation and compliance with regulatory framework - Appellant is providing assistance and support which enables concerned units to carry on their business and export activities. Services have nexus with business or commerce and are covered by scope of Business Support Service. Neither Foreign Trade Development and Regulation Act nor FEMA prescribes impugned amount as statutory levy payable to Government – The charges are credited to separate fund maintained by STPI and utilised towards its establishment and administrative expenditure and not deposited into Government Treasury as tax, cess, fee or compulsory exaction. The fact that charges may have been approved by Governing Council of STPI does not alter their character - Approval of fee by Governing body of autonomous society cannot be equated with statutory levy imposed by Parliament or under Authority of Statute - Activities of certification of SOFTEX forms, issuance of NOC and allied assistance rendered by Appellant to STP and Software Exporting Units cannot be regarded as sovereign and public authority functions. Charges collected are not compulsory statutory levies payable into Govt Treasury, they represent consideration collected for services rendered to concerned business entities and duties are appropriately taxable under Business Support Service – The appeals are dismissed [Read less]

Service Tax – Demand under Reverse Charge Mechanism on charges deducted by foreign and intermediary banks - Service Provider-Recipient Relationship – Appellant-Exporter of goods receiving export proceeds remitted through foreign banking channels and banks deducting charges while transmitting such remittance - The appellant, being an exporter of goods, can be regarded as recipient of services rendered by foreign banks/intermediary banks involved in transmission of export proceeds remitted by foreign buyer and, consequently, service tax is payable by the appellant under RCM on the charges deducted by such foreign banks /... [Read more]

Service Tax – Demand under Reverse Charge Mechanism on charges deducted by foreign and intermediary banks - Service Provider-Recipient Relationship – Appellant-Exporter of goods receiving export proceeds remitted through foreign banking channels and banks deducting charges while transmitting such remittance - The appellant, being an exporter of goods, can be regarded as recipient of services rendered by foreign banks/intermediary banks involved in transmission of export proceeds remitted by foreign buyer and, consequently, service tax is payable by the appellant under RCM on the charges deducted by such foreign banks / intermediaries - HELD - Levy under Reverse Charge contemplated under Finance Act, 1994 must first establish the taxable relationship between service provider and service recipient - Merely because foreign banks deducted charges from export proceeds, cannot automatically be concluded that service provider-service recipient relationship exists between foreign intermediary banks and exporter - For establishing Reverse Charge liability, there must be evidence showing that foreign banks were engaged by exporter for rendering services to it - Absence of any evidence that Appellant had entered into contractual arrangement with foreign banks or was under obligation to pay consideration to such banks for any service rendered to it - Intervention of corresponding or intermediary banks in transmission of funds is essentially part of inter-bank arrangement for transfer of money - Appellant cannot be fastened with Service Tax merely because amount ultimately credited to its account is net of certain bank charges - Service provider must be engaged and there must be contractual nexus for levy of tax to be justified - Tribunal's earlier decision in Appellant's own case for preceding period setting aside demand has not been shown to be reversed or stayed by any higher judicial forum - Demand of Service Tax under Banking and Other Financial Services on charges deducted by foreign and intermediary banks is not sustainable and is set aside - Service Tax - Scientific or Technical Consultancy Services - Classification of Regulatory Documentation Services - Pharmaceutical manufacturer and exporter engaging foreign entities for compilation and preparation of documentation necessary for filing regulatory applications and obtaining approvals before overseas regulatory authorities - Whether services for preparation and compilation of regulatory dossiers and assistance in obtaining regulatory approvals for pharmaceutical products constitute taxable Scientific or Technical Consultancy Services - HELD - Essential character of service must be determined from nature of activity actually undertaken and not merely from professional qualifications of persons rendering service - Possession of scientific or technical expertise by consultant does not ipso facto make every activity undertaken by such consultant a Scientific or Technical Consultancy Service - For taxable service in question there must be advice, consultancy or scientific and technical assistance rendered by scientist, technocrat or science or technology institution or organisation in a discipline of science or technology - Preparation and compilation of documentation for regulatory filings from information already available with service recipient or in published literature cannot, without anything further, be equated with Scientific or Technical Consultancy - In present case Appellant's own earlier decision squarely applies to present period where Tribunal examined very same foreign service providers and substantially identical activities and held that services relating to obtaining permissions and registrations and meeting regulatory requirements for marketing pharmaceutical products abroad cannot be classified as Scientific or Technical Consultancy Services - Service Tax in respect of payments had been discharged under category of Management or Business Consultant Service and amount so paid was appropriated in impugned order while simultaneously confirming demand by reclassifying activity under Scientific or Technical Consultancy Service - Once classification adopted by Revenue itself is found not sustainable, consequential demand cannot survive - Services rendered by foreign entities for preparation and compilation of regulatory dossiers and assistance in obtaining approvals cannot be classified under Scientific or Technical Consultancy Service - Demands under this head are set aside. [Read less]

Service Tax - Construction of Complex Service - Meaning of "Residential Complex" under Section 65(91a) of the Finance Act, 1994 - Appellant undertook construction of residential units contending that individual houses were constructed on independent plots for individual purchasers and did not constitute a residential complex with common areas and common facilities as contemplated under the statutory definition - Whether construction of individual residential houses on independent plots attracts Service Tax under Construction of Complex Service category - HELD - Section 65(91a) contemplates a Residential Complex comprising ... [Read more]

Service Tax - Construction of Complex Service - Meaning of "Residential Complex" under Section 65(91a) of the Finance Act, 1994 - Appellant undertook construction of residential units contending that individual houses were constructed on independent plots for individual purchasers and did not constitute a residential complex with common areas and common facilities as contemplated under the statutory definition - Whether construction of individual residential houses on independent plots attracts Service Tax under Construction of Complex Service category - HELD - Section 65(91a) contemplates a Residential Complex comprising more than 12 residential units, a common area and one or more specified common facilities situated within premises approved by the competent authority - Mere construction of a number of residential houses by itself would not be sufficient unless the statutory requirements are established - In the present case material on record indicates that construction was of individual houses on independent plots for respective purchasers and roads and open spaces were handed over to Municipal Authority - Tribunal did not find sufficient evidence brought on record by Department to establish existence of common area and common facilities belonging to a residential complex in the manner contemplated under the statutory definition - The principle established in decisions of Tribunal that construction of individual residential houses does not fall within taxable category merely because number of such houses are constructed in common layout has been consistently followed - Department has not established that individual residential houses constructed by Appellant satisfied statutory ingredients of Residential Complex so as to attract Service Tax - Demands cannot be sustained - Demands together with interest and penalties are set aside – The appeals are allowed [Read less]

Customs duty on pilfered goods - Custody of imported goods under Major Port Trusts Act and Customs Act - Interaction between saving clause in Section 45(1) and non obstante clause in Section 45(3) of Customs Act - Whether the Notification dated 11.10.2000 approving respondent-Port Trust as the custodian of the notified customs area under Section 45(1) of the Customs Act is valid and consequently whether liability for pilfered goods could be fastened on the respondent in terms of Section 45(3) of the Customs Act - HELD - The saving clause in Section 45(1) operates only where another law for the time being in force itself fa... [Read more]

