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GST – Discharge of regulatory functions - Levy of GST on the amount received by the petitioner as Tariff petition fee and license fee - Whether the regulatory functions discharged by the Electricity Regulatory Commissions, such as regulation of tariff, inter-State transmission of electricity, and issuance of licenses, can be construed as activities undertaken or functions discharging in furtherance of business, thereby attracting the levy of GST – HELD - The regulatory functions discharged by the Electricity Regulatory Commissions cannot be construed as activities undertaken or functions discharging in furtherance of b... [Read more]

GST – Discharge of regulatory functions - Levy of GST on the amount received by the petitioner as Tariff petition fee and license fee - Whether the regulatory functions discharged by the Electricity Regulatory Commissions, such as regulation of tariff, inter-State transmission of electricity, and issuance of licenses, can be construed as activities undertaken or functions discharging in furtherance of business, thereby attracting the levy of GST – HELD - The regulatory functions discharged by the Electricity Regulatory Commissions cannot be construed as activities undertaken or functions discharging in furtherance of business under the GST Act. The Delhi High Court in the matter of Central Electricity Regulatory Commission v. DGGI held that the regulation of tariff, inter-State transmission of electricity, or issuance of licenses cannot be considered as activities undertaken or functions discharging in furtherance of business, but are an extension of the statutory obligation placed upon the Commissions to regulate these subjects - The regulatory power wielded by the Commissions under the Electricity Act would not fall within the ambit of the definition of "business" under the GST Act, as it is not a trade, commerce, manufacture, profession, vocation, adventure, wager, or any other similar activity, whether or not it is for a pecuniary benefit. The payments received by the Commissions in the form of fees are not an outcome of an inducement to supply goods or services, and therefore, do not constitute "consideration" under the GST Act - Furthermore, the Schedule III of the GST Act expressly excludes services rendered by a Court or Tribunal, and the Electricity Regulatory Commissions, being quasi-judicial bodies, are covered under this exclusion - The impugned Show Cause Notices are set aside and the petition is allowed [Read less]

GST - Seizure of cash under CGST Act - Searches were conducted at the petitioner's premises and cash amounting to INR 1 crore was seized by the respondents - Whether the seizure of cash by the respondents is justified under Section 67(2) of CGST Act – HELD - The provisions of Section 67(2) of the CGST Act have not been fulfilled as the "reason to believe" condition mandated under the section has not been fulfilled by the authorities. The authorities have failed to record any reasons to conclude that the cash found at the premises was liable to be seized. Further, the authorities have also failed to comply with the provis... [Read more]

GST - Seizure of cash under CGST Act - Searches were conducted at the petitioner's premises and cash amounting to INR 1 crore was seized by the respondents - Whether the seizure of cash by the respondents is justified under Section 67(2) of CGST Act – HELD - The provisions of Section 67(2) of the CGST Act have not been fulfilled as the "reason to believe" condition mandated under the section has not been fulfilled by the authorities. The authorities have failed to record any reasons to conclude that the cash found at the premises was liable to be seized. Further, the authorities have also failed to comply with the provisions of Section 67(7) of the CGST Act which requires issuance of notice within 6 months of seizure, failing which the goods are to be returned to the person from whose possession they were seized - The statements of the petitioner and another person indicate that the seized cash belongs to the petitioner, which has not been controverted by the respondents – The seizure of cash was without the authority of law. The seizure order is quashed and the authorities are directed to release the seized cash to the petitioner along with applicable interest – The petition is allowed [Read less]

Customs - Scope of Show Cause Notice, Substitution of ground in SCN - Denial of benefit of exemption under Notification No. 21/2002-Cus dated 01.03.2002 as amended by Notification No. 12/2012-Cus dated 17.03.2012 in respect of import of coal - Show Cause Notice (SCN) proposing to deny the benefit on the grounds that Mean Reflectance had not been ascertained by a departmental laboratory and that the load port survey reports were unreliable based on certain geological texts - Whether the adjudicating authority traveled beyond the scope of the Show Cause Notice by confirming a demand based on evidentiary material not disclose... [Read more]

Customs - Scope of Show Cause Notice, Substitution of ground in SCN - Denial of benefit of exemption under Notification No. 21/2002-Cus dated 01.03.2002 as amended by Notification No. 12/2012-Cus dated 17.03.2012 in respect of import of coal - Show Cause Notice (SCN) proposing to deny the benefit on the grounds that Mean Reflectance had not been ascertained by a departmental laboratory and that the load port survey reports were unreliable based on certain geological texts - Whether the adjudicating authority traveled beyond the scope of the Show Cause Notice by confirming a demand based on evidentiary material not disclosed in the original notice – HELD - The impugned order is legally unsustainable as it exceeded the jurisdiction defined by the Show Cause Notice. It is a settled proposition of law that the SCN constitutes the foundation of the proceedings and circumscribes the permissible scope of adjudication. The jurisdictional validity of any order must be tested strictly against the allegations and grounds contained in the notice - In this case, the decisive evidentiary foundation, the research institute's report, did not form part of the SCN and the notice did not allege that subsequent scientific testing demonstrated non-fulfillment of the notification's conditions. The adjudicating authority cannot retrospectively expand or substitute the foundation of the SCN with new grounds during adjudication - By substituting the original grounds in the SCN with reliance upon CIMFR reports, the adjudicating authority has travelled beyond the scope of the notice. The reliance on CIMFR test reports not referred to in the SCN renders the impugned order legally unsustainable - the impugned order is set aside to the extent it denies exemption and confirms demand in respect of the relevant Bill of Entry, along with the interest demand – The appeal is allowed - Customs Exemption - Coking Coal - Contemporaneous Evidence vs. Belated Testing - The importer claimed exemption for coal supported by load port certificates and a Customs House Chemical Examiner’s report showing both Mean Reflectance (MR) and Crucible Swelling Number (CSN) values above the required thresholds of 0.60 and 1 respectively - Department sought to deny the exemption based on a re-test of remnant samples conducted more than two years later which reported a CSN value below the threshold - Whether the imported coal satisfied the conditions of the exemption notification and whether a belated test report can override contemporaneous evidence of the goods' condition at the time of import – HELD - The imported coal satisfied the conditions for exemption as the contemporaneous evidence established compliance with the prescribed parameters. It is well-settled that the classification and assessment of goods must be determined based on their condition at the time of import. Technical literature and judicial precedents confirm that coal is a hygroscopic material subject to oxidation and weathering, which causes the deterioration of caking properties like CSN over time. A test conducted more than two years after the samples were drawn, without evidence of preservation in specialized conditions to prevent oxidation, cannot displace contemporaneous reports. Since the Chemical Examiner’s initial report and the load port certificates were not rejected on any cogent or scientific grounds, they remain valid evidence of the goods' state at import. The department's preference for a belated test report over contemporaneous evidence is arbitrary. As the duty demand is set aside, the consequential interest demand also cannot survive. [Read less]

Service Tax - Taxable Service - Appellant was engaged in manufacturing and trading of household appliances and incurred expenditure in India towards business promotion and marketing of goods of its foreign collaborator, for which it received reimbursement in convertible foreign currency - Whether such reimbursement constitutes a taxable service under "Business Auxiliary Service" - HELD - The Appellant and the foreign group company are distinct legal entities capable of a provider-recipient relationship, and the concept of self-service does not apply. However, the agreement between the parties was a cost-sharing arrangement... [Read more]

Service Tax - Taxable Service - Appellant was engaged in manufacturing and trading of household appliances and incurred expenditure in India towards business promotion and marketing of goods of its foreign collaborator, for which it received reimbursement in convertible foreign currency - Whether such reimbursement constitutes a taxable service under "Business Auxiliary Service" - HELD - The Appellant and the foreign group company are distinct legal entities capable of a provider-recipient relationship, and the concept of self-service does not apply. However, the agreement between the parties was a cost-sharing arrangement for advertising and promotional expenses, without the Appellant rendering any taxable service to the foreign group company. The amounts received merely represent reimbursement of the foreign company's share of expenses for services jointly availed from third-party vendors, and not consideration for any service provided by the Appellant. In the absence of both a taxable service and consideration, no service tax liability arises - The impugned order is accordingly set aside and the appeals are disposed of in favor of the appellant [Read less]

Customs - Mis-declaration of cargo as "Heavy Melting Scrap" - Examination by customs officers revealed 35 MT out of 99.12 MT as "old and used gas cut drill pipes" - Whether the "old and used pipes" are to be classified as scrap or serviceable goods – HELD – The Revenue did not engage any expert or chartered engineer to examine the cargo. Customs officers are not experts to decide the nature of the goods. Revenue did not provide any documentary evidence to show the cargo was used/second-hand goods. The Section Note 8 of the Customs Tariff Act defines "waste and scrap" as goods "definitely not usable as such". In the abs... [Read more]

Customs - Mis-declaration of cargo as "Heavy Melting Scrap" - Examination by customs officers revealed 35 MT out of 99.12 MT as "old and used gas cut drill pipes" - Whether the "old and used pipes" are to be classified as scrap or serviceable goods – HELD – The Revenue did not engage any expert or chartered engineer to examine the cargo. Customs officers are not experts to decide the nature of the goods. Revenue did not provide any documentary evidence to show the cargo was used/second-hand goods. The Section Note 8 of the Customs Tariff Act defines "waste and scrap" as goods "definitely not usable as such". In the absence of evidence that the "old and used pipes" were serviceable, they are to be treated as melting scrap - For any enhancement in assessable value, the transaction value has to be first rejected based on legal permissible ground. Revenue failed to produce any such evidence. The enhancement of value and consequential short payment of duty is illegal and incorrect - The impugned order confiscating the goods and imposing redemption fine and penalty is set aside and the appeal is allowed [Read less]

Central Excise - Cenvat Credit Distribution by ISD based on turnover - The appellant has five regional offices registered as Input Service Distributors (ISDs) which distribute the service tax credit among the appellant's eight manufacturing units. During an audit, the Department observed that the appellant had claimed disproportionate distribution of Cenvat credit on input services - Whether the appellant had correctly distributed the Cenvat credit as per the provisions of Rule 7 of the Cenvat Credit Rules, which allowed discretionary distribution of credit during the relevant period - HELD - As per Rule 7 prevailing durin... [Read more]

Central Excise - Cenvat Credit Distribution by ISD based on turnover - The appellant has five regional offices registered as Input Service Distributors (ISDs) which distribute the service tax credit among the appellant's eight manufacturing units. During an audit, the Department observed that the appellant had claimed disproportionate distribution of Cenvat credit on input services - Whether the appellant had correctly distributed the Cenvat credit as per the provisions of Rule 7 of the Cenvat Credit Rules, which allowed discretionary distribution of credit during the relevant period - HELD - As per Rule 7 prevailing during the relevant period from May 2013 to October 2015, the ISD had the discretion to distribute the Cenvat credit among the manufacturing units, and the conditions for proportionate distribution based on turnover were not mandatory. The appellant had produced CA certificates showing the distribution of credit among the units based on their turnover. The appellate authority in the appellant’s own case for the previous and subsequent period has allowed the Cenvat credit distributed by ISD to the appellant on the basis of the CA certificates and the said decisions in favour of the appellant have not appealed against by the Revenue and the said orders have attained finality. As per the settled law, the department cannot take contrary stand on the same issue for the same assesse - Further, the department has not disputed the eligibility or admissibility of the credit. It is a settled principle that the distribution of credit can only be questioned at the ISD's end and not at the recipient's end. Accordingly, the impugned order is set aside and the appeal is allowed [Read less]

Customs – Import of Prohibited Goods for re-export - Petitioner imported cosmetics and FMCG products without obtaining the mandatory CDSCO license required under the Drugs and Cosmetics Act, 1940 and Cosmetics Rules, 2020. The petitioner filed Warehousing Bills of Entry for these imports, contending that the goods were intended for re-export and not for home clearance - Whether the goods imported without the required CDSCO license can be allowed to be re-exported or are liable for confiscation under the Customs Act – HELD - The goods imported without the mandatory CDSCO license are "prohibited goods" under Section 2(33... [Read more]

Customs – Import of Prohibited Goods for re-export - Petitioner imported cosmetics and FMCG products without obtaining the mandatory CDSCO license required under the Drugs and Cosmetics Act, 1940 and Cosmetics Rules, 2020. The petitioner filed Warehousing Bills of Entry for these imports, contending that the goods were intended for re-export and not for home clearance - Whether the goods imported without the required CDSCO license can be allowed to be re-exported or are liable for confiscation under the Customs Act – HELD - The goods imported without the mandatory CDSCO license are "prohibited goods" under Section 2(33) of the Customs Act, as the import of such goods is prohibited under the Drugs and Cosmetics Act, 1940 and Cosmetics Rules, 2020. The fact that the goods were filed under Warehousing Bills of Entry does not absolve the importer from complying with the applicable legal and regulatory requirements at the time of importation - The petitioner's contention that the goods were imported only for the purpose of warehousing and subsequent re-export is rejected as this was an afterthought and not the intention at the time of import - The provisions of Section 69 of the Customs Act, which allows re-export of warehoused goods, would apply only to legally imported goods, not prohibited goods. Accordingly, the goods are liable for confiscation under Section 111(d) of the Customs Act for being imported in violation of the Drugs and Cosmetics Act, 1940 and Cosmetics Rules, 2020 - The petition is accordingly dismissed [Read less]

Service Tax – Supply of naturally bundled service under ‘Cargo Handling Service’ – Bifurcation of charges under ‘Rail freight’, ‘Terminal Handling Charges’ and ‘Goods Transport Agency Services’ - The respondent provided various services such as transportation by road, transportation by rail, and cargo handling services to its customers under different contracts. While some contracts had a composite rate for all services, the respondent billed the customers separately for each service availed. The department alleged that the respondent artificially bifurcated the value of services to avail lower abatemen... [Read more]

