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GST - Exercise of writ jurisdiction, Availability of statutory appellate remedy - Petitioner participated in audit and adjudication proceedings, submitted detailed replies with supporting documentary evidence, agreements, invoices and reconciliations, and participated in personal hearings conducted by the adjudicating authority - Whether the High Court should exercise writ jurisdiction to challenge the adjudication order on the ground that the adjudicating authority did not call for further documents or clarifications before concluding the proceedings - HELD - The existence of an efficacious statutory appellate remedy does... [Read more]

GST - Exercise of writ jurisdiction, Availability of statutory appellate remedy - Petitioner participated in audit and adjudication proceedings, submitted detailed replies with supporting documentary evidence, agreements, invoices and reconciliations, and participated in personal hearings conducted by the adjudicating authority - Whether the High Court should exercise writ jurisdiction to challenge the adjudication order on the ground that the adjudicating authority did not call for further documents or clarifications before concluding the proceedings - HELD - The existence of an efficacious statutory appellate remedy does not operate as an absolute bar to writ jurisdiction. The High Court may entertain a petition under Article 226 only in exceptional circumstances such as breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction, or a challenge to the vires of a statute or delegated legislation. However, the present case does not disclose any such exceptional circumstance - The contention that the adjudicating authority should have called for further documents before concluding cannot be accepted as an inflexible requirement of natural justice. Once adequate opportunity has been afforded to place all material in support of its case, the adjudicating authority is required to adjudicate on the basis of the record available before it. Whether the material produced was sufficient, whether any further documents ought to have been furnished, and whether the conclusions ultimately drawn are sustainable are all matters touching upon the merits of adjudication and are eminently within the province of the statutory appellate authority - The Writ Petition is dismissed leaving it open to the Petitioner to avail the statutory remedy of appeal [Read less]

GST – Levy of Interest and penalty on delayed reversal of input tax credit on exempt goods, Manner of Pre-deposit where there is defect in recording of figures in the Order-in-Original - Upon Audit, the petitioner reversed the wrongly availed credit but the Adjudicating Authority raised demand towards interest for delayed reversal and imposed penalty. The Adjudicating Authority wrongly classified the interest demand under the head Tax instead of Interest in the adjudication form - The Appellate Authority affirmed the order but failed to rectify this defect, expressing inability to rectify its own order as the period of l... [Read more]

GST – Levy of Interest and penalty on delayed reversal of input tax credit on exempt goods, Manner of Pre-deposit where there is defect in recording of figures in the Order-in-Original - Upon Audit, the petitioner reversed the wrongly availed credit but the Adjudicating Authority raised demand towards interest for delayed reversal and imposed penalty. The Adjudicating Authority wrongly classified the interest demand under the head Tax instead of Interest in the adjudication form - The Appellate Authority affirmed the order but failed to rectify this defect, expressing inability to rectify its own order as the period of limitation under Section 161 had already lapsed - Petitioner contend that it would be required to deposit percentage of remaining amount in dispute for filing appeal before the Appellate Tribunal, and the online system would not allow filing without such pre-deposit based on the wrongly classified amount – HELD - The disputed question of fact is to be settled by the fact-finding authorities in terms of provisions of the GST Act and the wrong claim of input tax credit stated to have been restored by way of disclosing in DRC and Form GSTR-3B is required to be verified and examined by the authorities. Further, the GST Appellate Tribunal could adjudicate the correctness of demand raised by levying interest and legal justification to impose penalty by instituting proceeding under Section 73 of the GST Act. However, serious prejudice would be caused if the petitioner is relegated to approach the GSTAT as there is no provision for the Appellate Authority to recall the Order-in-Appeal as the appeal has been rejected on merit - The Court is compelled to interfere with the order of the Appellate Authority as, if the Petitioner is directed to avail the alternative remedy available under Section 112, justice would not be subserved. The bare perusal of the Show Cause Notice, Order-in-Original and the Order-in-Appeal clearly evince that the demand of reversal of input tax credit, interest and penalty raised in the Order-in-Original has been confirmed in the appeal. The Appellate Authority being not in a position to rectify such mistake, attempts to file appeal before the Appellate Tribunal would be futile inasmuch as the online system would not allow the Petitioner to do so without pre-deposit being made. Therefore the Order-in-Appeal is set aside and the matter is remitted to the Appellate Authority for deciding the appeal on merit afresh without being swayed away by earlier order and pass appropriate order in accordance with law after hearing the Petitioner – The petition is disposed of [Read less]

Service Tax - Reversal of Cenvat Credit in Restaurant Services - Appellant engaged in providing restaurant and outdoor catering services determined taxable value at forty percent of total turnover under exemption notification and claimed no further reversal of credit - Department interpreted that benefit shall not be available on ground that appellant sold cooked food without payment of Central Excise duty and therefore required reversal of credit under Rule 6(3) of Cenvat Credit Rules 2004 - Whether further reversal of credit under Rule 6(3) is required when restaurant service is provided by appellant with supply of food ... [Read more]

Service Tax - Reversal of Cenvat Credit in Restaurant Services - Appellant engaged in providing restaurant and outdoor catering services determined taxable value at forty percent of total turnover under exemption notification and claimed no further reversal of credit - Department interpreted that benefit shall not be available on ground that appellant sold cooked food without payment of Central Excise duty and therefore required reversal of credit under Rule 6(3) of Cenvat Credit Rules 2004 - Whether further reversal of credit under Rule 6(3) is required when restaurant service is provided by appellant with supply of food - HELD - In view of Circular No. 213/3/2019-Service Tax dated 05.07.2019 in case of provision of the “Restaurant Service”, where food or any other articles are supplied, then there is no need for reversal of CENVAT Credit under Rule 6(3) of the Rules of 2004 - Since there is no ambiguity with regard to exempted goods/services, in the circumstances when service is provided in a restaurant, the stand of the Department for reversal of CENVAT Credit by taking recourse to sub-rule (3) of Rule 6 of CCR cannot be sustained - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Activities Not Constituting Service - Availability of CENVAT Credit on Common Input Services used partly for Non-Taxable Activities – Appellant availed CENVAT credit on common input services used partly for rendering taxable services and partly for activities which do not amount to service, such as investment of own funds in buying and selling securities on its own account – Demand raised on the ground that trading in securities was an exempted service requiring proportionate reversal of CENVAT credit on common input services - Whether when common input services are used partly for rendering taxable servi... [Read more]

Service Tax - Activities Not Constituting Service - Availability of CENVAT Credit on Common Input Services used partly for Non-Taxable Activities – Appellant availed CENVAT credit on common input services used partly for rendering taxable services and partly for activities which do not amount to service, such as investment of own funds in buying and selling securities on its own account – Demand raised on the ground that trading in securities was an exempted service requiring proportionate reversal of CENVAT credit on common input services - Whether when common input services are used partly for rendering taxable services and partly for activities which do not amount to service at all, the assessee is entitled to full CENVAT credit or is required to reverse proportionate amount of CENVAT credit – HELD - The assessee is not entitled to full CENVAT credit on common input services to the extent they are used for activities which do not amount to service at all. Any activity which is not a service falls outside the purview of the Finance Act, 1994 and Central Excise Act, 1944 and therefore input services for such activity are not eligible for CENVAT credit – To the extent the input services were used for activity which is not a service, the credit is not admissible and the assessee is required to reverse proportionate CENVAT credit as determined under sub-rule (3) of Rule 6 of the CCR, 2004 - The decision of the Delhi High Court in the case of Lally Automobiles, explicitly upheld by the Supreme Court, established that an activity which is not a service at all goes out of the purview of the Finance Act and Central Excise Act and therefore no CENVAT credit on input services is admissible for such activity either wholly or partly - In the decisions relied on by the ld. counsel, the decision of Lally Automobiles was not presented before the bench nor was it considered – Further, the impugned services cannot be attributed to any particular activity but are services meant for running the office and can only be called common input services, hence, cannot agree with the submission that these were used exclusively used for providing taxable services - The impugned order requiring reversal of proportionate CENVAT credit on common input services to the extent used for activities which do not amount to service is correct and proper – The appeal is dismissed - Invocation of Extended Period of Limitation and Imposition of Penalties – HELD - The assessee was well aware of the exact nature and extent of its service tax liability and the eligible service tax inputs. It was also aware that it was claiming credit in respect of activities which were not subjected to service tax levy and that such claim was excessive and could not be justified. Being conscious of its investment activity and that such activity was not liable to service tax, it was aware of what it was doing. An assessee cannot take shelter under the plea that the non-service activity became expressly exempt from claiming credit only after an amendment in 2011, as trading was never taxable under the Finance Act, 1994. The assessee failed to maintain regular separate accounts in respect of the non-service taxable activity. The invocation of extended period of limitation was warranted in the circumstances. Penalties were properly imposed as the assessee had availed excess credit without reversing the same by suppression of material facts – The extended period of limitation was properly invoked and penalties were correctly imposed. [Read less]

Customs - Reasonableness of Conditions for Provisional Release of Imported Goods – Appellant-importer filed applications for provisional release of seized imported sugar under suspicion of mis-declaration as beet sugar instead of cane sugar. The Commissioner imposed conditions for provisional release requiring furnishing of bank guarantee covering future liabilities towards duty, penalty and fine - Whether conditions imposed for provisional release were fair, reasonable and justified when no conclusive test report confirmed mis-declaration and investigating agency had not come to definitive conclusion - HELD - Conditions... [Read more]

Customs - Reasonableness of Conditions for Provisional Release of Imported Goods – Appellant-importer filed applications for provisional release of seized imported sugar under suspicion of mis-declaration as beet sugar instead of cane sugar. The Commissioner imposed conditions for provisional release requiring furnishing of bank guarantee covering future liabilities towards duty, penalty and fine - Whether conditions imposed for provisional release were fair, reasonable and justified when no conclusive test report confirmed mis-declaration and investigating agency had not come to definitive conclusion - HELD - Conditions for provisional release should not tantamount to virtual denial and should not be so impracticable and harsh as to kill importer's business. While adjudicating authority is well within right to impose conditions, such conditions must be reasonable and proportionate. Where goods are not per se prohibited, importer is regular operator, investigating agency has not come to definitive conclusion by way of test report, and no conclusive evidence of mis-declaration exists, putting stringent conditions is not fair and justified. Courts and Tribunals have been consistently holding that bank guarantee or security to extent of thirty percent of differential duty would suffice. Appellant-importer had already deposited substantial amount which being more than thirty percent of differential duty should suffice – The bank guarantee requirement set aside, bond as per original order to be furnished, goods to be provisionally released within one week – The appeal is partly allowed [Read less]

Central Excise – Distribution of ISD Credit - Validity of Cenvat Credit of Service Tax based on distribution through Head Office letters - Respondent claimed credit of service tax on basis of invoices issued by head office and challans issued by head office distributing the credit though not bearing the document name of invoice or challan. The authority denied credit on ground that distribution letters are not valid documents for availing cenvat credit - Whether cenvat credit can be denied merely on procedural lapses when all the required details concerning input service provider, service details and service tax paid are... [Read more]

Central Excise – Distribution of ISD Credit - Validity of Cenvat Credit of Service Tax based on distribution through Head Office letters - Respondent claimed credit of service tax on basis of invoices issued by head office and challans issued by head office distributing the credit though not bearing the document name of invoice or challan. The authority denied credit on ground that distribution letters are not valid documents for availing cenvat credit - Whether cenvat credit can be denied merely on procedural lapses when all the required details concerning input service provider, service details and service tax paid are contained in the challans and invoices - HELD - When input services have been received by manufacturing unit under invoices of service providers issued in name of head office, the head office had taken cenvat credit and passed on the same to manufacturing units, the credit to manufacturing unit cannot be denied on procedural grounds if challans alongwith invoices contain all details required to be mentioned in invoices or challans. Such shortcomings constitute procedural lapses which cannot be treated as reason to deny cenvat credit particularly when genuineness of original invoices is not disputed by department – Further, once all the details are recorded and ER-1 returns are relied on for issuing the SCN, the Revenue is precluded from invoking the extended period of limitation. Accordingly even on account of time bar the demand for the extended period would not survive - The demand and penalty is set aside and the appeal is allowed [Read less]

Central Excise - Extended period of limitation - Appellant undertook packing, re-packing, labelling and re-labelling of goods and cleared the same. Department issued Show Cause Notice invoking extended period of limitation to demand duty. Appellant had communicated its intention to Department through exchange of letters - Whether extended period of limitation was rightly invoked – HELD - Department was kept informed through contemporaneous communications about Appellant's intention and activities. Department cannot plead ignorance of material facts after three years - Despite High Court's direction, Revenue delayed issua... [Read more]

