More Judgements

1. Home
2. More Judgements

Tamil Nadu Value Added Tax Act, 2006 - Limitation period for passing assessment order under Section 27, Validity of revival of stale proceeding - A show cause notice for assessment year 2009-2010 was issued on 10.02.2014, to which the assessee replied on 28.03.2014 requesting the respondent to await the order of the High Court in related writ petitions for assessment years 2006-2007, 2007-2008 and 2008-2009. The High Court disposed of the related writ petitions on 29.10.2014, after which a denovo assessment order was passed on 30.09.2015. Subsequently, the assessee filed appeals before the Joint Commissioner and the Sales ... [Read more]

Tamil Nadu Value Added Tax Act, 2006 - Limitation period for passing assessment order under Section 27, Validity of revival of stale proceeding - A show cause notice for assessment year 2009-2010 was issued on 10.02.2014, to which the assessee replied on 28.03.2014 requesting the respondent to await the order of the High Court in related writ petitions for assessment years 2006-2007, 2007-2008 and 2008-2009. The High Court disposed of the related writ petitions on 29.10.2014, after which a denovo assessment order was passed on 30.09.2015. Subsequently, the assessee filed appeals before the Joint Commissioner and the Sales Tax Appellate Tribunal. The respondent issued an impugned show cause notice on 22.04.2024, which was after the statutory limitation period of six years under Section 27 had expired on 14.03.2017 - Whether the respondent can issue a show cause notice and pass an assessment order for the assessment year 2009-2010 after the statutory limitation period prescribed under Section 27 of the TNVAT Act, 2006 has expired – HELD - The respondent cannot revive a stale proceeding by issuing a fresh show cause notice after the limitation period has expired. The statutory limitation of six years under Section 27 commences from the date of the original assessment order dated 15.03.2011 and expired on 14.03.2017. Although the assessee requested the respondent to keep the proceedings in abeyance pending the High Court's order, this request does not suspend or extend the statutory limitation period. The respondent was entitled to proceed with the adjudication of the SCN even while appeals were pending before the Appellate authorities. Nothing precluded the respondent from passing the order within the prescribed limitation period. The benefit of limitation must enure to the assessee, and a stale proceeding cannot be revived merely because the assessee had sought deferment of adjudication. The fact that the assessee is not required to maintain books of accounts beyond six years further supports this conclusion. The Rule prescribing maintenance of records for six years cannot be applied rigidly when there is a statutory embargo to proceed further - The impugned show cause notice is quashed and the writ petition is allowed [Read less]

Service Tax - Demand under Rule 6(3) of CENVAT Credit Rules, 2004 - CENVAT credit on common input services used for both taxable and exempted services – Non-maintenance of separate account of CENVAT credit taken for taxable and exempted services – Demand for reversal of credit under Rule 6(3) of CCR – Appellant contention is demand under Rule 6(3) of CCR does not arise because it had only availed proportionate amount of CENVAT credit on common input services – HELD - The Rule 6 of the CENVAT Credit Rules provides three options to an assessee for managing CENVAT credit on common input services: not availing credit o... [Read more]

Service Tax - Demand under Rule 6(3) of CENVAT Credit Rules, 2004 - CENVAT credit on common input services used for both taxable and exempted services – Non-maintenance of separate account of CENVAT credit taken for taxable and exempted services – Demand for reversal of credit under Rule 6(3) of CCR – Appellant contention is demand under Rule 6(3) of CCR does not arise because it had only availed proportionate amount of CENVAT credit on common input services – HELD - The Rule 6 of the CENVAT Credit Rules provides three options to an assessee for managing CENVAT credit on common input services: not availing credit on inputs exclusively used for exempted services, maintaining separate accounts, or paying a prescribed percentage of exempted services value. The assessee is free to choose any option. Nothing in the CCR permits officers to make a choice and require the assessee to fulfil obligation as per the officers’ choice. An amount under rule 6(3) of CCR cannot be demanded from the assessee under Rule 14 of CCR by making a choice for the assessee - Additionally, if the assessee has already taken only proportionate CENVAT credit on common input services and has not availed complete credit attributable to exempted services, the question of reversing any portion under Rule 6(3) does not arise - The demand of amount under Rule 6(3) of CENVAT Credit Rules is set aside and the appeal is allowed - Appropriation of tax on the same services but under different service heads - Short payment of service tax on erection, commissioning and installation services – Demand of additional service tax alleging short payment under the head of erection, commissioning and installation services - Whether service tax demand can be sustained when the assessee has paid appropriate tax on the same services but under different service heads based on the nature of work performed in each invoice – HELD - The Chartered accountant's certificate and detailed invoice records produced by the assessee clearly demonstrate that the assessee had rendered multiple types of services and paid the corresponding service tax at the applicable rates for each category. The evidence shows that the services in dispute fall under different heads including works contract services and erection, commissioning and installation services, and the assessee had accounted for and paid service tax on all services rendered. Since the assessee has paid correct service tax on all services rendered, merely reclassifying them under a different service head does not create a demand - The demand of service tax under erection, commissioning and installation services is set aside - Change in Service Tax Rate - Point of Taxation Rules and applicability of changed service tax rate - The assessee raises invoices before the rate change date of 01.04.2012 when service tax was increased from 10% to 12%, but receives payments for these invoices after this date - Revenue case that service tax be paid at the higher rate of 12% on the ground that payment was received after the rate change - Whether service tax at the higher rate of 12% applies to invoices raised and services rendered before 01.04.2012 when payment is received after that date – HELD - The rate of service tax is determined by either the date of invoice or date of payment, whichever is earlier. Where both invoices and services are provided before 01.04.2012, the point of taxation is the date of invoice under Rule 4(a)(ii), and the older rate applies regardless of when payment is received. Where invoices are raised before 01.04.2012 but services are provided partly before and partly after with advance payment before the rate change, Rule 4(b)(ii) applies and the rate is determined by the earlier of invoice or payment date. Only to the extent that payment is received after 01.04.2012 for invoices raised before this date does the higher rate apply - No additional service tax is payable as the assessee has correctly applied the point of taxation rules and already paid differential tax where applicable. [Read less]

Service Tax - Interpretation of exemption notification - Scope of "culture" in recreational activities exemption - Appellant, a coaching institute providing training in astronomy, claimed exemption from service tax under Entry 8 of Notification No. 25/2012, which exempts "services by way of training or coaching in recreational activities relating to arts, culture, or sports." The appellant contended that astronomy constitutes part of Indian culture and therefore qualifies for exemption - Department issued notice proposing a demand of service tax, contending that astronomy is a pure science and not covered under the exempti... [Read more]

Service Tax - Interpretation of exemption notification - Scope of "culture" in recreational activities exemption - Appellant, a coaching institute providing training in astronomy, claimed exemption from service tax under Entry 8 of Notification No. 25/2012, which exempts "services by way of training or coaching in recreational activities relating to arts, culture, or sports." The appellant contended that astronomy constitutes part of Indian culture and therefore qualifies for exemption - Department issued notice proposing a demand of service tax, contending that astronomy is a pure science and not covered under the exemption notification - Whether services of providing training and coaching in astronomy fall within the scope of "culture" as mentioned in Entry 8 of the exemption notification and are therefore exempt from service tax – HELD – It is well-established principle that exemption notifications must be interpreted strictly and the burden of proving applicability lies on the assessee. The term "culture" in the context of recreational activities refers to dance, music, theatre, literature, and similar traditional art forms. Applying the doctrine of noscitur a sociis, which provides that the meaning of a doubtful word may be ascertained by reference to associated words, the term "culture" must be interpreted narrowly in light of the preceding term "art" used in the notification. Science, including astronomy, is distinguishable from culture and art. Although astronomy may have been integral to Indian civilization historically, the specific terminology used in the Notification cannot be stretched to encompass scientific activities. The CBEC clarification supporting the limited scope of the exemption to traditional art forms like dance, music, painting, sculpture, theatre, and sports reinforces this interpretation - The appeal is dismissed on merits, with the impugned order affirmed. However, the matter is remanded to the adjudicating authority for the limited purpose of recalculation to provide the benefit of cum-tax to the appellant in accordance with section 67(2) of the Finance Act, 1994 – The appeal is dismissed [Read less]