Service Tax – Supply of naturally bundled service under ‘Cargo Handling Service’ – Bifurcation of charges under ‘Rail freight’, ‘Terminal Handling Charges’ and ‘Goods Transport Agency Services’ - The respondent provided various services such as transportation by road, transportation by rail, and cargo handling services to its customers under different contracts. While some contracts had a composite rate for all services, the respondent billed the customers separately for each service availed. The department alleged that the respondent artificially bifurcated the value of services to avail lower abatements and evade service tax - Whether the services provided by the respondent constitute a bundled service classifiable under "Cargo Handling Service" or can be treated as separate identifiable services – HELD – The respondent's services were separately identifiable and the customers were free to choose the services as per their requirements. The department failed to establish that the essential character of the services was cargo handling rather than transportation. The principle laid down by the Supreme Court is that the apparent tenor of the agreements should reflect the real state of affairs, and the department cannot construe the contract differently. The bifurcation of charges in the invoices was not artificial and the services were not naturally bundled - Revenue has to find out the essential character of the service for the purposes of bringing the assessee within the frame work of the said activity. Department has not discharged its onus and the attempt to classify the services as a composite or bundle of services is contrary to the provisions of the Finance Act,1994. In the impugned case, though all the services are rendered under one contract, individual services are identifiable and are separately charged. Thus, revenue has not discharged burden of proving either that the services are bundled services, not identifiable separately or that the essential character is that of cargo handling - For post 01.07.2012 also the essential elements of services being same, remaining separately identifiable and separately charged, Revenue has not made out any case for bundling of the Services - The services should be classified under the respective specific descriptions rather than as a bundled service under "Cargo Handling Service". The impugned order is a reasoned, logical and thus legally maintainable - The Department's appeal is dismissed [Read less]

Service Tax - Business Auxiliary Service, Extended period - The appellant was engaged as a Direct Marketing Associate (DMA) of ICICI Bank and Citi Bank, responsible for developing customers and completing documentation for various loans - Whether the services provided by the appellant fall under the category of Business Auxiliary Service – HELD - Based on the agreements between the parties and the statement of the appellant's proprietor, the appellant was not merely verifying documents but was also actively developing customers for the banks. Therefore, the services provided by the appellant fall under the definition of ... [Read more]

Service Tax - Business Auxiliary Service, Extended period - The appellant was engaged as a Direct Marketing Associate (DMA) of ICICI Bank and Citi Bank, responsible for developing customers and completing documentation for various loans - Whether the services provided by the appellant fall under the category of Business Auxiliary Service – HELD - Based on the agreements between the parties and the statement of the appellant's proprietor, the appellant was not merely verifying documents but was also actively developing customers for the banks. Therefore, the services provided by the appellant fall under the definition of Business Auxiliary Service and the demand for service tax under this category is upheld - The case laws relied upon by the appellant are not applicable in the facts of the present case because in those cases the assessee was only engaged in verification of the documents whereas, in the present case they are not only working as Direct Marketing Associates for the banks but also developing customers for the bank and therefore, acting as facilitator for the prospective customers - The appellants are liable to pay service tax under BAS - The Commissioner (Appeals) had dropped the demand for the extended period of limitation, finding no fraud, suppression or willful misstatement on the part of the appellant. The revenue did not appeal against this finding. Once the demand for the extended period is set aside, the demand for the normal period would also not survive. Therefore, the demand for the normal period is also set aside - Consequently, on merit, the demand is confirmed, but on limitation, the demand is set aside. The appeal is disposed of accordingly [Read less]

Service Tax - Export of Service Rules - Call center services provided to overseas entity - Whether the services qualify as export of services under Rule 3(2) of the Export of Service Rules, 2005 and whether the respondent is entitled to claim rebate of service tax paid - HELD - The services provided by the respondent to BA UK qualify as "export of services" under Rule 3(2) as the services were provided from India and used outside India, and the payment was received in convertible foreign exchange - The phrase "used outside India" has been clarified by the Department's Circulars to mean where the effective use and enjoyment... [Read more]

Service Tax - Export of Service Rules - Call center services provided to overseas entity - Whether the services qualify as export of services under Rule 3(2) of the Export of Service Rules, 2005 and whether the respondent is entitled to claim rebate of service tax paid - HELD - The services provided by the respondent to BA UK qualify as "export of services" under Rule 3(2) as the services were provided from India and used outside India, and the payment was received in convertible foreign exchange - The phrase "used outside India" has been clarified by the Department's Circulars to mean where the effective use and enjoyment of the service has been obtained, which in the present case is British Airways situated outside India - in the present case, it is clear from the agreement between the parties that service is provided to BA UK and the consideration is also paid by BA UK and therefore, the recipient of service as BA UK and the said services qualify as export of service because the said services are used outside India - There is no infirmity in the impugned order and the same is upheld while dismissing the appeal of the Revenue [Read less]

Central Excise - Valuation of Demo Vehicles - The appellant, a motor finance company, offered discounts on the sale of demo vehicles to its dealers - Department disallowed these discounts and included them in the assessable value - Whether the discounts offered on demo vehicles are includible in the assessable value of the demo vehicle – HELD - The Tribunal in its earlier decisions in the cases of Ford India Pvt. Ltd. and Hyundai Motor India Ltd., held that there is no difference between a normal vehicle and a demo vehicle cleared by the manufacturer, and the discount offered on demo vehicles cannot be deducted from the ... [Read more]

Central Excise - Valuation of Demo Vehicles - The appellant, a motor finance company, offered discounts on the sale of demo vehicles to its dealers - Department disallowed these discounts and included them in the assessable value - Whether the discounts offered on demo vehicles are includible in the assessable value of the demo vehicle – HELD - The Tribunal in its earlier decisions in the cases of Ford India Pvt. Ltd. and Hyundai Motor India Ltd., held that there is no difference between a normal vehicle and a demo vehicle cleared by the manufacturer, and the discount offered on demo vehicles cannot be deducted from the assessable value - The demo vehicles, being used for test drives and publicity, cannot be considered as normal transactions at the time of removal from the factory, and the price charged for such demo vehicles should be determined based on the price of the normal vehicles cleared to the dealers - The appeals filed by the appellant are dismissed [Read less]

Central Excise - Input service credit for Business Support Services and Management or Business Consultant Services - Whether the denial of credit of service tax paid on 'BSS' and 'MBCS' is sustainable - HELD - The issue is no longer res integra as the same has been addressed in the appellant's own case for earlier periods - The definition of 'input service' under the Cenvat Credit Rules is wide enough to cover services related to the functioning of the business, and is not restricted only to services directly or indirectly related to the manufacture of final products. The definition of 'input service' cannot be restricted ... [Read more]

Central Excise - Input service credit for Business Support Services and Management or Business Consultant Services - Whether the denial of credit of service tax paid on 'BSS' and 'MBCS' is sustainable - HELD - The issue is no longer res integra as the same has been addressed in the appellant's own case for earlier periods - The definition of 'input service' under the Cenvat Credit Rules is wide enough to cover services related to the functioning of the business, and is not restricted only to services directly or indirectly related to the manufacture of final products. The definition of 'input service' cannot be restricted only to services related to the manufacture of final products - The impugned services constitute 'eligible services' and the availment of credit by the appellant is in order - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Valuation of Imported "Power Bank 5200mAH" - Dept re-determined the assessable value under Rule 5 of the Customs Valuation Rules, 2007 based on the price of similar goods imported by another importer, and imposed penalties - Whether the re-determination of assessable value by the customs authorities under Rule 5 of the Customs Valuation Rules, 2007 and the consequent imposition of confiscation, redemption fine and penalty are sustainable - HELD - The Dept failed to consider the value of 'identical goods' imported by the appellant earlier at US$ 3.64 per piece, which should have been the basis for determining the ... [Read more]

Customs - Valuation of Imported "Power Bank 5200mAH" - Dept re-determined the assessable value under Rule 5 of the Customs Valuation Rules, 2007 based on the price of similar goods imported by another importer, and imposed penalties - Whether the re-determination of assessable value by the customs authorities under Rule 5 of the Customs Valuation Rules, 2007 and the consequent imposition of confiscation, redemption fine and penalty are sustainable - HELD - The Dept failed to consider the value of 'identical goods' imported by the appellant earlier at US$ 3.64 per piece, which should have been the basis for determining the assessable value under Rule 4 of the Customs Valuation Rules, 2007. The price of similar goods imported by another importer at Rs. 454.50 per piece cannot be compared with the price offered to the appellant, who is a wholesaler, without making necessary adjustments for the difference in commercial level and quantity. The transaction value cannot be rejected without evidence of contemporaneous imports of identical or similar goods at a higher price – Furthermore, under Note to Rule 4, 5 of the ‘Interpretative Notes’ specified in the Schedule to CVR vide Rule 13, have not at all been considered in arriving such value redetermined by the department. The value determined under Rule 5 of CVR in the original order is liable to set aside inasmuch as it is not in conformity with the legal provisions of Rule 4, 5, which mandates that the goods being appraised are to be valued on the basis of transaction value of identical or similar goods – The whole process of arriving at the re-determined value on the basis of NIDB data regarding the price of similar goods, and based on such value, the assessable value of the impugned goods having been re-determined is contrary to the law and factually incorrect. There is no evidence of mis-declaration of INCO terms or any other evidence to reject the transaction value and impose penalties - The impugned order is set aside to the extent it had confirmed the adjudged demands on the basis of revised/enhanced valuation of goods and the also upheld confiscation, imposition of redemption fine and penalty on the appellants – The appeal is allowed [Read less]

Service Tax - Taxable value of security services - Whether rent-free accommodation, electricity, and other facilities provided by the service recipient constitute additional consideration under Section 67 of the Finance Act, 1994 and are therefore, includible in the taxable value of security agency services - HELD - The rent-free accommodation, electricity, and other facilities provided by the service recipient do not constitute additional consideration under Section 67 and are not includible in the taxable value of security agency services. The Tribunal in its previous decisions in the appellant's own case held that such ... [Read more]

Service Tax - Taxable value of security services - Whether rent-free accommodation, electricity, and other facilities provided by the service recipient constitute additional consideration under Section 67 of the Finance Act, 1994 and are therefore, includible in the taxable value of security agency services - HELD - The rent-free accommodation, electricity, and other facilities provided by the service recipient do not constitute additional consideration under Section 67 and are not includible in the taxable value of security agency services. The Tribunal in its previous decisions in the appellant's own case held that such reimbursement of expenses and the value of rent-free accommodation provided by the service recipient cannot be included in the taxable value as they do not constitute consideration for the services rendered - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Secondment of expats, Reimbursement of salary, Absence of Secondment Agreement - Whether the payments made by the appellant to the foreign entity for reimbursement of salary of expatriate employees deployed in India are taxable under 'Manpower Recruitment or Supply Agency Service' as held by the Hon'ble Supreme Court in the case of Northern Operating System Pvt Ltd. – HELD - The facts of the present case are distinct from the case of Northern Operating System Pvt Ltd. In the present case, there was no formal secondment agreement between the appellant and the foreign entity and the employment agreements were... [Read more]

Service Tax - Secondment of expats, Reimbursement of salary, Absence of Secondment Agreement - Whether the payments made by the appellant to the foreign entity for reimbursement of salary of expatriate employees deployed in India are taxable under 'Manpower Recruitment or Supply Agency Service' as held by the Hon'ble Supreme Court in the case of Northern Operating System Pvt Ltd. – HELD - The facts of the present case are distinct from the case of Northern Operating System Pvt Ltd. In the present case, there was no formal secondment agreement between the appellant and the foreign entity and the employment agreements were independent of any service agreement. The expatriate employees were directly employed by the appellant to manage and operate the Indian business operations, and not to fulfill any service contract of the foreign entity – In the case of Northern Operating System Pvt Ltd., it has been specifically observed that the nature of service will be that of service of manpower supply. Whereas, in this case, the proposal itself has been made under the Management Business Consultancy Service. Therefore, this case cannot be decided based on the observation and decision of the judgment of Hon’ble Supreme Court in the case of Northern Operating System Pvt Ltd. - The nature of work performed by the expatriate employees was much beyond the scope of 'Management Consultancy Service' and was in the course of their employment with the appellant. The payments made by the appellant to the foreign entity for reimbursement of salary of the expatriate employees do not qualify as consideration for any taxable service - In the facts of the case and especially in the absence of any specific secondment agreement, the relationship is that of employer employee and therefore no service tax is leviable post 01.07.2012. For the period prior to 01.07.2012, these activities would still be in the realm of self service and could not be covered within the category of Business Support Service or Business Auxiliary Service hence not leviable to service tax – The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Limitation period for filing appeal – Disallowance of Cenvat credit - Petitioner filed an appeal before the Commissioner (Appeals), which was rejected as being time-barred - The petitioner challenged this order before the High Court – HELD - The applicability of the provisions of the Limitation Act has to be judged not from the terms of the Limitation Act, 1963, but by the provisions of the Central Excise Act, 1944 - The High Court has no power to condone the delay in filing the appeal beyond the statutory period of limitation. The provisions of the Limitation Act, 1963 do not apply to appeals filed be... [Read more]

Central Excise - Limitation period for filing appeal – Disallowance of Cenvat credit - Petitioner filed an appeal before the Commissioner (Appeals), which was rejected as being time-barred - The petitioner challenged this order before the High Court – HELD - The applicability of the provisions of the Limitation Act has to be judged not from the terms of the Limitation Act, 1963, but by the provisions of the Central Excise Act, 1944 - The High Court has no power to condone the delay in filing the appeal beyond the statutory period of limitation. The provisions of the Limitation Act, 1963 do not apply to appeals filed before quasi-judicial authorities. The High Court cannot supplement the statutory provisions to allow a time-barred appeal - The delay beyond the period of limitation cannot be condoned, and the writ petitions are accordingly dismissed [Read less]

There can be no prohibition in transfer of ITC on the ground that the transferee and the transferor companies are located in different States; Transfer of ITC on amalgamation of company is permissible in terms of provision of Sec. 18(3) r/w Rule 41.