Central Excise - Extended period of limitation - Appellant undertook packing, re-packing, labelling and re-labelling of goods and cleared the same. Department issued Show Cause Notice invoking extended period of limitation to demand duty. Appellant had communicated its intention to Department through exchange of letters - Whether extended period of limitation was rightly invoked – HELD - Department was kept informed through contemporaneous communications about Appellant's intention and activities. Department cannot plead ignorance of material facts after three years - Despite High Court's direction, Revenue delayed issuance of notice beyond stipulated period, thereby losing right to invoke extended period. Invocation was made without any justification and is legally unsustainable. When limitation is held unjustified, the consequential order and demand cannot stand. Appeal allowed and impugned order set aside [Read less]

Service Tax - Works contract services - Exemption for government irrigation projects - The Appellant provided works contract services to the Executive Engineer, Irrigation Construction Division and Executive Engineer, Bundhi Division for soil work on canal, construction of pulia on nala and soil work at minor irrigation facilities. The Appellant received payments for these services but was not registered with the Service Tax department on the bona fide belief that the services were not liable to service tax - Whether services provided for irrigation works to government agencies are exempt from service tax under the Mega Ex... [Read more]

Service Tax - Works contract services - Exemption for government irrigation projects - The Appellant provided works contract services to the Executive Engineer, Irrigation Construction Division and Executive Engineer, Bundhi Division for soil work on canal, construction of pulia on nala and soil work at minor irrigation facilities. The Appellant received payments for these services but was not registered with the Service Tax department on the bona fide belief that the services were not liable to service tax - Whether services provided for irrigation works to government agencies are exempt from service tax under the Mega Exemption Notification No. 25/2012-ST - HELD - The Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 provides exemption under Serial No. 12(d) for services provided to the Government by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of canal, dam or other irrigation works. The Lower Authorities themselves found and recorded that the services were provided by the Appellant to the Executive Engineer for soil work on canal, construction of pulia and other irrigation-related work. The nature of services provided is not in dispute. The Adjudicating Authority's insistence on production of additional documentary evidence such as work orders or agreements was procedurally erroneous when the essential nature of the services and the fact of their provision to the government agency were already established through Form 26AS and the certificate issued by the Executive Engineer. Services relating to irrigation works are explicitly covered by the Mega Exemption Notification. The impugned order is set aside. The service tax demand is set aside. All penalties imposed under Section 78 and 77(1) of the Finance Act, 1994 are also set aside and the appeal is allowed [Read less]

Service Tax - Limitation Period for claim of refund - Appellant, an industrial development corporation, granted long-term lease of industrial plots and claimed refund of service tax collected on development charges for the period prior to coming into force of Finance Act, 2017 which provided exemption with retrospective effect. The refund application made after the six-month period prescribed under Section 104(3) of Finance Act, 2017 was rejected on ground of limitation reckoned from date of assent to the Act - Whether limitation period should be reckoned from date of assent of amendment Act or from date of certificate iss... [Read more]

Service Tax - Limitation Period for claim of refund - Appellant, an industrial development corporation, granted long-term lease of industrial plots and claimed refund of service tax collected on development charges for the period prior to coming into force of Finance Act, 2017 which provided exemption with retrospective effect. The refund application made after the six-month period prescribed under Section 104(3) of Finance Act, 2017 was rejected on ground of limitation reckoned from date of assent to the Act - Whether limitation period should be reckoned from date of assent of amendment Act or from date of certificate issued by service provider confirming payment - HELD - To claim refund under the provision, the refund claim shall be accompanied by certificate from service provider in confirmation of payment of service tax. The limitation period under statute must be reckoned from date when certificate from service provider is made available and not from date of assent to the Finance Act. Following precedent decision of Bombay High Court in similar case, application for refund by appellant is construed to be within six-month limitation. The Tribunal erred in reckoning the period of limitation from the date of assent of the amendment Act - The respondent is directed to consider refund application and pass orders in accordance with law – The appeal is allowed [Read less]

Service Tax - Interest on refund of tax erroneously paid under mistaken belief – Eligibility to refund in the absence of documentary proof of duty payment - Voluntary payment of service tax on works executed in respect of construction of low cost house of carpet area less than 60 square meters and single independent house/ flats built by Rajasthan Housing Board (RHB), which is exempted by virtue of Notification No. 21/2012-ST – Commissioner (Appeals) denied interest observing that no interest is payable as the orders were passed well within three months from the date of filing of the refund claims – HELD - The narrat... [Read more]

Service Tax - Interest on refund of tax erroneously paid under mistaken belief – Eligibility to refund in the absence of documentary proof of duty payment - Voluntary payment of service tax on works executed in respect of construction of low cost house of carpet area less than 60 square meters and single independent house/ flats built by Rajasthan Housing Board (RHB), which is exempted by virtue of Notification No. 21/2012-ST – Commissioner (Appeals) denied interest observing that no interest is payable as the orders were passed well within three months from the date of filing of the refund claims – HELD - The narration of the appellant’s refund claim, by the Revenue, in its notice issued to the appellant cannot be considered as a stamp of assertion by the authority - The amount so claimed to be paid, is unknown; the date on which such amounts were said to be paid is unknown; the head under which the said amounts said to be paid is unknown, the purpose for such payment, if made, is also unknown. With so many unknown settings it fails rational logic to accept the claim of the appellants on its face value, when the law mandates furnishing of such “documentary and other evidence” in support of the claim - The assertion of the appellant is vague and indeterminate, completely non-verifiable and no more than a bland statement, which cannot substitute the need for hard evidence as required for allowing a refund claim under Section 11B of the CEA, 1944 - Section 11B requires documentary or other evidence establishing payment of duty; in the absence of challans or certificates from the Rajasthan Housing Board, the claimed payment was unverifiable - The appellants are not entitled to refund amounts withheld by the authorities - The appeals are disposed of by confirming rejection of refund components not supported by documentary evidence of tax payment and directing payment of statutory interest at 6% on the admissible refunds, from expiry of three months after the respective refund applications until payment – The appeals are disposed of accordingly - Interest on delayed refund - Statutory rate of interest on refund – HELD - The voluntarily paid duty cannot be treated as a revenue deposit merely because the service was subsequently asserted to be exempt. Interest commences only after expiry of three months from receipt of the refund application, and the Tribunal cannot award interest from the date of payment or at a rate beyond that notified under Section 11BB of CEA, 1944 - The appellants are liable to be paid interest by the Revenue in terms of Section 11BB. The interest would be accruable and payable to the appellants only in terms of Section 11BB of the Act for the delay in grant of refund beyond three months from the date of refund application. With utmost respect to the decisions cited by the appellant and law as settled by the Constitutional Courts, any claim of interest @12% is contrary to the extent provisions of Section 11BB of the Act and therefore contra legem the authority of this Tribunal, it not being in accordance with the prescribed statutory provisions. However, the rate of interest @ 6% in terms of Notification No.67/2003-CE(NT) dated 12.09.2003 is ex lege to which the appellant would lawfully be entitled to. [Read less]

Customs - Classification of QFT tubes and benefit of exemption notification - Individual components cannot claim exemption available to complete products; functional inter-dependence not a criterion for tariff classification when entry refers to complete unit - Respondent imported QFT tubes (blood collection tubes containing peptide antigens used for tuberculosis testing) and classified them under Custom Tariff Heading 3002 9020 claiming 5% concessional basic customs duty under Serial No. 166(A) of Notification 50/2017-Customs dated 30.06.2017 - Customs authorities reclassified the goods under CTH 3822 1990 (other diagnost... [Read more]

Customs - Classification of QFT tubes and benefit of exemption notification - Individual components cannot claim exemption available to complete products; functional inter-dependence not a criterion for tariff classification when entry refers to complete unit - Respondent imported QFT tubes (blood collection tubes containing peptide antigens used for tuberculosis testing) and classified them under Custom Tariff Heading 3002 9020 claiming 5% concessional basic customs duty under Serial No. 166(A) of Notification 50/2017-Customs dated 30.06.2017 - Customs authorities reclassified the goods under CTH 3822 1990 (other diagnostic reagents) with 10% BCD. Respondent later accepted the CTH 3822 1990 classification but contended that despite this classification, QFT tubes qualify for the 5% concessional BCD as integral components of ELISA kits citing functional interdependence between the tubes and ELISA plates - Whether QFT tubes, being components of ELISA kits, are eligible for the 5% concessional basic customs duty available for ELISA kits under Serial No. 166(A) of Notification 50/2017-Customs, or whether the exemption benefit is restricted to complete ELISA kits only and individual components cannot claim exemption meant for complete products – HELD – The exemption notifications must be strictly construed and when there is ambiguity, benefit goes to revenue not to assessee. Benefits cannot be extended beyond literal scope. The statute has extended exemption to ELISA kits as complete units. The imported goods are admittedly not the kit but a component thereof. Had legislature intended to extend benefit to individual components, it would have been specifically mentioned in the notification. QFT tubes are glass tubes meant for blood collection and being coated with antigens customizing them for use in ELISA kits does not render them ELISA kits. Functional interdependence of components does not fulfill criteria of strict interpretation of fiscal statutes. The established position is that individual components cannot claim exemption meant for complete products or systems - The end use or functional interdependence is not a criterion for determining classification unless the tariff entry explicitly refers to used or adaptation. The taxable event occurs when goods are imported and what matters is the condition of goods at time of import. The Commissioner (Appeals) wrongly extended exemption benefit of ELISA kit to QFT tubes by basing the decision on functional interdependence rather than on the literal wording of the notification - The order-in-appeal allowing respondent the benefit of 5% concessional BCD under Notification 50/2017 is set aside. QFT tubes do not qualify for the 5% concessional basic customs duty and should be classified under CTH 3822 1990 with 10% basic customs duty - The appeals filed by the department are allowed [Read less]

GST - Availability of Statutory Remedy in Assessment Proceedings - The Petitioner invoked writ jurisdiction of the Supreme Court under Article 32 of the Constitution seeking quashing of Show Cause Notice. The Petitioner prayed for ad-interim stay staying the proceedings initiated through the impugned Show Cause Notice - HELD - In view of the recent pronouncement of the Supreme Court in Gameskraft Technologies case, the petition need not be adjudicated on merits. The Petitioner will have to appear before the Assessing Officer and ultimately if any final order of assessment is passed and the Petitioner is aggrieved by the sa... [Read more]

GST - Availability of Statutory Remedy in Assessment Proceedings - The Petitioner invoked writ jurisdiction of the Supreme Court under Article 32 of the Constitution seeking quashing of Show Cause Notice. The Petitioner prayed for ad-interim stay staying the proceedings initiated through the impugned Show Cause Notice - HELD - In view of the recent pronouncement of the Supreme Court in Gameskraft Technologies case, the petition need not be adjudicated on merits. The Petitioner will have to appear before the Assessing Officer and ultimately if any final order of assessment is passed and the Petitioner is aggrieved by the same, the Petitioner may avail the remedy of Statutory Appeal provided under the Act - The petition stands disposed of - Final Order of Assessment - An interim order had been passed by the Court that no coercive steps shall be taken against the Petitioner. However, the Assessing Officer proceeded with the hearing of the impugned show cause notice and passed a final order of assessment - Whether a writ petition should be entertained when a final order of assessment has already been passed – HELD - Since a final order of assessment has already been passed, the Petitioner may now prefer an appeal as provided under the Act. It shall be open for the Petitioner to raise all contentions available to them in law before the appellate authority including the issue of revaluation and pre-deposit - The petition stands disposed of [Read less]

GST - Validity of Show Cause Notice without Document Identification Number - Whether the Show Cause Notice issued without Document Identification Number is in violation of the mandatory requirement specified in the CBIC Circular dated November 5, 2019 – HELD - A show cause notice issued without DIN number is invalid. Since the impugned order-in-original was passed on the basis of show cause notice which is without DIN number and is prima facie invalid, in view of the Circular dated 05.11.2019 so also the judgment of the Hon’ble Supreme Court of India, the respondent is directed not to take any coercive step on the basi... [Read more]

GST - Validity of Show Cause Notice without Document Identification Number - Whether the Show Cause Notice issued without Document Identification Number is in violation of the mandatory requirement specified in the CBIC Circular dated November 5, 2019 – HELD - A show cause notice issued without DIN number is invalid. Since the impugned order-in-original was passed on the basis of show cause notice which is without DIN number and is prima facie invalid, in view of the Circular dated 05.11.2019 so also the judgment of the Hon’ble Supreme Court of India, the respondent is directed not to take any coercive step on the basis of impugned order-in-original – Ordered accordingly [Read less]