Service Tax - Authority to issue Completion Certificate, Validity of Completion Certificate issued by technical person of Municipal Authority – Appellant is real estate promoter company submitted a Completion Certificate for a construction project issued by an authorized technical officer of the Municipal Corporation, followed by a formal Completion Certificate issued by the competent authority on 30.05.2011 - The adjudicating authority rejected the first certificate as it was not issued by the competent authority and confirmed a service tax demand based on non-acceptance of Completion Certificate - Whether a Completion ... [Read more]

Service Tax - Authority to issue Completion Certificate, Validity of Completion Certificate issued by technical person of Municipal Authority – Appellant is real estate promoter company submitted a Completion Certificate for a construction project issued by an authorized technical officer of the Municipal Corporation, followed by a formal Completion Certificate issued by the competent authority on 30.05.2011 - The adjudicating authority rejected the first certificate as it was not issued by the competent authority and confirmed a service tax demand based on non-acceptance of Completion Certificate - Whether a Completion Certificate issued by a technical person authorized by the Municipal Corporation for certifying project completion can be accepted as valid evidence of completion of a construction project even though the formal Completion Certificate was issued later by the competent authority – HELD - The completion certificate issued by the authorized technical officer of the Kolkata Municipal Corporation constitutes valid evidence of project completion. The technical person, being authorized by the Municipal Corporation for examining and certifying completion of projects, has the requisite authority to issue the certificate. The technical examination and certification on 11.06.2010 represents the substantive completion of the project, while the formal completion certificate issued by the competent authority on 30.05.2011 is merely a procedural formality. The date of actual completion should be considered as 11.06.2010 when the technical person examined the project and certified its completion in all respects - The service tax demand confirmed by the adjudicating authority is set aside. Consequently, the questions of interest and penalty thereon do not survive – The appeal is allowed [Read less]

Service Tax - Demand invoking extended period - Assessee had recorded all transactions in books of accounts, reported CENVAT Credit in statutory returns, and provided all necessary documents to the Department. The inquiry was conducted based on records submitted by the assessee, with the only discrepancy being difference in presentation or reconciliation of figures - Whether the extended period of limitation is invokable when all transactions were duly recorded in books of accounts, all CENVAT Credits were duly reported in statutory returns, and entire data was available with the department, with merely a difference in pre... [Read more]

Service Tax - Demand invoking extended period - Assessee had recorded all transactions in books of accounts, reported CENVAT Credit in statutory returns, and provided all necessary documents to the Department. The inquiry was conducted based on records submitted by the assessee, with the only discrepancy being difference in presentation or reconciliation of figures - Whether the extended period of limitation is invokable when all transactions were duly recorded in books of accounts, all CENVAT Credits were duly reported in statutory returns, and entire data was available with the department, with merely a difference in presentation or reconciliation of figures – HELD - Mere difference in presentation or reconciliation of figures does not constitute suppression of facts or willful misstatement with an intent to evade payment of service tax. The Department cannot invoke extended period when all transactions were transparently recorded in statutory books of accounts, all credits were properly disclosed in statutory returns filed with the department, and the entire data was available with the department. The ingredients of suppression, willful misstatement, or fraud are absent when the assessee has maintained complete transparency and provided all requisite documents during proceedings. Accordingly, the Department cannot resort to extended period of limitation merely on the basis of reconciliation differences. The demand raised under extended period is ex-facie barred by limitation and set aside - The impugned order is set aside and the Order-In-Original dropping the proceedings is upheld. The appeal filed by the assessee is allowed [Read less]

Service Tax - Penalty under Section 78 - Mandatory Nature when Extended Period Invoked - Adjudicating authority invoked the extended period under proviso to Section 73(1) on account of suppression of facts but imposed penalty under Section 78 only to the extent of short-declared tax and not equal to the entire service tax confirmed - Whether penalty under Section 78 of the Finance Act, 1994 is mandatory and must be imposed once the extended period under Section 73 is invoked on ground of suppression of facts with intent to evade payment of tax – HELD - The penalty under Section 78 is not automatically mandatory equal to ... [Read more]

Service Tax - Penalty under Section 78 - Mandatory Nature when Extended Period Invoked - Adjudicating authority invoked the extended period under proviso to Section 73(1) on account of suppression of facts but imposed penalty under Section 78 only to the extent of short-declared tax and not equal to the entire service tax confirmed - Whether penalty under Section 78 of the Finance Act, 1994 is mandatory and must be imposed once the extended period under Section 73 is invoked on ground of suppression of facts with intent to evade payment of tax – HELD - The penalty under Section 78 is not automatically mandatory equal to the entire demand once extended period is invoked, and the adjudicating authority has correctly exercised discretion in imposing lesser penalty based on the specific factual circumstances of the case. The dispute arose out of classification and adjustment of tax paid under different taxable heads rather than deliberate tax evasion. Since the respondent-assessee had rendered taxable services under multiple categories with short payment under one category being simultaneously neutralized by excess payment under another category. No revenue loss occurred to the Government since excess tax already paid under one taxable category substantially neutralized the short payment under another category, and once tax reached the exchequer, the allegation of deliberate suppression loses considerable force - The respondent had already discharged the entire differential tax liability together with interest and penalty in terms of Section 73 even before issuance of SCN, demonstrating conduct that does not support an allegation of deliberate tax evasion - The adjudicating authority has correctly distinguished between classification and payment adjustment issues on one hand and independent statutory non-compliance on the other, and has rightly applied CBEC Circular clarifying that adjustment of excess service tax paid under one taxable category against liability arising under another taxable category is permissible - The impugned Order-in-Original is upheld and the appeal filed by the Department seeking enhancement of penalty is rejected [Read less]

Customs - Classification of Clear Float Glass – Appellant imported clear float glass and claimed exemption benefit under Notification No. 46/2011-Cus. based on classification under CTH 7005 10 90. The adjudicating authority classified the goods under CTH 7005 29 90 and denied the exemption benefit. The Commissioner (Appeals) accepted the classification under CTH 7005 10 90 but remanded the matter for verification of the PTA Certificate of Origin which mentioned CTH 7005 29 90 - Whether the tariff classification mentioned in the PTA Certificate of Origin can override the classification of imported goods determined under t... [Read more]

Customs - Classification of Clear Float Glass – Appellant imported clear float glass and claimed exemption benefit under Notification No. 46/2011-Cus. based on classification under CTH 7005 10 90. The adjudicating authority classified the goods under CTH 7005 29 90 and denied the exemption benefit. The Commissioner (Appeals) accepted the classification under CTH 7005 10 90 but remanded the matter for verification of the PTA Certificate of Origin which mentioned CTH 7005 29 90 - Whether the tariff classification mentioned in the PTA Certificate of Origin can override the classification of imported goods determined under the Customs Tariff Act, 1975 – HELD - Classification of imported goods under the first schedule of Customs Tariff Act, 1975 is governed by the General Rules of Interpretation of Import Tariff and not by the classification mentioned in the Certificate of Origin. The existence of an absorbent, reflecting or non-reflecting microscopic layer as contemplated by Chapter Note 2(c) of Chapter 70 determines whether goods fall under Heading 7005. Multiple scientific reports consistently establish the presence of a microscopic tin layer on the imported float glass possessing absorbent and non-reflective characteristics, satisfying the requirements of Chapter Note 2(c) - The Certificate of Origin serves only to establish originating status and cannot override classification legally determined under the Customs Tariff Act. Since the Department neither disputed the originating status nor alleged the Certificate of Origin to be invalid, the mere mention of a different tariff heading therein cannot deny the exemption benefit - The appellant’s classification stands supported by binding precedents and consistent judicial decisions - The imported goods are correctly classifiable under CTH 7005 10 90, making them eligible for the benefit of Notification No. 46/2011-Cus. The tariff heading mentioned in the PTA Certificate of Origin does not constitute a valid ground for denying the notification benefit – The appeal is allowed - Sustainability of Duty Demand, Confiscation, Fine and Penalty - Whether the differential duty demand, confiscation, redemption fine, penalty under Section 114A, and consequential interest are sustainable when the goods are correctly classifiable under the Tariff entry claimed by the importer – HELD - The entire duty demand is founded on the premise that goods are classifiable under a higher tariff entry, and once that premise fails, the foundation of the demand crumbles. The SCN does not allege misdescription or fraudulent conduct; the dispute relates solely to tariff interpretation. Section 111(m) of the Customs Act contemplates confiscation only where goods are imported by reason of misdeclaration of value, description, or other material particulars. Since neither the description nor the nature of goods has been disputed and the controversy centres only on classification, the basis for invoking Section 111(m) disappears once the claimed classification is accepted. Redemption fine imposed in lieu of confiscation cannot survive independently where confiscation itself fails. Penalty under Section 114A presupposes a legally sustainable duty demand arising from collusion, wilful misstatement, or deliberate contravention - Bona fide claims based on plausible legal interpretation and supported by relevant material do not warrant penal consequences merely because the Department entertains a different view. Interest is merely accessory and incidental to the principal duty demand and cannot survive independently in the absence of a legally sustainable duty liability - The differential duty demand, confiscation, redemption fine, penalty under Section 114A, and consequential interest are unsustainable and are set aside. [Read less]