Customs duty on pilfered goods - Custody of imported goods under Major Port Trusts Act and Customs Act - Interaction between saving clause in Section 45(1) and non obstante clause in Section 45(3) of Customs Act - Whether the Notification dated 11.10.2000 approving respondent-Port Trust as the custodian of the notified customs area under Section 45(1) of the Customs Act is valid and consequently whether liability for pilfered goods could be fastened on the respondent in terms of Section 45(3) of the Customs Act - HELD - The saving clause in Section 45(1) operates only where another law for the time being in force itself fastens liability in respect of pilfered goods upon the custodian. The Major Port Trusts Act does not create any specific liability on the Port Trust for customs duty on pilfered goods and deals only with the bailee's civil liability towards the owner of goods under Sections 42 and 43 thereof - The liability under Section 43 of the Major Port Trusts Act is fundamentally different from the liability created under Section 45(3) of the Customs Act - Section 45(3), inserted by Act 22 of 1995 with effect from 26.05.1995, deliberately employed a non obstante clause so as to give it an overriding effect to the liability created thereunder, notwithstanding the saving clause contained in sub-section (1). The expression used in the non obstante clause, notwithstanding anything contained in any law for the time being in force, necessarily includes the Major Port Trusts Act. Pilferage of goods is distinct from general loss or destruction of goods - Section 13 of the Customs Act absolves the importer from liability in respect of pilfered goods, and it is precisely to address the lacuna that Parliament introduced sub-section (3) of Section 45, thereby fastening the liability to pay duty on the person approved under sub-section (1). Section 45(2) of the Customs Act imposes statutory duties upon the custodian to maintain proper records and prevent removal of goods except with permission of proper officer, regardless of the legal source of custody. Pilferage is a consequence of breach of these statutory obligations, and it is for this reason that liability is fastened on the approved custodian for pilfered goods. The Commissioner of Customs was fully justified in issuing the Notification dated 11.10.2000 approving the respondent-Port Trust as custodian under Section 45(1) of the Customs Act. There is no conflict between Section 45 of the Customs Act and Sections 42 and 43 of the Major Port Trusts Act - The fact that the Board may have contractual or statutory rights of indemnity or recovery against another person responsible for the loss does not detract from its primary statutory liability under Section 45(3) of the Customs Act to discharge the customs duty payable to the revenue - The Notification dated 11.10.2000 issued by the Commissioner of Customs (Import) in exercise of the powers conferred under Section 45(1) of the Customs Act is valid. The impugned judgment of the High Court to the extent it held otherwise and quashed the said Notification is set aside - The challenge to the show cause-cum-demand notices pertaining to the period prior to the date of the Notification dated 11.10.2000 is not pressed by appellants as no liability under Section 45(3) could have arisen in the absence of an approval under Section 45(1). Accordingly, the impugned judgment to the extent it quashed the show cause-cum-demand notices prior to 11.10.2000 is not interfered with. The appeal is disposed of accordingly [Read less]

Customs - Detention and seizure of imported vehicle - Distinction between detention and seizure under Customs Act - Petitioner purchased a Toyota Land Cruiser and upon arrival, Bill of Entry was filed with assessable value of 54,000 USD. The petitioner paid applicable customs duty - DRI conducted a search at residential premises and prepared a Panchnama directing petitioner not to deal with the car. A seizure memo under Section 110(1) was issued only on 17.04.2026, i.e., after more than one year, and thereafter show-cause notice was issued on 08.05.2026 under Section 124 of the Act - Whether detention of goods without a pr... [Read more]

Customs - Detention and seizure of imported vehicle - Distinction between detention and seizure under Customs Act - Petitioner purchased a Toyota Land Cruiser and upon arrival, Bill of Entry was filed with assessable value of 54,000 USD. The petitioner paid applicable customs duty - DRI conducted a search at residential premises and prepared a Panchnama directing petitioner not to deal with the car. A seizure memo under Section 110(1) was issued only on 17.04.2026, i.e., after more than one year, and thereafter show-cause notice was issued on 08.05.2026 under Section 124 of the Act - Whether detention of goods without a proper seizure order under Section 110(1) is valid and whether the limitation period under Section 110(2) for issuance of show cause notice applies from the date of detention or from the date of formal seizure order - HELD - Section 110 of the Customs Act uses the expression "reason to believe" that any goods are liable to confiscation, the proper officer may seize the goods. The first proviso uses the expression "where it is not practicable to remove, transport, the proper officer may give custody on execution of an undertaking". The second proviso further mentions "where it is not practicable to seize the goods". In either scenario, the proper officer is legally bound to satisfy a two-fold statutory obligation before passing a seizure order: first, he must explicitly record reasons that the goods are liable for confiscation, and second, he must record clear satisfaction by passing the order regarding the nature of goods under the respective provisos - The Panchnama cannot satisfy the ingredients of Section 110 of the Act, and an order is mandatory under the proviso to Section 110 for paving way for issuance of notice under Section 124 within a period of six months unless extended. The proper officer cannot consume a considerable period, such as over one year, to pass the seizure order under Section 110(1) after Panchnama was prepared by continuing the detention of the vehicle. When the seizure memo travels beyond the period of one year, the time limit of six months as mentioned in Section 110(2) and the further period of six months as envisaged under the proviso to sub-section (2) of Section 110 will get consumed – The respondents have detained the car vide Panchnama dated 07.02.2025, and in fact the seizure order under Section 110(1) has been passed after a period of one year on 17.04.2026, and in order to escape the limitation of six months, the Notice for confiscation under Section 124(a) of the Act has been issued on 08.05.2026. The order of provisional release dated 18.05.2026 is also illegal, as the conditions mentioned are premised on paragraph No. 2 of Circular No. 35/2017 dated 16.08.2017, which has been struck down by the Delhi High Court - The respondents are directed to release the vehicle. Costs of 10,000 rupees are imposed on the respondents – The petition is allowed [Read less]

GST - Entitlement on budgetary support - Petitioner claimed Input Tax Credit for its eligible unit and subsequently submitted a Chartered Accountant certificate disclosing a lower actual ITC amount than the initial declaration – Non-consideration of CA certificate or affording an opportunity for the petitioner to explain the discrepancy – HELD - When a discrepancy existed between the declaration and the CA certificate, the authorities were required to afford the Petitioner an opportunity to explain the discrepancy before concluding proceedings, particularly since the certificate was produced pursuant to the direction o... [Read more]

GST - Entitlement on budgetary support - Petitioner claimed Input Tax Credit for its eligible unit and subsequently submitted a Chartered Accountant certificate disclosing a lower actual ITC amount than the initial declaration – Non-consideration of CA certificate or affording an opportunity for the petitioner to explain the discrepancy – HELD - When a discrepancy existed between the declaration and the CA certificate, the authorities were required to afford the Petitioner an opportunity to explain the discrepancy before concluding proceedings, particularly since the certificate was produced pursuant to the direction of the authorities themselves. The proceedings were concluded without considering the CA certificate or providing a hearing to explain the error, thereby violating the principles of natural justice and fairness - The proceedings are set aside and matter is remitted back to the authorities to afford the petitioner an opportunity to explain the mistake in the declaration and provide supporting documents – The petition is allowed by remand [Read less]

Central Excise - Refund of Duty on Value Addition - Suo Moto Credit of Differential Duty - Appellant manufacturer availed suo moto credit of differential duty for financial year 2008-09 in account current in April 2010 as per provisions of Notification No. 39/2001-CE - show cause notice was issued for recovery of said credit on 29.02.2016 after period of approximately six years - Whether the appellant by taking suo moto credit of the refund amount has violated the provision of Notification No. 39/2001-CE - HELD - Para 2C(g) of Notification No. 39/2001-CE prescribes that excess amount of credit availed by manufacturer shall... [Read more]

Central Excise - Refund of Duty on Value Addition - Suo Moto Credit of Differential Duty - Appellant manufacturer availed suo moto credit of differential duty for financial year 2008-09 in account current in April 2010 as per provisions of Notification No. 39/2001-CE - show cause notice was issued for recovery of said credit on 29.02.2016 after period of approximately six years - Whether the appellant by taking suo moto credit of the refund amount has violated the provision of Notification No. 39/2001-CE - HELD - Para 2C(g) of Notification No. 39/2001-CE prescribes that excess amount of credit availed by manufacturer shall be reversed within five days from receipt of intimation and if not reversed within above time period it shall be recoverable as if it is recovery of duty of excise erroneously refunded - A combined reading of Notification No. 39/2001-CE and Section 11A of the Central Excise Act, 1944 clearly reveals that SCN for recovery of refund granted erroneously to a manufacturer, can be issued within 5 years from the date of refund - In present matter appellant had availed suo moto credit of duty in April 2010 but notice for recovery was issued on 29.02.2016 i.e. after period of five years from date of taking credit - Entire proceedings emanating from time barred show cause notice are not sustainable - Appellant had submitted statement for annual differential duty for financial year 2008-09 on 11.05.2009 and when no decision was communicated for almost one year appellant took suo moto credit in April 2010 - Appellant cannot be faulted as it acted as per provisions of Notification and breach if any was occasioned by breach of procedure committed by Departmental officer – The impugned order is not sustainable on limitation. Even on merits demand does not survive – The appeal allowed and impugned order set aside [Read less]

Service Tax - Invocation of Extended Period of Limitation – Demand based on Third-Party Data from Income Tax Department - Whether invocation of extended period of limitation was sustainable when the demand is based entirely on third-party data obtained from the Income Tax Department and no evidence of suppression, mis-statement, fraud or collusion has been put forth - HELD - Where the demand is merely on the basis of data obtained from Income Tax Department, it cannot be alleged that there was suppression or any wrongful conduct justifying the invocation of extended period - The demand is not sustainable in law as the ex... [Read more]