GST - Distinction between "Issue" and "Service" under GST Law - Meaning of term "issue" in Section 73(10) of the CGST Act, 2017 - Statutory Interpretation of Taxing Statutes - Petitioner contended that an adjudication order under the GST Act was barred by limitation as it was not served to the taxpayer until after the extended deadline, even though it was digitally signed within the prescribed period - The order under Section 73 of the CGST Act, 2017 digitally signed on 30th April, 2024 was uploaded on 1st May, 2024 – Whether the order can be said to be validly issued within the period of limitation, having regard to the... [Read more]

GST - Distinction between "Issue" and "Service" under GST Law - Meaning of term "issue" in Section 73(10) of the CGST Act, 2017 - Statutory Interpretation of Taxing Statutes - Petitioner contended that an adjudication order under the GST Act was barred by limitation as it was not served to the taxpayer until after the extended deadline, even though it was digitally signed within the prescribed period - The order under Section 73 of the CGST Act, 2017 digitally signed on 30th April, 2024 was uploaded on 1st May, 2024 – Whether the order can be said to be validly issued within the period of limitation, having regard to the provisions contained in Section 73(10) of the CGST Act – HELD - Section 73 employs the expression “issue” in sub-sections (2), (9) and (10) thereof, while the word “service” is used in sub-section (1) of said Section as regards service of the show-cause notice. The legislature has used the words “issue” and “service” distinctly having regard to the nature of its requirement in the various sub-sections of the Section 73 while also providing for the manner in which such a notice and order is required to be served as provided for in Section 169 and under Rule 142 of the CGST Rules - The legislature deliberately used distinct terminology in the GST Act, employing "service" for show-cause notices under Section 73(1) but "issue" for orders under Sections 73(9) and 73(10), thereby indicating an intentional departure from Finance Act, 1994 and the Central Excise Act, 1944. The GST Act separates the act of issuance (determination and formal signing) from the act of service (communication via prescribed modes under Section 169) - Relying on the principle of strict construction of taxing statutes, the term "issue" means the official sending forth or promulgating of an order by digital signature, not its subsequent delivery or communication to the taxpayer. An order is complete for jurisdictional purposes upon issuance within the limitation period, regardless of when service occurs. The order digitally signed within the extended deadline was valid and enforceable despite being uploaded to the portal after the deadline – The writ petition is dismissed - Validity of Orders Signed within Limitation but Served After - Petitioner argued that the proper officer lacked competence to enforce an order that was served beyond the period of limitation prescribed under Section 73(10) of the CGST Act - Whether the statutory limitation period applies to the date of signing and issuance of an order or to the date of its communication to the taxpayer – HELD - The limitation period is confined to the act of issuance, not service. Since the order was digitally signed on the last day of the extended period of limitation, within the prescribed time, the officer vested with jurisdiction to issue the order. The subsequent uploading of the order and accompanying documents to the GST portal after the deadline does not invalidate or render the order void. The precedents under the Income Tax Act are distinguished as the GST Act employs different statutory language and structure. An order becomes enforceable upon issuance within the limitation period, and the mode, timing, or manner of subsequent service does not affect its validity or the authority's jurisdiction. The validity of the order is upheld. [Read less]

Karnataka Sales Tax Act, 1957 - Interpretation of Exemption Entry, Scope of an exemption granted to “sugar” - Appellant had imported sugar during a period when the statutory entry in the Fifth Schedule to the KST Act exempted sugar without specifying its origin. The respondent argued that because the entry referred to the Additional Duties of Excise, it was confined to domestic sugar - Whether imported sugar was covered by the exemption entry relating to sugar in the Fifth schedule to the Act prior to the 2001 amendment – HELD - The exemption entry must be construed on the strength of its own language and cannot be c... [Read more]

Karnataka Sales Tax Act, 1957 - Interpretation of Exemption Entry, Scope of an exemption granted to “sugar” - Appellant had imported sugar during a period when the statutory entry in the Fifth Schedule to the KST Act exempted sugar without specifying its origin. The respondent argued that because the entry referred to the Additional Duties of Excise, it was confined to domestic sugar - Whether imported sugar was covered by the exemption entry relating to sugar in the Fifth schedule to the Act prior to the 2001 amendment – HELD - The exemption entry must be construed on the strength of its own language and cannot be curtailed by adding words which the legislature did not employ. The reference to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 was for the limited purpose of identifying the commodity and did not incorporate a territorial limitation. If the exemption was intended to be confined to domestic sugar, the Legislature could have said so, and the subsequent 2001 amendment eventually did so - To accept the State’s argument would be to read into the pre-2001 entry words which were not there. It would amount to saying that “sugar” meant “sugar produced or manufactured in India” even before the Legislature inserted those very words. Such an approach would offend the settled rule of strict construction in taxing statutes - Prior to the Karnataka Act No. 5 of 2001, the imported sugar was covered by the exemption entry – The issue decided in favour of the appellant - Constitutional Validity of Retrospective Fiscal Legislation - The State legislature enacted an amendment inserting the words produced or manufactured in India after sugar in the exemption entry with a retrospective deeming clause. The single judge of the high court struck down the retrospective operation as unreasonable, but the division bench upheld it - Whether Karnataka Act No. 5 of 2001, inserting the words “produced or manufactured in India” with retrospective effect, is within the legislative competence of the State and constitutionally valid – HELD - The amendment is not merely clarificatory. Once it is held that imported sugar was covered by the exemption before 2001, the amendment cannot be characterized as a mere explanation of an existing legal position. It altered the legal position. It withdrew the exemption from imported sugar retrospectively. However, this conclusion does not by itself invalidate the amendment - The State Legislature, at the relevant time, had legislative competence under Entry 54 of List II to levy tax on sale or purchase of goods. The power to levy tax includes the power to grant exemption. The power to grant exemption includes the power to withdraw or restrict exemption - Retrospective fiscal legislation is not unconstitutional merely because it operates retrospectively, provided it stays within the legislative field. The amendment used clear language indicating a manifest intention to give retrospective effect and is within legislative competence and constitutionally valid - Issue decided in favour of the respondent - Enforcement of Retrospective Levy Regarding Penalty and Interest - After the retrospective withdrawal of the exemption for imported sugar, the respondent initiated reassessment proceedings to recover tax, penalty, and interest for past periods when the appellant had not collected tax from purchasers based on the earlier exemption regime - Whether the retrospective operation of the amendment can be enforced without qualification regarding penalty and interest against dealers who had acted under the earlier exemption regime – HELD - While the principal tax liability is valid, the imposition of penalty presupposes culpability or default, which is absent when the dealer acted in accordance with the statute and judicial understanding at the time. Similarly, interest should not be treated mechanically as it becomes punitive when the liability itself is created retrospectively and the dealer could not have collected tax at the time of sale the reassessment proceedings may continue for determination of principal tax liability in accordance with law. However, no penalty shall be imposed or recovered for the pre-amendment period. Interest, if otherwise leviable under the statute, shall run only from the date of lawful demand raised pursuant to reassessment after giving effect to this judgment and not from the date of the original transaction or the original assessment period – The issue decided partly in favour of the appellant - Computation of Central Sales Tax - Whether the reassessment in respect of inter-State sales must comply with the CST Act, 1956 notwithstanding the State amendment – HELD - The validity of the retrospective amendment under the State Sales Tax Act does not dispense with compliance with the CST Act. If tax is to be levied on inter-state sales, the assessing authority must apply the rate and conditions prescribed by the central sales tax act as applicable for the relevant period. The assessing authority shall recompute the liability in respect of inter-State sales strictly in accordance with the CST Act. [Read less]

Customs - Late Filing Fee for filing of Supplementary Bills of Entry - Bulk Cargo Variations – Appellant filed Bills of Entry within the prescribed time and cleared the manifested quantity of bulk steam coal upon payment of applicable customs duties. Subsequently, a marginal excess quantity of coal was discovered remaining in the port stockyard and appellant filed Supplementary Bills of Entry for the excess quantity. While assessing the Supplementary Bills of Entry, the Department imposed late filing fee under Section 46(3) of the Customs Act, 1962 by computing the delay from the date of filing of the original Import Gen... [Read more]

Customs - Late Filing Fee for filing of Supplementary Bills of Entry - Bulk Cargo Variations – Appellant filed Bills of Entry within the prescribed time and cleared the manifested quantity of bulk steam coal upon payment of applicable customs duties. Subsequently, a marginal excess quantity of coal was discovered remaining in the port stockyard and appellant filed Supplementary Bills of Entry for the excess quantity. While assessing the Supplementary Bills of Entry, the Department imposed late filing fee under Section 46(3) of the Customs Act, 1962 by computing the delay from the date of filing of the original Import General Manifest - Whether late filing fee can be imposed in routine and mechanical manner when the delay arises from natural and unavoidable characteristics of bulk cargo, with no allegation of suppression, misdeclaration or fraud - HELD - Section 46(3) of the Customs Act, 1962 and Regulation 4 of the Bill of Entry Regulations, 2018 authorize the proper officer to waive late fee in deserving cases when satisfied that there was sufficient cause for the delay. The Board Circular 14/2017-Customs directs that penal action should not be initiated mechanically in all cases of Import General Manifest amendment and that due consideration may be given to the circumstances of amendment. The SOP for excess dry bulk cargo delivery issued by the Commissioner of Customs provides that the levy of applicable fine or penalty shall be applicable as deemed fit by the jurisdictional officer and should not be imposed in routine or mechanical manner - The excess quantity arose solely from the inherent characteristics of bulk cargo which are recognized commercial incidents entirely beyond the control of the importer. The Appellant filed the Supplementary Bills of Entry only after obtaining due permission from the customs authorities in accordance with the prescribed procedure and there was no allegation whatsoever of suppression of facts, misdeclaration, undervaluation or attempt to evade customs duty. The Appellant discharged the applicable customs duty on the excess quantity immediately upon assessment. The authorities below proceeded on an unduly technical interpretation of Section 46(3), overlooking the practical realities governing importation of bulk cargo and the absence of any revenue loss to the exchequer. The late filing fee was imposed solely on account of circumstances arising from the peculiar nature of bulk cargo imports without adequately considering whether the Appellant had sufficient cause for not filing the Supplementary B/E earlier. The levy of late filing fee in the present case is not sustainable - The impugned Order-in-Appeal is set aside and the appeals are allowed [Read less]

Customs - Tariff Classification of Industrial Shrimp Feed Manufacturing Machinery - Heading 8436 versus Heading 8438 – Appellant imported complete integrated industrial plant for large-scale commercial manufacture of shrimp feed claiming classification under Heading 8436 (machinery for preparing animal feeding stuffs) whereas the Department classified under Heading 8438 (industrial machinery for food manufacture) - Whether machinery designed for industrial shrimp feed production falls under Heading 8436 for farm-level machinery or under Heading 8438 for industrial machinery – HELD – The classification must depend upo... [Read more]

Customs - Tariff Classification of Industrial Shrimp Feed Manufacturing Machinery - Heading 8436 versus Heading 8438 – Appellant imported complete integrated industrial plant for large-scale commercial manufacture of shrimp feed claiming classification under Heading 8436 (machinery for preparing animal feeding stuffs) whereas the Department classified under Heading 8438 (industrial machinery for food manufacture) - Whether machinery designed for industrial shrimp feed production falls under Heading 8436 for farm-level machinery or under Heading 8438 for industrial machinery – HELD – The classification must depend upon statutory tariff entries, commercial identity and legislative intent, not merely upon the end product manufactured. Although Heading 8436 covers machinery for preparing animal feeding stuffs, HSN Explanatory Notes expressly exclude machinery clearly of a kind designed for industrial use. The machinery imported was a technologically sophisticated integrated production plant for continuous large-scale commercial manufacture with annual capacity of approximately 125,000 MT, not ordinary farm-level feed preparation equipment - The nature, design, character and commercial function of the imported goods revealed industrial use and therefore machinery stands excluded from Heading 8436 - Scope of Heading 8436 is contextually limited to agricultural or farm-level machinery as it appears in a statutory grouping dealing with agricultural, horticultural, forestry and allied husbandry machinery whereas Heading 8438 specifically covers machinery for industrial preparation or manufacture of food whether for human or animal consumption. Consequently, machinery is more appropriately classifiable under Heading 8438 - The distinction between farm-level operations and commercial industrial aquaculture operations for large-scale shrimp feed manufacture is material and supports classification under Heading 8438 - The imported Shrimp Feed Manufacturing Machinery is correctly classifiable under Customs Tariff Heading 8438 80 90 and not under CTH 8436 10 00 as claimed by the appellant. Consequently, the re-classification made by the Department and the consequential levy of additional duty of customs (CVD) are held to be legal and proper - The appeal is dismissed - Provisional Assessment and Appealability - Rejection of Appeal as Time-Barred – The appeal rejected by Commissioner (Appeals) as barred by limitation under Section 128 Customs Act with delay of 159 days beyond condonable period on basis that communication dated 22.03.2017 refusing to issue speaking order constituted appealable order; bills of entry involved were treated as provisionally assessed by Department - Whether Commissioner (Appeals) correctly rejected appeal as time-barred without examining foundational issues relating to nature of assessment and proper commencement of limitation period – HELD – The Commissioner (Appeals) committed serious errors by mechanically treating communication dated 22.03.2017 as appealable order and starting point for limitation without first examining whether B/E were provisionally assessed or finally assessed under Section 18 of Customs Act. The communication merely conveyed department's position regarding speaking orders and neither finalized assessment nor determined classification or duty liability - Before invoking limitation under Section 128, Commissioner was required to determine whether any final assessment order existed, whether speaking order was required under Section 17(5) where reassessment was contrary to self-assessment and not accepted by importer, and from which date limitation could legally commence; impugned order contained no finding regarding legal character and effect of the communication and no proper factual determination of delay including date of service, date of filing and methodology of computing delay - The contention that under Section 2(2) Customs Act the expression assessment includes provisional assessment and reassessment and therefore refusal to issue speaking order was legally questionable was completely overlooked - Further as imported machinery was registered as project import, whether same was finalized under Project Import Regulations 1986 had to be ascertained; rejection of appeals without determining these foundational issues and without proper legal reasoning cannot be sustained - The matter be remanded to the Commissioner (Appeals) for fresh consideration of all issues including maintainability, provisional assessment, applicability of Sections 17 and 18 of the Customs Act, limitation and merits, in accordance with the law. [Read less]