GST - Principles of Natural Justice - Violation of right to cross-examination, non-supply of documents subsequently and not along with show case notice - Petitioners challenged the order of the authority on the grounds that the documents on which reliance was placed were not supplied along with the show cause notice and that the petitioners were denied the opportunity to cross-examine the witnesses whose statements were relied upon by the department – HELD - The non-supply of the relied upon documents along with the show cause notice and the refusal to extend the opportunity of cross-examination of the witnesses, whose s... [Read more]

GST - Principles of Natural Justice - Violation of right to cross-examination, non-supply of documents subsequently and not along with show case notice - Petitioners challenged the order of the authority on the grounds that the documents on which reliance was placed were not supplied along with the show cause notice and that the petitioners were denied the opportunity to cross-examine the witnesses whose statements were relied upon by the department – HELD - The non-supply of the relied upon documents along with the show cause notice and the refusal to extend the opportunity of cross-examination of the witnesses, whose statements were relied upon by the department, amounted to a violation of the principles of natural justice - Since the documents on which reliance has been placed during the investigation were supplied to the petitioners subsequently and not along with the SCN, the same would amount to violation of the principles of natural justice - The documents on which reliance was placed by the respondents should have been supplied to the petitioners along with the list of Relied Upon Documents (RUDs), and that the opportunity of cross-examination of the witnesses, whose statements were relied upon by the department, should have been provided to the petitioners - The impugned order is quashed and matter is remanded to the respondent authority for a fresh investigation from the stage of issuance of the SCN, with the directions to comply with the principles of natural justice - The petition is allowed [Read less]

GST – Refund - Delay in the electronic transmission of invoices from ICEGATE portal to the GST portal - Time Limitation for Filing Refund Application under Section 54 of CGST Act, 2017 - The appellant exported goods and paid IGST, and filed a refund claim under Section 54 which was rejected by the adjudicating authority as time-barred - Whether the refund application is hit by the time limit under Section 54(1) of CGST Act, 2017 – HELD – The refund application filed by the appellant on 23.04.2024 should be considered in continuation of the deemed refund application filed in the form of the Shipping Bill dated 15.04.2... [Read more]

GST – Refund - Delay in the electronic transmission of invoices from ICEGATE portal to the GST portal - Time Limitation for Filing Refund Application under Section 54 of CGST Act, 2017 - The appellant exported goods and paid IGST, and filed a refund claim under Section 54 which was rejected by the adjudicating authority as time-barred - Whether the refund application is hit by the time limit under Section 54(1) of CGST Act, 2017 – HELD – The refund application filed by the appellant on 23.04.2024 should be considered in continuation of the deemed refund application filed in the form of the Shipping Bill dated 15.04.2021 as per Rule 96 of the CGST Rules, 2017. The delay in the electronic transmission of the invoices from the ICEGATE/Customs portal to the GST portal was not attributable to the appellant. The appellant had taken reasonable steps to get the technical glitch resolved. It will be grave injustice to the appellant to de link the refund application filed by them in 2024 from the deemed refund claim application in the form of shipping bill dated 15.04.2021 – The substantive rights cannot be defeated on procedural grounds - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Eligibility of Cenvat Credit on Input Services – Eligibility to Cenvat Credit on input services used for construction of factory prior to April 1, 2011 – HELD - As per the definition of "input service" under the Cenvat Credit Rules prevailing at that time, the appellant was eligible to avail the Cenvat Credit on input services used for construction of factory during the relevant period prior to April 1, 2011, The definition included services used in relation to setting up, modernization, renovation or repairs of a factory. The exclusions introduced in the definition post April 1, 2011 cannot be retrosp... [Read more]

Central Excise - Eligibility of Cenvat Credit on Input Services – Eligibility to Cenvat Credit on input services used for construction of factory prior to April 1, 2011 – HELD - As per the definition of "input service" under the Cenvat Credit Rules prevailing at that time, the appellant was eligible to avail the Cenvat Credit on input services used for construction of factory during the relevant period prior to April 1, 2011, The definition included services used in relation to setting up, modernization, renovation or repairs of a factory. The exclusions introduced in the definition post April 1, 2011 cannot be retrospectively applied to the earlier period when the appellant had availed the credit - Since the credit itself has been taken correctly, therefore, there is no scope for imposition of any penalty also. The impugned order denying the Cenvat Credit and imposing penalty is set aside and appeal allowed [Read less]

Central Excise – EOU to DTA clearance; Fulfilment of condition of Exemption Notification No. 23/2003-CE - Appellant is an EOU engaged in manufacture of automotive cylinder heads from castings made in its Foundry Division in India and processed ingots manufactured by a job worker in India from scrap generated in Appellant's Machining Division - Whether Appellant satisfied the condition in Exemption Notification that goods cleared to DTA be "manufactured wholly from the raw materials produced or manufactured in India" – HELD - The immediate raw material for manufacturing automotive cylinder heads is the castings made in ... [Read more]

Central Excise – EOU to DTA clearance; Fulfilment of condition of Exemption Notification No. 23/2003-CE - Appellant is an EOU engaged in manufacture of automotive cylinder heads from castings made in its Foundry Division in India and processed ingots manufactured by a job worker in India from scrap generated in Appellant's Machining Division - Whether Appellant satisfied the condition in Exemption Notification that goods cleared to DTA be "manufactured wholly from the raw materials produced or manufactured in India" – HELD - The immediate raw material for manufacturing automotive cylinder heads is the castings made in India, and even the processed ingots were manufactured in India, therefore Appellant satisfied the condition in the Exemption Notification and was entitled to its benefit. The scrap generated during manufacturing is a technological necessity and cannot be attributed to any portion of the inputs, following the principles laid down in Supreme Court and Tribunal decisions – Further, extended period of limitation cannot be invoked as there was no suppression of facts by the appellant as it held a bona fide belief that it was correctly availing the exemption based on a reasonable interpretation of the Notification - The impugned orders denying the exemption to the Appellant is set aside and the appeal is allowed [Read less]

Service Tax - Refund Claim for service tax paid on 'space selling services' and 'newspaper promotion services' - Quantification of service tax paid relating to space selling activity - Bar of unjust enrichment - Whether the appellant can re-classify their services as 'sale of space or time for advertisements' and claim refund without revising their self-assessed ST3 returns - HELD - The appellant could not establish the exact quantification of service tax paid relating to space selling activity as they did not provide invoices/bills raised on the customer. The CA certificate alone is not conclusive proof to rebut the statu... [Read more]

Service Tax - Refund Claim for service tax paid on 'space selling services' and 'newspaper promotion services' - Quantification of service tax paid relating to space selling activity - Bar of unjust enrichment - Whether the appellant can re-classify their services as 'sale of space or time for advertisements' and claim refund without revising their self-assessed ST3 returns - HELD - The appellant could not establish the exact quantification of service tax paid relating to space selling activity as they did not provide invoices/bills raised on the customer. The CA certificate alone is not conclusive proof to rebut the statutory presumption that the incidence of tax has not been passed on to the ultimate customer. The matter is remanded to the RSA to re-examine the documents provided by the appellant to quantify the eligible refund and to determine if the appellant has crossed the bar of unjust enrichment – Further, the appellant cannot claim refund by re-classifying their services without revising their self-assessed ST3 returns. It is a settled position in law that refund proceedings cannot modify the original assessment. However, the appellant may be allowed to take appropriate steps for re-assessment/revision of ST3 returns, if eligible. The matter is remanded to the RSA for re-examination – The appeals are allowed by way of remand [Read less]

Service Tax - Applicability of service tax on members club - The appellant is a members club registered under the Societies Registration Act, 1860 and is a body constituted under a law for the time being in force - Whether the services rendered to its members by the club are taxable under the category of 'Club or Association Services' - HELD – The issue is no more res integra and has been settled by the Hon'ble Supreme Court in the case of State of West Bengal vs. Calcutta Club Ltd wherein the Hon'ble Supreme Court has affirmed that incorporated or registered clubs and associations were outside the scope of service tax l... [Read more]

Service Tax - Applicability of service tax on members club - The appellant is a members club registered under the Societies Registration Act, 1860 and is a body constituted under a law for the time being in force - Whether the services rendered to its members by the club are taxable under the category of 'Club or Association Services' - HELD – The issue is no more res integra and has been settled by the Hon'ble Supreme Court in the case of State of West Bengal vs. Calcutta Club Ltd wherein the Hon'ble Supreme Court has affirmed that incorporated or registered clubs and associations were outside the scope of service tax levy prior to 01.07.2012 and that the doctrine of mutuality continues to apply to such entities. Therefore, all receipts from the members of the club are not exigible to service tax under 'Club or Association Services' during the impugned period – Regarding applicability of service tax on non-members, prior to 2011, there was no provision for demanding service tax from non-members on availing the services of the club, but after the amendment introduced by Section 76 of the Finance Act, 2011 (w.e.f. 01.05.2011) that the phrase "or any other person" was inserted after the words "its members". By the said amendment, the scope of tax was widened and even the non-members were liable to pay service tax on the services rendered by the clubs or associations; but the period involved in the present case is prior to introduction of said amendment, therefore, the appellant is not liable to pay service tax on services rendered to non-members – The impugned order is set aside and the appeal is allowed - Demand on income from sponsorship - The department has demanded the service tax on income from sponsorship under the head 'Club or Association Services' - Whether the demand on income from sponsorship under the head 'Club or Association Services' is sustainable - HELD - The sponsorship service, which was primarily for sports event, was having a separate category under the head 'Sponsorship Services' introduced under Section 68(2) vide Notification No. 15/2006-ST dated 25.04.2006. But instead of demanding the service tax on sponsorship service, the SCN has raised the demand under an incorrect head 'Club or Association Services', therefore, the demand confirmed under an incorrect head is not sustainable in law. [Read less]

Customs - Valuation and classification of "walking stick with torch" - The appellant had imported a consignment of assorted goods from China which were subjected to 100% examination by the customs authorities - Authorities had re-determined the assessable value of the goods under Rule 7 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 based on a market survey and had also re-classified one of the items 'walking stick with torch' from CTI 6602 0000 to CTI 9405 4900. The appellant challenged the re-determined value and re-classification in appeal - HELD - The re-determination of the assessable ... [Read more]

Customs - Valuation and classification of "walking stick with torch" - The appellant had imported a consignment of assorted goods from China which were subjected to 100% examination by the customs authorities - Authorities had re-determined the assessable value of the goods under Rule 7 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 based on a market survey and had also re-classified one of the items 'walking stick with torch' from CTI 6602 0000 to CTI 9405 4900. The appellant challenged the re-determined value and re-classification in appeal - HELD - The re-determination of the assessable value solely based on the market survey without considering the requirements under Rule 7 of the CVR, 2007 such as the prices of identical or similar goods sold at the greatest aggregate quantity at the same or first commercial level after importation was not in conformity with the legal provisions - the requirement of comparison of the goods sold in the domestic market at various prices, whether these were at the same commercial level, being at the highest aggregate quantity and that such sale was nearer to the time and place of import (maximum of six months from the date of import) as provided under Note to Rule 7 of the ‘Interpretative Notes’ specified in the Schedule to CVR vide Rule 13, have not at all been considered in arriving such value re-determined by the Department - The authorities below had re-determined the assessable value solely on the basis of investigation report submitted by SIIB, without applying the legal provisions of various rules provided under the CVR, 2007, sequentially. Therefore, the whole basis of market survey conducted about the price of similar or identical goods, and based on such value, the assessable value having been re-determined is contrary to the law and factually incorrect - The impugned order is set aside and the appeal is allowed - Classification - The re-classification of the 'walking stick with torch' from CTI 6602 0000 to CTI 9405 4900 is not correct as the essential character of the goods was that of a walking stick and not a luminaire and there is no mis-declaration of the walking sticks with torch for attracting non-compliance requirements under BIS certification and in respect of other goods for mis-declaration of value, description under Section 111(d) and 111(m) of the Act of 1962 - Confiscation and penalty on imported goods - The authorities had confiscated certain items of the imported consignment under Sections 111(d) and 111(m) of the Customs Act, 1962 for mis-declaration of description and value, and had also imposed redemption fine and penalties on the appellant - HELD - There was no evidence of deliberate mis-declaration of description or value by the appellant-importer. The variations in the description of certain items like 'kitchen knife set' and 'Halloween gift items' were minor and did not amount to mis-declaration. The Tribunal also held that the requirement of BIS certification was not applicable for the 'walking stick with torch' as it was correctly classified under CTI 6602 0000 - The Tribunal set aside the confiscation, redemption fine and penalties imposed on the appellant-importer. [Read less]

Service Tax demand based on Income Tax Data - Revenue initiated proceedings against the assessee based on information obtained from Form 26AS, which indicated receipts from various companies - Whether a service tax demand is sustainable when based primarily on Form 26AS data without establishing the specific nature of the taxable services through contracts or corroborative evidence – HELD - The entire case was built on data from the Income Tax authorities. The Show Cause Notice lacked explicit details to conclude the nature of the services provided or whether the total income arose from taxable provisions. There was no e... [Read more]

Service Tax demand based on Income Tax Data - Revenue initiated proceedings against the assessee based on information obtained from Form 26AS, which indicated receipts from various companies - Whether a service tax demand is sustainable when based primarily on Form 26AS data without establishing the specific nature of the taxable services through contracts or corroborative evidence – HELD - The entire case was built on data from the Income Tax authorities. The Show Cause Notice lacked explicit details to conclude the nature of the services provided or whether the total income arose from taxable provisions. There was no evidence that the Department had scrutinized the contracts between the assessee and the service recipients to verify the classification of services such as manpower recruitment or the supply of tangible goods - For services like the supply of tangible goods, evidence regarding the transfer of right of possession or effective control is crucial for classification, and claims regarding the sale of goods rather than provision of service must be examined - without any detailed corroboration and only because certain payments were made to the appellant, the Department has presumed that they have provided a taxable service - The adjudicating authority is directed to examine the nature of services with relevant documents and evidence to determine the net demand and allow for adjustments of tax already paid – Appeal is allowed by way of remand - Limitation and Invocation of Extended Period - Whether the Department was justified in invoking the extended period of limitation when the assessee was aware of their tax liability but failed to comply with filing and payment obligations – HELD - The Department is correct in invoking the extended period of limitation as the appellant was aware of the service tax liability associated with the services they provided, yet they failed to file the required returns or accurately discharge their tax liability. The grounds such as financial difficulty cannot be accepted as a basis for the non-payment of taxes. [Read less]

Service Tax exemption to services provided under Pandeet DeenDayal Upadhyay-Grameen Kaushalya Yojna” (DDU-GKY) - Appellant was providing training services under Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) scheme - Department demanded service tax on the ground that the services fell under "Commercial Training and Coaching Services" - HELD - The services provided by the appellant under the DDU-GKY scheme are exempt from service tax. As per the Notification No. 09/2016-ST dated 01.03.2016, services provided by training providers under the DDU-GKY scheme were fully exempted from service tax for the period from 01... [Read more]