Service Tax - Invocation of Extended Period of Limitation – Demand based on Third-Party Data from Income Tax Department - Whether invocation of extended period of limitation was sustainable when the demand is based entirely on third-party data obtained from the Income Tax Department and no evidence of suppression, mis-statement, fraud or collusion has been put forth - HELD - Where the demand is merely on the basis of data obtained from Income Tax Department, it cannot be alleged that there was suppression or any wrongful conduct justifying the invocation of extended period - The demand is not sustainable in law as the extended period of limitation cannot be invoked on the basis of third-party data obtained from Income Tax Department without independent evidence of suppression of facts with intent to evade payment of service ta - The appeal is allowed on limitation, without going into the merits of the case [Read less]

Service Tax - Selling of Space for Advertisement - Local Body not Covered under Definition of Person - Statutory Levy versus Service Consideration – Appellant-Municipal Corporation engaged in the selling of space for advertisement to different parties - Whether a sovereign local body is a person liable to pay service tax on selling of space for advertisement and whether licence fee collected under Municipal Corporation Act constitutes consideration for taxable service - HELD - The period involved is from April 2012 to June 2012 and during that time no definition of person was provided in the Service Tax Laws and local bo... [Read more]

Service Tax - Selling of Space for Advertisement - Local Body not Covered under Definition of Person - Statutory Levy versus Service Consideration – Appellant-Municipal Corporation engaged in the selling of space for advertisement to different parties - Whether a sovereign local body is a person liable to pay service tax on selling of space for advertisement and whether licence fee collected under Municipal Corporation Act constitutes consideration for taxable service - HELD - The period involved is from April 2012 to June 2012 and during that time no definition of person was provided in the Service Tax Laws and local body was not covered under the definition of person provided under Section 2(42) of the General Clauses Act. Accordingly, the activity rendered by the Appellant does not fall under the definition of taxable service – The issue involved in the present appeal is no longer res integra as the Tribunal has already dropped the demand of the impugned service in the Appellant’s own case for the earlier period - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Classification of Leasing of Medical Equipment - Transfer of Right to Use Goods - Deemed Sale under Article 366(29A) of the Constitution - Taxability as Supply of Tangible Goods under Section 66E of the Finance Act, 1994 - Appellant engaged in leasing of dialysis equipment and providing comprehensive maintenance contracts and annual maintenance agreements to hospitals retained ownership of equipment and did not transfer possession and effective control to lessee as per contractual terms which indicated appellant was providing services only and not transfer of right to use equipments - Whether leasing of equip... [Read more]

Service Tax - Classification of Leasing of Medical Equipment - Transfer of Right to Use Goods - Deemed Sale under Article 366(29A) of the Constitution - Taxability as Supply of Tangible Goods under Section 66E of the Finance Act, 1994 - Appellant engaged in leasing of dialysis equipment and providing comprehensive maintenance contracts and annual maintenance agreements to hospitals retained ownership of equipment and did not transfer possession and effective control to lessee as per contractual terms which indicated appellant was providing services only and not transfer of right to use equipments - Whether leasing of equipment with retention of ownership and control by lessor constitutes deemed sale not liable to Service Tax or falls within declared service category and liable to Service Tax - HELD - Article 366(29A)(d) of Constitution provides deeming fiction to treat transactions as deemed sale which includes transfer of right to use goods and such transactions are subject to VAT or CST. However transactions involving supply of tangible goods without transfer of right to use goods have been declared to be a service under Section 66E of the Finance Act - In the present case conditions laid down in the principle of BSNL case are not satisfied. Mere permission to enter premises for inspection and maintenance of leased equipment is insufficient to hold the lease as deemed sale. Usage of leased machines throughout lease period was subject to appellant's approval. Maintenance expenses and insurance expenses were borne by appellant - Department has correctly observed that appellant retained ownership of equipment and had not transferred possession and effective control of equipment - Contract is essentially a contract for services and not a deemed sale of goods - Activity in question falls under definition of service and declared service under Section 66E(e) of Finance Act prior to 2012 category was Supply of Tangible Goods under Section 65(105)(zzzzj) of the Act - Payment of VAT by hospital is insufficient to alter the conclusion. Service Tax demand on leasing of equipment is sustainable – The order under challenge is upheld and the appeal is dismissed [Read less]

Service Tax on liability on security services provided by statutory welfare board - Taxability under security agency definition - Appellant is a statutory board constituted under statute and engaged in welfare activities for ex-servicemen by providing security guards to banks on no profit no loss basis - Department sought to levy service tax on amounts received against providing security services classifying them under security agency service - Whether services rendered by statutory welfare board providing security guards for welfare purposes constitute taxable security agency services - HELD - A statutory body performing ... [Read more]

Service Tax on liability on security services provided by statutory welfare board - Taxability under security agency definition - Appellant is a statutory board constituted under statute and engaged in welfare activities for ex-servicemen by providing security guards to banks on no profit no loss basis - Department sought to levy service tax on amounts received against providing security services classifying them under security agency service - Whether services rendered by statutory welfare board providing security guards for welfare purposes constitute taxable security agency services - HELD - A statutory body performing statutory functions and not engaged in commercial business cannot be classified as security agency within meaning of Section 65(105)(w) and Section 65(94) of Finance Act 1994 - The definition of security agency specifically requires that entity be a commercial concern engaged in business of providing security personnel. The Appellant-Board provides ex-servicemen as security guards purely for welfare purposes without earning profit and merely routes payments through Board to maintain administrative control. The consideration received constitutes reimbursement of salary disbursed to guards not commercial consideration for security services. Fee collected by public authority while performing statutory functions is not exigible to service tax as per Board Circular 89/7/2006. The activities performed by statutory board do not fall within definition of security agency service - No suppression of facts or willful misstatement has been established. Revenue has not established fraud collusion wilful misstatement suppression of facts or contravention with intent to evade tax which are prerequisites for extended period invocation - The impugned orders are set aside and appeals are allowed [Read less]

Service Tax liability on leasing of immovable property and club services by development authority - Meaning of term ‘Renting of Immovable Property’ - Appellant is statutory body created under statute for development of Delhi and performs functions under statutory mandate - Department sought to levy service tax on amounts received by Appellant against leasing or renting of land held on behalf of Government and club membership subscription charges - Appellant claimed that as statutory authority performing statutory functions it is not liable to pay service tax - Whether statutory body performing commercial activities of ... [Read more]

Service Tax liability on leasing of immovable property and club services by development authority - Meaning of term ‘Renting of Immovable Property’ - Appellant is statutory body created under statute for development of Delhi and performs functions under statutory mandate - Department sought to levy service tax on amounts received by Appellant against leasing or renting of land held on behalf of Government and club membership subscription charges - Appellant claimed that as statutory authority performing statutory functions it is not liable to pay service tax - Whether statutory body performing commercial activities of renting immovable property and providing club services is liable to service tax - HELD - The appellants were letting/giving on rent/lease, the Nazul lands on behalf of Central Government in the President of India on freehold basis and were receiving ground rent and one time premium holding it to be in the nature of land revenue - Whenever activity of any Governmental authority or authority created under statute amounts to an activity for commerce irrespective of status of such authority it is liable to pay service tax - Where sovereign or public authority performs statutory activity mandatory in nature and collects fee which is compulsory levy deposited into Government treasury such activity is not taxable service. However if such authority performs service not in nature of statutory activity and undertaken for consideration not in nature of statutory fee or levy then service tax is leviable if activity falls within ambit of taxable service - Activity of renting or leasing immovable property, including land, is taxable service under Section 65(105)(zzzz) of Finance Act 1994 - Renting of immovable property includes allowing or permitting use of space in immovable property irrespective of transfer of possession or control. Where Appellant received lease premium or ground rent against allowing use of Nazul land such amounts are not statutory levy but commercial consideration for providing use of property - Appellant earns amounts against renting which are not deposited into Government treasury and are not in nature of statutory levy but revenue earned from commercial activity - Appellant failed to produce documents establishing that activities were sovereign in nature. Further, the club membership and subscription charges for sports complex facilities are clearly commercial activities not statutory functions – The impugned orders are upheld and the appeals are dismissed [Read less]