Customs - Classification of ophthalmic instruments - Appellant imported Operation Microscopes, Lensmeters and Chart Projectors and classified them under Heading 9018 as ophthalmic instruments, which was accepted by the Department at the time of clearance. Department subsequently based on audit objection proposed reclassification under Headings 9011, 9031 and 9008 - Whether the goods are correctly classifiable under Heading 9018 or under the alternate headings – HELD - The goods are specialized ophthalmic instruments designed for ophthalmic surgical procedures and clinical examination of the eye. HSN Explanatory Notes spe... [Read more]

Customs - Classification of ophthalmic instruments - Appellant imported Operation Microscopes, Lensmeters and Chart Projectors and classified them under Heading 9018 as ophthalmic instruments, which was accepted by the Department at the time of clearance. Department subsequently based on audit objection proposed reclassification under Headings 9011, 9031 and 9008 - Whether the goods are correctly classifiable under Heading 9018 or under the alternate headings – HELD - The goods are specialized ophthalmic instruments designed for ophthalmic surgical procedures and clinical examination of the eye. HSN Explanatory Notes specifically exclude ophthalmic binocular-type microscopes from Heading 9011 and expressly include them under Heading 9018. Lensmeters are specialized ophthalmic diagnostic instruments integral to eye treatment and fall within Heading 9018 rather than residuary Heading 9031. Chart Projectors are specialized ophthalmic devices for projecting visual acuity charts in clinical environment and form part of eye testing systems covered under Heading 9018 not general-purpose projectors under Heading 9008. Product catalogues establish that goods are designed, marketed and configured as ophthalmic surgical instruments with features uniquely aligned to ophthalmic procedures - Classification must be based on primary function and essential character, not hypothetical alternate uses. Subsequent classification of identical goods under Heading 9018 by department reinforces correctness of appellant's classification. Classification adopted by appellant is legally sustainable and reclassification proposed is set aside – The appeal is allowed - Extended period of limitation - Invocation without suppression or wilful misstatement - Appellant imported goods over prolonged period with consistent declarations as ophthalmic instruments under Heading 9018 supported by product catalogues and technical literature. Goods were examined and assessed by customs officers on multiple occasions and classification was accepted - Department later sought to invoke extended period of limitation on allegation of intentional misclassification and suppression of facts. Whether extended period of limitation was rightly invoked – HELD – The invocation of extended period is contingent upon existence of collusion, wilful misstatement or suppression of facts with intent to evade duty. Burden lies on Revenue to establish these elements. Appellant had disclosed all material particulars in Bills of Entry. Contemporaneous examination reports establish that goods were physically opened and examined by customs authorities with verification of description including model numbers and specifications. Assessment was not mechanical acceptance but involved officers raising queries and seeking product catalogues and technical details. Department was fully aware of nature, description and use of goods at time of clearance. Dispute is purely interpretational in nature arising from difference of opinion on classification. Similar audit objection was raised and closed by department in 2015 demonstrating prior awareness and acceptance. Where issue has been previously examined and accepted by department, extended period cannot be invoked on same set of facts. In absence of evidence of suppression or wilful misstatement, extended period is not rightly invoked and demand is barred by limitation - Confiscation, redemption fine and penalties in absence of misdeclaration – HELD – The confiscation under Section 111(m) requires misdeclaration which involves incorrect declaration of value, quantity or description of goods. In present case description of goods is not disputed and dispute relates only to classification which is interpretational. Concept of redemption fine arises when goods are available for redemption - Power to impose redemption fine is not automatic and must be exercised judiciously keeping in view factual matrix including availability of goods and nature of alleged contravention. Penalty under Section 114A requires mens rea and is attracted only when duty has not been levied or short-levied by reason of collusion, wilful misstatement or suppression of facts. In present case contemporaneous records clearly demonstrate that appellant had disclosed all relevant particulars and goods were verified by department. Essential ingredient of mens rea is completely absent. In absence of misdeclaration and suppression and considering bona fide conduct of appellant, confiscation and penalties are not legally tenable. Confiscation, redemption fine and penalty are set aside. [Read less]

Service Tax - Liability under Reverse Charge Mechanism for Insurance Commission - Whether commission received by insurance agent for providing services to insurance company is liable to service tax on the agent or the recipient under reverse charge – HELD – A plain reading of Rule 2(1)(d)(i)(A) of Service Tax Rules, 1994 clearly provides that in the case of commission paid by an insurance company to its insurance agent, the liability to discharge service tax is cast upon the insurance company as recipient of service under reverse charge mechanism. Once it stands established through documentary evidence including charte... [Read more]

Service Tax - Liability under Reverse Charge Mechanism for Insurance Commission - Whether commission received by insurance agent for providing services to insurance company is liable to service tax on the agent or the recipient under reverse charge – HELD – A plain reading of Rule 2(1)(d)(i)(A) of Service Tax Rules, 1994 clearly provides that in the case of commission paid by an insurance company to its insurance agent, the liability to discharge service tax is cast upon the insurance company as recipient of service under reverse charge mechanism. Once it stands established through documentary evidence including chartered accountant's certificate and bank statements that appellant acted merely as commission agent of the insurance company, the statutory liability to discharge service tax could not have been fastened upon appellant - The obligation to establish payment of service tax by recipient cannot be shifted upon appellant, and if Department entertained any doubt it was open to verify records of insurance company, inadequacy of investigation cannot be fastened upon appellant – As the services rendered by the appellant are not liable to Service Tax, there was no need to take the Registration from the Department for the said services. Moreover, the necessary ingredients for imposition of penalties are also found to be absent in this case. Accordingly, the penalties imposed on the appellant are set aside - The impugned order is set aside and the appeal is allowed - Demand on the basis of figures reflected in income tax returns and form 26AS without conducting independent verification - Whether service tax demand can be sustained solely on the basis of income tax returns and form 26AS without independent investigation establishing nature and taxability of receipts – HELD - Demand of service tax cannot be confirmed merely on the basis of figures reflected in income tax returns or form 26AS; such information may at best constitute a starting point for investigation but demand must ultimately be supported by independent and corroborative evidence establishing nature, taxability and exigibility of receipts - In the present case no such independent exercise has been undertaken by respondent and findings recorded rest merely on assumptions and presumptions rather than legally admissible evidence. Where documentary evidence brought on record during appellate proceedings establishes true nature of services and source of receipts, it becomes incumbent upon revenue to examine same on its own merits and if necessary, dislodge factual assertions by leading cogent and affirmative evidence. [Read less]

Service Tax – Requirement of Hearing on Preliminary Issue of Limitation - Appellant filed appeal before Commissioner (Appeals) challenging order-in-original but appeal was dismissed as time-barred without granting opportunity of personal hearing. The appellant claimed that original order was sent to old address after business shifted and knowledge of order was received subsequently from departmental authorities - Whether dismissal of appeal on preliminary issue of limitation without affording effective opportunity of hearing violates principles of natural justice - HELD - Where appellate authority proposes to reject appe... [Read more]

Service Tax – Requirement of Hearing on Preliminary Issue of Limitation - Appellant filed appeal before Commissioner (Appeals) challenging order-in-original but appeal was dismissed as time-barred without granting opportunity of personal hearing. The appellant claimed that original order was sent to old address after business shifted and knowledge of order was received subsequently from departmental authorities - Whether dismissal of appeal on preliminary issue of limitation without affording effective opportunity of hearing violates principles of natural justice - HELD - Where appellate authority proposes to reject appeal on preliminary issue which finally determines valuable statutory right of appeal, observance of principles of natural justice is indispensable. Right of personal hearing is not empty formality but enables appellant to explain circumstances relating to limitation, date of communication of order, reasons constituting sufficient cause and other relevant facts bearing on maintainability. Denial of such opportunity vitiates decision-making process. Audi-alteram-partem is fundamental canon of natural justice and order passed in breach thereof cannot be sustained. An order affecting civil rights passed without granting effective opportunity of hearing cannot be allowed to stand - Impugned order set aside, matter remanded to Commissioner (Appeals) for fresh adjudication with proper notice of hearing and consideration of all submissions. [Read less]

Central Excise - Cross-utilization of Education Cess and SHE Cess Credit against Excise Duty - The appellant transferred accumulated Education Cess and Secondary and Higher Education Cess credit from its Cenvat Account towards payment of Excise Duty in May 2015, after the cesses were withdrawn and subsumed into Excise Duty and Service Tax effective from March 1, 2015 for excisable goods and June 1, 2015 for taxable services - Department raised a demand for Excise Duty contending that there was no provision to transfer the accumulated EC and SHE cess to the Cenvat account and utilize the same towards payment of Excise Duty ... [Read more]

Central Excise - Cross-utilization of Education Cess and SHE Cess Credit against Excise Duty - The appellant transferred accumulated Education Cess and Secondary and Higher Education Cess credit from its Cenvat Account towards payment of Excise Duty in May 2015, after the cesses were withdrawn and subsumed into Excise Duty and Service Tax effective from March 1, 2015 for excisable goods and June 1, 2015 for taxable services - Department raised a demand for Excise Duty contending that there was no provision to transfer the accumulated EC and SHE cess to the Cenvat account and utilize the same towards payment of Excise Duty - Whether accumulated Education Cess and SHE Cess credit under the Cenvat Credit Rules 2004 can be transferred to the Cenvat account and utilized towards payment of Excise Duty after these cesses were withdrawn and incorporated into the Excise Duty and Service Tax - HELD - The Delhi High Court in Cellular Operators Association of India held that under the Cenvat Credit Rules 2004, credit of EC and SHE was admissible and could be utilized only for payment of EC and SHE respectively, and that cross-utilization of EC and SHE towards excise duty or Service Tax was impermissible. Even though the cesses were withdrawn and subsumed into Excise Duty and Service Tax, this did not change the statutory restriction on cross-utilization - The confirmed demand is upheld. However, since the appellant was carrying much more balance than the amount in question when it utilized the ED and SHE cess, no interest was required to be paid on the confirmed demand. The issue as to whether ED and SHE cess could be transferred to the Cenvat account and utilized therefrom was being actively litigated and had reached the High Court and Larger Bench level at the time of the appellant's action. Hence, no penalty is called for under such circumstances where the question was subject to judicial determination. The penalty imposed is set aside – The appeal is partly allowed [Read less]

Customs - Tariff Value Notifications and Governmental Policy Prerogative - Petitioner challenged tariff value notifications issued under Section 14(2) of Customs Act for betel nuts of Nepalese origin claiming that application of inflated tariff values constitutes para-tariff prohibited under South Asian Free Trade Area Agreement and Revised Indo-Nepal Treaty of Trade - Whether Court could interfere with tariff value notifications issued by Government authorities - HELD - Relief sought by petitioner pertains to policy decision which lies within prerogative of Government of India and while exercising writ jurisdiction, Court... [Read more]

Customs - Tariff Value Notifications and Governmental Policy Prerogative - Petitioner challenged tariff value notifications issued under Section 14(2) of Customs Act for betel nuts of Nepalese origin claiming that application of inflated tariff values constitutes para-tariff prohibited under South Asian Free Trade Area Agreement and Revised Indo-Nepal Treaty of Trade - Whether Court could interfere with tariff value notifications issued by Government authorities - HELD - Relief sought by petitioner pertains to policy decision which lies within prerogative of Government of India and while exercising writ jurisdiction, Court does not ordinarily interfere with policy decisions of authorities unless same are shown to be arbitrary, illegal or in violation of statutory or constitutional provisions. In present case no arbitrariness or illegality has been demonstrated to warrant interference by Court – There is no merit in the present application and the same stands dismissed [Read less]