Service Tax exemption to services provided under Pandeet DeenDayal Upadhyay-Grameen Kaushalya Yojna” (DDU-GKY) - Appellant was providing training services under Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) scheme - Department demanded service tax on the ground that the services fell under "Commercial Training and Coaching Services" - HELD - The services provided by the appellant under the DDU-GKY scheme are exempt from service tax. As per the Notification No. 09/2016-ST dated 01.03.2016, services provided by training providers under the DDU-GKY scheme were fully exempted from service tax for the period from 01.04.2016 till June 2017. Further, as per Notification No. 01/2019-ST dated 06.03.2019, service tax on such activities has been retrospectively exempted. Considering both the notifications, the entire period covered under the show cause notice is fully exempted and the appellant is not liable to pay any service tax on their training activities under the DDU-GKY scheme - The impugned order is set aside and the appeal is allowed [Read less]

GST - Principles of Natural Justice – Petitioner contention that the impugned adjudication order was passed ex parte, without affording reasonable opportunity of hearing – Rejection of petitioner's applications of rectification – HELD – The principles of natural justice require reasonable opportunity, which cannot be stretched to such an extent that statutory timelines become unworkable. The petitioner, who did not avail repeated opportunities, cannot later contend total denial of hearing - However, the adjudication order did not reflect independent adjudicatory consideration, as it uniformly recorded that the peti... [Read more]

GST - Principles of Natural Justice – Petitioner contention that the impugned adjudication order was passed ex parte, without affording reasonable opportunity of hearing – Rejection of petitioner's applications of rectification – HELD – The principles of natural justice require reasonable opportunity, which cannot be stretched to such an extent that statutory timelines become unworkable. The petitioner, who did not avail repeated opportunities, cannot later contend total denial of hearing - However, the adjudication order did not reflect independent adjudicatory consideration, as it uniformly recorded that the petitioner had not filed objections and proceeded to confirm the demand - Further, the scope of Section 161 is limited in scope and does not permit re-hearing on merits. The rejection of the rectification applications cannot be termed wholly illegal, as the authority may not have acted outside its jurisdiction. However, the rectification orders substantially reproduced the earlier reasoning without deeper scrutiny of the grievances raised, indicating a lack of sufficient analytical depth in the overall adjudicatory exercise. Considering the magnitude of the demand and the nature of reasoning in the adjudication order, the petitioner is granted one final opportunity to the petitioner to contest the matter on its merits, but with cost of Rs.50,000/- payable to the Karnataka State Legal Services Authorities - the impugned adjudication order is set aside and matter is remanded for fresh consideration – The writ petition is partly allowed [Read less]

Service Tax - Appellant challenged the demand for service tax for the period from January 2013 to June 2017 on the ground of limitation - Department had conducted an initial audit for the period from January 2013 to March 2014 and raised the issue of non-payment of service tax. However, no demand was raised at that time. Later, another audit was conducted covering the period after March 2015, and the impugned demand was issued invoking the extended period of limitation – HELD - Since the issue was known to the Department during the first audit, the demand issued after the second audit by invoking the extended period of l... [Read more]

Service Tax - Appellant challenged the demand for service tax for the period from January 2013 to June 2017 on the ground of limitation - Department had conducted an initial audit for the period from January 2013 to March 2014 and raised the issue of non-payment of service tax. However, no demand was raised at that time. Later, another audit was conducted covering the period after March 2015, and the impugned demand was issued invoking the extended period of limitation – HELD - Since the issue was known to the Department during the first audit, the demand issued after the second audit by invoking the extended period of limitation is not legally sustainable – Further, the services rendered by the appellant for “Linen Distribution Service” are appropriately classifiable under the category of "manpower supply service". The service tax liability for the normal period of limitation (i.e. from April 2016 to March 2017) is on the recipient of service, i.e., M/s. RailTel, under the reverse charge mechanism as per the applicable notifications - There is no evidence of any suppression of facts with intent to evade tax. Accordingly, the penalty imposed under Section 78 of the Finance Act, 1994 is set aside - The demand confirmed by invoking the extended period of limitation was set aside. The demand for the normal period of limitation was upheld, but the liability was held to be on the recipient of service, i.e., M/s. RailTel. The penalty imposed under Section 78 was set aside – The appeal is disposed of [Read less]

Central Excise - Reversal of irregular CENVAT Credit - Appellant reversed the entire credit along with payment of interest on the excess utilization before the adjudication process - Whether penalty can be imposed on the appellant under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - HELD - The appellant had reversed the irregular CENVAT credit along with payment of applicable interest, although the interest payment was made after the issuance of the show cause notice but before the adjudication. The appellant had been filing their returns regularly and intimating the av... [Read more]

Central Excise - Reversal of irregular CENVAT Credit - Appellant reversed the entire credit along with payment of interest on the excess utilization before the adjudication process - Whether penalty can be imposed on the appellant under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - HELD - The appellant had reversed the irregular CENVAT credit along with payment of applicable interest, although the interest payment was made after the issuance of the show cause notice but before the adjudication. The appellant had been filing their returns regularly and intimating the availment of credit. Therefore, the allegation of wilful suppression of material facts to avail irregular credit was unsubstantiated. Considering the facts and circumstances, no penalty was imposable on the appellant - The penalty imposed on the appellant is set aside and the appeal is allowed [Read less]

Service Tax - Declared Service - Section 66E(e) of Finance Act, 1994 - Idle Capacity Compensation - The Respondent, an Indian manufacturing unit and subsidiary of a foreign entity, entered into a contract manufacturing agreement to maintain and hold specific production capacity for the parent company. The agreement provided for a "Manufacturing Fee" for products delivered and an "Idle Cost Compensation" for underutilization of the committed capacity - Department sought to tax the compensation received for underutilized capacity as a "declared service" under Section 66E(e) of the Finance Act, 1994 - Whether the receipt of c... [Read more]

Service Tax - Declared Service - Section 66E(e) of Finance Act, 1994 - Idle Capacity Compensation - The Respondent, an Indian manufacturing unit and subsidiary of a foreign entity, entered into a contract manufacturing agreement to maintain and hold specific production capacity for the parent company. The agreement provided for a "Manufacturing Fee" for products delivered and an "Idle Cost Compensation" for underutilization of the committed capacity - Department sought to tax the compensation received for underutilized capacity as a "declared service" under Section 66E(e) of the Finance Act, 1994 - Whether the receipt of compensation for underutilization of installed production capacity constitutes consideration for the declared service of "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation" - HELD - For a transaction to fall under Section 66E(e), there must be an obligation undertaken for consideration. There is distinction between "liquidated damages" arising from an unanticipated breach of contract and the "Idle Cost Compensation" in this case, which was a pre-conceived, contractual part of the remuneration. Since the capacity was created and earmarked at the specific desire of the foreign principal, and the contract remained subsisting without being discharged or breached, the payment constitutes consideration for a service as defined under Section 2(d) of the Indian Contract Act, 1872. The provider undertook an active obligation to hold capacity available, and the principal paid for this availability as part of the overall remuneration package. This arrangement falls within the legal fiction of "declared service" because it involves a pre-determined obligation to tolerate a situation of capacity reservation for a fee, rather than a remedial payment for a loss - Merely using word “compensation”, does not in the present context means it is compensation for some “damages” but is very much a payment already agreed at the time of entering into an agreement for an event which was highly probable to occur and was well-known to both the parties. The consideration has already been concurred by both the parties, variating quantum over a period of time does not make it “compensation for damages” - The Idle Cost Compensation was part of the agreed remuneration and not merely compensation for damages. The agreement between the assessee and the holding company satisfied the requirements of a "declared service" under Section 66E(e) as there was an agreement for the assessee to undertake an obligation in return for consideration While holding that there is a “declared service” involved in the factual matrix of the case, it is also held that the “declared service” has been exported to the place of service recipient. Accordingly, the "declared service" provided by the assessee was an "export of service" not liable to service tax – Revenue appeal is dismissed - Place of Provision of Services Rules, 2012 - Rule 3 vs. Rule 5 - Immovable Property - The Department alleged that since the idle capacity compensation related to the underutilization of plant and machinery, which is attached to the earth, the service was "directly in relation to immovable property" under Rule 5, making India the place of provision. The Respondent argued that it was a general service where the place of provision is the location of the recipient under Rule 3 - Whether a declared service involving manufacturing capacity reservation constitutes a service provided directly in relation to immovable property for the purpose of determining the place of provision - HELD – The Rule 5 has a restricted scope and requires a direct, close link or association with a specific site, such as construction, renting, or grant of rights to use land/buildings. The "declared service" of agreeing to an obligation is a distinct legal species created by statute. In the present case, the compensation was for unabsorbed fixed costs and volume variance rather than a grant of a "right to use" the immovable property. The connection to the plant and machinery was incidental to the manufacturing agreement and did not constitute a service directly in relation to the property as envisaged under Rule 5. In the absence of a specific rule for "declared services," the residuary Rule 3 applies, which designates the place of provision as the location of the service recipient. As the recipient was located outside the taxable territory, the service is deemed to have been provided outside India. Accordingly, the "declared service" provided by the assessee was an "export of service" not liable to service tax - Export of Services - Rule 6A of Service Tax Rules, 1994 - Distinct Persons - The Department contended that the transaction between the Indian subsidiary and the foreign parent company was merely a transfer between establishments of the same person and did not satisfy the conditions for "export of service" under Rule 6A(1)(f) - Whether the provision of service by an Indian subsidiary to its foreign parent qualifies as an export of service and whether they are merely establishments of a distinct person - HELD - An Indian company and its foreign parent are separate legal entities. They are not "merely establishments of a distinct person" in a way that precludes the "export" status. All conditions of Rule 6A were satisfied: the provider was in the taxable territory, the recipient was outside India, the service was not in the negative list, the place of provision (under Rule 3) was outside India, payment was received in convertible foreign exchange, and the parties were distinct legal persons. Following established jurisprudence, the mere presence of a subsidiary does not create a fixed place of business for the parent company, and their inter-se provision of services qualifies as an export of service, thus exempting the transaction from service tax. [Read less]

Service Tax - Levy of Service Tax/IGST on Ocean Freight - The petitioner challenged the provisions of the Finance Act 1994 along with related Notifications, that sought to levy Service Tax on services by way of transportation of goods by a vessel provided by a service provider located outside the taxable territory and received by a person outside the taxable territory – HELD – In the case of Sanathan Textiles Pvt. Ltd. v. Union of India and Sal Steel India Ltd. & Ors. v. Union of India, it has been held that the impugned notifications were ultra vires Sections 64, 65B(44), 66(b), 67, 68 and 94 of the Finance Act 1994 -... [Read more]

Service Tax - Levy of Service Tax/IGST on Ocean Freight - The petitioner challenged the provisions of the Finance Act 1994 along with related Notifications, that sought to levy Service Tax on services by way of transportation of goods by a vessel provided by a service provider located outside the taxable territory and received by a person outside the taxable territory – HELD – In the case of Sanathan Textiles Pvt. Ltd. v. Union of India and Sal Steel India Ltd. & Ors. v. Union of India, it has been held that the impugned notifications were ultra vires Sections 64, 65B(44), 66(b), 67, 68 and 94 of the Finance Act 1994 - Further, the levy of IGST on such ocean freight under the Reverse Charge Mechanism would be violative of CGST Act, 2017, as the Indian importers were liable to pay IGST on the 'composite supply' comprising of supply of goods and supply of services of transportation, insurance, etc. in CIF contracts - Any deposit or demand of Service Tax/IGST would be without authority in law and violative of Article 265 of the Constitution. The petitioner would be entitled to the refund of the duty, if any paid, subject to the petitioner filing the refund application which would be decided in accordance with law including on the principles of unjust enrichment – The petition is disposed of [Read less]

GST – Reasonable apprehension and bias - Challenge to Audit report, show cause notice, order-in-original, and consequential recovery proceedings on the ground that the same officer conducted the audit, issued the show cause notice, and passed the order-in-original, giving rise to a reasonable apprehension of bias – HELD – It is not in dispute that respondent No.1–Deputy Commissioner of Commercial Taxes (Audit)-2 has conducted the audit proceedings, issued the audit report, issued the show cause notice, and passed the order-in-original confirming the demand - Though the statute may not expressly prohibit such exerci... [Read more]

GST – Reasonable apprehension and bias - Challenge to Audit report, show cause notice, order-in-original, and consequential recovery proceedings on the ground that the same officer conducted the audit, issued the show cause notice, and passed the order-in-original, giving rise to a reasonable apprehension of bias – HELD – It is not in dispute that respondent No.1–Deputy Commissioner of Commercial Taxes (Audit)-2 has conducted the audit proceedings, issued the audit report, issued the show cause notice, and passed the order-in-original confirming the demand - Though the statute may not expressly prohibit such exercise, the principles of natural justice require that the adjudication must be free from reasonable apprehension of bias - An officer who conducts the audit and formulates the audit objections may be said to have already framed a prima facie opinion on the issues, and if the same officer thereafter adjudicates the very same allegations, it may give rise to a reasonable apprehension that the decision-making process is not entirely independent - The impugned order-in-original, garnishee notice are set aside and the matter is remitted to the Joint Commissioner of Commercial Tax (Administration) to assign the matter to a proper officer other than the respondent no. 1 for fresh adjudication from the stage of the reply submitted by the petitioner to the show cause notice, affording reasonable opportunity of hearing and passing a reasoned order in accordance with law - The writ petition is allowed [Read less]

GST - Cancellation of GST Registration with retrospective effect - Whether the registration could be cancelled with retrospective effect when it was not proposed in the show cause notice – HELD - While the CGST Act allows for retrospective cancellation of registration under Section 29, such power can be exercised only upon existence of specific contingencies and the order must reflect the reasons for such retrospective cancellation. It is a basic principle that the concerned authority must put the assessee on notice of the proposed action and the reasons for the same - In the present case, there was no proposal for retro... [Read more]