GST - Imposition of penalty not proposed in show cause notice - Confusion of penalties between taxpayer and handler/operator - Show cause notice proposed penalty against the petitioner under Section 122(1)(ii) and 122(1)(vii) of the CGST Act. A separate penalty under Section 122(1A) was specifically proposed against the handler/operator. However, in the impugned order, the adjudicating authority has imposed both the penalties including that of the handler/operator under Section 122(1A) on the petitioner, which was never proposed in the show cause notice - Whether the penalty imposed on the petitioner is in accordance with ... [Read more]

GST - Imposition of penalty not proposed in show cause notice - Confusion of penalties between taxpayer and handler/operator - Show cause notice proposed penalty against the petitioner under Section 122(1)(ii) and 122(1)(vii) of the CGST Act. A separate penalty under Section 122(1A) was specifically proposed against the handler/operator. However, in the impugned order, the adjudicating authority has imposed both the penalties including that of the handler/operator under Section 122(1A) on the petitioner, which was never proposed in the show cause notice - Whether the penalty imposed on the petitioner is in accordance with the show cause notice and whether the petitioner is liable for penalties never proposed against him. - HELD - The show cause notice specifically proposed separate penalty on the handler/operator under Section 122(1A) of the CGST Act. However, in the impugned order in original, the adjudicating authority has imposed both the penalties including that of the handler/operator under Section 122(1A) on the petitioner - The respondents have not specifically controverted the facts of mixing up the proposed penalties as specified in show-cause notice while passing the final order in the case of the petitioner. In the similar matter of the handler/operator, this Court has set aside the impugned order of penalty and matter is remanded to the respondent authorities for fresh consideration - The impugned order is quashed and set aside. The matter is remanded back to the adjudicating authority to pass a fresh order, after hearing the petitioner – The petition is disposed of [Read less]

GST - Writ Appeal against dismissal of Writ Petition - Assessment order challenge - Appellant filed a writ petition challenging the assessment order. The Writ Court dismissed the Writ Petition and granted liberty to file appeal against the assessment order - Whether the direction under order dismissing the writ petition would be effective with the observations on merits made by the Writ Court or whether clarification is needed that those observations would not influence the appellate authority's decision - HELD - The appellant does not very seriously object to the conclusion of the Writ Court directing them to file an appe... [Read more]

GST - Writ Appeal against dismissal of Writ Petition - Assessment order challenge - Appellant filed a writ petition challenging the assessment order. The Writ Court dismissed the Writ Petition and granted liberty to file appeal against the assessment order - Whether the direction under order dismissing the writ petition would be effective with the observations on merits made by the Writ Court or whether clarification is needed that those observations would not influence the appellate authority's decision - HELD - The appellant does not very seriously object to the conclusion of the Writ Court directing them to file an appeal. In order that the direction be effective, it is necessary that the observations on merits made by the Writ Court are set aside or at least a direction given to the appellate authority that those observations would not influence the decision in appeal - The direction under order dated 08.06.2026 relegating the appellant to appellate remedy is confirmed with clarification that the observations of the Writ Court on the merits of the assessment shall not stand in the way of an independent adjudication of the appeal in accordance with law - The Writ Appeal is dismissed [Read less]

Customs - Penalty under Section 117 on voluntary disclosure of import discrepancy - Mens rea and bona fide error - Appellant imported scientific equipment and filed Bill of Entry for goods covered under one invoice - Upon opening consignment appellant discovered additional items corresponding to second invoice inadvertently not mentioned by foreign supplier - Appellant voluntarily informed Customs Authorities within six days of clearance and requested for re assessment to pay differential duty - Department imposed penalty of Rupees Two lakhs under Section 117 - Whether penalty under Section 117 can be imposed when appellan... [Read more]

Customs - Penalty under Section 117 on voluntary disclosure of import discrepancy - Mens rea and bona fide error - Appellant imported scientific equipment and filed Bill of Entry for goods covered under one invoice - Upon opening consignment appellant discovered additional items corresponding to second invoice inadvertently not mentioned by foreign supplier - Appellant voluntarily informed Customs Authorities within six days of clearance and requested for re assessment to pay differential duty - Department imposed penalty of Rupees Two lakhs under Section 117 - Whether penalty under Section 117 can be imposed when appellant exhibited bona fide error and voluntarily disclosed discrepancy without mens rea - HELD - Appellant volunteered to point out discrepancy and offered to pay differential duty even after Out of Charge was granted showing absence of mens rea or intention to evade payment of duty. Content of appellant's letter to Deputy Commissioner shows clear knowledge of appellant's intention that after verification upon receiving material they came to know they had received material against both orders and wanted to include later received left out invoice in Bill of Entry for re assessment and requested for needful re assessment. There was no trace of proof that Customs Department would have known of such irregularities had it not been pointed out by appellant who also volunteered to rectify mistake by payment of required customs duty for entire consignment - CBIC Directive issued for self assessment clearly directs that penal provision would not be invoked in cases of bona fide errors in self assessment where mens rea or willful intention to evade duty or non compliance of condition cannot be proved. Express penalty provisions under Sections 112 and 114 of Customs Act are available for such contraventions. Penalising the appellant for exhibiting its loyalty to the said State, that to under a provision of law for which express penal provision is available, is unsustainable – The penalty under Section 117 is unsustainable and set aside – The appeal is allowed [Read less]

GST - Cancellation of Registration - Declaration of Nil Turnover for specific location - Burden of Proof for Discontinuance of Business - Petitioner declared nil turnover in GSTR 3B returns for period 01.04.2021 to 31.03.2024 as no business turnover was undertaken from that location though petitioner had business activities and turnover from other locations - Respondent authority issued Show Cause Notice proposing to cancel the registration as turnover in GSTR 3B was shown ‘nil’ - Without awaiting reply to SCN, authority suspended registration and cancelled registration order observing that petitioner had shown nil tur... [Read more]

GST - Cancellation of Registration - Declaration of Nil Turnover for specific location - Burden of Proof for Discontinuance of Business - Petitioner declared nil turnover in GSTR 3B returns for period 01.04.2021 to 31.03.2024 as no business turnover was undertaken from that location though petitioner had business activities and turnover from other locations - Respondent authority issued Show Cause Notice proposing to cancel the registration as turnover in GSTR 3B was shown ‘nil’ - Without awaiting reply to SCN, authority suspended registration and cancelled registration order observing that petitioner had shown nil turnover during period and therefore had closed business - Whether mere declaration of nil turnover in returns for specific location suffices to cancel registration - HELD – An obligation is cast upon Proper Officer to arrive at conclusion that business has been discontinued based on cogent and tangible evidence. Mere declaration of ‘nil’ turnover cannot be construed that petitioner had discontinued business – The Section 29 of the CGST Act contemplates that Proper Officer may cancel registration having regard to circumstances where business has been discontinued, transferred fully, amalgamated or demerged or where there is change in constitution of business or where taxable person is no longer liable to be registered - Mere fact that petitioner declared nil turnover in GSTR 3B returns for specific location does not fall within circumstances prescribed under which notice under Section 29(1) can be issued for cancellation - Petitioner produced requisite evidence to show that business was being carried on from registered premises. Respondent authority cancelled registration without verification of factual aspect that petitioner had stopped business merely on premise that petitioner failed to furnish reply to SCN – The proceedings initiated against petitioner by impugned orders is quashed and set aside. However, liberty is reserved in favour of respondent authority to verify whether petitioner's business has continued or not and act in accordance with law - The petition is allowed [Read less]

Service Tax - Security Agency Services – Determination of Taxable Value - Exclusion of Exempted, Non-Taxable Services and Reimbursable Expenses - Appellant engaged in providing Security Agency Services had claimed that substantial amounts were liable to be excluded from taxable value on account of exempted services, non-taxable services and reimbursable expenses, which were not subjected to any meaningful independent verification before being discarded by the Revenue - Whether amounts which are exempted or non-taxable in nature can be mechanically included in taxable value without proper examination of underlying transac... [Read more]