Customs - Duty liability on destruction of duty-free inputs in export oriented units - Appellant, a 100% EOU engaged in pharmaceutical manufacturing, procured raw materials duty-free under Notification No. 52/2003-Customs and Notification No. 22/2003-Central Excise. Certain raw materials became obsolete and unusable and were destroyed within the factory after due intimation to departmental authorities. Revenue initiated proceedings claiming that the notifications prior to 2015 amendments did not permit destruction without payment of duty and that the Foreign Trade Policy could not override statutory provisions - Whether du... [Read more]

Customs - Duty liability on destruction of duty-free inputs in export oriented units - Appellant, a 100% EOU engaged in pharmaceutical manufacturing, procured raw materials duty-free under Notification No. 52/2003-Customs and Notification No. 22/2003-Central Excise. Certain raw materials became obsolete and unusable and were destroyed within the factory after due intimation to departmental authorities. Revenue initiated proceedings claiming that the notifications prior to 2015 amendments did not permit destruction without payment of duty and that the Foreign Trade Policy could not override statutory provisions - Whether duty is payable on raw materials procured duty-free and subsequently destroyed within the factory under intimation to departmental officials – HELD - The EOU scheme is a composite statutory scheme wherein the Foreign Trade Policy provides the substantive framework and exemption notifications provide the implementation mechanism. These must be read harmoniously, not in isolation. Paragraph 6.15 of the FTP expressly permits destruction of raw materials within the unit after due intimation. Destruction of unusable inputs is a recognized commercial reality expressly permitted under the FTP. In the absence of any allegation of diversion or misuse, and where the appellant complied with all procedural requirements and intimated the department prior to destruction, insisting on duty payment results in artificial liability not contemplated by the scheme. The decisions in Indian Tobacco Association, Mehler Engineered Products, Tyco Electronics and Saint Gobain Crystals support that destruction of obsolete materials under the FTP framework does not attract duty. Conversely, Revenue's reliance on Sandoz, Teva API and Bell Match Company is distinguishable as those cases involved non-compliance with mandatory conditions or violation of notification conditions, whereas here there was admitted compliance – The destruction of raw materials within the factory under due intimation does not attract duty liability. The appellant is not liable to pay Customs or Central Excise duties on duty-free inputs destroyed under intimation as such destruction is in accordance with the Foreign Trade Policy and the EOU scheme - Retrospective application of amendments clarifying destruction of inputs in export oriented units - Prior to 2015, the exemption notifications contained no explicit provision permitting destruction of goods without payment of duty. Vide Notification No. 30/2015-Central Excise and Notification No. 34/2015-Customs dated 25.05.2015, an express provision was inserted permitting destruction of raw materials, consumables, spares and other goods within the unit after intimation to customs authorities - Whether the amendments made in 2015 permitting destruction of inputs are clarificatory and retrospective or only prospective in nature – HELD - A comparative reading of pre-amended and amended notifications shows that while pre-amended notifications were silent, Paragraph 6.15 of the FTP already permitted destruction of raw materials prior to 2015. The amendments merely bring the notifications into line with the policy that already existed. The amendments do not introduce new conditions but merely align the notifications with existing FTP provisions - Accordingly, the amendments introduced vide Notification No. 30/2015-CE and Notification No. 34/2015-Cus are held to be clarificatory and retrospective in nature - Non-sustainability of duty, interest and penalty demands in EOU destruction cases involving bona fide compliance with policy framework - Revenue demanded Customs duty, Central Excise duty, interest and penalties for destruction of duty-free inputs within the factory. The appellant had acted transparently, intimated the department prior to destruction, and followed the policy framework - Whether the demands of duty, interest and penalties are sustainable in law – HELD - Given the findings that destruction of raw materials does not attract duty liability and the amendments permitting such destruction are clarificatory and retrospective, the demand of duty itself is unsustainable. Consequently, the demand for interest also fails. Regarding penalties, established judicial precedents prohibit imposing penalties in cases involving bona fide interpretation of law and absence of mens rea. The record clearly shows the appellant acted transparently, intimated the Department prior to destruction, followed the policy framework, and there is no evidence of suppression, wilful misstatement or intent to evade duty. Revenue has not produced material to rebut this position. Applying settled principles on penalty imposition, the penalties imposed are unsustainable. [Read less]

Service Tax - Refundable Advances for Construction Services - The Respondent, engaged in providing construction services, received advances from customers described as security deposits for finding suitable property. Department raised a service tax demand treating these advances as taxable consideration for construction services rendered - Whether service tax is payable on refundable advances received for providing construction services – HELD - The evidence clearly established that the advances were received as refundable security deposits for the service of finding suitable property for customers, and in the event of n... [Read more]

Service Tax - Refundable Advances for Construction Services - The Respondent, engaged in providing construction services, received advances from customers described as security deposits for finding suitable property. Department raised a service tax demand treating these advances as taxable consideration for construction services rendered - Whether service tax is payable on refundable advances received for providing construction services – HELD - The evidence clearly established that the advances were received as refundable security deposits for the service of finding suitable property for customers, and in the event of non-fulfillment thereof, the amounts were refunded back to the clients. No taxable service was rendered in respect of these advances. The amount received as refundable advance does not constitute taxable consideration. The contention that advances were reflected as current liabilities instead of short/long-term borrowings had no merit as such classification does not affect the nature of the payment - The challenge to the benefit of cum-tax value extended to the appellant is also not sustainable in view of the provisions of Section 67(2) of the Act which specifically provides that where tax is not separately recovered, the gross amount shall be treated as inclusive of tax. It is not the case of the Revenue that separate recovery of tax has been made by the appellant - The demand on advances was rightly dropped by the Commissioner. Answered in favour of assessee – The Revenue appeal is dismissed - Service Tax on Real Estate Agent Services relating to Meerut Development Authority Flats - Whether service tax is payable on the sale of immovable property where the seller had acquired ownership of the property through purchase – HELD - The purchase agreement and the allotment letter shows that the flats were originally allotted to another entity and were subsequently purchased by the assessee. Having acquired the flats and become the owner, the subsequent sale was merely a transaction of sale and purchase of its own immovable property and not a service. Such transaction does not fall within the ambit of service tax - The demand on real estate agent services relating to Meerut Development Authority flats was rightly dropped - Validity of Completion Certificate - Department contended that the certificate relied upon by the assessee was merely an occupancy certificate and not a completion certificate, and that statutory provisions take cognizance only of completion certificates - Whether the benefit of completion certificate can be denied on the ground that occupancy certificate was initially produced instead of completion certificate – HELD - The completion certificate issued by the Municipal Corporation of Delhi was rejected by the investigating officer merely on the ground of not producing the original. The assessee subsequently produced the original certificate which was verified and returned. The benefit cannot be denied to the assessee on the basis of such procedural non-compliance when the original certificate was later produced and verified. [Read less]

Service Tax - Demand of Service Tax on Meeting Fees paid to Whole-time Directors under Reverse Charge Mechanism – Appellant incurred expenses on meeting fees paid to whole-time directors. The revenue raised a service tax demand under Reverse Charge Mechanism contending that meeting fees constituted taxable service and the lower authorities confirmed the demand - Whether service tax is payable on meeting fees paid to whole-time directors under RCM – HELD – It is settled jurisprudence that a whole-time director is essentially an employee of the company under the provisions of the Companies Act and is recognized as key ... [Read more]

Service Tax - Demand of Service Tax on Meeting Fees paid to Whole-time Directors under Reverse Charge Mechanism – Appellant incurred expenses on meeting fees paid to whole-time directors. The revenue raised a service tax demand under Reverse Charge Mechanism contending that meeting fees constituted taxable service and the lower authorities confirmed the demand - Whether service tax is payable on meeting fees paid to whole-time directors under RCM – HELD – It is settled jurisprudence that a whole-time director is essentially an employee of the company under the provisions of the Companies Act and is recognized as key managerial personnel. Whatever remuneration is paid to a whole-time director in conformity with the Companies Act is pursuant to an employer-employee relationship - The levy of service tax on such payment falls within the exclusion clause of the definition of Service under Section 65B(44)(b) of the Finance Act, 1994, which excludes provision of service by an employee to the employer in the course of or in relation to his employment – Further, the CBEC Circular dated 01.12.2008 clarifying that so long as the activities performed are duties within the framework of the terms of employment, the amount paid by an employer to an employee would not be subject to service tax - No service tax is leviable on the Meeting Fees paid to Whole-time Directors and therefore, the impugned order is unsustainable and set aside - The appeal is allowed [Read less]

GST – Revocation of GST registration, Violation of principles of natural justice - Whether an order of rejection can be validly passed when the Show Cause Notice and the rejection order bear the same date, thereby denying the petitioner any reasonable opportunity to respond to the notice – HELD - When a Show Cause Notice and the order of rejection of application for revocation bear the same date, it violates the principles of natural justice and procedural fairness. Although there was some contest to the medical certificate submitted by the petitioner, the glaring procedural defect that the Show Cause Notice was stated... [Read more]

GST – Revocation of GST registration, Violation of principles of natural justice - Whether an order of rejection can be validly passed when the Show Cause Notice and the rejection order bear the same date, thereby denying the petitioner any reasonable opportunity to respond to the notice – HELD - When a Show Cause Notice and the order of rejection of application for revocation bear the same date, it violates the principles of natural justice and procedural fairness. Although there was some contest to the medical certificate submitted by the petitioner, the glaring procedural defect that the Show Cause Notice was stated to have been issued on the same date on which the order of rejection was passed makes the order invalid - No reasonable opportunity was afforded to the petitioner to submit his response to the Show Cause Notice before passing the rejection order - The order of rejection is set aside. The petitioner is granted liberty to submit his response to the Show Cause Notice and the Department is directed to pass a fresh order taking into consideration the reply - The writ petition is disposed of [Read less]

Service tax - Manpower recruitment or supply agency service - Contract for washing and servicing activities - Appellant entered into a contract for undertaking washing activities, stacking bottles in godowns, cleaning of washing areas, bottling areas, blending areas and godown servicing using the appellant's own manpower - Revenue alleged that the services rendered amounted to supply of Manpower service - Whether the provision of labour-intensive services using contractor's own personnel constitutes manpower recruitment or supply agency service within the taxable definition – HELD - The contract basically relates to prov... [Read more]

Service tax - Manpower recruitment or supply agency service - Contract for washing and servicing activities - Appellant entered into a contract for undertaking washing activities, stacking bottles in godowns, cleaning of washing areas, bottling areas, blending areas and godown servicing using the appellant's own manpower - Revenue alleged that the services rendered amounted to supply of Manpower service - Whether the provision of labour-intensive services using contractor's own personnel constitutes manpower recruitment or supply agency service within the taxable definition – HELD - The contract basically relates to provision of specific work activities namely washing, cleaning and servicing using the contractor's own manpower, and contains no obligation on the appellant to supply manpower to the service recipient - The contract explicitly prescribes performance of quality work activities rather than supply of personnel - The issue being no longer res-integra in light of consistent decisions rendered by the Tribunal in similar matters concerning the same service recipient; accordingly, the appeal is allowed and the impugned order is set aside [Read less]

Central Excise - CENVAT credit on Countervailing duty paid at concessional rate - Eligibility based on nature of duty not rate of levy - Appellant imported steam coal and sought to avail CENVAT credit on CVD paid at concessional rates of one percent and two percent under Notification No. 12/2012-Cus dated 17.03.2012 - Revenue denied the credit contending that Central Excise Notification No. 1/2011 exempts central excise duty on steam coal and therefore the additional duty of customs equivalent to such excise duty should not be allowed as credit - Whether CVD paid at concessional rates of one percent or two percent qualifie... [Read more]