GST - Cancellation of GST Registration with retrospective effect - Whether the registration could be cancelled with retrospective effect when it was not proposed in the show cause notice – HELD - While the CGST Act allows for retrospective cancellation of registration under Section 29, such power can be exercised only upon existence of specific contingencies and the order must reflect the reasons for such retrospective cancellation. It is a basic principle that the concerned authority must put the assessee on notice of the proposed action and the reasons for the same - In the present case, there was no proposal for retrospective cancellation in the show cause notice, which was a violation of principles of natural justice. Further, the impugned order was non-speaking and did not indicate any application of mind by the authority. There is no reference to any material on record on the basis of which an opinion was formed by the authority regarding the reason for cancellation of petitioner’s registration. It merely stated the reference to the show cause notice without providing any reasoning for the cancellation – The impugned cancellation order is set aside granting liberty to the authorities to take necessary steps for recovery of any tax, penalty or interest, after serving proper notice and hearing the petitioner in accordance with law – The writ petition is allowed [Read less]

GST - Quashing of ex-parte order-in-original and refund of tax amount recovered – The petitioner sought to set aside the ex-parte order-in-original and the recovery of tax amount - HELD - The order-in-original was passed without the benefit of any reply to the show cause notice. The petitioner had not participated in the proceedings due to a bona fide lapse. The petitioner has asserted that it had material to explain the grounds raised in the show cause notice - Considering the substantial amount recovered, it would be appropriate to afford the petitioner an opportunity to submit its reply. Accordingly, the order-in-orig... [Read more]

GST - Quashing of ex-parte order-in-original and refund of tax amount recovered – The petitioner sought to set aside the ex-parte order-in-original and the recovery of tax amount - HELD - The order-in-original was passed without the benefit of any reply to the show cause notice. The petitioner had not participated in the proceedings due to a bona fide lapse. The petitioner has asserted that it had material to explain the grounds raised in the show cause notice - Considering the substantial amount recovered, it would be appropriate to afford the petitioner an opportunity to submit its reply. Accordingly, the order-in-original is set aside and the matter is remitted to the stage of reply to the show cause notice – The petition is disposed of [Read less]

GST - Leasehold Rights Assignment – Petitioners are lessees who have assigned/transferred their leasehold rights in land and building to third parties/assignees. Revenue authorities regarded such assignment/transfer as taxable under Section 7(1)(a) read with Schedule II(2) of the CGST Act, as a "supply of service" - Petitioners contend that the assignment/transfer of leasehold rights is not a "supply" under the CGST Act, but rather a transfer of immovable property which is not liable to GST – HELD - The High Court of Gujarat in the case of Gujarat Chamber of Commerce and Industry v. Union of India has held that the as... [Read more]

GST - Leasehold Rights Assignment – Petitioners are lessees who have assigned/transferred their leasehold rights in land and building to third parties/assignees. Revenue authorities regarded such assignment/transfer as taxable under Section 7(1)(a) read with Schedule II(2) of the CGST Act, as a "supply of service" - Petitioners contend that the assignment/transfer of leasehold rights is not a "supply" under the CGST Act, but rather a transfer of immovable property which is not liable to GST – HELD - The High Court of Gujarat in the case of Gujarat Chamber of Commerce and Industry v. Union of India has held that the assignment/transfer of leasehold rights in land and building by a lessee to a third party would not constitute a "supply" liable to GST, as it is a transfer of immovable property. This decision has been followed by a coordinate Bench of the Bombay High Court in several cases. Though the revenue has appealed the Gujarat High Court decision before the Supreme Court, the Supreme Court is yet to stay the said decision - In view of the consistent position taken by the High Courts that such assignment/transfer of leasehold rights is not a "supply" under the CGST Act, the Court has granted interim protection to the petitioners, restraining the revenue from taking any coercive action against them based on the show cause notices issued or orders passed - The matter is to be heard further after awaiting the decision of the Supreme Court on the issue. The Court granted interim protection to the petitioners by restraining the revenue from taking any coercive action, pending further hearing and final disposal of the petitions – Ordered accordingly [Read less]

Central Excise - Cenvat Credit on the basis of endorsed Bills of Entry received from principal manufacturer - Whether endorsed BoEs are valid documents under Rule 9 of the Cenvat Credit Rules 2004 for availing credit - HELD - The endorsed BoEs are valid documents for taking Cenvat credit. The Supreme Court had held that the BoE, which is not in the name of the manufacturer intending to take credit, cannot be denied merely because it is not in their name as long as the duty paid character of the goods is not doubted. Merely because the BoEs were endorsed by the original importer in favour of the appellant, it does not take ... [Read more]

Central Excise - Cenvat Credit on the basis of endorsed Bills of Entry received from principal manufacturer - Whether endorsed BoEs are valid documents under Rule 9 of the Cenvat Credit Rules 2004 for availing credit - HELD - The endorsed BoEs are valid documents for taking Cenvat credit. The Supreme Court had held that the BoE, which is not in the name of the manufacturer intending to take credit, cannot be denied merely because it is not in their name as long as the duty paid character of the goods is not doubted. Merely because the BoEs were endorsed by the original importer in favour of the appellant, it does not take away the fact that the same would still be a valid document for taking credit, especially when the payment of duty or the receipt of goods in the appellant's factory are not doubted or disputed - There is no provision under the law to bar availment of Cenvat Credit on the basis of endorsed BoE. The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Cenvat credit on steel items used for maintenance and repair of plant and machinery - Whether the appellant is entitled to avail Cenvat credit on the steel items used for manufacture of spares and parts required for maintenance and repair of the plant and machinery installed in the factory – HELD - The appellant is entitled to avail Cenvat credit on the steel items used for manufacture of spares and parts required for maintenance and repair of the plant and machinery installed in the factory. The Hon'ble Supreme Court in the case of Kisan Co-operative Sugar Factory Ltd. held that the items used for maint... [Read more]

Central Excise - Cenvat credit on steel items used for maintenance and repair of plant and machinery - Whether the appellant is entitled to avail Cenvat credit on the steel items used for manufacture of spares and parts required for maintenance and repair of the plant and machinery installed in the factory – HELD - The appellant is entitled to avail Cenvat credit on the steel items used for manufacture of spares and parts required for maintenance and repair of the plant and machinery installed in the factory. The Hon'ble Supreme Court in the case of Kisan Co-operative Sugar Factory Ltd. held that the items used for maintenance, repair, upkeep or fabrication of plant and machinery are admissible for Cenvat credit as they are used in the process of manufacture of finished goods, whether directly or indirectly - The appellant has provided detailed information regarding the specific use of the steel items in the manufacture of spares and parts for the plant and machinery, which was duly certified by a Chartered Engineer, but the Commissioner had wrongfully ignored the same – The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Refund of unutilized CENVAT credit - The appellant, a holder of Private bonded warehouse and an in-bond manufacturer holding 100% EOU licence, claimed refund of unutilized CENVAT credit after closure of business and surrender of Central Excise registration - Bar of limitation under Section 11B of the Central Excise Act, 1944 - Whether the appellant is eligible for refund under Rule 5 of the CENVAT Credit Rules, 2004 – HELD - The appellant is eligible for refund of unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 as the appellant was primarily engaged in export of goods and the credi... [Read more]

Central Excise - Refund of unutilized CENVAT credit - The appellant, a holder of Private bonded warehouse and an in-bond manufacturer holding 100% EOU licence, claimed refund of unutilized CENVAT credit after closure of business and surrender of Central Excise registration - Bar of limitation under Section 11B of the Central Excise Act, 1944 - Whether the appellant is eligible for refund under Rule 5 of the CENVAT Credit Rules, 2004 – HELD - The appellant is eligible for refund of unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 as the appellant was primarily engaged in export of goods and the credit pertains to CENVAT credit availed on input services used for manufacture and export of finished goods which remained unutilized on closure of factory. There are various judicial precedents to hold that the limitation under Section 11B of the Central Excise Act, 1944 is not applicable to refund claims filed under Rule 5 of the CENVAT Credit Rules, 2004 – Further, the eligibility of a claim cannot be questioned when refund claim is made under Rule 5 and the Adjudication authority cannot reject the refund claim on a ground which was not part of the first adjudication/appellate proceedings. Accordingly, the impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Captive Consumption of Coal, Difference in quantity in ER1 returns and CEC returns - Appellant is engaged in production and sale of coal and was paying Central Excise Duty (CED) on coal and also Clean Energy Cess (CEC) on coal - Department noticed differences in the quantities of coal removed as reflected in ER1 returns versus CEC returns and demanded CED or CEC on the differential quantity - Whether the quantity reflected in CEC return can be taken for discharging CED and vice versa – HELD - While CEC is payable on the entire quantity of raw coal extracted from the mines at the time of removal, except t... [Read more]

Central Excise - Captive Consumption of Coal, Difference in quantity in ER1 returns and CEC returns - Appellant is engaged in production and sale of coal and was paying Central Excise Duty (CED) on coal and also Clean Energy Cess (CEC) on coal - Department noticed differences in the quantities of coal removed as reflected in ER1 returns versus CEC returns and demanded CED or CEC on the differential quantity - Whether the quantity reflected in CEC return can be taken for discharging CED and vice versa – HELD - While CEC is payable on the entire quantity of raw coal extracted from the mines at the time of removal, except the part sent to the captive power plant, CED is not paid at the time of clearance from the mine to the washeries and is paid subsequently on the washed coal, rejects and slurry. Due to the different statutory provisions governing the manner and time of payment of CED and CEC, as well as the exemptions available, there can be differences in the quantities reflected in the CED and CEC returns - The appellants have tried to explain that while they are not paying CEC on raw coal dispatched to CPP, as the said coal is intended for generation of power, which is further used in mines for raising of coal, except for limited extent of use for lighting the staff quarters, etc., on which they are discharging CEC. However, they are not even discharging CED on captive power plants under assumption that it is meant for captive consumption. The exclusion claimed by the appellant for non-payment of CEC on coal cleared to the captive power plant on the ground that it is used for further raising of coal is not tenable, as there is no direct correlation between the coal cleared to the power plant and the coal raised from the mines. Further, the benefit of exemption from CED under Notification No.67/95-CE is also not applicable as coal is not a dutiable good – The matter is remanded back to the adjudicating authority to re-compute the demand after considering the observations made and the reconciliation of the statements to establish that whatever coal has been produced in the mines, appropriate CEC and CED has been discharged at the time of removal from the mines and any removal without payment of either CEC or CED has to be covered either by way of exemption or in terms of statutory provisions warranting exclusion of said clearance for the purpose of payment of CEC – The principal is to ensure that they discharge payment of both the cess and CED on the entire quantity of coal produced in the mines and appellant cannot claim any exclusion on account of its consumption in the power plant for raising the coal or for captive consumption in the absence of any statutory provisions or notification - The appeals are allowed by way of remand [Read less]

Service Tax - Refund of accumulated Credit of Education Cess (EC), Secondary and Higher Education Cess (SHEC) and Krishi Kalyan Cess (KKC) as on 30.6.2017 - Whether the appellant is entitled to refund of accumulated credit of EC, SHEC and KKC under Section 140 & 142 of CGST Act, 2017 – HELD - The Larger Bench of the Tribunal in M/s. KEI Industries Ltd. case has categorically held that no refund can be granted for the blocked Education Cess, SHE Cess and KKC under the provisions of Section 142(3) of the CGST Act, and the refund claims, if filed after stipulated dates, would be time-barred. The Hon'ble Supreme Court in VKC... [Read more]

Service Tax - Refund of accumulated Credit of Education Cess (EC), Secondary and Higher Education Cess (SHEC) and Krishi Kalyan Cess (KKC) as on 30.6.2017 - Whether the appellant is entitled to refund of accumulated credit of EC, SHEC and KKC under Section 140 & 142 of CGST Act, 2017 – HELD - The Larger Bench of the Tribunal in M/s. KEI Industries Ltd. case has categorically held that no refund can be granted for the blocked Education Cess, SHE Cess and KKC under the provisions of Section 142(3) of the CGST Act, and the refund claims, if filed after stipulated dates, would be time-barred. The Hon'ble Supreme Court in VKC Footsteps India Pvt. Ltd. case has also laid down that the right to refund can be circumscribed by statutory provisions, and in the absence of any enabling provision granting refund of unutilized EC, SHEC and KKC, no refund claim can be entertained - The reliance placed by the learned Counsel on the decision of Hon’ble Karnataka High Court in Slovak India Trading Co. Pvt. Ltd is of no assistance. the refund or transition of accumulated credit pertaining to Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess, lying unutilized as on 30.6.2017 is not permitted - The impugned orders are upheld and the appeals filed by the appellant are dismissed [Read less]

Service Tax - Calculation of interest on service tax due on short paid service tax – Demand of short paid service tax along with interest and penalty. The appellant paid the service tax, part of the interest and penalty within 30 days of the show cause notice - Whether the interest calculated by the lower authorities is correct or the appellant's calculation of interest at 12% as per Notification No.13/2016 dated 01.03.2016 is correct - HELD - The case is simply one of short payment of service tax, and not a case where the appellant had collected service tax from the customers but failed to deposit it with the government... [Read more]

Service Tax - Calculation of interest on service tax due on short paid service tax – Demand of short paid service tax along with interest and penalty. The appellant paid the service tax, part of the interest and penalty within 30 days of the show cause notice - Whether the interest calculated by the lower authorities is correct or the appellant's calculation of interest at 12% as per Notification No.13/2016 dated 01.03.2016 is correct - HELD - The case is simply one of short payment of service tax, and not a case where the appellant had collected service tax from the customers but failed to deposit it with the government. Therefore, the interest should be calculated as per Sl. No. 2 of Notification No. 13/2016-Service Tax, which prescribes a rate of 15% for the first six months, 21% for the next six months, and 27% for the period beyond one year. The Tribunal calculated the interest accordingly and found that the appellant had already deposited the entire interest amount - The demand of the balance interest and penalty is set aside and the appeal is allowed [Read less]

Service Tax - Invocation of Extended Period of Limitation based on difference between value of services declared in ITR and ST-3 returns – HELD - For invocation of extended period of limitation under proviso to Section 73(1), there must be specific averments in the SCN alleging fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment of tax. Mere difference between ITR and ST-3 return values, without any specific allegation of suppression or intent to evade, is not sufficient to invoke the extended period - The appellant had bonafidely believed that the services provided were exempted an... [Read more]

Service Tax - Invocation of Extended Period of Limitation based on difference between value of services declared in ITR and ST-3 returns – HELD - For invocation of extended period of limitation under proviso to Section 73(1), there must be specific averments in the SCN alleging fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment of tax. Mere difference between ITR and ST-3 return values, without any specific allegation of suppression or intent to evade, is not sufficient to invoke the extended period - The appellant had bonafidely believed that the services provided were exempted and accordingly did not pay service tax, which amounts to a dispute on interpretation of law and not suppression or fraud. In the absence of any such specific allegations in the show-cause notice, the extended period of limitation could not have been invoked against the appellant - The impugned order is set aside and the appeal is allowed [Read less]