Service Tax - Security Agency Services – Determination of Taxable Value - Exclusion of Exempted, Non-Taxable Services and Reimbursable Expenses - Appellant engaged in providing Security Agency Services had claimed that substantial amounts were liable to be excluded from taxable value on account of exempted services, non-taxable services and reimbursable expenses, which were not subjected to any meaningful independent verification before being discarded by the Revenue - Whether amounts which are exempted or non-taxable in nature can be mechanically included in taxable value without proper examination of underlying transactions – HELD - A receipt cannot be subjected to service tax merely because it finds reflection in the books of account; what is material is its true legal character and its nexus with consideration for a taxable service. Where a substantial portion of proposed taxable turnover is disputed on the ground that it comprises exempted or non-taxable receipts, the adjudicating authority is required to examine the nature of those receipts and record a reasoned finding as to their taxability - Amounts which are genuinely attributable to exempted or non-taxable services cannot, merely by reason of their reflection in the books of account, be brought within the taxable value of service tax levy. To include receipts which are outside the statutory charging provision would be to travel beyond the four corners of the taxing statute and would be antithetical to the settled principle that a taxing liability must have clear statutory foundation - The legal position concerning reimbursable expenses came to be authoritatively considered by the Hon'ble Supreme Court in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. wherein it was held that the value of taxable service could not, during the period prior to the statutory amendment, be enlarged so as to include amounts which were merely reimbursed expenses and did not represent consideration for the service provided. The entire period covered was anterior to the amendment which came into effect on 14.05.2015. The Revenue was required to undertake a proper verification of the constituent elements of the receipts and thereafter determine the taxable value in accordance with law. In the absence of such exercise and without considering reconciliation statements furnished by the Appellant, the computation suffers from a fundamental infirmity – The matter is remanded for re-quantification with directions that exempted and non-taxable services and reimbursable expenses be excluded from taxable value upon proper verification in accordance with law - Service Tax - CENVAT Credit - Denial on Assumptions - Appellant claimed that substantial CENVAT credit was legitimately available and had already been adjusted towards discharge of service tax liability but the same was not given due credit while determining demand, and Revenue proceeded on premise that Appellant had not incurred expenditure on sub-contracting services and that expenditure was predominantly in nature of salary payments - Whether CENVAT credit can be denied without proper examination of Appellant's comprehensive audited financial records showing substantial administrative and office expenses – HELD - The Revenue's approach was unduly restrictive and not borne out by comprehensive examination of Appellant's audited financial records. The Appellant had placed reliance upon audited books to demonstrate that apart from employee-related expenditure, it had incurred substantial administrative and other office expenses in course of carrying on taxable business - Selective reliance upon one part of financial record while completely overlooking another material component thereof cannot furnish a sound basis for determination of tax liability. There was inherent incongruity in Department's approach wherein allegations concerning exemption and CENVAT credit were directed towards particular components yet Department proceeded to recompute entire turnover without demonstrating nexus between particular alleged irregularities and wholesale re-computation - Mere fact that Appellant incurred substantial expenditure towards salaries cannot lead to converse inference that no other expenditure was incurred or that Appellant could not have availed eligible CENVAT credit. CENVAT credit is a substantive statutory benefit and cannot be denied merely on assumptions or generalized conclusions unsupported by cogent evidence. Admissibility of credit must necessarily be determined upon proper verification of underlying records. The substantive benefit of CENVAT Credit, in facts and circumstances of case, must be allowed – The demand necessarily requires to be reworked after giving due effect to eligible CENVAT credit adjustment - Service Tax - Extended Period of Limitation - Invocation without Suppression - Whether extended period can be invoked when foundation of demand itself is drawn from disclosed financial records and facts were within Department's knowledge – HELD - The very figures utilised by Department for raising demand have been substantially drawn from Appellant's audited financial statements, Profit and Loss Accounts, Balance Sheets and other statutory records maintained in ordinary course of business. Such records were not clandestine documents discovered through independent investigation rather they constituted very source from which impugned computation was made - The financial records of Appellant were statutorily maintained and audited and relevant financial particulars were available in ordinary course before competent statutory authorities. In such circumstances, mere circumstance that Appellant had not filed statutory returns cannot without more be elevated into finding of deliberate suppression of material facts with intent to evade service tax. Non-filing of returns may attract consequences specifically provided by law but procedural lapse cannot by automatic process of reasoning be converted into suppression of facts or deliberate intention to evade tax - The extended period invoked cannot be sustained; demand if otherwise found payable can survive only for normal period of limitation - Service Tax - Best Judgment Assessment - Resort Despite Availability of Actual Financial Records - Whether best judgment assessment under Section 72 can be invoked as matter of course despite Department's possession of audited financial statements and actual financial records – HELD - Section 72 embodies machinery for best judgment assessment in circumstances where statutory conditions for invocation stand satisfied but it is not a charter for Department to abandon primary material on record and proceed upon conjecture or estimation for administrative convenience. The expression best judgment cannot in law be equated with best guess - In present case impugned demands for respective periods have been arrived at by resorting to methodologies including applying assumed percentage increase over preceding year's taxable value and adopting highest taxable value of preceding years as basis for determination of liability. Such methodology requires much greater scrutiny before it can constitute legally sustainable best judgment assessment. An assessment even when made to best judgment of assessing authority must bear reasonable nexus with material available on record and cannot rest upon figures which are merely hypothetical or arbitrarily extrapolated - Section 72 power is circumscribed by material available and requirement of rational determination; it cannot be employed to replace actual financial data with artificial mathematical projection without first demonstrating why primary records were incapable of being relied upon or verified - Department had access to or was admittedly aware of substantial financial and statutory material pertaining to Appellant. The impugned order does not satisfactorily explain why such material could not be examined [Read less]

GST – West Bengal AAR - Passenger Transportation Service - Place of supply and taxability of passenger transportation services on international passenger air transportation where passenger boards from outside India and travels to India – Applicant contended that where a passenger boards from Dhaka, Bangladesh and travels to Kolkata, India, the place of embarkation is outside India and therefore the supply is not taxable in India - Whether the place of supply being outside India, the transaction falls outside the charging provisions of the GST Acts - HELD - The place of supply of passenger transportation service is dete... [Read more]