Central Excise - CENVAT credit on Countervailing duty paid at concessional rate - Eligibility based on nature of duty not rate of levy - Appellant imported steam coal and sought to avail CENVAT credit on CVD paid at concessional rates of one percent and two percent under Notification No. 12/2012-Cus dated 17.03.2012 - Revenue denied the credit contending that Central Excise Notification No. 1/2011 exempts central excise duty on steam coal and therefore the additional duty of customs equivalent to such excise duty should not be allowed as credit - Whether CVD paid at concessional rates of one percent or two percent qualifies as additional duty of customs equivalent to duty of excise eligible for CENVAT credit, or whether such credit can be denied on the ground of payment at concessional rate rather than tariff rate – HELD - When more than one Notification is available, the importer is free to choose any notification and no particular notification can be pressed upon the importer. The expression equivalent to duty of excise in Rule 3(1)(vii) of CENVAT Credit Rules refers to the measure or yardstick of levy and not to the quantum or rate at which duty is paid - The countervailing duty paid under Notification No. 12/2012-Cus remains a duty under Section 3 of Customs Tariff Act and is eligible for credit irrespective of the concessional rate at which it is paid; the Rule does not impose any condition that such duty must be paid at the tariff rate or must strictly correspond to the rate of excise duty, reading such condition into the Rule would amount to importing words into the statute which is impermissible – Further, denial of credit on the basis of concessional rate would defeat the very purpose of the CENVAT scheme which is designed to avoid cascading of taxes and ensure seamless flow of credit; circulars and administrative instructions cannot override statutory provisions - The extended period cannot be invoked when the dispute relates to pure interpretation of statute and credit is claimed under bona fide belief of entitlement; accordingly, the demand for disallowance of CENVAT credit and associated penalties are set aside, though a discretionary penalty of approximately ten percent of the credit availed is imposed to meet the interest of justice – The appeal is allowed [Read less]

Central Excise - Exemption for Wind Energy Parts - Un-machined castings for wind operated electricity generators - The Appellant manufactured un-machined castings which were supplied to manufacturers of Wind Operated Electricity Generators claiming exemption under Notification 6/2006-CE dated 01.03.2006 which exempts goods falling under any chapter and used in conventional energy devices including WOEG, its components and parts. The Commissioner held that un-machined castings falling under CETH 7325 were not eligible for exemption and that only WOEG parts classifiable under CETH 8503 qualified - Whether un-machined casting... [Read more]

Central Excise - Exemption for Wind Energy Parts - Un-machined castings for wind operated electricity generators - The Appellant manufactured un-machined castings which were supplied to manufacturers of Wind Operated Electricity Generators claiming exemption under Notification 6/2006-CE dated 01.03.2006 which exempts goods falling under any chapter and used in conventional energy devices including WOEG, its components and parts. The Commissioner held that un-machined castings falling under CETH 7325 were not eligible for exemption and that only WOEG parts classifiable under CETH 8503 qualified - Whether un-machined castings tailor-made for use in the manufacture of WOEG are eligible for exemption under Notification 6/2006-CE when they are not separately classified as WOEG parts and components - HELD - The Commissioner misinterpreted Serial No. 21 of List 5 of the Notification. The Serial No. 21 of the said Notification specifically provides exemption for parts consumed within the factory of production of such parts for the manufacture of goods listed in Serial Nos. 1 to 20 including WOEG. This entry was specifically included to cover parts which further go into the making of parts for WOEG. The exemption notification applies to goods falling under any chapter without chapter-specific limitation - The Appellant manufactured the castings strictly as per specifications and drawings provided by customers for use only in manufacturing WOEG. The castings are tailor-made for WOEG manufacture and cannot be used elsewhere with or without changes. The CBEC clarification dated 30.06.2011 confirmed that both un-machined and machined castings tailor-made for WOEG are eligible for exemption. Un-machined castings are not merely intermediate goods but are specifically designed and produced for direct incorporation into WOEG. Any other reading of the notification would defeat its intention. The un-machined castings are eligible for exemption under Notification 6/2006-CE - the impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Extended Period - Suppression of Facts - Disclosure in Returns - Appellant procured two types of coal: higher quality coal with Cenvat credit and lower quality coal without Cenvat credit, both used in manufacturing process and also sold non-Cenvat availed coal to third parties - SCN issued under extended period provisions alleging that Cenvat availed coal was cleared to third parties - Whether extended period demand for excise duty can be sustained when all facts including removal details and duty treatment have been properly disclosed in monthly ER-6 and ER-1 returns filed with Department – HELD - Since... [Read more]

Central Excise - Extended Period - Suppression of Facts - Disclosure in Returns - Appellant procured two types of coal: higher quality coal with Cenvat credit and lower quality coal without Cenvat credit, both used in manufacturing process and also sold non-Cenvat availed coal to third parties - SCN issued under extended period provisions alleging that Cenvat availed coal was cleared to third parties - Whether extended period demand for excise duty can be sustained when all facts including removal details and duty treatment have been properly disclosed in monthly ER-6 and ER-1 returns filed with Department – HELD - Since appellant filed ER-6 returns regularly showing opening balance, receipt, removal and closing balance, and filed ER-1 returns clearly indicating that no excise duty was paid or Cenvat was reversed when coal was removed for third party sale, there is no justification to allege any suppression on part of appellant – SCNs were issued purely based on ER-6 returns without any investigation to verify quality of coal from invoices or any verification to check whether Cenvat availed coal was actually dispatched or non-Cenvat availed coal was cleared - Department did not bring any corroborative evidence that appellant cleared only Cenvat availed coal to third parties, and no enquiry was made from receiver of such coal; quantities cleared as per ER-6 returns tally with quantities in Annexure-A of show cause notice; all facts have been properly disclosed in returns and revenue has not made out any case of suppression with intent to evade duty payment; confirmed demand for extended period is not sustainable on merits and also not sustainable on account of time bar provisions - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Mandatory Pre-deposit for Appeal - Cumulative Compliance of pre-deposit requirement – Rejection of appeal before the Commissioner (Appeals) on the ground that the Appellant had not complied with the mandatory pre-deposit requirement. Subsequently, when the Appellant filed a further appeal before the Tribunal, the Tribunal dismissed it on the ground that the Appellant had failed to deposit the required percentage at the First appellate stage, and therefore the appeal was not maintainable. The Appellant contended that it had deposited a portion of the required amount at the first appellate stage and deposi... [Read more]

Central Excise - Mandatory Pre-deposit for Appeal - Cumulative Compliance of pre-deposit requirement – Rejection of appeal before the Commissioner (Appeals) on the ground that the Appellant had not complied with the mandatory pre-deposit requirement. Subsequently, when the Appellant filed a further appeal before the Tribunal, the Tribunal dismissed it on the ground that the Appellant had failed to deposit the required percentage at the First appellate stage, and therefore the appeal was not maintainable. The Appellant contended that it had deposited a portion of the required amount at the first appellate stage and deposited the remaining amount before the Tribunal, thereby fully satisfying the statutory pre-deposit requirement - Whether the pre-deposit made at the First appellate stage should be taken into account while reckoning compliance with the mandatory pre-deposit requirement for appeal before the Tribunal under Section 35F of the Central Excise Act, 1944 – HELD - The mandatory pre-deposit requirement for a second appeal before the Tribunal is inclusive of the deposit already made at the First Appellate stage and that the Appellant is not required to deposit a fresh amount in addition to the earlier deposit - Since the Tribunal and the Commissioner (Appeals) had dismissed the appeal on technical grounds without considering the merits, both orders are set aside. Accordingly, the impugned orders of the Tribunal and the Commissioner (Appeals) are set aside and the matter is remitted back to the Commissioner (Appeals) for deciding the appeal on its merits - The appeal stands disposed of [Read less]

Service Tax – Refund of service tax paid erroneously on supplying RMC and cement slurry - Applicability of Doctrine of Unjust Enrichment when Service Tax is Initially Collected and Subsequently Refunded through Credit Notes - Whether the doctrine of unjust enrichment applies to prevent refund of service tax when the assessee has initially charged the tax from the customer and subsequently issued credit notes reversing the charge – HELD - The supply of RMC is a pure sale contract and does not involve any provision of service and accordingly the appellant was not liable to pay service tax. Since service tax was not payab... [Read more]

Service Tax – Refund of service tax paid erroneously on supplying RMC and cement slurry - Applicability of Doctrine of Unjust Enrichment when Service Tax is Initially Collected and Subsequently Refunded through Credit Notes - Whether the doctrine of unjust enrichment applies to prevent refund of service tax when the assessee has initially charged the tax from the customer and subsequently issued credit notes reversing the charge – HELD - The supply of RMC is a pure sale contract and does not involve any provision of service and accordingly the appellant was not liable to pay service tax. Since service tax was not payable, the amount paid was an erroneous payment and refund thereof is admissible – The Supreme Court in CCE Vs. Addison & Co. Ltd. held that when the assessee returns the excess duty amount to its buyers evidenced by credit notes and a Chartered Accountant's certificate, it is presumed that the incidence of duty has been borne by the assessee and such incidence has not been passed on, thereby rebutting the presumption of unjust enrichment. When the appellant returned the duty recovered from customers back to the customers by way of credit notes immediately after filing the refund claim, the presumption is rebutted. The appellant had subsequently transferred the amount by RTGS to the customer with supporting certificates from the customer and Chartered Accountant confirming receipt and payment - The presumption of unjust enrichment is rebutted and the appellant is held eligible for refund of the erroneously collected service tax – The appeals are allowed - Interest on refund of erroneously collected Service Tax, Applicability of Limitation Period under Section 11B – The appellant filed a refund claim for interest paid on the erroneously collected service tax, which was rejected on the ground that the refund was barred by limitation under Section 11B of the Central Excise Act - Whether the limitation period under Section 11B applies to refund of interest paid on erroneously collected amounts that do not constitute lawfully payable duty, and whether interest is refundable when the principal amount is determined to be erroneously collected – HELD - When an amount is collected by the Revenue without authority of law, it must be refunded with interest. The tribunal held that any amount paid under mistaken notion of law remains only a deposit and not duty, and provisions of Section 11B are not attracted to such deposits. The interest is a corollary to such erroneous payment and should be treated as a deposit like the principal amount, and the Revenue cannot retain such deposits unlawfully - Since amounts paid erroneously do not acquire the character of duty, the provisions of Section 11B which refer only to refund of duty are not applicable, and therefore the limitation of one year does not apply – The refund of interest paid on the erroneously collected service tax is allowed without any limitation period applying. [Read less]

Service Tax - Exemption from Service Tax for Intermediate Production Process Job Work in Liquor Manufacture under Entry 30(c) of Notification No. 25/2012-ST - Appellant undertook job work activities for liquor manufacturers including repacking of old bottles, repackaging of glass bottles, barcode sticking, and cleaning of bottles and claimed exemption from service tax under Serial No. 30(c) of Notification No. 25/2012-ST - Department denied the exemption contending that the activities did not constitute an intermediate production process and were not essential to the manufacturing process, and hence were liable to service ... [Read more]

Service Tax - Exemption from Service Tax for Intermediate Production Process Job Work in Liquor Manufacture under Entry 30(c) of Notification No. 25/2012-ST - Appellant undertook job work activities for liquor manufacturers including repacking of old bottles, repackaging of glass bottles, barcode sticking, and cleaning of bottles and claimed exemption from service tax under Serial No. 30(c) of Notification No. 25/2012-ST - Department denied the exemption contending that the activities did not constitute an intermediate production process and were not essential to the manufacturing process, and hence were liable to service tax - Whether the activities undertaken by the appellant constitute an intermediate production process carried out as job work in relation to the manufacture of liquor and qualify for exemption under Entry 30(c) of Notification No. 25/2012-ST – HELD - Each activity undertaken by the appellant facilitated or completed a particular stage in the production, finishing and marketability of the final product. The activities undertaken formed part of the process resulting in manufacture or finishing of liquor and constituted an intermediate production process carried out as job work in relation to liquor manufacture on which appropriate State Excise Duty is payable by the principal manufacturer – Further, as per the CBEC Circular F.No.249/1/2006-CX-4 dated 27-10-2008, the manufacturing process includes any process incidental or ancillary to the completion of a manufactured product and that packaging and bottling of liquor come within the ambit of manufacture as defined under Section 2(f) of the Central Excise Act, 1944 - The job work undertaken by the appellant is an intermediate production process essential for completion of the manufacturing process of alcoholic liquor and the appellant is entitled to the benefit of exemption under Serial No. 30(c) of Notification No. 25/2012-ST - The demand of service tax is set aside and the interest and penalties imposed were also set aside. However, late fees and interest for delay in filing returns for certain periods were confirmed – The appeal is partly allowed [Read less]

GST - Requirement of Reasoned Order – Rejection of the Petitioner's written explanation to the Show Cause Notice without adequate and specific reasons. The authority had merely stated that the explanation was not satisfactory without addressing the particular issues raised therein – HELD - An adjudicating authority, while exercising quasi-judicial functions, must deal with the specific issues urged before it and cannot simply state that an explanation is not satisfactory. Merely making a blanket statement regarding unsatisfactory explanation would not serve the purpose of valid adjudication and that reasons form the so... [Read more]

GST - Requirement of Reasoned Order – Rejection of the Petitioner's written explanation to the Show Cause Notice without adequate and specific reasons. The authority had merely stated that the explanation was not satisfactory without addressing the particular issues raised therein – HELD - An adjudicating authority, while exercising quasi-judicial functions, must deal with the specific issues urged before it and cannot simply state that an explanation is not satisfactory. Merely making a blanket statement regarding unsatisfactory explanation would not serve the purpose of valid adjudication and that reasons form the soul of an order. An order lacking adequate reasoning and failing to address the specific contentions raised by the Petitioner suffers from an inherent defect rendering it invalid - The impugned order was set aside, and the matter was remitted to the adjudicating authority for fresh consideration on merits in accordance with law - The writ petition is allowed [Read less]