Assam Value Added Tax Act, 2003 - Taxable turnover, Free samples as Trade discount - Petitioner provided free samples of medicines to retailers as a promotional activity. The authorities reassessed the petitioner's tax liability for the assessment years 2007-08 to 2009-10, including the value of the free samples in the taxable turnover – Whether the free samples can be treated as trade discount and excluded from the taxable turnover under Section 11 of the AVAT Act read with Rule 9(b) of the Assam VAT Rules – HELD – A free sample is a sample which is provided to the end customer free of cost for promotion of the prod... [Read more]

Assam Value Added Tax Act, 2003 - Taxable turnover, Free samples as Trade discount - Petitioner provided free samples of medicines to retailers as a promotional activity. The authorities reassessed the petitioner's tax liability for the assessment years 2007-08 to 2009-10, including the value of the free samples in the taxable turnover – Whether the free samples can be treated as trade discount and excluded from the taxable turnover under Section 11 of the AVAT Act read with Rule 9(b) of the Assam VAT Rules – HELD – A free sample is a sample which is provided to the end customer free of cost for promotion of the product. On the other hand, a trade discount is a percentage reduction from the listed price, given to the intermediaries (wholesalers/retailers) for bulk purchase thereby reducing the invoice value. The free samples cannot be equated to trade discounts for the purpose of deduction from taxable turnover under Rule 9(b) of the AVAT Rules. While trade discounts are allowed as deductions, free samples provided for promotional purposes are not covered under this provision - The Government had issued a Notification dated 11.10.2006 clarifying that free supplies along with sale at the first point of sale in the State on MRP shall be deemed as sale and liable to tax on the MRP. This Notification is found to be a valid exercise of power under the AVAT Act to address the prevalent practice of providing free samples which were subsequently sold by retailers at MRP along with tax - the petitioner being in the trade of medicine ought to have known about the Notification dated 11.10.2006 which was holding the field at least till 31.10.2009. The petitioner never challenged the said notification till filing of the present proceedings in the year 2018. Under such circumstances also, the impugned notification cannot be interfered with - The writ petitions filed by the petitioner company challenging the reassessment orders imposing tax on the value of free samples provided to retailers are dismissed [Read less]

Service Tax - Liability of service tax on individual truck owner under Goods Transport Agency (GTA) service - Whether the appellant, being an individual truck owner, is liable to pay service tax under the GTA service – HELD - The appellant, being an individual truck owner, is not liable to pay service tax under the GTA service. The definition of "Goods Transport Agency" clearly indicates that the tax liability does not arise on an individual, but on the agency who provides the service of transportation of goods and issues a consignment note. The Mega Exemption Notification No.25/2012-ST clarifies that a truck owner is ex... [Read more]

Service Tax - Liability of service tax on individual truck owner under Goods Transport Agency (GTA) service - Whether the appellant, being an individual truck owner, is liable to pay service tax under the GTA service – HELD - The appellant, being an individual truck owner, is not liable to pay service tax under the GTA service. The definition of "Goods Transport Agency" clearly indicates that the tax liability does not arise on an individual, but on the agency who provides the service of transportation of goods and issues a consignment note. The Mega Exemption Notification No.25/2012-ST clarifies that a truck owner is exempted from any tax liability if the truck is taken on hire by the GTA - Further, the adjudication proceedings were not completed within the timelines prescribed under Section 73(4B) of the Finance Act, 1994, and therefore, the impugned order cannot be sustained - The demand of service tax along with penalties imposed on the appellant are set aside and the appeal is allowed [Read less]

Customs - Applicability of Warehouse Regulations vs. Special Warehouse Regulations - Customs Act, 1962, Sections 57, 58, 58A - The petitioner was granted a license under Section 58A of the Customs Act, 1962 for a Special Warehouse. The respondent imposed a penalty on the petitioner for alleged violation of the Warehouse Regulations, 2016 – HELD - The Special Warehouse Regulations, 2016 would be applicable in the case of the petitioner and not the Warehouse Regulations, 2016. The Customs Act, 1962 provides for three categories of warehouses under Sections 57, 58, and 58A, and the framers of the regulations were conscious ... [Read more]

Customs - Applicability of Warehouse Regulations vs. Special Warehouse Regulations - Customs Act, 1962, Sections 57, 58, 58A - The petitioner was granted a license under Section 58A of the Customs Act, 1962 for a Special Warehouse. The respondent imposed a penalty on the petitioner for alleged violation of the Warehouse Regulations, 2016 – HELD - The Special Warehouse Regulations, 2016 would be applicable in the case of the petitioner and not the Warehouse Regulations, 2016. The Customs Act, 1962 provides for three categories of warehouses under Sections 57, 58, and 58A, and the framers of the regulations were conscious of these different categories. Therefore, the initiation of proceedings under the Warehouse Regulations, 2016 against the petitioner was erroneous - Further, the respondent failed to supply the audit report based on which the show-cause notice was issued, even though the petitioner had requested for it. The impugned order imposing the penalty was illegal and deserved to be quashed and set aside. Moreover, initiation of proceedings against the petitioner after such a long delay was not justified, and the respondent should have verified the records before accepting the surrender of the license - The impugned order imposing the penalty on the petitioner is set aside and the petition is allowed [Read less]

GST - Zero-rated supply, Expiry of e-way Bill - Whether the imposition of penalty under Section 129(1)(a) of the CGST Act is valid in the case of zero-rated supply where no tax is payable – HELD – In the case of Marcowagon Retail Pvt. Ltd. v. Union of India, it was held that in the case of zero-rated supply, where no tax is payable, the imposition of penalty under Section 129(1)(a) of the CGST Act would be beyond the scope of the provision. The present case is squarely covered by the Marcowagon Retail Pvt. Ltd. decision – The impugned orders are set aside and the respondents are directed to refund the amount paid by ... [Read more]

GST - Zero-rated supply, Expiry of e-way Bill - Whether the imposition of penalty under Section 129(1)(a) of the CGST Act is valid in the case of zero-rated supply where no tax is payable – HELD – In the case of Marcowagon Retail Pvt. Ltd. v. Union of India, it was held that in the case of zero-rated supply, where no tax is payable, the imposition of penalty under Section 129(1)(a) of the CGST Act would be beyond the scope of the provision. The present case is squarely covered by the Marcowagon Retail Pvt. Ltd. decision – The impugned orders are set aside and the respondents are directed to refund the amount paid by the petitioner along with applicable interest – The petition is disposed of [Read less]

Rajasthan VAT Act 2003 - Section 25(1) - Validity of Reassessment Proceedings when the assessment already completed – Petitioner challenge the inspection / survey report and show cause notices issued by the respondents alleging that the supply of High Speed Diesel (HSD) amounted to "sale" under the Rajasthan VAT Act 2003 - Whether the respondents have the power to re-open the assessment already completed – HELD - There is no statutory bar against the re-opening of assessment already completed. Under Section 25(1) of the Rajasthan VAT Act 2003, the assessing authority has the power to re-open the assessment if it has re... [Read more]

Rajasthan VAT Act 2003 - Section 25(1) - Validity of Reassessment Proceedings when the assessment already completed – Petitioner challenge the inspection / survey report and show cause notices issued by the respondents alleging that the supply of High Speed Diesel (HSD) amounted to "sale" under the Rajasthan VAT Act 2003 - Whether the respondents have the power to re-open the assessment already completed – HELD - There is no statutory bar against the re-opening of assessment already completed. Under Section 25(1) of the Rajasthan VAT Act 2003, the assessing authority has the power to re-open the assessment if it has reason to believe that the dealer has not paid tax in accordance with law - In the present case, the inspection/survey report and the material on record, such as the letter dated 15.04.2013 and the tabular chart showing differential rates for supply of diesel, provided sufficient justification for the respondents to initiate reassessment proceedings. The show cause notices merely called for the petitioner's explanation and did not reflect a pre-decided conclusion. Further, there is no merit in the contention that the show-cause notice has been issued merely on the basis of change of opinion - The petitioner is directed to participate in the inquiry proceedings before the respondent authorities and present its explanation with supporting documents. If aggrieved by the final order, the petitioner was granted the liberty to avail the statutory remedy of appeal – The petition is disposed of [Read less]

Central Excise - Rebate Claim – Petitioner-Merchant-exporter filed claim for rebate of excise duty paid on exported goods - Denial of rebate claim on the grounds of non-submission of original ARE-1 documents and claim being time-barred – Whether the non-production of original and duplicate copies of ARE-1 forms is fatal to a rebate claim when the fact of export and payment of duty is established through other contemporaneous documentary evidence – HELD - The production of original and duplicate copies of ARE-1 is a procedural requirement and is directory rather than mandatory. If an exporter is able to prove through... [Read more]

Central Excise - Rebate Claim – Petitioner-Merchant-exporter filed claim for rebate of excise duty paid on exported goods - Denial of rebate claim on the grounds of non-submission of original ARE-1 documents and claim being time-barred – Whether the non-production of original and duplicate copies of ARE-1 forms is fatal to a rebate claim when the fact of export and payment of duty is established through other contemporaneous documentary evidence – HELD - The production of original and duplicate copies of ARE-1 is a procedural requirement and is directory rather than mandatory. If an exporter is able to prove through other documents, such as shipping bills, bills of lading, and invoices, that the excisable goods were indeed exported on payment of duty, the rebate cannot be denied solely on the absence of specific original forms. If the substantive conditions are satisfied and the authenticity of the export is not doubted by the Revenue, technical lapses in documentation should not frustrate the claim. There can be valid reasons for the loss of documents and that secondary evidence, such as quadruplicate copies supported by indemnity bonds, is sufficient for adjudication - The impugned orders are quashed and set aside - The petition is allowed - Revenue authorities rejected the re-filed claim as being barred by limitation, arguing that the time should be calculated from the date of the second filing - Whether a rebate application re-filed after the removal of technical defects relates back to the date of the original filing for the purpose of computing the limitation period under Section 11B of CEA, 1944 – HELD - The subsequent filing of a rebate application after the rectification of defects relates back to the original date of filing. Since the initial application was filed within the statutory period and was merely returned rather than rejected, the re-presentation of the application in the correct format constitutes a continuous attempt to seek the benefit. The technicalities should not be used to defeat a substantive claim that was initially brought within time. To hold otherwise would allow the Dept to time-bar claims by simply returning them for minor defects near the expiry of the limitation period - Whether the tax authorities have a statutory obligation to point out specific deficiencies in a rebate claim to allow the claimant to rectify them, rather than summarily returning the application – HELD - The action of the authority in returning the claim application without a formal order or a specific deficiency memo amounts to a refusal to perform a statutory duty. In terms of the CBEC Manual, the rebate sanctioning authority is required to point out all deficiencies collectively within a specified timeframe to enable the exporter to cure them. The duty of the officer is to consider the application on its merits and pass a reasoned order under the Act and Rules. Summarily returning applications on the day of filing without providing a chance for rectification constitutes a procedural irregularity. [Read less]

Central Excise – Scope of Manufacture - The appellant converted colour-coated/galvanised steel sheets in coil form into profiled roofing sheets by processes such as decoiling, roll-forming, profiling, crimping and cutting - Whether the activity undertaken by the appellant amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944 – HELD - The activity undertaken by the appellant results in a substantial and irreversible transformation of flat steel sheets into profiled roofing sheets possessing enhanced structural strength, functional utility and a distinct commercial identity - Manufacture is not conf... [Read more]

Central Excise – Scope of Manufacture - The appellant converted colour-coated/galvanised steel sheets in coil form into profiled roofing sheets by processes such as decoiling, roll-forming, profiling, crimping and cutting - Whether the activity undertaken by the appellant amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944 – HELD - The activity undertaken by the appellant results in a substantial and irreversible transformation of flat steel sheets into profiled roofing sheets possessing enhanced structural strength, functional utility and a distinct commercial identity - Manufacture is not confined to a single act but is the cumulative effect of a series of operations leading to the emergence of the final product. It is also settled that the test of manufacture does not require the input product to become unusable for its original purpose; what is required is acquisition of a distinct commercial identity. In the present case, profiled roofing sheets are marketed, priced and demanded as a separate class of goods in the construction industry - The impugned activity amounts to "manufacture" within the meaning of Section 2(f) of the CEA, 1944 - The cases relied upon by the appellant are distinguished on the ground that they dealt with cases where the processes were superficial or incidental and the original commodity retained its essential identity without the emergence of a new commercially distinct product - The Order-in-Appeal is upheld and the appeal is dismissed - Valuation of Job-work - Applicability of Valuation under Section 4 of the CEA, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000 – The appellant undertook manufacture on job-work basis using raw materials supplied by traders and cleared the finished profiled roofing sheets back to such suppliers - Whether valuation under Section 4 of the Central Excise Act, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000 is applicable – HELD - Once manufacture is established, valuation of the goods cleared by the appellant on job-work basis is correctly governed by Section 4 of the Central Excise Act, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000. The appellant's plea that valuation should be confined only to job charges is contrary to both statutory provisions and settled law. Acceptance of such a plea would defeat the very object of Rule 10A and lead to systematic undervaluation of excisable goods manufactured on job-work basis. The valuation methodology adopted by the Department, based on the sale price of the goods by the suppliers in the open market, is legally sound and sustainable in principle - Extended period of limitation - The Department invoked the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 - Whether the extended period of limitation is invokable – HELD - The appellant suppressed material facts relating to valuation with intent to evade payment of duty. Despite undertaking manufacture of a distinct excisable product, the appellant discharged duty only on job-work charges, excluding the value of raw materials supplied by traders, which formed a substantial part of the assessable value. Such non-disclosure of the full assessable value in respect of job-work clearances, coupled with payment of duty only on job-charges, amounts to suppression of material facts with intent to evade duty. Accordingly, the invocation of the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 is upheld - Penalty - The Department imposed penalty under Section 11AC of the Central Excise Act, 1944 - Whether the imposition of penalty is sustainable – HELD - Once the ingredients for invoking the extended period under Section 11A(4) are satisfied, the imposition of penalty under Section 11AC follows as a statutory consequence. The same facts and evidence which justify invocation of the extended period equally satisfy the statutory requirements for imposition of penalty under Section 11AC. Accordingly, the imposition of penalty under Section 11AC of CEA, 1944 is upheld. [Read less]