Central Excise - Refund of Revenue Deposits - Commencement of Interest - During provisional assessment of excise duty on chewing tobacco, Appellant deposited excess amount under protest prior to any adjudication or confirmation of demand. Subsequently, the Tribunal determined that the product was correctly classified and the higher duty was never legally payable. The assessee claimed refund with interest from the date of deposit, but the lower authorities restricted interest to commence only three months after the refund application filing date, applying section 11BB of the Central Excise Act, 1944 - Whether interest on de... [Read more]

Central Excise - Refund of Revenue Deposits - Commencement of Interest - During provisional assessment of excise duty on chewing tobacco, Appellant deposited excess amount under protest prior to any adjudication or confirmation of demand. Subsequently, the Tribunal determined that the product was correctly classified and the higher duty was never legally payable. The assessee claimed refund with interest from the date of deposit, but the lower authorities restricted interest to commence only three months after the refund application filing date, applying section 11BB of the Central Excise Act, 1944 - Whether interest on delayed refund of amounts deposited under protest during investigation and provisional assessment stages, where no quantified demand existed at the time of deposit, is payable from the respective date of deposit or only from expiry of three months after refund application filing – HELD - The section 11BB of the Central Excise Act applies only to refunds of duty and not to refunds of revenue deposits. When an amount is deposited during investigation, adjudication, or provisional stages where no legal duty liability pre-exists and no quantified demand has been confirmed through valid adjudication, such payment retains the character of a revenue deposit and does not acquire the character of duty under the Act. Therefore, the restrictive conditions of section 11BB, including the three-month deferment period, cannot be imported into cases involving refund of revenue deposits. The distinction between duty and deposit is material for determining the applicability of section 11BB. Since no duty was legally payable in the present case, the amount continued to remain a deposit retained without authority of law. Consequently, interest must be paid from the actual date of deposit till the date of refund - The impugned order is set aside and interest is directed to be calculated from the respective dates of deposit of the excess amount till the date of actual refund – The appeal is allowed - Refund of Revenue Deposits - Rate of Interest - Whether the assessee is entitled to interest at 12% per annum instead of 6% per annum on refund of amounts deposited under protest during investigation and adjudication proceedings – HELD - Since the amount does not partake the character of duty, the statutory provisions governing refund of duty under sections 11B and 11BB cease to have application. The Central Excise Act contains no specific provision prescribing the rate of interest payable on refund of revenue deposits, and therefore the rate has been consistently determined by judicial precedents based on principles of equity, fairness and reasonableness. The statutory rate of 6% prescribed under notification No.67/2003-C.E. (N.T.) is wholly inapplicable to revenue deposits - The impugned order is set aside and the revenue is directed to recalculate interest at 12% per annum from the respective dates of deposit till the date of actual refund, after adjusting the amount already paid, with the balance to be disbursed within 60 days. [Read less]

Service Tax - Invocation of extended period of limitation under Section 73 of the Finance Act, 1994 – Audit observed that the appellant-society had not paid service tax on legal services received from advocates during the disputed period under the Reverse Charge Mechanism - Whether the show cause notice invoking the extended period of limitation beyond the normal period of 30 months is sustainable when the only allegation made is that the non-payment would have remained undetected had the audit not been conducted – HELD - The extended period of limitation under Section 73 of the Finance Act, 1994 cannot be invoked mere... [Read more]

Service Tax - Invocation of extended period of limitation under Section 73 of the Finance Act, 1994 – Audit observed that the appellant-society had not paid service tax on legal services received from advocates during the disputed period under the Reverse Charge Mechanism - Whether the show cause notice invoking the extended period of limitation beyond the normal period of 30 months is sustainable when the only allegation made is that the non-payment would have remained undetected had the audit not been conducted – HELD - The extended period of limitation under Section 73 of the Finance Act, 1994 cannot be invoked merely on the ground that non-payment would have gone unnoticed - The Department has failed to produce any evidence establishing any positive act of fraud or suppression by the appellant. The mere fact that the non-payment was discovered during audit does not constitute suppression of facts or willful evasion - The show cause notice is held to be barred by time. The order under challenge confirming the proposal of such show cause notice is set aside - The appeal is allowed [Read less]

GST - Liquidated damages; Compensation towards Transportation loss – Appellant engaged various transporters for transportation of chemicals, which were susceptible to unavoidable losses during transportation. While losses within an agreed tolerance limit were accepted without recovery, losses exceeding this threshold were treated as breaches of contractual terms – Applicant sought compensation from transporters under various circumstances including material shortage in transit, material quality issues, damage or destruction of goods, theft or pilferage, failure to deliver at required location and time, and damages due ... [Read more]

GST - Liquidated damages; Compensation towards Transportation loss – Appellant engaged various transporters for transportation of chemicals, which were susceptible to unavoidable losses during transportation. While losses within an agreed tolerance limit were accepted without recovery, losses exceeding this threshold were treated as breaches of contractual terms – Applicant sought compensation from transporters under various circumstances including material shortage in transit, material quality issues, damage or destruction of goods, theft or pilferage, failure to deliver at required location and time, and damages due to negligence during handling, loading or unloading - Whether the amount received towards compensation for loss arising from various breaches of contractual terms constitutes a supply of services under GST – HELD – The compensation received from transporters for various breaches of contractual obligations constitutes liquidated damages payable as mere flow of money to compensate for injury, loss or damage suffered due to breach of contract and does not constitute consideration for supply of services - The various circumstances under which compensation is claimed reveal that the applicant is merely receiving compensation for injury, loss or damage and is not tolerating any act of the transporters in return for such payment. Since liquidated damages do not represent the object of the contract and constitute merely an event in the course of performance of the agreement. Such payments do not fall within the ambit of services described in paragraph 5(e) of Schedule II and are not taxable under the Act. Accordingly, the compensation received from transporters for various material defects, breaches and non-performance of contractual obligations does not constitute supply of services and is not liable to GST – Ordered accordingly [Read less]

Service Tax – Limitation and Condonation of Delay – Whether dismissal of appeal solely on account of non-filing of condonation of delay application is sustainable in law when the Order-in-Original contains an unambiguous misstatement of the statutory limitation period – HELD - While a preamble or administrative note in an adjudication order cannot override the statutory limitation prescribed by the parent Act. When such a misstatement induces a party to act or refrain from acting in a particular manner, the doctrine of legitimate expectation and estoppel against the Revenue assumes significance. It is the well-establ... [Read more]

Service Tax – Limitation and Condonation of Delay – Whether dismissal of appeal solely on account of non-filing of condonation of delay application is sustainable in law when the Order-in-Original contains an unambiguous misstatement of the statutory limitation period – HELD - While a preamble or administrative note in an adjudication order cannot override the statutory limitation prescribed by the parent Act. When such a misstatement induces a party to act or refrain from acting in a particular manner, the doctrine of legitimate expectation and estoppel against the Revenue assumes significance. It is the well-established principle that a party should not be made to suffer for the mistake of the authority, particularly where the mistake relates to the exercise of a statutory remedy because such mistake misleads the party into believing that a legally necessary step was in fact unnecessary. The mechanical application of the principle that limitation cannot be waived, without examination of the reasons underlying the procedural omission, is not a proper exercise of quasi-judicial discretion. Where the delay itself is traceable to a positive misstatement of law in the order under challenge, the appellate authority is duty-bound to afford the appellant an opportunity to regularise the procedural defect, as summary dismissal results in grave injustice and amounts to denial of the right of appeal – The impugned order is set aside and the appeal is restored before the Commissioner (Appeals) with directions to consider the condonation of delay application in light of the fact that the delay was directly induced by an incorrect statement of law in the Order-in-Original – The appeal is allowed [Read less]