GST – West Bengal AAR - Passenger Transportation Service - Place of supply and taxability of passenger transportation services on international passenger air transportation where passenger boards from outside India and travels to India – Applicant contended that where a passenger boards from Dhaka, Bangladesh and travels to Kolkata, India, the place of embarkation is outside India and therefore the supply is not taxable in India - Whether the place of supply being outside India, the transaction falls outside the charging provisions of the GST Acts - HELD - The place of supply of passenger transportation service is determined with reference to Section 13(10) of the IGST Act, 2017 where the location of the supplier or recipient is outside India. The place of supply is the place where the passenger embarks on the conveyance for a continuous journey. In this scenario, the place of embarkation is outside India. Since the place of supply is outside India, the transaction does not fall within the ambit of the GST charging provisions. No GST is leviable in India on such supplies – Accordingly, no GST is applicable on passengers boarding from outside India and coming to India - GST - Place of supply and taxability of passenger transportation services - Whether GST is leviable on international passenger air transportation where passenger boards from India and travels to foreign country - Petitioner contended that where a passenger boards from Kolkata, India and travels to Dhaka, Bangladesh, the supply originates in India through the Indian branch and the place of embarkation is Kolkata - Whether the place of supply being within India, CGST and SGST are leviable - HELD - Section 12(9) of the IGST Act, 2017 applies where both the supplier and recipient are located in India. The place of supply is the place where the passenger embarks on the conveyance for a continuous journey, which in this case is Kolkata, West Bengal. Since the location of the supplier and the place of supply are both in West Bengal, the supply is treated as an intra-state supply under Section 8 of the IGST Act. The supply is accordingly liable to CGST and SGST at the applicable rate - For a passenger travelling in economy class where the supplier does not avail the corresponding input tax credit, the applicable tax rate is 5% GST. For a passenger travelling in any class other than economy class, the applicable rate is 18% GST - The Advance Ruling is issued holding that CGST and SGST are applicable on passengers boarding from India for flights to foreign countries - GST - Place of supply and taxability of passenger transportation services - Continuous journey with single ticket - Whether GST is leviable on international passenger air transportation where passenger holds a single ticket from a foreign country to India with a transit stop in an intermediate location - HELD - Section 13(10) of the IGST Act, 2017 applies where either the supplier or the recipient is located outside India. The place of supply is determined with reference to the place where the passenger embarks on the conveyance for a continuous journey - A transit stop for a short duration does not constitute a stopover as defined in the explanation clause to Section 2(3) of the IGST Act. A stopover involves a break in the journey with a change of aircraft and transshipment of luggage, whereas a transit stop is an intermediate landing where the aircraft briefly stops without the passenger disembarking to leave the airport. The transit stop does not break the continuity of the journey undertaken by the passenger from the point of embarkation to the final destination. Since the first point of embarkation is London, which is outside India, the place of supply is outside India. The transaction does not fall within the ambit of the GST charging provisions and no tax is leviable - The Advance Ruling is issued holding that no GST is applicable on passengers on continuous journey with single ticket from a foreign country to India with a transit stop - GST - Place of supply and taxability of passenger transportation services - Continuous journey with single ticket - Whether GST is leviable on international passenger air transportation where passenger holds a single ticket from India to a foreign country with a transit stop in an intermediate location - HELD - Section 12(9) of the IGST Act, 2017 applies where both the supplier and the recipient are located in India. The place of supply is determined with reference to the place where the passenger embarks on the conveyance for a continuous journey - A transit stop for a short duration does not break the continuity of the journey. It cannot be equated with stopover as defined in the explanation clause to Section 2(3) of the IGST Act. The transit stop in no way breaks the continuity of the journey undertaken by the passenger from Kolkata to London. The first point of embarkation is Kolkata, which is within West Bengal, India. The place of supply is accordingly Kolkata. Since the location of the supplier and the place of supply are both in the same State, the supply is treated as an intra-state supply under Section 8 of the IGST Act. The supply is accordingly liable to CGST and SGST at the applicable rate - For a passenger travelling in economy class where the supplier does not avail the corresponding input tax credit, the applicable rate is 5% GS. For a passenger travelling in any class other than economy class, the rate is 18% GST - The Advance Ruling is issued holding that CGST and SGST are applicable on passengers on continuous journey with single ticket from India to a foreign country with a transit stop - GST - Place of supply and taxability of passenger transportation services - Continuous journey with single ticket - Whether GST is leviable on international passenger air transportation where passenger holds a single ticket from one foreign country to another foreign country with a transit stop in India - HELD - Section 13(10) of the IGST Act, 2017 applies where either the supplier or the recipient is located outside India. The place of supply is determined with reference to the place where the passenger embarks on the conveyance for a continuous journey. A transit stop for a short duration does not constitute a stopover as defined in the explanation clause to Section 2(3) of the IGST Act. The transit stop in no way breaks the continuity of the journey undertaken by the passenger from Dhaka to London. Here both the supplier and the recipient are located outside India. The place of supply is the place of embarkation, namely Dhaka, which is outside India's taxable territory. The transaction does not fall within the ambit of the GST charging provisions and no tax is leviable - The Advance Ruling is issued holding that no GST is applicable on passengers on continuous journey with single ticket between two foreign countries with a stop in India - GST – Scope of Supply - Transportation of human remains by air - Whether transportation of human remains falls within the definition of supply under Section 7 of the CGST Act, 2017 - HELD - Section 7 of the CGST Act, 2017 includes all forms of supply for consideration in the course or furtherance of business. Schedule III appended to the CGST Act, 2017 specifies activities or transactions which shall be treated neither as a supply of goods nor a supply of services. Clause 4 of Schedule III refers to services of funeral, burial, crematorium or mortuary including transportation of the deceased. The services mentioned in Clause 4 are all related to services offered to a person after he passes away. It includes transportation of the deceased - Since transportation of the deceased is neither a supply of goods nor a supply of services, it does not come under the ambit of Section 7(1) of the CGST Act, 2017 and hence there is no question of any tax being imposed on such services - Transportation of human remains does not constitute a supply within the mea [Read less]

Service Tax – Maintainability of appeal before the High Court - Department sought to levy of service tax on the royalty under the ‘Intellectual Property Rights’ under reverse charge mechanism. The other question is as to whether the services rendered would amount to ‘Business Auxiliary Service’ or ‘Technical Inspection and Certification Service’ – HELD - The appeal cannot be entertained before the High Court as it involved issues relating to taxability and classification, which are maintainable only before the Supreme Court under Section 35L of the Central Excise Act, 1944 read with Section 83 of the Financ... [Read more]

Service Tax – Maintainability of appeal before the High Court - Department sought to levy of service tax on the royalty under the ‘Intellectual Property Rights’ under reverse charge mechanism. The other question is as to whether the services rendered would amount to ‘Business Auxiliary Service’ or ‘Technical Inspection and Certification Service’ – HELD - The appeal cannot be entertained before the High Court as it involved issues relating to taxability and classification, which are maintainable only before the Supreme Court under Section 35L of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - the present appeal is not maintainable and the same is dismissed accordingly. It shall be open for the appellant-Department to pursue the appropriate remedy in accordance with law [Read less]

GST - Cancellation of GST registration - Limitation in filing appeal - Whether cancellation of registration can be upheld on the ground of delay in filing appeal beyond 30 days when the Commissioner has no power to condone delay - HELD - The provisions of GST enactment cannot be interpreted so as to deny right to carry on trade and commerce to any citizen. The Constitutional guarantee is unconditional and unequivocal and must be enforced regardless of shortcomings in the scheme of GST enactment - The right to carry on trade or profession cannot be curtailed contrary to the Constitutional guarantee under Article 19(1)(g) an... [Read more]

GST - Cancellation of GST registration - Limitation in filing appeal - Whether cancellation of registration can be upheld on the ground of delay in filing appeal beyond 30 days when the Commissioner has no power to condone delay - HELD - The provisions of GST enactment cannot be interpreted so as to deny right to carry on trade and commerce to any citizen. The Constitutional guarantee is unconditional and unequivocal and must be enforced regardless of shortcomings in the scheme of GST enactment - The right to carry on trade or profession cannot be curtailed contrary to the Constitutional guarantee under Article 19(1)(g) and Article 21 of the Constitution of India. If the person is not allowed to revive the registration, the State would suffer loss of revenue and the ultimate goal under GST regime will stand defeated - Since it is merely a matter of cancellation of registration, the question of limitation should not bother the court since it cannot be said that any right has accrued to the State which would rather be adversely affected by cancellation - The orders canceling the GST registration are quashed and set aside. The registration is valid from 29.02.2024 onwards subject to the condition that the petitioner files up to date GST returns and deposits entire pending dues along with applicable interest, penalty, late fees in terms of Rule 23(1) of the MGST Rules 2017 – The Writ Petition is allowed [Read less]

Customs - Recovery of drawback erroneously paid - Limitation period for recovery of drawback - Whether recovery proceedings initiated more than ten years after drawback was availed can be sustained when no statutory period of limitation is prescribed in Rule 16 of Customs, Central Excise Duties and Service Tax Drawback Rules - HELD - It is a settled principle of law that fraud vitiates all solemn acts and that a person cannot be permitted to take advantage of his own fraud, irrespective of the passage of time. However, in the present case, there is no allegation that petitioner fraudulently obtained the drawback or suppres... [Read more]

Customs - Recovery of drawback erroneously paid - Limitation period for recovery of drawback - Whether recovery proceedings initiated more than ten years after drawback was availed can be sustained when no statutory period of limitation is prescribed in Rule 16 of Customs, Central Excise Duties and Service Tax Drawback Rules - HELD - It is a settled principle of law that fraud vitiates all solemn acts and that a person cannot be permitted to take advantage of his own fraud, irrespective of the passage of time. However, in the present case, there is no allegation that petitioner fraudulently obtained the drawback or suppressed any material facts. The only allegation is that petitioner had not produced proof of realisation of export proceeds - Where the statute does not prescribe a period of limitation, the proceedings must nevertheless be initiated within a reasonable time. What constitutes a reasonable time would depend upon the facts and circumstances of each case. The drawback was availed during the period from 2004 to 2007 and last payment was made on 28.12.2007. The show cause notice was allegedly issued only in 2018 and the impugned order was passed in 2022. No reason has been assigned for the delay in initiating the recovery proceedings. There is also no explanation for the considerable delay between the alleged issue of the show cause notice and passing of the impugned order - Recovery proceedings initiated after such an inordinate delay cannot be sustained - The impugned order passed for recovery of drawback is set aside. Consequently, the attachment of the petitioner's bank account is also set aside - The Writ Petition is allowed [Read less]

U.P. VAT Act, 2008 - Imposition of penalty despite acceptance of Books of Account - Appellant was engaged in manufacturing welding electrodes and goods were seized on ground that Column No. 6 of Form-38 was blank; penalty proceedings initiated solely on ground of technical omission in Form-38 - Whether penalty can be sustained merely on account of technical discrepancy when books of account and turnover have been accepted in assessment order – HELD - Once books of account and disclosed turnover of Appellant have been accepted by assessing authority and no other material has been brought on record to establish mens rea on... [Read more]