Customs - Penalty on Customs Broker for violation of statutory provisions - Whether the penalty imposed is grossly disproportionate to the seriousness of the offences – HELD – The proceedings under the Customs Brokers Licensing Regulations (CBLR) are disciplinary in nature, intended to ensure statutory compliance and maintain discipline within the Customs area. The Original Authority, being a Commissioner of adequate seniority, is presumed to possess the requisite legal expertise and institutional competence to appreciate the complexities of the dispute. Where the Commissioner exercises discretionary jurisdiction for t... [Read more]

Customs - Penalty on Customs Broker for violation of statutory provisions - Whether the penalty imposed is grossly disproportionate to the seriousness of the offences – HELD – The proceedings under the Customs Brokers Licensing Regulations (CBLR) are disciplinary in nature, intended to ensure statutory compliance and maintain discipline within the Customs area. The Original Authority, being a Commissioner of adequate seniority, is presumed to possess the requisite legal expertise and institutional competence to appreciate the complexities of the dispute. Where the Commissioner exercises discretionary jurisdiction for this purpose, the Tribunal ought not to interfere or substitute its own discretion in the absence of cogent reasons warranting such interference. The Tribunal cannot interfere with the findings of the Inquiry Officer or competent authority where they are not arbitrary or utterly perverse - The issue of fraud relates to one of the employees of the Customs Broker firm, and the Adjudicating Authority was satisfied with the response of the Customs Broker that it had terminated the services of the delinquent employee and closed its firm in Mumbai. Considering the facts and circumstances of the case, the discretion exercised by the Adjudicating Authority is reasonable and in consonance with law. The revocation of a Customs Broker licence is a drastic penal measure which needs to be finely balanced. The impugned order reflects due application of mind, satisfies the test of proportionality, and does not suffer from arbitrariness, perversity, or violation of principles of natural justice - The impugned order is upheld and the Revenue appeal is dismissed [Read less]

GST - Blocking of Input Tax Credit creating a negative balance in Electronic Credit Ledger - Whether the respondents can block the ITC in excess of the ITC available in the ECL of the petitioner – HELD - The High Courts in various decisions have held that the power under Rule 86A of the CGST Rules, 2017 can only be exercised if the ITC is available in the ECL of the registered person - View expressed by High Courts of Gujarat, Delhi, Telangana and Bombay was endorsed by this Court to the effect that there is no ambiguity in the plain language of Rule 86A of 2017 Rules and neither does literal construction of this Rule le... [Read more]

GST - Blocking of Input Tax Credit creating a negative balance in Electronic Credit Ledger - Whether the respondents can block the ITC in excess of the ITC available in the ECL of the petitioner – HELD - The High Courts in various decisions have held that the power under Rule 86A of the CGST Rules, 2017 can only be exercised if the ITC is available in the ECL of the registered person - View expressed by High Courts of Gujarat, Delhi, Telangana and Bombay was endorsed by this Court to the effect that there is no ambiguity in the plain language of Rule 86A of 2017 Rules and neither does literal construction of this Rule lead to any absurdity - Blocking the ITC in excess of the available ITC in the ECL is not permissible. The impugned orders are set aside to the extent that they disallowed debit from the ECL of the petitioner in excess of the ITC available therein at the time of passing of the said decisions. The respondents are, however, at liberty to undertake and resort to remedies available to them for recovery in accordance with the law – The writ petition is allowed [Read less]

GST - Remand by Appellate Authority - Section 107(11) of CGST Act 2017 - Refund claims for export of services under GST - The Appellate Authority found the condition for export of services fulfilled by the petitioner but remanded the matter back to the Adjudicating Authority to re-determine the place of supply to qualify the services as export – whether the Appellate Authority has power to remand the matter - HELD – The Section 107(11) of the CGST Act 2017 clearly prohibits the Appellate Authority from remanding the matter back to the Adjudicating Authority. The Appellate Authority has the power to either confirm, modi... [Read more]

GST - Remand by Appellate Authority - Section 107(11) of CGST Act 2017 - Refund claims for export of services under GST - The Appellate Authority found the condition for export of services fulfilled by the petitioner but remanded the matter back to the Adjudicating Authority to re-determine the place of supply to qualify the services as export – whether the Appellate Authority has power to remand the matter - HELD – The Section 107(11) of the CGST Act 2017 clearly prohibits the Appellate Authority from remanding the matter back to the Adjudicating Authority. The Appellate Authority has the power to either confirm, modify or annul the order under appeal, but it cannot refer the case back to the original authority. The remand order passed by the Appellate Authority is not sustainable in law - Since it has not been disputed by the learned counsel for the Revenue that the matter could not have been remitted back to the adjudicating authority, it would not be appropriate to relegate the writ petitioner to approach the appellate authority, i.e. GST Tribunal – The remand part of the Appellate Authority order is set aside and the Appellate Authority is directed to decide the appeals in accordance with law – The writ petition is disposed of [Read less]

Customs - Classification of imported "Joss Powder" - Appellant classified it under CTH 44050000, assessed to BCD at 5% under Notification No.46/2011. The adjudicating authority reclassified the goods under CTH 12119039, resulting in demanding differential duty – HELD - The Note 1(a) to Chapter 44 excludes only wood in powdered form that is used primarily in perfumery, and the "Joss Powder" in question did not have any perfumery effect or medical properties to be classified under CTH 1211. The goods are correctly classified under CTH 44050000 – Further, the SCN was issued after one year from the relevant period. The ext... [Read more]

Customs - Classification of imported "Joss Powder" - Appellant classified it under CTH 44050000, assessed to BCD at 5% under Notification No.46/2011. The adjudicating authority reclassified the goods under CTH 12119039, resulting in demanding differential duty – HELD - The Note 1(a) to Chapter 44 excludes only wood in powdered form that is used primarily in perfumery, and the "Joss Powder" in question did not have any perfumery effect or medical properties to be classified under CTH 1211. The goods are correctly classified under CTH 44050000 – Further, the SCN was issued after one year from the relevant period. The extended period of limitation under Section 28 of the Customs Act is not applicable as there is no collusion, wilful misstatement or suppression of facts by the appellant - The demand is also barred by limitation - The impugned order is set aside and the appeals are allowed [Read less]

Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 - Refund Adjustment - The petitioner was entitled to a refund of tax for the tax period 2007-08. However, the Department sought to adjust this refund against the alleged dues for the subsequent tax periods 2008-09 and 2009-10, whereas petitioner had already availed the benefits of the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 for the dues pertaining to 2008-09 and 2009-10, and there were no pending dues for these years – HELD - The action of the department to adjust the refund for 2007-08 against th... [Read more]

Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 - Refund Adjustment - The petitioner was entitled to a refund of tax for the tax period 2007-08. However, the Department sought to adjust this refund against the alleged dues for the subsequent tax periods 2008-09 and 2009-10, whereas petitioner had already availed the benefits of the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 for the dues pertaining to 2008-09 and 2009-10, and there were no pending dues for these years – HELD - The action of the department to adjust the refund for 2007-08 against the settled dues for 2008-09 and 2009-10 is inconsequential and irrelevant. The department cannot retain the refund amount which is not in accordance with law, as it would be violative of Article 265 of the Constitution of India. The settlement scheme under the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 would have an overriding effect, and the Department cannot overlook the settlement arrived at. The petitioner is entitled to the refund of tax for the tax period 2007-08 along with applicable interest - The petition is allowed [Read less]

Customs - Provisional release of goods on furnishing of Bonds and Bank Guarantees – Import of "Prime Cold Rolled Stainless Steel Coils", claiming preferential duty exemption under Notification No. 46/2011-Cus. - Department refused to grant "Out of Charge" order for clearance of the goods, citing instructions to deny preferential benefits on the basis of Certificates of Origin issued in the name of the foreign supplier - Whether the petitioners are entitled to provisional release of the goods upon furnishing of Bonds and Bank Guarantees securing the differential duty, pending further verification by the customs department... [Read more]

Customs - Provisional release of goods on furnishing of Bonds and Bank Guarantees – Import of "Prime Cold Rolled Stainless Steel Coils", claiming preferential duty exemption under Notification No. 46/2011-Cus. - Department refused to grant "Out of Charge" order for clearance of the goods, citing instructions to deny preferential benefits on the basis of Certificates of Origin issued in the name of the foreign supplier - Whether the petitioners are entitled to provisional release of the goods upon furnishing of Bonds and Bank Guarantees securing the differential duty, pending further verification by the customs department. HELD - In respect of similar consignments supplied by the same foreign exporter, clearance of the goods for domestic consumption was granted to other importers. The foreign supplier had also expressed its willingness to fully cooperate in any verification process. In these circumstances, the provisional release of the goods would serve the interests of justice, particularly when the petitioners offered to secure the differential duty, if any, by furnishing Bonds and Bank Guarantees - The Department is directed to provisionally assess the goods within 10 days, and upon the petitioners furnishing the requisite Bonds and Bank Guarantees within 7 days thereafter, to release the goods within 7 days. This order is confined to the grant of provisional release and shall not be construed as an expression of opinion on the merits of the rival contentions - The writ petitions are disposed of [Read less]

GST – Karnataka AAR – Taxability of Corpus Fund Contributions - The applicant is an apartment owners' association that collects monthly maintenance charges from its members and also collects corpus fund contributions for future contingencies - Whether the corpus fund contributions are treated as "consideration" under the CGST Act, 2017 and attract GST – HELD - The applicant’s contention that “the members and the association are the same person” based on the doctrine of mutuality cannot be accepted. The applicant and its members are to be treated as distinct persons under the Explanation to Section 7(1) of the C... [Read more]

GST – Karnataka AAR – Taxability of Corpus Fund Contributions - The applicant is an apartment owners' association that collects monthly maintenance charges from its members and also collects corpus fund contributions for future contingencies - Whether the corpus fund contributions are treated as "consideration" under the CGST Act, 2017 and attract GST – HELD - The applicant’s contention that “the members and the association are the same person” based on the doctrine of mutuality cannot be accepted. The applicant and its members are to be treated as distinct persons under the Explanation to Section 7(1) of the CGST Act, 2017 - The amounts collected towards the corpus fund are indisputably in the nature of advances for future supply of service and not deposits. The corpus fund collected by the applicant for future contingencies constitutes consideration for a future supply of services and, therefore, attracts GST in terms of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, under SAC 999598 - The corpus fund contributions collected by the applicant for future contingencies constitute "consideration" as advances meant for the future supply of services to members and therefore attract GST – Ordered accordingly - Whether the corpus fund can be treated separately and independently from monthly maintenance charges for GST applicability – HELD - The corpus fund is distinct in character and purpose from the monthly maintenance charges, as the former is a contribution toward future capital expenditures while the latter is consideration for ongoing services. Therefore, the corpus fund can be treated separately and independently from monthly maintenance charges for GST applicability - Time of Supply – HELD – The corpus or sinking fund contributions are collected in advance to meet future contingencies. The GST is payable at the time of collection/receipt of the corpus fund, as the time of supply is triggered on the date of receipt of the advance amounts, in terms of Section 13(2)(a) of the CGST Act. [Read less]

GST – Karnataka AAR - Applicability of GST exemption for solid waste management services provided to a Gram Panchayat - The applicant, an Indian Charitable Trust, provides solid waste management services to a Gram Panchayat in Karnataka, including waste collection and transportation, segregation, recycling, and disposal, as well as street sweeping, drain cleaning, and public awareness activities - Whether the solid waste management qualify as an exempt supply under the scope of activities entrusted to a Panchayat under Article 243G of the Constitution of India – HELD - The applicant's solid waste management services pr... [Read more]

GST – Karnataka AAR - Applicability of GST exemption for solid waste management services provided to a Gram Panchayat - The applicant, an Indian Charitable Trust, provides solid waste management services to a Gram Panchayat in Karnataka, including waste collection and transportation, segregation, recycling, and disposal, as well as street sweeping, drain cleaning, and public awareness activities - Whether the solid waste management qualify as an exempt supply under the scope of activities entrusted to a Panchayat under Article 243G of the Constitution of India – HELD - The applicant's solid waste management services provided to the Gram Panchayat are pure services (excluding works contract service or other composite supplies involving any goods) and are covered under entry no. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as they are in relation to the functions entrusted to a Panchayat under Article 243G of the Constitution, specifically health and sanitation (including solid waste management) – For claim of exemption, two conditions must be satisfied: (i) the services must be provided to a local authority, and (ii) the services must be in relation to any function entrusted to a Panchayat under Article 243G of the Constitution. Since both conditions were met in the present case, the applicant's solid waste management services to the Gram Panchayat are exempted from GST – Ordered accordingly [Read less]

GST – Karnataka AAR – RWA, Housing Society - Exemption under Entry 77 of Notification No. 12/2017-Central Tax (Rate) on amount of Rs.7,500/- collected on annual basis - Whether the availability of exemption up to an amount of Rs.7,500/- per member per month under entry No.77 of Notification 12/2017 - Central Tax (Rate) dated 28-06-2017, as amended is to be ascertained on per annum basis i.e. 90,000/- (7500x12) per financial year per member or on the basis of invoicing period i.e. Monthly/Quarterly Invoicing – HELD - the exemption of Rs.7,500 per month per member, in respect of sourcing of goods or services from a thi... [Read more]