Central Excise - Refund of Excise Duty deposited under protest - Entitlement to Interest - Whether the appellant is entitled to interest on the amount deposited under protest when the refund is sanctioned after a considerable delay beyond the statutory period of three months – HELD - The amounts paid under protest against central excise duty demands constitute duty deposits within the meaning of Section 11B of the Central Excise Act, 1944, and not mere revenue deposits. The Section 11BB provides for payment of interest at the prescribed rate, currently six percent per annum, when any duty ordered to be refunded under Sec... [Read more]

Central Excise - Refund of Excise Duty deposited under protest - Entitlement to Interest - Whether the appellant is entitled to interest on the amount deposited under protest when the refund is sanctioned after a considerable delay beyond the statutory period of three months – HELD - The amounts paid under protest against central excise duty demands constitute duty deposits within the meaning of Section 11B of the Central Excise Act, 1944, and not mere revenue deposits. The Section 11BB provides for payment of interest at the prescribed rate, currently six percent per annum, when any duty ordered to be refunded under Section 11B is not refunded within three months from the date of receipt of the refund application – The decisions of various High Courts and the Supreme Court consistently held that when a statute prescribes a specific mechanism and period of limitation for refund, such statutory framework must be adhered to and cannot be circumvented by invoking section 72 of the Indian Contract Act or Article 265 of the Constitution. While the appellant’s refund claim was filed on 28.04.2025 and sanctioned on 18.09.2025, which constitutes a delay beyond three months, the entitlement to interest arises only from the expiry of the three-month period from the date of filing the application - The appellant’s contention that interest should be payable from the original date of deposit is rejected, as the statutory provision governing interest on refunds is section 11BB which operates only after an order for refund has been made and applies only to delays in disbursement beyond the prescribed three months. The appellant is entitled to interest at six percent per annum under Section 11BB for the period commencing from 27.07.2025, being the date of expiry of three months from the filing of the refund application on 28.04.2025, till the date of actual refund - The impugned order is modified to the extent of granting interest as per the statutory provisions of section 11BB of the Central Excise Act, 1944 – The appeal is disposed of [Read less]

GST – Service of show cause notice by uploading on GST portal under 'Additional Notice and Orders' tab - Whether the adjudication order and the appeal order passed without proper service of the show cause notice – HELD - Since the tax payer has not been able to receive the show cause notice and file a reply to the same due to improper service, the tax payer must be given an opportunity to do so - Mere uploading of intimation on the GST portal does not constitute adequate service when the tax payer remains unaware of the proceedings - The appeal order and the adjudication order are quashed and set aside. The tax payer i... [Read more]

GST – Service of show cause notice by uploading on GST portal under 'Additional Notice and Orders' tab - Whether the adjudication order and the appeal order passed without proper service of the show cause notice – HELD - Since the tax payer has not been able to receive the show cause notice and file a reply to the same due to improper service, the tax payer must be given an opportunity to do so - Mere uploading of intimation on the GST portal does not constitute adequate service when the tax payer remains unaware of the proceedings - The appeal order and the adjudication order are quashed and set aside. The tax payer is directed to file a reply to the show cause notice – The writ petition is disposed of [Read less]

GST - Service of show cause notice for Cancellation of Registration, Sufficiency of uploading notice on common portal - Compliance with principles of natural justice –Respondents issued show cause notice by uploading it only on the common portal under the heading "Additional Document and Order". Upon failure to respond, the authority cancelled the GST registration of the petitioner - Whether the cancellation of registration is valid when the show cause notice was served only through uploading on the common portal without complying with the mandatory requirement of serving the notice through at least two modes as stipulat... [Read more]

GST - Service of show cause notice for Cancellation of Registration, Sufficiency of uploading notice on common portal - Compliance with principles of natural justice –Respondents issued show cause notice by uploading it only on the common portal under the heading "Additional Document and Order". Upon failure to respond, the authority cancelled the GST registration of the petitioner - Whether the cancellation of registration is valid when the show cause notice was served only through uploading on the common portal without complying with the mandatory requirement of serving the notice through at least two modes as stipulated under Section 169 of the CGST Act, 2017 – HELD - The cancellation order is invalid and suffers from the vice of non-compliance with the principles of natural justice. While Section 169 of the CGST Act provides for notice by uploading on the common portal, the division bench of the Court has held that merely uploading the notice under the heading "Additional Document and Order" on the portal does not constitute sufficient compliance with the mandatory requirement of natural justice. The law requires that the official authorities comply with at least two modes of service as mentioned in Section 169 of the Act – Further, the cancellation order was passed ex-parte without affording the petitioner any real opportunity to comply with the show cause notice, since the petitioner was not properly served with the notice. The court also expresses displeasure at the manner in which the department uses pre-written formats for cancellation orders, which diminishes the sanctity of such orders - The registration cancellation order is set aside. The order of the appellate authority dismissing the appeal on grounds of limitation is also set aside. The respondent authorities are permitted to proceed afresh with proper compliance with the statutory requirements – The writ petition is allowed [Read less]

Service Tax - Classification of Composite Service as Cargo Handling Service – Appellant engaged in transportation of cargo through road-cum-rail mode undertakes a composite contractual obligation consisting of bringing empty containers, loading packed goods, arranging containers and trailers, obtaining freight documents, coordinating with freight agencies, monitoring cargo movement, and ensuring delivery at destination - Whether the services constitute cargo handling service under Section 65(23) read with Section 65(105)(zr) of the Finance Act, 1994, or mere goods transport agency service – HELD - The definition of car... [Read more]

Service Tax - Classification of Composite Service as Cargo Handling Service – Appellant engaged in transportation of cargo through road-cum-rail mode undertakes a composite contractual obligation consisting of bringing empty containers, loading packed goods, arranging containers and trailers, obtaining freight documents, coordinating with freight agencies, monitoring cargo movement, and ensuring delivery at destination - Whether the services constitute cargo handling service under Section 65(23) read with Section 65(105)(zr) of the Finance Act, 1994, or mere goods transport agency service – HELD - The definition of cargo handling service is wide and does not restrict the service only to cases where the assessee personally undertakes loading or unloading. When an assessee undertakes a composite contractual obligation and uses agencies for loading, unloading, container movement, freight arrangements and allied activities, the nature of the service must be determined from the totality of the contract and not from isolated elements. The essential character of the transaction must be identified, and the method of invoicing or description of charges in the bill is not conclusive. A composite service is classified on the basis of principal and essential nature of activity - In the present case, the scope of work extends beyond simple carriage of goods. The activities of arranging containers, obtaining freight documents, coordinating with multiple agencies, monitoring dispatches and ensuring delivery clearly go beyond mere transportation. Transportation constitutes only one component of the entire integrated cargo handling arrangement. The outsourcing certain activities through independent contractors does not change the nature of service provided. The nomenclature of the agreement and bifurcation of charges in invoices are not decisive factors for classification - The services provided by the appellant are rightly classifiable under Cargo Handling Service under Section 65(23) read with Section 65(105) (zr) of the Finance Act, 1994. The demands confirmed by the Lower Authorities are legally sustainable. The invocation of extended period and imposition of penalties are justified – The appeal is dismissed [Read less]

Service Tax - Construction of Roads in Agricultural Market - Service tax exemption for construction of roads meant for public use - Appellant provided services to an agricultural produce market by constructing roads within the premises of the market. Department raised demand on these services, contending that the roads were not meant for public use but only for users of the market - Whether construction of roads within an agricultural produce market, which is accessible and meant for use by farmers, traders and the general public, qualifies for service tax exemption as roads meant for use by general public – HELD - The r... [Read more]

Service Tax - Construction of Roads in Agricultural Market - Service tax exemption for construction of roads meant for public use - Appellant provided services to an agricultural produce market by constructing roads within the premises of the market. Department raised demand on these services, contending that the roads were not meant for public use but only for users of the market - Whether construction of roads within an agricultural produce market, which is accessible and meant for use by farmers, traders and the general public, qualifies for service tax exemption as roads meant for use by general public – HELD - The roads constructed within an agricultural produce market are entitled to service tax exemption. An agricultural produce market is a place meant for use by general public such as farmers, traders and other users. The roads constructed within such a market are not private roads on private property but are meant for the use of the general public who visit the market for commercial purposes. Therefore, such roads qualify as roads meant for use by general public and attract the benefit of exemption notification. The market's public character extends to the roads within it, making them public roads rather than private ones - The demand for service tax on construction of roads is set aside and the rest of the demand is confirmed. The penalty under section 78 of the Act will also be correspondingly reduced - The appeal is partly allowed [Read less]