U.P. VAT Act, 2008 - Imposition of penalty despite acceptance of Books of Account - Appellant was engaged in manufacturing welding electrodes and goods were seized on ground that Column No. 6 of Form-38 was blank; penalty proceedings initiated solely on ground of technical omission in Form-38 - Whether penalty can be sustained merely on account of technical discrepancy when books of account and turnover have been accepted in assessment order – HELD - Once books of account and disclosed turnover of Appellant have been accepted by assessing authority and no other material has been brought on record to establish mens rea on part of Appellant to evade payment of tax or to suppress tax liability, penalty proceedings cannot be sustained merely on account of technical discrepancy. It is settled that existence of mere technical or procedural irregularity, in absence of any material demonstrating an intention to evade tax, cannot by itself justify imposition of penalty - Once assessment order was passed after due consideration of books of account, disclosed turnover and penalty proceedings initiated against Appellant, and no adverse finding was recorded with regard to turnover or genuineness of transactions, no adverse inference could thereafter have been drawn against Appellant in penalty proceedings - The non-filling of Column No. 6 of Form-38 was attributable to urgency of requirement of goods and not due to any deliberate intention to evade tax. The goods were found to constitute raw material used in manufacturing process and authorities never found that said goods were sold by Appellant – The impugned penalty order is not sustainable and quashed – The revision is allowed [Read less]

GST - Maintainability of Appeal before GSTAT in the absence of First Appellate Authority Order - Appellant filed an appeal with the First Appellate Authority and simultaneously filed another appeal with the Tribunal on the same day as the Department was in the process of recovery, however, at the time of filing the appeal with the Tribunal, no order passed under Section 107 or 108 of the CGST Act, 2017 was in existence. The First Appellate Authority order was subsequently passed after the filing of the appeal with the Appellate Tribunal - Whether a person aggrieved can file an appeal with the GSTAT in the absence of an ord... [Read more]

GST - Maintainability of Appeal before GSTAT in the absence of First Appellate Authority Order - Appellant filed an appeal with the First Appellate Authority and simultaneously filed another appeal with the Tribunal on the same day as the Department was in the process of recovery, however, at the time of filing the appeal with the Tribunal, no order passed under Section 107 or 108 of the CGST Act, 2017 was in existence. The First Appellate Authority order was subsequently passed after the filing of the appeal with the Appellate Tribunal - Whether a person aggrieved can file an appeal with the GSTAT in the absence of an order passed under Section 107 or 108 of the Act - HELD – The Section 112(1) CGST Act stipulates that any person aggrieved by an order passed against him under Section 107 or 108 of the Act may appeal to the Appellate Tribunal - The appeal filed with the Appellate Tribunal is not in accordance with Section 112(1) of the Act as the First Appellate Authority order was not in existence at the time of filing of the appeal. The First Appellate Authority order came into existence after the filing of the appeal with the Appellate Tribunal - When no order passed under Section 107 or 108 is in existence at the time of filing of the appeal, there is no order against which an appeal can be maintained before the Appellate Tribunal - The Appeal is not maintainable, hence dismissed with liberty to the Applicant/Appellant to file an appeal with GSTAT, if they desire so, in accordance with law [Read less]

Customs - Undervaluation of Imported Goods - Evidentiary Value of Export Documents -The appellants imported cigarettes and declared value at USD 5 per thousand sticks on the basis of contract with supplier in Hong Kong. The Department proposed enhancement to USD 18 per thousand sticks based on Certificate of Origin and shipping bills allegedly obtained from port of export - Whether the Department can reject declared transaction value and enhance it based on unauthenticated export documents obtained from third parties in the absence of contemporaneous price evidence - HELD - Before rejecting the invoice price, the Departmen... [Read more]

Customs - Undervaluation of Imported Goods - Evidentiary Value of Export Documents -The appellants imported cigarettes and declared value at USD 5 per thousand sticks on the basis of contract with supplier in Hong Kong. The Department proposed enhancement to USD 18 per thousand sticks based on Certificate of Origin and shipping bills allegedly obtained from port of export - Whether the Department can reject declared transaction value and enhance it based on unauthenticated export documents obtained from third parties in the absence of contemporaneous price evidence - HELD - Before rejecting the invoice price, the Department has to give cogent reasons for such rejection and the Department has to find out whether there are any imports of any identical goods or similar goods at a higher price around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value - Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. There is a valid contract between the appellant and supplier in Hong Kong with agreed upon price of USD 5 per 1000 sticks. Appellants have not sought any preferential treatment or exemption benefit warranting production of country-of-origin certificate - The Certificate of Origin was neither specifically produced by the Appellant nor was any claim for exemption made based on said certificate and same was not part of any declaration by the party nor obtained officially by the Department from authorities issuing such origin certificate. Hence reliance placed on said document per se is not tenable – The statements under Section 108 are relevant and admissible but need to be corroborated by other admissible and urgent evidence. Documents procured from foreign customs authorities must be authenticated. Xerox copies or export declarations not even attested would not make such genuine declarations – The export declaration value cannot be made basis for increasing value of goods in India when value is derived from Section 14(1). No evidence from side of Department showing contemporaneous imports at higher price - Department has not been able to produce cogent and substantive evidence in support of wrong declaration of transaction value to reject the same - The impugned order is set aside and the appeal is allowed [Read less]

GST – Scope of Section 161 of the CGST Act, 2017 - Denial of Opportunity to be Heard, Consideration to reply in rectification order - Ex-Parte Order - Petitioner was issued show-cause notice under Section 74 and submitted replies on 13.07.2021 and 18.07.2021; wholly ex-parte order came to be passed on 30.01.2025 without offering any consideration to replies furnished; subsequently order dated 05.02.2025 passed under Section 161 purporting to rectify error by offering ex-parte consideration to replies – Whether Adjudicating Authority can offer ex-parte consideration to reply in rectification order when fundamental error... [Read more]

GST – Scope of Section 161 of the CGST Act, 2017 - Denial of Opportunity to be Heard, Consideration to reply in rectification order - Ex-Parte Order - Petitioner was issued show-cause notice under Section 74 and submitted replies on 13.07.2021 and 18.07.2021; wholly ex-parte order came to be passed on 30.01.2025 without offering any consideration to replies furnished; subsequently order dated 05.02.2025 passed under Section 161 purporting to rectify error by offering ex-parte consideration to replies – Whether Adjudicating Authority can offer ex-parte consideration to reply in rectification order when fundamental error was denial of opportunity to be heard – HELD - When show-cause notice is issued, fundamental principle of natural justice requires that Petitioner be afforded meaningful opportunity to place its case on record and be heard. Denial of opportunity of hearing vitates proceedings beyond cure - Where Adjudicating Authority admits that replies were furnished by Petitioner and had not been considered in original order, the order suffered from fundamental procedural defect. Once fundamental error of denial of consideration to Petitioner's replies is noted, the power of rectification under Section 161 cannot be exercised to offer ex-parte merit review or to pass order creating tax demand without notice. The appropriate course was to recall original order and pass fresh order after issuing fresh notice to Petitioner for personal hearing. To allow ex-parte consideration in rectification order would amount to conceding power to review order on merits without issuing notice. Principles of natural justice are violated where Adjudicating Authority passes second ex-parte order after noticing that first order failed to consider Petitioner's submissions. The third proviso to Section 161 regarding non-prejudicial rectification does not apply where rectification involves fundamental procedural error – The impugned order is set aside; matter remitted to Adjudicating Authority to pass fresh order after affording opportunity of hearing to petitioner – The petition is allowed [Read less]

GST - Issuance of show cause notice and demand order against deceased taxpayer - Validity of proceedings against dead person - Whether show cause notices and demand orders issued against a deceased taxpayer on GSTN portal only can bind the legal heir when the legal heir was unaware and not involved in the business - HELD - The petitioner is a housewife of the deceased assessee who passed away during Covid Pandemic on 03.05.2021. The petitioner was not remotely connected to the proprietorship and ultimately, the registration was cancelled on 16.07.2021 of the proprietorship. After the period of almost three years, on 14.06.... [Read more]