GST – Karnataka AAR – RWA, Housing Society - Exemption under Entry 77 of Notification No. 12/2017-Central Tax (Rate) on amount of Rs.7,500/- collected on annual basis - Whether the availability of exemption up to an amount of Rs.7,500/- per member per month under entry No.77 of Notification 12/2017 - Central Tax (Rate) dated 28-06-2017, as amended is to be ascertained on per annum basis i.e. 90,000/- (7500x12) per financial year per member or on the basis of invoicing period i.e. Monthly/Quarterly Invoicing – HELD - the exemption of Rs.7,500 per month per member, in respect of sourcing of goods or services from a third party for the common use of its members in a housing society or residential complex, is available on a monthly basis, irrespective of the pattern of issuance of invoices, whether monthly or quarterly – Ordered accordingly - Whether contribution collected from members for supply of water procured through water tanker or BWSSB are covered under entry no. 99 of Notification.2/2017 Central Tax (Rate) dated 28-06-2017, as amended i.e. under HSN Code 2201 and therefore exempt - HELD - As per Section 2(30) of the CGST Act, 2017, a composite supply consists of two or more supplies which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. In the present case, the principal supply is upkeep and maintenance services, and the supply of water is ancillary thereto. Accordingly, the entire consideration collected from the members, including amounts attributable to water supply, forms part of the value of the composite supply, the principal supply being services classifiable under SAC 999598. Therefore, the exemption under Entry No. 99 of Notification No. 02/2017-Central Tax (Rate) is not applicable to the applicant - Whether the applicant is liable to pay GST on amounts which it collects from its members for setting up a corpus fund/sinking fund which is in form of deposit – HELD - An advance is generally a payment made upfront toward a future supply and is typically non-refundable, whereas a deposit is ordinarily refundable and held as security, subject to return upon occurrence of specified conditions - The amount collected towards the corpus fund are indisputably in the nature of advances for future supply of service and not deposits. The corpus fund collected by the applicant for future contingencies constitutes consideration for a future supply of services and, therefore, attracts GST in terms of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, under SAC 999598 - Whether the application of deposit towards consideration at the time of actual supply of service (Capital asset purchase) can be proportion to the depreciation charged in books of accounts in relation to a capital asset – HELD - Accounting treatment or depreciation practices do not determine the GST liability or timing, which is governed by the provisions of the CGST Act. the applicant’s argument that GST should be levied only in proportion to depreciation over the life of the capital asset is not supported by the provisions of the CGST Act. Taxability must be determined based on the existence of a supply, the time of supply as per Sections 12 or 13, and the consideration attributable to such supply, independent of accounting treatment or depreciation practices - Whether the exemption up to an amount of Rs.7,500 per member per month for sourcing of goods or services for the common use of members under Entry No. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended) is available in respect of sinking/ repair fund contributions collected from members, either at the time of actual supply of services when such deposits are applied as consideration or at the time of collection treating them as advances – HELD - the amount collected by the applicant from its members towards sinking fund/corpus fund constitutes an advance received against future supply of services to its members. Accordingly, the time of supply is determined at the time of receipt of such advance, in terms of Section 13 of the CGST Act, 2017 - the amounts collected towards sinking fund/corpus fund are not required to be clubbed with common area maintenance charges for the purpose of determining eligibility for exemption under Entry No. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended - Whether voluntary contribution received from members for celebration of cultural festivals is liable to GST – HELD - the voluntary donations collected by the applicant do not involve any quid pro quo, as the applicant is not under any contractual or statutory obligation to provide any goods or services in return for such donations. The contributions are made at the discretion of the members and are not linked to any specific supply. In view of the above, the voluntary donations collected by the applicant from its members for the celebration of cultural festivals do not constitute consideration for any supply and, therefore, are not liable to GST. [Read less]

GST - Cancellation of GST Registration - Failure to Challenge Assessment Order within Time - Petitioner had participated in the personal hearing during the GST assessment proceedings. However, due to the change of the proper officer, the new officer had issued fresh notices for production of documents and personal hearing, which the petitioner failed to comply with. Subsequently, the impugned GST assessment order was passed. The petitioner had later filed an application for cancellation of GST registration, which was granted. The petitioner remained unaware of the assessment order due to the cancellation of registration an... [Read more]

GST - Cancellation of GST Registration - Failure to Challenge Assessment Order within Time - Petitioner had participated in the personal hearing during the GST assessment proceedings. However, due to the change of the proper officer, the new officer had issued fresh notices for production of documents and personal hearing, which the petitioner failed to comply with. Subsequently, the impugned GST assessment order was passed. The petitioner had later filed an application for cancellation of GST registration, which was granted. The petitioner remained unaware of the assessment order due to the cancellation of registration and filed the present writ petition challenging the assessment order after 11 months - Whether the writ petition filed by the petitioner challenging the GST assessment order is maintainable - HELD - The petitioner's contention of not being aware of the assessment order due to the cancellation of GST registration is not acceptable. Having filed the reply and participated in the personal hearing, now, it is not proper for the petitioner to make a plea that he is not aware of the uploading of assessment order. It is the duty of an assessee to verify the GST web portal for any subsequent developments in the proceedings, after participating in the same. The petitioner had filed the application for cancellation of GST registration only after the quantification of tax liabilities, which suggests that the petitioner was aware of the assessment order - The petitioner is at liberty to file an appeal against the assessment order, subject to the petitioner paying an additional 10% of the disputed tax amount over and above the statutory pre-deposit, and permitting the petitioner to utilize the bank account to make a payment of 20% of the disputed tax amount to the department - The writ petition is dismissed [Read less]

Customs - Transaction Value - The appellant exported Iron Ore Fines and filed shipping bills for the export – Rejection of declared transaction value of USD 115 PDMT FOB and Dept adopted a higher value of USD 128 PDMT FOB based on contemporaneous export prices of other exporters - Whether the department was justified in rejecting the declared transaction value and adopting a higher value – HELD - The Department cannot reject the declared transaction value without raising any doubt about its truth or accuracy and without following the procedure prescribed under the Customs Valuation Rules. The transaction value as refle... [Read more]

Customs - Transaction Value - The appellant exported Iron Ore Fines and filed shipping bills for the export – Rejection of declared transaction value of USD 115 PDMT FOB and Dept adopted a higher value of USD 128 PDMT FOB based on contemporaneous export prices of other exporters - Whether the department was justified in rejecting the declared transaction value and adopting a higher value – HELD - The Department cannot reject the declared transaction value without raising any doubt about its truth or accuracy and without following the procedure prescribed under the Customs Valuation Rules. The transaction value as reflected in the BRC and corroborated by sale/purchase contract cannot be rejected without substantive evidence that the export price was not true or genuine. The adjudicating authority has not raised any doubt about the transaction value or the BRC, and has not given any reasons to reject the declared transaction value. The department has merely adopted the highest of the contemporaneous prices without making any adjustments as required under the Rules - The impugned order is set aside and the case is remanded to the Assessing Officer to finalize the assessment as per the declared transaction value reflected in the BRC – The appeal is allowed by way of remand [Read less]

Customs - Admissibility of Electronic Records - The appellant challenged the penalties imposed on him under Section 114AA of the Customs Act, 1962 based on electronic records in the form of a DVD which was allegedly seized during the investigation, but was found to be broken and unavailable for verification – HELD - The electronic records cannot be treated as admissible evidence in the absence of verification of their genuineness, veracity or reliability from the original electronic device by/from which these were created, as required under Section 138C of the Customs Act. The Supreme Court in Anvar P.V. case held that ... [Read more]

Customs - Admissibility of Electronic Records - The appellant challenged the penalties imposed on him under Section 114AA of the Customs Act, 1962 based on electronic records in the form of a DVD which was allegedly seized during the investigation, but was found to be broken and unavailable for verification – HELD - The electronic records cannot be treated as admissible evidence in the absence of verification of their genuineness, veracity or reliability from the original electronic device by/from which these were created, as required under Section 138C of the Customs Act. The Supreme Court in Anvar P.V. case held that without fulfilling the statutory requirements under Section 138C, the electronic records cannot be relied upon to impose penalty under Section 114AA - The electronic records in the form of the DVD cannot be relied upon as evidence to impose penalty on the appellant under Section 114AA - the penalties imposed on the appellant under Section 114AA of the Customs Act, 1962 are set aside and the appeal is allowed - Reliance on Retracted Statements – Apart from reliance placed by the Revenue on the retracted statements of a co-accused to implicate the appellant, no other concrete or corroborative evidence was placed on record by the Revenue to substantiate the allegations against the appellant. Relying on the decision in Jeen Bhavani International, the Tribunal held that the retracted statements cannot be the sole basis to implicate the appellant without any independent and cogent evidence. HELD that the retracted statements of Shri Jyoti Biswas cannot be relied upon to impose penalty on the appellant under Section 114AA. [Read less]

GST - Detention and demand order for delayed movement of goods – Non-generation of new e-way Bill - Whether the impugned order deserves to be quashed and set aside as the appellate authority has not considered the explanation tendered by the petitioner – HELD - The petitioner had specifically contended that the E-way Bills were duly generated on 31.05.2025 and the vehicle was scheduled to depart on Sunday, 1st June, 2025, however, due to technical fault the vehicle remained in a non-motorable condition throughout 1st June, 2025 and the movement of the vehicle began only on the morning of 2nd June, 2025 - The appellate ... [Read more]

GST - Detention and demand order for delayed movement of goods – Non-generation of new e-way Bill - Whether the impugned order deserves to be quashed and set aside as the appellate authority has not considered the explanation tendered by the petitioner – HELD - The petitioner had specifically contended that the E-way Bills were duly generated on 31.05.2025 and the vehicle was scheduled to depart on Sunday, 1st June, 2025, however, due to technical fault the vehicle remained in a non-motorable condition throughout 1st June, 2025 and the movement of the vehicle began only on the morning of 2nd June, 2025 - The appellate authority has not even remotely adverted to the explanation tendered by the petitioner and has proceeded to pass the impugned order without considering the same - Accordingly, the impugned order is quashed and set aside, and the matter is remanded to the respondent who shall pass a fresh, reasoned and speaking order after duly considering the explanation submitted by the petitioner and after granting an opportunity of hearing, if so required - The petition is allowed [Read less]

Service Tax - Franchise service – Respondent-assessee had granted "Franchise" for the manufacture of goods of specifications, design and quality described by them to some other small manufacturing units under Notarised Agreements - Whether the activity conducted by the respondent/assessee is taxable under the category of 'Franchise Service' – HELD - The Tribunal has rightly examined the issue and found that the agreement entered into by the respondent with the manufacturer was not in the nature of a "Franchise Agreement" - The respondent did not give any right to manufacture its brand to the small unit and sell it dire... [Read more]

Service Tax - Franchise service – Respondent-assessee had granted "Franchise" for the manufacture of goods of specifications, design and quality described by them to some other small manufacturing units under Notarised Agreements - Whether the activity conducted by the respondent/assessee is taxable under the category of 'Franchise Service' – HELD - The Tribunal has rightly examined the issue and found that the agreement entered into by the respondent with the manufacturer was not in the nature of a "Franchise Agreement" - The respondent did not give any right to manufacture its brand to the small unit and sell it directly to the customer. The franchisees were given only specifications, quantity of firebricks, or were directly supplied to the assessee or to the customer at a given rate mentioned in the purchase order. There was no Authority to manufacture bricks under the brand name of the assessee and the liberty to sell in the open market. Thus, it has been wrongly treated as a "Franchise Agreement" by the Revenue. The actual transactions are also in conformity with the agreement and clearly support the inference that the agreement was not a franchise agreement - The order passed by the Tribunal is upheld and the Revenue appeal is dismissed [Read less]

GST - Cancellation of Bail – Revenue’s application seeking for cancellation of bail granted to the respondent for offences under Sections 132(1)(a)(f)(h) and (1) of CGST Act, 2017 - The respondent was accused of clandestinely supplying goods without issuing invoices – HELD - The Trial court's reasoning for granting bail is flawed, as the offences under Section 132 of the CGST Act are non-cognizable and non-bailable if the tax evasion amount exceeds Rs. 5 crores, irrespective of the deposit made by the accused. In this case, the deposit of Rs.5 Crores from an allegedly evaded tax does not alter the classification of t... [Read more]

GST - Cancellation of Bail – Revenue’s application seeking for cancellation of bail granted to the respondent for offences under Sections 132(1)(a)(f)(h) and (1) of CGST Act, 2017 - The respondent was accused of clandestinely supplying goods without issuing invoices – HELD - The Trial court's reasoning for granting bail is flawed, as the offences under Section 132 of the CGST Act are non-cognizable and non-bailable if the tax evasion amount exceeds Rs. 5 crores, irrespective of the deposit made by the accused. In this case, the deposit of Rs.5 Crores from an allegedly evaded tax does not alter the classification of the offence as either non-cognisable or bailable. Additionally, under section 138 of the Act, tax evasion up to 5 crores is compoundable, whereas amounts above 5 crores are not compoundable. Therefore, the analogy used by the trial court is flawed and cannot justify granting bail to the respondent - Nevertheless, beyond this analogy, the respondent intends to deposit 50 per cent of the alleged evasion amount. The department’s counsel has agreed to this and in accordance with the court’s order, the respondent has already deposited five crores in the trial court. Additionally, other co-accused had been granted bail by the Supreme Court. Accordingly. the instant application to cancel bail is dismissed [Read less]

GST - Expired e-way bill, auto-population of incorrect distance in e-way Bill – Transportation of consignment of motor vehicle chassis - The consignment was covered by a tax invoice and an e-way bill. However, the Part-B of e-way bill wrongly mentioned the distance as 170 kilometers instead of the actual distance of over 800 kilometers, resulting in the e-way bill expiring before the goods reached the destination. The goods were intercepted and seized on the ground that the e-way bill had expired. The authorities imposed a penalty on the petitioner under Section 129(3) of the CGST Act, 2017 - HELD - The goods in question... [Read more]

GST - Expired e-way bill, auto-population of incorrect distance in e-way Bill – Transportation of consignment of motor vehicle chassis - The consignment was covered by a tax invoice and an e-way bill. However, the Part-B of e-way bill wrongly mentioned the distance as 170 kilometers instead of the actual distance of over 800 kilometers, resulting in the e-way bill expiring before the goods reached the destination. The goods were intercepted and seized on the ground that the e-way bill had expired. The authorities imposed a penalty on the petitioner under Section 129(3) of the CGST Act, 2017 - HELD - The goods in question are motor vehicle chassis which were duly accompanied with tax invoice, e-way bill, sale certificate and temporary registration as per the Central Motor Vehicle Rules, 1989. It is a matter of common knowledge that motor vehicles cannot be sold except after getting due registration with the Motor Vehicle Department. - The petitioner had complied with all the legal requirements for the transportation of the goods, including having a tax invoice, trade certificate, and temporary registration for the chassis. The expiry of the e-way bill was due to a technical glitch in the auto-populated distance field, which was beyond the control of the petitioner. The expiry of an e-way bill alone cannot be attributed to an intention to evade tax - The impugned order is quashed and the writ petition is allowed [Read less]