Service Tax – Eligibility of exemption to Works Contract Services for construction of roads and drainage provided to Government Departments and local authorities, Demand based solely on Form 26AS statement – The Appellant, engaged in providing works contract services for construction of roads and drainage to various government departments and local bodies, received payments reflected in Form 26AS. A SCN was issued demanding service tax on the gross receipts along with penalties for non-registration, non-filing of returns, and suppression of facts - Whether the works contract services provided for construction of roads ... [Read more]

Service Tax – Eligibility of exemption to Works Contract Services for construction of roads and drainage provided to Government Departments and local authorities, Demand based solely on Form 26AS statement – The Appellant, engaged in providing works contract services for construction of roads and drainage to various government departments and local bodies, received payments reflected in Form 26AS. A SCN was issued demanding service tax on the gross receipts along with penalties for non-registration, non-filing of returns, and suppression of facts - Whether the works contract services provided for construction of roads and drainage to Government departments and local authorities are exempt from Service Tax under Serial No. 13(a) of Notification No. 25/2012-ST dated 20.06.2012 – HELD - The services provided by the appellant are exempt from the levy of Service Tax under Serial No. 13(a) of Notification No. 25/2012-ST dated 20.06.2012, which covers services provided by way of construction, erection, commissioning, installation, fitting out, repair, maintenance, renovation, or alteration of structures - The demand of service tax has been made on the basis of Form 26AS statement on which TDS has been deducted under Section 194-C of the Income Tax Act. The authorities below confirmed the demand merely on the basis of the gross value of service received for the work orders but failed to substantiate and examine whether such services were taxable or exempt. While the burden of proof lies with the assessee to demonstrate eligibility for exemption through clear and sufficient documentation, the fundamental requirement is that the authorities must first examine and determine whether the services are taxable or exempt before demanding tax. The demand cannot be sustained when the authorities themselves acknowledge that the services in dispute are in relation to construction of roads but proceed to deny the benefit of exemption without proper examination of the applicability of the exemption notification. The SCN and subsequent orders suffer from legal infirmities as they proceed on an incorrect premise - The impugned order and the Order-In-Original are set aside. The demand of service tax including interest and penalties is set aside – The appeal is allowed [Read less]

Central Excise - Admissibility of Statements Recorded under Section 14 of Central Excise Act, 1944 - Section 9D Compliance - Statements recorded during investigation without cross-examination – HELD - The mandatory procedure prescribed under Section 9D(1)(b) requires that persons making statements during investigation must be examined as witnesses before the adjudicating authority, and the authority must form an opinion that admission of such statements is warranted in the interests of justice. The mere inability of a witness to identify entries or express comments, particularly after a considerable lapse of time or when... [Read more]

Central Excise - Admissibility of Statements Recorded under Section 14 of Central Excise Act, 1944 - Section 9D Compliance - Statements recorded during investigation without cross-examination – HELD - The mandatory procedure prescribed under Section 9D(1)(b) requires that persons making statements during investigation must be examined as witnesses before the adjudicating authority, and the authority must form an opinion that admission of such statements is warranted in the interests of justice. The mere inability of a witness to identify entries or express comments, particularly after a considerable lapse of time or when not shown the complete set of invoices, cannot be construed as an admission of clandestine manufacture or removal. The legislative rationale behind Section 9D is manifest—statements recorded during investigation are often obtained under circumstances where coercion, pressure, or inducement cannot be ruled out, and examination before the adjudicating authority coupled with the right of cross-examination constitutes an indispensable safeguard against miscarriage of justice. Where statements are sought to be relied upon as substantive evidence without compliance with Section 9D, and no reasoned satisfaction regarding the circumstances under Section 9D(1)(a) is recorded, the statements are rendered completely devoid of evidentiary value for proving the truth of their contents. The refusal to grant cross-examination of witnesses and the failure to produce deponents before the adjudicating authority amounts to denial of a fundamental right and constitutes a serious infraction of principles of natural justice. Consequently, statements of Directors, workers, and transporters recorded under Section 14 without following the mandatory Section 9D procedure cannot be relied upon to sustain the grave charge of clandestine manufacture and removal - The demand of duty together with interest and the penalty imposed upon the appellant-company are set aside. The appeal is allowed - Admissibility of Computer-Derived Evidence and Seized Documents — Section 36B Compliance - HELD - Documents and computer printouts cannot be treated as admissible evidence without satisfying the mandatory conditions prescribed under Section 36B of the Central Excise Act, 1944, which is pari materia with Section 65B of the Indian Evidence Act, 1872. The Section 36B(2) cumulatively requires proof that the computer printout was produced by the computer during the period it was regularly used to store or process information for activities regularly carried on, that information of the relevant kind was regularly supplied to the computer in the ordinary course of such activities, that the computer was operating properly throughout the material period, and that the information reproduced is derived from information supplied to the computer in the ordinary course of activities. Additionally, Section 36B(4) mandates issuance of a certificate by a person occupying a responsible official position in relation to the operation of the computer, identifying the record and describing the manner of its production. In the absence of such certificates and where no evidence is adduced demonstrating compliance with these foundational conditions, the seized documents, notebooks, and comparison charts cannot be accorded evidentiary value. Further, unsigned, unconfirmed documents bearing no acknowledgment from alleged buyers cannot be elevated to conclusive evidence of clandestine removals, particularly when the adjudicating authority rejects the assessee's explanation without recording cogent reasons. Where the investigating agency undertakes selective comparison of entries only against invoices issued to one customer while ignoring invoices issued to other customers, such truncated analysis is fundamentally flawed and incapable of forming the basis for allegations of clandestine manufacture - Charge of Clandestine Manufacture and Removal — Requirement of Cogent and Corroborative Evidence — HELD - Allegations of clandestine manufacture and removal are quasi-criminal in nature carrying civil and penal consequences and therefore cannot be sustained on the basis of assumptions, presumptions, or inferences alone but must rest upon tangible, independent, and corroborative evidence. Revenue must establish evidence of excess raw materials procurement beyond statutory records, physical stock shortages at the factory, actual instances of removal of unaccounted finished goods (not inferential or assumed), discovery of such goods outside the factory, instances of sales to identified parties, receipt of sale proceeds, use of electricity in excess of what is necessary for lawfully manufactured and cleared goods, statements of buyers with details of illicit transactions, proof of actual transportation without duty payment, and links between recovered documents and factory activities – The methodology adopted by the investigating agency, the failure to conduct comprehensive investigation into various aspects of the alleged transaction, and the reliance upon documents and statements that do not satisfy mandatory evidentiary requirements render the entire allegation unsustainable in law. The demand of duty and the penalty imposed as a consequence thereof are set aside as the principal charge itself fails. [Read less]

Central Excise - Reversal of amount equal to 6% of the value of exempted goods cleared in terms of Notification No.30/2004-CE - Rule 6(3) of CCR, 2004 – Appellant availed CENVAT credit on inputs used in the manufacture of exempted goods in May 2017 and reversed an amount equal to 6 percent of the value of such exempted goods in terms of Rule 6(3) of the CENVAT Credit Rules, 2004 – Denial of benefit of exemption notification and demand of duty at the merit rate of 12.5 percent ad valorem, along with interest and penalty - Whether the appellant who avails exemption under Notification No. 30/2004-CE, which contains a cond... [Read more]