GST – Cancellation of registration for non-filing of returns - Petitioners expressed their willingness to continue with business operations and agreed to comply with the provisions of the Act and to pay the outstanding tax, interest, penalty and fine as may be applicable – HELD - While the Department is empowered to cancel registration for non-filing of returns, suspension or revocation of registration in cases where there is no allegation of fraudulent or dubious practices would be counterproductive and work against the interest of revenue. When registration is suspended or revoked, the registered person cannot carry ... [Read more]

GST – Cancellation of registration for non-filing of returns - Petitioners expressed their willingness to continue with business operations and agreed to comply with the provisions of the Act and to pay the outstanding tax, interest, penalty and fine as may be applicable – HELD - While the Department is empowered to cancel registration for non-filing of returns, suspension or revocation of registration in cases where there is no allegation of fraudulent or dubious practices would be counterproductive and work against the interest of revenue. When registration is suspended or revoked, the registered person cannot carry on business, cannot raise invoices, and consequently cannot make payments or file valid declarations, which ultimately impacts recovery of tax and the revenue's interest. The petitioner's willingness to comply with statutory obligations and file overdue returns provides a basis for a pragmatic approach - The Department should permit the petitioner to continue business operations while ensuring compliance with statutory obligations rather than impose a blanket cancellation that defeats revenue interests - The order of cancellation is set aside subject to the condition that petitioner files returns for the entire period of default and pays the requisite amount of tax, interest, penalty and fine as may be applicable. If the petitioner complies with these directions within the stipulated period, the registration shall be restored by the jurisdictional officer - The writ petition is disposed of [Read less]

GST - Validity of Vague Show Cause Notices - Petitioner challenged a Show Cause Notice on the ground that it lacked specific factual allegations and supporting documentation referenced therein – HELD - The issuance of a Show Cause Notice is not an empty formality but is intended to achieve the definite object of informing the assessee of specific allegations against them. For a person to respond effectively to charges, the notice must contain relevant facts narrating the situation and the manner in which a statute was allegedly violated. An assessee cannot prepare a meaningful defense without being fully informed of the ... [Read more]

GST - Validity of Vague Show Cause Notices - Petitioner challenged a Show Cause Notice on the ground that it lacked specific factual allegations and supporting documentation referenced therein – HELD - The issuance of a Show Cause Notice is not an empty formality but is intended to achieve the definite object of informing the assessee of specific allegations against them. For a person to respond effectively to charges, the notice must contain relevant facts narrating the situation and the manner in which a statute was allegedly violated. An assessee cannot prepare a meaningful defense without being fully informed of the factual basis of the allegations - The SCN in question has been issued in such a manner that it merely refers to the statutory provision alleged to have been violated, without there being any factual narration of the situation and the manner in which such statute is violated - The Show Cause Notice is quashed on the ground that it violated the principles of natural justice - The respondents are granted liberty to commence fresh proceedings with proper documentation and factual specifications in compliance with the requirements of natural justice – The petition is disposed of [Read less]

Kerala Value Added Tax Act, 2003 - Classification of Goods as Timber or Firewood - The assessee sold goods which were classified as firewood during the relevant period. The Petitioner contended that these goods should have been classified as timber for taxation purposes - Whether goods sold as firewood which were remnants from the process of timber cutting should be reclassified as timber - HELD - The goods were correctly classified as firewood and not as timber. The assessee explained that when customers bring timber for sawing they usually will not take the remance of woods which will be dropped back in the assessee's pr... [Read more]

Kerala Value Added Tax Act, 2003 - Classification of Goods as Timber or Firewood - The assessee sold goods which were classified as firewood during the relevant period. The Petitioner contended that these goods should have been classified as timber for taxation purposes - Whether goods sold as firewood which were remnants from the process of timber cutting should be reclassified as timber - HELD - The goods were correctly classified as firewood and not as timber. The assessee explained that when customers bring timber for sawing they usually will not take the remance of woods which will be dropped back in the assessee's premises and such fire woods have been collected together and sold during the end of the year. This explanation was found correct and reasonable especially since there was no suppression detected by any of the authorities. The articles in question are the vestiges of the process of timber cutting which are not taken by the customers and hence disposed of as fire wood and not as timber - The revision petition is dismissed - Inclusion of Vehicle Running Expenses in Taxable Turnover - Assessee claimed certain amounts as expenses incurred for maintenance of lorry and vehicle running expenses. The Revenue sought to include this amount as part of the sales turnover - Whether expenses for maintenance of lorry and vehicle running needs to be assessed as part of the taxable turnover - HELD - Both the lower authorities admitted that the amount shown was an expense. There was no case for the lower authorities that there was sales suppression or any quantity difference. The assessing authority had detected the expenses from the books of accounts of the assessee - The Assessing Officer accepted the vehicle running expenses as expenses and a case to the contrary had not been even attempted to be proved through any other document or input - The revision petition is dismissed [Read less]

Customs - Refund of Customs duty - Lapse of limitation period under Section 27 of Customs Act – Import of capital goods and spares – Pursuant to audit conducted by the CAG that additional duty of customs was not required to be paid, Appellant filed a refund application more than three years after the payment of duty - Whether the Appellant is eligible for refund of customs duty paid when the refund application is filed after lapse of more than three years, beyond the one-year period stipulated under Section 27 of the Customs Act, 1962 – HELD - The refund application was filed after expiry of the stipulated period of ... [Read more]

Customs - Refund of Customs duty - Lapse of limitation period under Section 27 of Customs Act – Import of capital goods and spares – Pursuant to audit conducted by the CAG that additional duty of customs was not required to be paid, Appellant filed a refund application more than three years after the payment of duty - Whether the Appellant is eligible for refund of customs duty paid when the refund application is filed after lapse of more than three years, beyond the one-year period stipulated under Section 27 of the Customs Act, 1962 – HELD - The refund application was filed after expiry of the stipulated period of one year from the date of payment of duty in terms of Section 27 of the Customs Act, 1962; no formal refund claim was filed with all the required annexures - The Larger Bench of the Tribunal in the case of ONGC has held that all refund claims except that of unconstitutional levy must be filed and adjudicated under the provisions of the Central Excise and Salt Act or the Customs Act, as the case may be. The provisions of Section 11B of the Central Excise Act, 1944 and Section 27 of the Customs Act, 1962 do constitute law within the meaning of Article 265 of the Constitution of India and to be refunded as prescribed under the statutory provisions; these acts provide a complete mechanism for correcting any errors whether of fact or law – The appeal is devoid of merit and the appeal is dismissed [Read less]

GST - Section 107(6) and Section 112(8) of the CGST Act, 2017 – Modification of Original Tax demand by the First Appellate Authority, Quantum of pre-deposit required to be made for admission of appeal before GSTAT - Petitioner had already made pre-deposit during the first appellate stage based on a significantly higher original demand, which was subsequently scaled down by the First Appellate Authority - Whether the Petitioner is required to make a fresh pre-deposit when the amount already deposited at the first stage exceeds the requirement for the revised demand - HELD – The ld. First Appellate Authority has reduced ... [Read more]

GST - Section 107(6) and Section 112(8) of the CGST Act, 2017 – Modification of Original Tax demand by the First Appellate Authority, Quantum of pre-deposit required to be made for admission of appeal before GSTAT - Petitioner had already made pre-deposit during the first appellate stage based on a significantly higher original demand, which was subsequently scaled down by the First Appellate Authority - Whether the Petitioner is required to make a fresh pre-deposit when the amount already deposited at the first stage exceeds the requirement for the revised demand - HELD – The ld. First Appellate Authority has reduced the original demand of tax and now the original demand of tax stands to the extent ordered by the ld. First Appellate Authority. The appellants have already made a pre-deposit of ten per cent of the original disputed tax during first appeal while preferring appeal before the First Appellate Authority, this amount now also covers the pre-deposit required for filing the present appeal before the Appellate Tribunal - The issue of pre-deposit decided by the Hon’ble Jharkhand High Court in the case of M/s Ashirwad Food Industries squarely applies to the present case of pre-deposit contested by the Appellant. Accordingly, no further pre-deposit is required to be made under the Section 112 of the Act - Upon proof of payment of the required statutory Court fees and verification of pre-deposit made during the first appeal by the appellant, the Registry shall place the matter before the Bench for Orders regarding admission of the appeal – Ordered accordingly [Read less]

GST - Validity of Service of Notices through GST Portal - Show-cause notices for non-filing of returns and subsequently for cancellation of GST registration were uploaded on the GST portal - Petitioner did not file any response to these notices nor did it seek revival of the cancelled registration or file statutory appeal within the prescribed time limit. Petitioner approached the High Court by writ petition contending that mere uploading of notices on the portal does not constitute valid service of notice and that notices should have been served physically - Whether service of SCNs through uploading on the GST portal cons... [Read more]

GST - Validity of Service of Notices through GST Portal - Show-cause notices for non-filing of returns and subsequently for cancellation of GST registration were uploaded on the GST portal - Petitioner did not file any response to these notices nor did it seek revival of the cancelled registration or file statutory appeal within the prescribed time limit. Petitioner approached the High Court by writ petition contending that mere uploading of notices on the portal does not constitute valid service of notice and that notices should have been served physically - Whether service of SCNs through uploading on the GST portal constitutes valid and sufficient service of notice under the GST Act – HELD – The service of notice by uploading on the GST portal is a valid mode of service of notice as provided under the GST Act. Although the Madras High Court had identified issues with the portal architecture where notifications were placed under different tabs making it difficult for taxpayers to notice them, the portal has since been redesigned to address these concerns - Once the show-cause notices have been duly served through a valid mode, they cannot be challenged on the ground of insufficiency of service, particularly when the assessee fails to demonstrate reasonable diligence. A writ petition under Article 226 cannot be invoked by a person who was not vigilant about his rights and who failed to avail of alternative statutory remedies available under the GST Act and Rules, including the right to revive cancelled registration under the statute and the right to file statutory appeal within prescribed time - The strict limitation period for filing statutory appeals and the mandatory pre-deposit requirement cannot be bypassed by invoking writ jurisdiction, especially when the petitioner's delay in approaching the court is due to its own negligence - The writ petition is dismissed [Read less]

GST - Reimbursement of tax on account of change in tax regime – Petitioners were awarded contracts for construction work when the tax regime was governed by the VAT Act and Finance Act - During the execution of the contract, the GST enactments were implemented; Petitioners sought reimbursement of the increased tax component based on the General Conditions of Contract and Government Orders, which Respondent rejected - Whether the Petitioners are entitled to reimbursement of the additional tax burden arising from the change in the tax regime during the subsistence of the contract – HELD - As per the relevant clause of th... [Read more]

GST - Reimbursement of tax on account of change in tax regime – Petitioners were awarded contracts for construction work when the tax regime was governed by the VAT Act and Finance Act - During the execution of the contract, the GST enactments were implemented; Petitioners sought reimbursement of the increased tax component based on the General Conditions of Contract and Government Orders, which Respondent rejected - Whether the Petitioners are entitled to reimbursement of the additional tax burden arising from the change in the tax regime during the subsistence of the contract – HELD - As per the relevant clause of the General Conditions of Contract, the project manager shall adjust the contract price if taxes, duties, and other levies are changed between the date 28 days before the submission of bids and the date of the last completion certificate. The change in the tax regime from the VAT to GST law entitles the Petitioners to reimbursement in terms of the principle akin to Section 64A of the Sale of Goods Act. The relevant Government Order also states that the entire tax of the supply will have to be finally borne by the purchaser; since the tax regime changed post-award, the amount of tax due to the change has to be reimbursed as it was not reflected in the contract price. Accordingly, Respondent is directed to refund the tax component - Refund of retention amounts and impact of audit objections - Petitioners completed the works under the respective contracts and sought the return of the retention amounts; Respondent rejected the request for refund on the ground that retention amounts could not be released due to pending audit objections related to the work packages - Whether the pendency of audit objections is a valid ground for Respondent to withhold the refund of retention amounts – HELD - The retention amounts are to be refunded back unless there are reasons for appropriating the same on account of the works executed by the Petitioners under the contract; merely because audit objections were raised by the Audit General would not be a ground for not processing the amount claimed by the Petitioners for refund of the retention amounts. The existence of audit objections does not justify the withholding of amounts due for work already executed; accordingly, Respondent is directed to refund the retention amounts with interest at commercial rate. [Read less]