GST - Issuance of show cause notice and demand order against deceased taxpayer - Validity of proceedings against dead person - Whether show cause notices and demand orders issued against a deceased taxpayer on GSTN portal only can bind the legal heir when the legal heir was unaware and not involved in the business - HELD - The petitioner is a housewife of the deceased assessee who passed away during Covid Pandemic on 03.05.2021. The petitioner was not remotely connected to the proprietorship and ultimately, the registration was cancelled on 16.07.2021 of the proprietorship. After the period of almost three years, on 14.06.2024, the respondent authority issued the pre-show cause notice intimation to the deceased assessee under the provisions of Section 73(5) of the CGST Act intimating about the proposed tax liability. Thereafter, the proceedings further continued and the notices were issued and affixed at the factory premises of the deceased assessee. Since no one appeared, as the taxpayer was deceased, the respondent authority passed the impugned order confirming the demands - It is true that the respondent authority was not aware about the death of the husband, who was connected with the business activities of the proprietorship. However, the petitioner, being a housewife, was not even remotely connected with the business and was unaware of the niceties of the GSTN portal - The show cause notices as well as the impugned orders passed thereafter are quashed and set aside. It will be open for the respondent to initiate proper proceedings in accordance with law against the petitioner for the outstanding demand - The present petition is allowed [Read less]

GST - Jurisdiction of Proper officer - Competency of Officer to issue Show-Cause Notice - Petitioner challenged show-cause notice issued under Section 122 of UPGST Act on ground that officer issuing notice lacked jurisdiction as proper officer was not clearly defined and notice was issued by Deputy Commissioner though penalty proposed was above monetary limit for which Additional Commissioner should have issued it – Whether show-cause notice issued by Deputy Commissioner can be quashed on ground of lack of jurisdiction – HELD - The State Circulars dated 11.12.2018 and 10.05.2022 clarify that Deputy Commissioner has bee... [Read more]

GST - Jurisdiction of Proper officer - Competency of Officer to issue Show-Cause Notice - Petitioner challenged show-cause notice issued under Section 122 of UPGST Act on ground that officer issuing notice lacked jurisdiction as proper officer was not clearly defined and notice was issued by Deputy Commissioner though penalty proposed was above monetary limit for which Additional Commissioner should have issued it – Whether show-cause notice issued by Deputy Commissioner can be quashed on ground of lack of jurisdiction – HELD - The State Circulars dated 11.12.2018 and 10.05.2022 clarify that Deputy Commissioner has been vested with power to issue show-cause notice under Section 122 and has pecuniary jurisdiction in cases involving amount exceeding Rs. 2.5 crores. The question of jurisdiction can be raised at any stage, however writ jurisdiction under Article 226 of Constitution is discretionary and required to be exercised judiciously - Where petitioner did not raise objection regarding jurisdiction when notice was issued but appeared before officer and advanced submissions on merits. Having suffered the impugned order, the petitioner has now taken a volte-face and challenged the impugned order on the ground of lack of jurisdiction - The authority which issued show-cause notice was not lacking in jurisdiction. The writ petition is disposed of; liberty granted to Petitioner to avail statutory appellate remedy under Act – The petition is disposed of [Read less]

Customs - Classification of Kitchen Exhaust Hoods - Appellant is engaged in ventilation solutions and routinely imports kitchen exhaust hoods - The appellant was initially classifying the products under Customs Tariff Heading 84148090 relating to residuary entries of Chapter 8414 and subsequently filed an application before the Customs Authority for Advance Rulings to reclassify the same under Customs Tariff Heading 84145990 relating to ventilating or recycling hoods incorporating a fan - The appellant had submitted additional documents and information in support of its claim to an incorrect email address, which was not co... [Read more]

Customs - Classification of Kitchen Exhaust Hoods - Appellant is engaged in ventilation solutions and routinely imports kitchen exhaust hoods - The appellant was initially classifying the products under Customs Tariff Heading 84148090 relating to residuary entries of Chapter 8414 and subsequently filed an application before the Customs Authority for Advance Rulings to reclassify the same under Customs Tariff Heading 84145990 relating to ventilating or recycling hoods incorporating a fan - The appellant had submitted additional documents and information in support of its claim to an incorrect email address, which was not considered by the AAR Authority while passing the impugned order - HELD - The Respondent Authority has come to a definite finding that the product would not contain a fan, whereas the appellant contends that the exhaust kitchen hoods contain fans. The Respondent Authority did not have the opportunity to examine the additional material submitted by the appellant as the same were sent to an incorrect email address - In the interest of justice, the appellant needs to be provided an opportunity to prove that the kitchen exhaust hoods contain fans and to establish its case before the Respondent Authority. The respondent Authority shall examine the additional material or submission and pass appropriate order on the basis of such examination - The impugned order is set aside and the matter is remitted back to the Respondent Authority for Advance Rulings – The appeal is disposed of [Read less]

Karnataka Value Added Tax Act, 2003 - Transfer of Right to Use Goods – Taxability of Rental Charges for Electronic Data Capture Terminals – Appellant-Bank providing payment processing services to merchant establishments and installing Electronic Data Capture Terminals (EDCT) commonly known as swiping machines with connected accessories and printers at merchant premises - Merchant establishments collected transaction-based charges as Merchant Discount Rate and separate fixed charges including monthly terminal rental charges, installation charges and maintenance charges - Appellant treated entire consideration as conside... [Read more]

Karnataka Value Added Tax Act, 2003 - Transfer of Right to Use Goods – Taxability of Rental Charges for Electronic Data Capture Terminals – Appellant-Bank providing payment processing services to merchant establishments and installing Electronic Data Capture Terminals (EDCT) commonly known as swiping machines with connected accessories and printers at merchant premises - Merchant establishments collected transaction-based charges as Merchant Discount Rate and separate fixed charges including monthly terminal rental charges, installation charges and maintenance charges - Appellant treated entire consideration as consideration for banking and financial services and discharged service tax - Department during reassessment proceedings held that rental charges for EDCT machines constituted consideration for transfer of right to use goods and amounted to deemed sale liable to tax under KVAT Act - Whether rental charges collected for EDCT machines constitute consideration for transfer of right to use goods liable to VAT - HELD - Transaction may contain different elements and may attract different levies under different statutes provided respective taxing fields are distinct and statutory requirements are satisfied - Payment of service tax on service component does not by itself exclude power of State to levy VAT on sale element if transfer of right to use goods is established - EDCT machines are identifiable and tangible goods installed at merchant premises and are separately identifiable from mere provision of banking service. Unlike SIM cards which are merely incidental to service rendered and do not confer independent right or utility, EDCT machines are separately identifiable and tangible equipment installed at premises of merchant establishments. Machine performs distinct function independent of mere provision of banking service - Merchant establishments are provided possession and operational access to identified equipment for accepting customer transactions, separate rental consideration is collected for such equipment - EDCT machines stand on different footing as compared to SIM cards in cellular operations. Retention of ownership and supervisory rights by Bank does not negate transfer of right to use such goods - Rental charges collected by Appellant in respect of EDCT machines constitute consideration for transfer of right to use goods and are liable to tax under VAT Act – The findings recorded by authorities below are based upon contractual terms, nature of equipment supplied and manner in which EDCT machines were made available to merchant establishments and do not suffer from any error warranting interference – The Revision Petition is dismissed [Read less]

Customs AAR - Classification of “Window Glass” or “CG - Window”, a critical component of an electronic device Display Assembly – HELD - Window Glass as being imported by the applicant is designed for use solely and principally in the Display Assembly, it satisfies the criteria laid down in Note 2(b) of Section XVI and, therefore, merits classification under CTH 8529. Even if it is considered that the Window Glass could be covered within the scope of “safety glass” under CTH 7007, the final classification would still fall under CTH 8529 by application of Rule 3(c) of the General Rules for the Interpretation (G... [Read more]

Customs AAR - Classification of “Window Glass” or “CG - Window”, a critical component of an electronic device Display Assembly – HELD - Window Glass as being imported by the applicant is designed for use solely and principally in the Display Assembly, it satisfies the criteria laid down in Note 2(b) of Section XVI and, therefore, merits classification under CTH 8529. Even if it is considered that the Window Glass could be covered within the scope of “safety glass” under CTH 7007, the final classification would still fall under CTH 8529 by application of Rule 3(c) of the General Rules for the Interpretation (GRI) – The Rule 3(c) stipulates that when classification cannot be determined under Rules 3(a) or 3(b), the product shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Hence, even if the product could arguably fit both under CTH 7007 and CTH 8529, it would still merit classification under CTH 8529, as this heading occurs later in numerical order – The product ‘Window Glass’ are classifiable under Tariff item 8529 90 90 of the First Schedule to the Customs Tariff Act, 1975 – Ordered accordingly [Read less]