Central Excise - Reversal of amount equal to 6% of the value of exempted goods cleared in terms of Notification No.30/2004-CE - Rule 6(3) of CCR, 2004 – Appellant availed CENVAT credit on inputs used in the manufacture of exempted goods in May 2017 and reversed an amount equal to 6 percent of the value of such exempted goods in terms of Rule 6(3) of the CENVAT Credit Rules, 2004 – Denial of benefit of exemption notification and demand of duty at the merit rate of 12.5 percent ad valorem, along with interest and penalty - Whether the appellant who avails exemption under Notification No. 30/2004-CE, which contains a condition that no CENVAT credit on inputs shall be taken, can claim the exemption benefit if the manufacturer initially takes CENVAT credit on inputs but subsequently reverses the credit equal to 6 percent of the value of exempted goods in terms of Rule 6(3) of the CENVAT Credit Rules, 2004 – HELD - The payment of an amount under Rule 6(3) is deemed to be CENVAT credit not taken for the purpose of an exemption notification - Though sub-rule (3D) was inserted with effect from 01.04.2011, it is clarificatory in nature and has retrospective effect. The reversal of 6 percent of the value of exempted goods in terms of Rule 6(3)(i) is one of the mechanisms to expunge the CENVAT credit availed by the assessee. Therefore, even after taking the credit, if the assessee reverses an amount as provided in Rule 6(3), it amounts to non-availment of CENVAT credit and the condition of the notification stands complied - The revenue authorities who themselves had initially directed the appellant to reverse the CENVAT credit at 6 percent, and subsequently initiating proceedings based on a change in interpretation is contrary to settled legal position that extended period of limitation cannot be invoked for change in opinion. The appellant is legally entitled to the exemption notification - The impugned order set aside and the appeal is allowed [Read less]

Customs - Classification of Clear Float Glass – Appellant imported clear float glass and claimed exemption benefit under Notification No. 46/2011-Cus. based on classification under CTH 7005 10 90. The adjudicating authority classified the goods under CTH 7005 29 90 and denied the exemption benefit. The Commissioner (Appeals) accepted the classification under CTH 7005 10 90 but remanded the matter for verification of the PTA Certificate of Origin which mentioned CTH 7005 29 90 - Whether the tariff classification mentioned in the PTA Certificate of Origin can override the classification of imported goods determined under t... [Read more]

Customs - Classification of Clear Float Glass – Appellant imported clear float glass and claimed exemption benefit under Notification No. 46/2011-Cus. based on classification under CTH 7005 10 90. The adjudicating authority classified the goods under CTH 7005 29 90 and denied the exemption benefit. The Commissioner (Appeals) accepted the classification under CTH 7005 10 90 but remanded the matter for verification of the PTA Certificate of Origin which mentioned CTH 7005 29 90 - Whether the tariff classification mentioned in the PTA Certificate of Origin can override the classification of imported goods determined under the Customs Tariff Act, 1975 – HELD - Classification of imported goods under the first schedule of Customs Tariff Act, 1975 is governed by the General Rules of Interpretation of Import Tariff and not by the classification mentioned in the Certificate of Origin. The existence of an absorbent, reflecting or non-reflecting microscopic layer as contemplated by Chapter Note 2(c) of Chapter 70 determines whether goods fall under Heading 7005. Multiple scientific reports consistently establish the presence of a microscopic tin layer on the imported float glass possessing absorbent and non-reflective characteristics, satisfying the requirements of Chapter Note 2(c) - The Certificate of Origin serves only to establish originating status and cannot override classification legally determined under the Customs Tariff Act. Since the Department neither disputed the originating status nor alleged the Certificate of Origin to be invalid, the mere mention of a different tariff heading therein cannot deny the exemption benefit - The appellant’s classification stands supported by binding precedents and consistent judicial decisions - The imported goods are correctly classifiable under CTH 7005 10 90, making them eligible for the benefit of Notification No. 46/2011-Cus. The tariff heading mentioned in the PTA Certificate of Origin does not constitute a valid ground for denying the notification benefit – The appeal is allowed - Sustainability of Duty Demand, Confiscation, Fine and Penalty - Whether the differential duty demand, confiscation, redemption fine, penalty under Section 114A, and consequential interest are sustainable when the goods are correctly classifiable under the Tariff entry claimed by the importer – HELD - The entire duty demand is founded on the premise that goods are classifiable under a higher tariff entry, and once that premise fails, the foundation of the demand crumbles. The SCN does not allege misdescription or fraudulent conduct; the dispute relates solely to tariff interpretation. Section 111(m) of the Customs Act contemplates confiscation only where goods are imported by reason of misdeclaration of value, description, or other material particulars. Since neither the description nor the nature of goods has been disputed and the controversy centres only on classification, the basis for invoking Section 111(m) disappears once the claimed classification is accepted. Redemption fine imposed in lieu of confiscation cannot survive independently where confiscation itself fails. Penalty under Section 114A presupposes a legally sustainable duty demand arising from collusion, wilful misstatement, or deliberate contravention - Bona fide claims based on plausible legal interpretation and supported by relevant material do not warrant penal consequences merely because the Department entertains a different view. Interest is merely accessory and incidental to the principal duty demand and cannot survive independently in the absence of a legally sustainable duty liability - The differential duty demand, confiscation, redemption fine, penalty under Section 114A, and consequential interest are unsustainable and are set aside. [Read less]

Service Tax - Eligibility for benefit under Sabka Vishwas (Legacy Dispute Resolution) Scheme – Tax liability quantification before cut-off date – Declaration under SVLDRS scheme claiming benefit on the basis of tax liability admitted during investigation proceedings - Whether the admission of tax liability by an assessee during investigation or inquiry proceedings, prior to the issuance of show-cause notice and final adjudication, amounts to quantification of duty within the meaning of the scheme and thereby renders the assessee eligible to claim benefit thereunder when the final quantified liability is determined afte... [Read more]

Service Tax - Eligibility for benefit under Sabka Vishwas (Legacy Dispute Resolution) Scheme – Tax liability quantification before cut-off date – Declaration under SVLDRS scheme claiming benefit on the basis of tax liability admitted during investigation proceedings - Whether the admission of tax liability by an assessee during investigation or inquiry proceedings, prior to the issuance of show-cause notice and final adjudication, amounts to quantification of duty within the meaning of the scheme and thereby renders the assessee eligible to claim benefit thereunder when the final quantified liability is determined after the statutory cut-off date of 30.06.2019 – HELD - The mere admission or acceptance of a portion of tax liability during investigation or inquiry does not constitute quantification for the purpose of establishing eligibility under the scheme. The definition of "quantified" under the statute means a written communication of the amount of duty payable under the indirect tax enactment, which must be the final determined amount as ascertained through the complete investigation, audit, or inquiry process - The intention of the legislature is unambiguous and specific i.e. benefit extends only to those persons whose total tax liability is fully determined before the cut-off date. If partial admissions during investigation were to constitute quantification, the statutory exclusion clause under Section 125(1)(e) would be rendered nugatory, as any assessee accepting a lesser liability during investigation could claim eligibility despite the actual liability being determined at a higher rate upon completion of proceedings. The pendency of investigation or inquiry which results in final quantification after the cut-off date disentitles the assessee from claiming the benefit. Furthermore, since the petitioner was found ineligible under the scheme, the procedural requirement to constitute a Designated Committee and afford an opportunity of hearing does not arise, as such procedural safeguards apply only after an eligible declarant is accepted into the scheme – The rejection of the declaration form by the competent authority is upheld. The writ petition is dismissed [Read less]

Service Tax - Construction Services - Residential Complex - Service tax liability on construction of individual residential houses - Whether construction of individual residential houses in tsunami affected areas undertaken for welfare organizations constitute "construction of complex" service under Section 65(91a) of the Finance Act, 1994 – HELD - The construction of individual residential houses does not attract service tax as such construction cannot be classified as "residential complex" under the statutory definition which mandates that a complex must comprise building or buildings having more than twelve residentia... [Read more]

Service Tax - Construction Services - Residential Complex - Service tax liability on construction of individual residential houses - Whether construction of individual residential houses in tsunami affected areas undertaken for welfare organizations constitute "construction of complex" service under Section 65(91a) of the Finance Act, 1994 – HELD - The construction of individual residential houses does not attract service tax as such construction cannot be classified as "residential complex" under the statutory definition which mandates that a complex must comprise building or buildings having more than twelve residential units with common areas and specified facilities. The definition is cumulative in nature and individual houses clearly fail to satisfy the primary requirement of having more than twelve residential units. Relying on the coordinate bench decisions in similar matters and the Supreme Court's pronouncement in CCE v. Larsen and Toubro that post 01-06-2007 only services simpliciter could be taxed, the Tribunal holds that for the period up to 31-03-2012, construction services rendered on individual residential units fall outside the ambit of taxable service under Section 65(105)(zzzh) - The demand confirmed in the impugned orders is set aside – The appeal is allowed - Construction Services - Police Quarters - Service tax liability on construction of police quarters - Whether construction of residential units (police quarters) rendered to Tamil Nadu Police Housing Corporation qualifies for exemption from service tax under the Mega Exemption Notification No.25/2012-ST - HELD – The construction services of residential units rendered to government organizations like the police corporation are not exigible to service tax, following the Tribunal's earlier decisions in similar cases which have held that such construction services for Government organizations do not attract service tax liability. The Commissioner (Appeals) has also allowed the appeal in the assessee's favour in a related matter. Given the similarity in facts and circumstances, the tribunal holds that the construction services rendered to the police corporation are not exigible to service tax and sets aside the demand - Construction Services - Commercial and Industrial Purpose - Service tax liability on construction of hospitals and municipal buildings - Whether construction services for hospitals and municipal corporation buildings can be classified as "commercial and industrial construction services" under Section 65(25b) of the Finance Act, 1994 – HELD - The demand of service tax on construction services rendered cannot be sustained when the revenue has failed to discharge its burden of proving that the buildings were constructed for commercial purposes with intent of making profit. The Board Circular No.80/10/2004 clarified that the leviability of service tax depends primarily upon the use of the building or civil structure and requires proving that the building was being used for purposes of making profit. The onus lies on the department to establish that the building was being used or to be used for commercial purposes, and mere assumption is insufficient. The Municipal Corporation construction was abandoned at the basement level due to a court order of stay and remained incomplete, and the department has not provided any evidence from approved building plans establishing commercial purpose. Appeals allowed - Service Tax - Extended Period of Limitation – HELD - The mere non-payment of tax without any element of intent or suppression is not sufficient to attract the extended period of limitation. For invoking extended period of limitation there must be an active and deliberate act on the part of the assessee to evade payment of tax. In the present case, the show cause notice contains no evidence of any positive or deliberate act of wilful suppression or misstatement of facts, and the statement recorded only indicates that the assessee was explained the tax implications and agreed to comply, thereby attributing ignorance rather than intent to evade. The burden of proving mala fides lies on the person alleging it, and such allegations require proof of a high order of credibility. Applying these principles, the tribunal holds that the invocation of extended period of limitation is wholly unwarranted - Renting of Immovable Property - Liability of Individual - Service tax demand on renting of immovable property - Whether service tax liability can be imposed on an individual for renting immovable property when the property actually belongs to another person who has let it out - HELD - The service tax demand on renting of immovable property cannot be made on an individual when the uncontroverted fact on record shows that the property belonged to a third person and the demand seeks only to recover rent received by the individual. Furthermore, when the leviability of service tax on such activity was susceptible to interpretational disputes and was the subject matter of litigation, resulting in the levy being effectuated through retrospective amendment, the demand is wholly barred by limitation. [Read less]

Central Excise - Compounded Levy Scheme – Continuation of proceedings after omission of clauses – Petitioner covered under the Compounded Levy Scheme under Section 3A of the Central Excise Act, 1944 read with Rule 96ZQ of the Central Excise Rules, 1944. The assessee claimed abatement of compounded levy for the period when its processing equipment was sealed and closed for a continuous period of not less than seven days, but the claim was rejected - Proceedings under Section 3A of the Act and Rule 96ZQ of the Rules, which were omitted with effect from 11th May, 2001 and 1st March, 2001 respectively - Whether proceedings... [Read more]

Central Excise - Compounded Levy Scheme – Continuation of proceedings after omission of clauses – Petitioner covered under the Compounded Levy Scheme under Section 3A of the Central Excise Act, 1944 read with Rule 96ZQ of the Central Excise Rules, 1944. The assessee claimed abatement of compounded levy for the period when its processing equipment was sealed and closed for a continuous period of not less than seven days, but the claim was rejected - Proceedings under Section 3A of the Act and Rule 96ZQ of the Rules, which were omitted with effect from 11th May, 2001 and 1st March, 2001 respectively - Whether proceedings initiated or pending under Section 3A of the CEA, 1944 and Rule 96ZQ of the CER, 1944 could be continued or concluded after the omission of these provisions with effect from 1st March, 2001 and 11th May, 2001 respectively, without any saving clause – HELD - The omission of statutory provisions amounts to repeal of an enactment and does not fall within the protection of Section 6 of the General Clauses Act, 1897, which applies only to repeals and not to omissions. After the omission of Rules 96ZQ, 96ZP and 96ZO with effect from 1st March, 2001 no proceedings could have been initiated thereunder, and after the omission of Section 3A with effect from 11th May, 2001 without any saving clause, no pending proceeding under the said Rules which had not been concluded before the omission came into effect could be concluded thereafter - The Section 3A of the Act is the charging provision and Rule 96ZQ is merely a machinery provision, and when the charging section itself is deleted without any saving clause, no recovery under the said section can be made by resorting to Rule 96ZQ. The respondent authorities, having initiated and continued proceedings under these provisions after their omission, acted without any authority of law and their actions were ultra vires and without jurisdiction - No proceedings could have been initiated or continued against the petitioner invoking Section 3A of the Act, 1944 read with Rule 96ZQ of the Rules, 1944 after the same had been omitted and repealed in the absence of any saving clause with effect from March 2001. The petition stands allowed [Read less]

GST - Invocation of extended period of limitation under Section 74 of CGST Act, 2017; requirement of "reasons to believe" versus "where it appears"; procedural compliance in assessment proceedings - Tax liability for discrepancies between GSTR-3B versus GSTR-2A, GSTR-7 versus GSTR-3B, and GSTR-9 versus Form 26AS - Whether the authorities can invoke the machinery under Section 74 of the Act by using the expression "where it appears" without furnishing explicit reasons to believe in fraud, wilful misstatement, or suppression of facts - HELD - Since the records before the authorities revealed short-payments of tax as compared... [Read more]

GST - Invocation of extended period of limitation under Section 74 of CGST Act, 2017; requirement of "reasons to believe" versus "where it appears"; procedural compliance in assessment proceedings - Tax liability for discrepancies between GSTR-3B versus GSTR-2A, GSTR-7 versus GSTR-3B, and GSTR-9 versus Form 26AS - Whether the authorities can invoke the machinery under Section 74 of the Act by using the expression "where it appears" without furnishing explicit reasons to believe in fraud, wilful misstatement, or suppression of facts - HELD - Since the records before the authorities revealed short-payments of tax as compared to the amounts mentioned in Form 26AS and GSTR-7, the authorities are entitled to invoke the machinery under Section 74 of the CGST Act as the expression used therein is "where it appears" and not "reasons to believe". The SCNs clearly referred to Section 74 and the expression "willful suppression of facts" was used in both notices - The statutory language "where it appears" provides a broader scope for invocation compared to the stricter "reasons to believe" standard applicable under the Income Tax Act. However, the revenue abstract to the notice for the tax period 2020-2021 erroneously recorded the exempted turnover as the tax liability instead of the actual tax liability, and the impugned order inadvertently recorded the exempted turnover from an incorrect tax period, resulting in an erroneous calculation of total tax liability. Additionally, the petitioner's reply to the show cause notice was insufficient and did not effectively address the allegations raised - The matters are remanded back to the respondents to pass fresh orders on merits after affording opportunity of personal hearing to the petitioner, who shall file detailed replies and necessary documents to defend their case – The petitions are disposed of [Read less]

GST - Jurisdictional facts and foundational prerequisites for Invocation of Extended Period of Limitation in GST proceedings - The Proper Officers had invoked the extended period of limitation of five years under Section 74 without explicitly specifying or providing material evidence of fraud, wilful misstatement, or suppression of facts to evade tax as required under the statute - Whether the Proper Officer can validly invoke the extended period of limitation under Section 74 of the CGST Act without establishing jurisdictional or foundational facts of fraud, wilful misstatement, or suppression of facts with intent to evad... [Read more]

GST - Jurisdictional facts and foundational prerequisites for Invocation of Extended Period of Limitation in GST proceedings - The Proper Officers had invoked the extended period of limitation of five years under Section 74 without explicitly specifying or providing material evidence of fraud, wilful misstatement, or suppression of facts to evade tax as required under the statute - Whether the Proper Officer can validly invoke the extended period of limitation under Section 74 of the CGST Act without establishing jurisdictional or foundational facts of fraud, wilful misstatement, or suppression of facts with intent to evade tax, and whether such jurisdictional facts must be recorded and communicated to the assessee in the Show Cause Notice – HELD - The expression "where it appears" in Section 73 and Section 74 of the CGST Act imports only a prima facie view and not conclusive proof, requiring a lesser degree of probability than proof, but this does not eliminate the necessity of jurisdictional facts. The existence of fraud, wilful misstatement, or suppression of facts to evade tax constitutes mandatory jurisdictional or foundational facts that must be established before invoking the extended period of limitation. These jurisdictional facts are sine qua non for the Proper Officer to assume jurisdiction to issue a SCN under Section 74 - The satisfaction of the Proper Officer must be based on objective material and relevant facts, and such satisfaction should be explicitly expressed and recorded on the face of the Notice. Mere impression, appearance, or assumption in the mind of the Proper Officer regarding the commission of these offences is insufficient. The Proper Officer cannot invoke Section 74 arbitrarily or without rendering a finding that the alleged short-payment of tax was occasioned by fraud, wilful misstatement, or suppression of facts to evade tax - The SCN must put the assessee to notice of the specific allegations of fraud, wilful misstatement, or suppression of facts to provide him with a reasonable opportunity to meet the case and defend himself, as failure to do so violates the principles of natural justice - The GST Council's amendment to Section 67 of the Second Draft GST Model Law during the 8th GST Council Meeting, by inserting the phrase "where it appears to the Proper Officer" was based on an erroneous assumption regarding due process of law. The deliberations show that the GST Council was under the mistaken impression that the original draft did not provide adequate due process, when in fact the original draft prescribed a higher threshold for invoking the extended period of limitation. This amendment inadvertently diluted the safeguards originally contemplated. The Rules and procedures framed under the GST Act, particularly Rule 142 and the pre-notice intimation requirements in Form DRC-01A, provide necessary safeguards that must be strictly adhered to before invoking Section 74 - Where the Proper Officer fails to specify the requisite ingredients or foundational facts in the SCN, the notice becomes arbitrary and liable to be quashed. The burden of establishing the jurisdictional facts rests on the revenue, and mere allegation or assumption cannot substitute for concrete material evidence of fraud, wilful misstatement, or suppression of facts - The Show Cause Notices issued by the Proper Officers invoking Section 74 without explicitly specifying jurisdictional facts of fraud, wilful misstatement, or suppression of facts to evade tax, or without providing adequate material evidence of such facts, are quashed as being without jurisdiction and violative of the principles of natural justice. The Proper Officer is required to spell out the specific allegations and provide concrete material evidence supporting the invocation of Section 74 in the Show Cause Notice itself. The extended period of limitation cannot be invoked on mere appearance or assumption – Ordered accordingly [Read less]

Customs - Misclassification of Aluminium Products – Reclassification from Profiles to Tubes - When imported goods are declared as aluminium profiles under CTH 7604 but examination reveals they are aluminium tubes mixed with profiles, reclassification to CTH 7608 for tubes is justified – HELD – The samples are drawn during examination and catalogues filed by the importer clearly indicate the presence of rectangular tubes with specific section numbers having hollow cross-sections with uniform dimensions, such goods are rightly classifiable as aluminium tubes and pipes under CTH 7608 2000 rather than aluminium profiles ... [Read more]

Customs - Misclassification of Aluminium Products – Reclassification from Profiles to Tubes - When imported goods are declared as aluminium profiles under CTH 7604 but examination reveals they are aluminium tubes mixed with profiles, reclassification to CTH 7608 for tubes is justified – HELD – The samples are drawn during examination and catalogues filed by the importer clearly indicate the presence of rectangular tubes with specific section numbers having hollow cross-sections with uniform dimensions, such goods are rightly classifiable as aluminium tubes and pipes under CTH 7608 2000 rather than aluminium profiles under CTH 7604 2990. The examination report and visual inspection conducted in the presence of witnesses and the importer's representative establish the true nature of the goods. Therefore, differential duty demand on account of reclassification for the consignment where detailed examination was conducted and samples were drawn stands upheld – Further, since the goods were mis-declared both on account of classification and valuation, the confiscation of goods is upheld though redemption fine is reduced to a reasonable amount under section 125 of the Customs Act, 1962 – The appeal is partly allowed - Undervaluation Based on Recovered Parallel Invoices – HELD - When investigations unearth parallel invoices for the same quantity and description of imported goods showing higher value than the declared value, the revenue authority is justified in rejecting the declared value and enhancing it based on recovered invoices - The difference between the declared value and the actual value as per recovered invoices constitutes sufficient evidence of misrepresentation, thereby justifying the differential duty demand on account of valuation along with interest - Invocation of Extended Period for Past Imports – Impermissibility of Multiple Show Cause Notices Based on Same Investigations – HELD - When show cause notices have already been issued invoking extended period of limitation based on investigations, the authority cannot issue another show cause notice based on the same investigations and documents recovered for a previous show cause notice without independent evidence proving that the past consignments were also misclassified or undervalued. Once the facts are known to the authorities at the time of first show cause notice, issuing subsequent show cause notices based on the same facts and documents cannot be justified as suppression of facts. Therefore, the demand of differential duty for past imports where extended period was invoked through an earlier show cause notice, cannot be sustained, and such demand is set aside except to the extent of duty payable on freight charges for the normal period - Reclassification Without Examination and Sampling in Subsequent Consignments – HELD - The subsequent consignments are sought to be reclassified on the same basis as an intercepted consignment without conducting detailed examination, drawing samples, or specifying which particular items are to be reclassified, the reclassification cannot be sustained. In the absence of physical examination, representative sampling, or documentary evidence specific to each consignment showing that the goods imported were tubes instead of profiles as declared, merely assuming similar misclassification based on the pattern found in one consignment is insufficient. Therefore, the demand for differential duty on account of reclassification for subsequent B/E is set aside along with redemption fine and all related penalties - Penalty on Third Party – HELD - A third party who is the General Manager of the foreign supplier cannot be held liable for penalty under the Customs Act for facilitating transfer of differential amounts between the importer and supplier, as such person is not engaged in violation of Customs Act provisions but merely acting in capacity of a representative of the supplier. The General Manager of the foreign supplier, though involved in collecting and forwarding differential amounts based on parallel invoices, cannot be construed as the person violating the provisions of the Customs Act, as the violation pertains to the importer's misclassification and undervaluation. Therefore, penalty imposed on such third party is set aside as there exists no justification for imposing customs penalties on a person who is not the party to the customs transaction or directly engaged in the import declaration. [Read less]

Central Excise - Deductibility of Stowing Excise Duty from Transaction Value of coal for computing excise duty - The appellant collected Stowing Excise Duty from its customers. Revenue contended that Stowing Excise Duty is includable in the assessable value of coal cleared, thereby attracting additional excise duty - Whether Stowing Excise Duty constitutes a "tax" under Section 4(3)(d) of the Central Excise Act, 1944 and therefore is deductible from the transaction value, or whether it is exigible to excise duty – HELD - The Stowing Excise Duty is a duty of excise itself and is deductible under the exclusion of "other ta... [Read more]

Central Excise - Deductibility of Stowing Excise Duty from Transaction Value of coal for computing excise duty - The appellant collected Stowing Excise Duty from its customers. Revenue contended that Stowing Excise Duty is includable in the assessable value of coal cleared, thereby attracting additional excise duty - Whether Stowing Excise Duty constitutes a "tax" under Section 4(3)(d) of the Central Excise Act, 1944 and therefore is deductible from the transaction value, or whether it is exigible to excise duty – HELD - The Stowing Excise Duty is a duty of excise itself and is deductible under the exclusion of "other taxes" provided under Section 4(3)(d) of the Act. Since Stowing Excise Duty is already a duty component, it cannot be subjected to further excise duty - No additional duty is imposed on Stowing Excise Duty as it constitutes a valid deduction from the transaction value – The appeal is disposed of - Deductibility of Royalty from Transaction Value of coal for computing excise duty - Revenue contended that Royalty should be included in the assessable value, thereby attracting additional excise duty - Whether Royalty is in the nature of a "tax" under Section 4(3)(d) of the Central Excise Act, 1944 and therefore deductible from the transaction value, or whether it is exigible to excise duty – HELD - Royalty is not in the nature of tax. Since Royalty does not fall within the exclusion of "other taxes" under Section 4(3)(d) of the CEA Act, it is not deductible from the transaction value and is therefore exigible to excise duty - Demand of duty on account of Royalty is confirmed for the period falling within the normal period of limitation, but no interest is imposed on such demand based on the Supreme Court precedent in Mineral Area Development Authority. [Read less]