GST - Condonation of Delay in Filing Appeal Against Cancellation of Registration – The appeal against the cancellation order was filed beyond the statutory period with a delay of 167 days. The Appellate Authority dismissed the appeal on limitation grounds, holding it had no power to condone the delay - Petitioner challenged this dismissal, contending that the delay was occasioned by circumstances beyond its control, having initially decided to discontinue business and thereafter being compelled to pursue the appeal following a subsequent GST drive during which notices were issued to purchasers for reversal of Input Tax C... [Read more]

GST - Condonation of Delay in Filing Appeal Against Cancellation of Registration – The appeal against the cancellation order was filed beyond the statutory period with a delay of 167 days. The Appellate Authority dismissed the appeal on limitation grounds, holding it had no power to condone the delay - Petitioner challenged this dismissal, contending that the delay was occasioned by circumstances beyond its control, having initially decided to discontinue business and thereafter being compelled to pursue the appeal following a subsequent GST drive during which notices were issued to purchasers for reversal of Input Tax Credit – HELD - While the Appellate Authority is bound by statutory limitations under Section 107, constitutional courts exercising plenary powers under Article 226 of the Constitution may in appropriate cases condone delay to prevent complete denial of remedy. The GST Act is not merely a statute for revenue collection but a comprehensive fiscal reform intended to consolidate indirect taxes and facilitate trade and commerce. Cancellation of GST registration results in loss of livelihood and economic paralysis, and denial of opportunity to an assessee undermines the inclusive and facilitative objective of the GST regime, thereby violating constitutional guarantees relating to livelihood and equality - An interpretation which renders appellate remedies illusory on hyper technical grounds would defeat the very purpose of the enactment. Accordingly, the impugned order dismissing the appeal is set aside, the delay is condoned, and the Appellate Authority was directed to entertain the appeal and adjudicate it on merits – The petition is disposed of [Read less]

GST – Limitation period for filing of appeal before the GST Appellate Tribunal for stay on Recovery proceedings, Claim for refund of recovered tax - Failure to file appeal within statutory timeline and non-compliance with procedural requirements of Circular No. 224/18/2024 - Respondents passed an Order-in-Appeal and recovered tax from petitioner pursuant to the appellate order. Petitioner filed an appeal before the GST Appellate Tribunal beyond the statutory timeline for filing appeal before the GSTAT under Section 112 of CGST Act, 2017 read with the Ninth Removal of Difficulties Order, 2019 dated 03.12.2019. The notific... [Read more]

GST – Limitation period for filing of appeal before the GST Appellate Tribunal for stay on Recovery proceedings, Claim for refund of recovered tax - Failure to file appeal within statutory timeline and non-compliance with procedural requirements of Circular No. 224/18/2024 - Respondents passed an Order-in-Appeal and recovered tax from petitioner pursuant to the appellate order. Petitioner filed an appeal before the GST Appellate Tribunal beyond the statutory timeline for filing appeal before the GSTAT under Section 112 of CGST Act, 2017 read with the Ninth Removal of Difficulties Order, 2019 dated 03.12.2019. The notification dated 17.09.2025 conferred power on the Appellate Tribunal to examine appellate orders and extended the deadline to 31.07.2026, but the original deadline was 01.04.2026 - Whether a taxpayer who failed to file an appeal before the GST Appellate Tribunal within the prescribed 3-month timeline under Section 112 of CGST Act, but filed it after 7 months, is entitled to refund of tax already recovered, notwithstanding the existence of a procedure under Circular No. 224/18/2024 that could have stayed recovery if complied with in time – HELD - The Circular No. 224/18/2024 prescribes a clear procedure whereby taxpayers intending to file appeal before the Appellate Tribunal within the 3-month timeline can prevent or stay recovery by filing an undertaking to appeal and paying an amount equal to pre-deposit. The petitioner failed to observe this prescribed procedure. Ignorance of law is not an excuse. The petitioner was obliged to file the appeal within the statutory 3-month period to avail of the stay provision, which was not done. The appeal was filed after 7 months, well beyond the prescribed timeline - The tax was already recovered after the appellate order and before the appeal was filed. Issuing a refund would tantamount to waiver of pre-deposit, which is impermissible under the statutory and regulatory framework. The judgments cited by the petitioner from other High Courts do not come to the rescue because those courts have not dealt with the requirements of Circular No. 224/18/2024. The statutory framework under Section 112 of CGST Act and the procedural guidelines under the Circular are mandatory and must be complied with to obtain relief from recover - The petitioner's claim for refund of the recovered tax is dismissed. The petitioner's remedy lies before the GST Appellate Tribunal where all issues may be examined on merits, but no interim relief for refund is granted on the basis of the present petition – The petition is rejected [Read less]

Since the petitioner has discharged the tax liability, albeit under the wrong head, it cannot be penalised by being directed to first pay the taxes and then seek refund. Dept is directed to appropriate the IGST amount towards CGST and SGST liability.

Service tax - Export of service - Refund of unutilized CENVAT credit on investment advisory services provided to overseas entity - Appellant provided investment advisory services including identifying investment opportunities, analyzing financial and economic intelligence, monitoring portfolio companies and providing advisory services to an overseas entity located outside India - Appellant availed CENVAT credit on input services and sought refund of unutilized credit under Rule 5 of CENVAT Credit Rules 2004 and Notification No. 5/2006; original authority sanctioned the refund but Commissioner (Appeals) rejected the refund ... [Read more]

Service tax - Export of service - Refund of unutilized CENVAT credit on investment advisory services provided to overseas entity - Appellant provided investment advisory services including identifying investment opportunities, analyzing financial and economic intelligence, monitoring portfolio companies and providing advisory services to an overseas entity located outside India - Appellant availed CENVAT credit on input services and sought refund of unutilized credit under Rule 5 of CENVAT Credit Rules 2004 and Notification No. 5/2006; original authority sanctioned the refund but Commissioner (Appeals) rejected the refund claim, holding that services were provided in relation to Indian investment opportunities and their effective use and enjoyment was possible only in India - Whether investment advisory services provided to an overseas service recipient constitutes export of service – HELD - The services provided to an overseas entity on principal-to-principal basis, invoiced in foreign currency with no agreement for provision of services to Indian customers of the overseas entity, constitute export of service within the meaning of Rule 3(1)(iii) of Export of Service Rules 2005. The fact that analysis and research relates to Indian investment opportunities does not change the character of export when the service recipient is located outside India and has paid consideration in convertible foreign exchange. The location of the service recipient and the mode of payment of service charges are determinative of the export character of service rather than the subject matter of the service or the location of service delivery - The consistent Tribunal decisions establish that investment advisory services provided to overseas entities qualify as export of service – The appellant is entitled for refund of accumulated CENVAT credit. The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Works Contract Services - Appellant, a works contract service provider, rendered services for irrigation works and claimed exemption under Notification No.25/2012-ST on the ground that services were provided to Government departments and fall under the category of water supply works. The original authority denied the benefit for want of documents - Commissioner (Appeals) denied exemption on different grounds holding that the service provider (Cauvery Neeravari Nigam Ltd.) does not fall under the category of Government, local authority or governmental authority but constitutes a body corporate - Whether the ap... [Read more]

Service Tax - Works Contract Services - Appellant, a works contract service provider, rendered services for irrigation works and claimed exemption under Notification No.25/2012-ST on the ground that services were provided to Government departments and fall under the category of water supply works. The original authority denied the benefit for want of documents - Commissioner (Appeals) denied exemption on different grounds holding that the service provider (Cauvery Neeravari Nigam Ltd.) does not fall under the category of Government, local authority or governmental authority but constitutes a body corporate - Whether the appellant is eligible for exemption under the said notification for irrigation works - HELD - The original authority having held eligibility was not considered only for want of documents but the Commissioner (Appeals) rejected the claim on a fresh ground which was beyond the scope already examined by original authority. The issue requires fresh adjudication by the original authority after considering all submissions along with documents regarding eligibility under Notification No.25/2012 particularly items 12(d), 12(e) and 12(h) thereof and the taxable value of services rendered to private parties – The matter is remanded to original authority for fresh adjudication – The appeal is allowed by remand [Read less]

Central Excise - CENVAT Credit Eligibility on Sales Promotion Services - The appellant, engaged in the manufacture of engines and parts, availed CENVAT Credit on service tax paid by authorized dealers for sales promotion activities of the appellant's goods. The Department denied the credit contending that such services did not fall within the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 - Whether services provided by dealers for sales promotion activities of goods manufactured by the appellant qualify as input services under Rule 2(l) of the CCR, 2004 – HELD – In terms of contract betwee... [Read more]

Central Excise - CENVAT Credit Eligibility on Sales Promotion Services - The appellant, engaged in the manufacture of engines and parts, availed CENVAT Credit on service tax paid by authorized dealers for sales promotion activities of the appellant's goods. The Department denied the credit contending that such services did not fall within the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 - Whether services provided by dealers for sales promotion activities of goods manufactured by the appellant qualify as input services under Rule 2(l) of the CCR, 2004 – HELD – In terms of contract between the appellant and the dealers, the dealers were specifically engaged for promoting the sale of goods manufactured by the appellant. Since the phrase sales promotion is specifically found in the inclusive part of the definition of input service as per Rule 2(l) of the CENVAT Credit Rules, the services provided by the dealers towards sales promotion of the appellant's goods appropriately fall under the purview of sales promotion – The denial CENVAT Credit of service tax paid for sales promotion activities is not justified. The impugned order is set aside and the appeal is allowed [Read less]

GST - Withdrawal of Best Assessment Order - Respondent passed an assessment order under Section 62 of the CGST Act, 2017. The petitioner subsequently filed the required statement and return by paying the entire tax liability along with applicable interest and late fees - Whether an assessment order passed under Section 62 of the CGST Act can be deemed to have been withdrawn when the taxpayer files the statutory returns after the prescribed time limit but within the subsequently extended time limit, while paying the entire tax, interest and late fees – HELD - The assessment orders shall be deemed to have been withdrawn on... [Read more]

GST - Withdrawal of Best Assessment Order - Respondent passed an assessment order under Section 62 of the CGST Act, 2017. The petitioner subsequently filed the required statement and return by paying the entire tax liability along with applicable interest and late fees - Whether an assessment order passed under Section 62 of the CGST Act can be deemed to have been withdrawn when the taxpayer files the statutory returns after the prescribed time limit but within the subsequently extended time limit, while paying the entire tax, interest and late fees – HELD - The assessment orders shall be deemed to have been withdrawn once returns are filed within the prescribed time or beyond the prescribed time along with payment of late fees. When a taxpayer substantively complies with statutory requirements by filing the returns and discharging all tax dues including interest and late fees, the assessment order becomes inoperative and stands withdrawn. The fact that the petitioner paid not only the tax but also interest and late fees demonstrates sufficient compliance with the statutory requirements - The impugned assessment order is declared to be deemed withdrawn, and the respondent is directed that no steps for recovery of tax and dues can be initiated or continued – The writ petition is allowed [Read less]

Customs - Burden of proof regarding smuggled nature of exotic wildlife not notified under Section 123 of the Customs Act, Absolute confiscation under Section 111 of the Customs Act - Appellant was apprehended for possession of exotic birds and mammals seized from a domestic air cargo terminal and residential premises; Department alleged they were smuggled items of foreign origin, while Appellant claimed they were procured through domestic suppliers within the country - Whether the onus lies on the Revenue or the Appellant to prove the smuggled nature of exotic birds and mammals which are not notified under Section 123 of t... [Read more]

Customs - Burden of proof regarding smuggled nature of exotic wildlife not notified under Section 123 of the Customs Act, Absolute confiscation under Section 111 of the Customs Act - Appellant was apprehended for possession of exotic birds and mammals seized from a domestic air cargo terminal and residential premises; Department alleged they were smuggled items of foreign origin, while Appellant claimed they were procured through domestic suppliers within the country - Whether the onus lies on the Revenue or the Appellant to prove the smuggled nature of exotic birds and mammals which are not notified under Section 123 of the Customs Act – HELD - The exotic birds and mammals are not notified items within the meaning of Section 123 of the Customs Act; therefore, the onus lies on the Revenue to prove that the exotic birds and mammals in question are of foreign origin and that the Appellant has smuggled the same into the country through illicit means; the Appellant has discharged their onus regarding procurement of the exotic birds and mammals through licit means within the domestic area; the burden is cast on the Revenue to prove by means of tangible and corroborative evidence that the said exotic birds and mammals have been procured through illegal or illicit means in violation of the relevant Act or Rules, which the Revenue has failed to prove; accordingly, the burden of proof is held to lie on the Revenue - As the exotic birds and mammals in question are not notified under Section 123 of the Customs Act, the burden lies on the Revenue to prove that the Appellant has procured the same through illicit means and are smuggled in nature; the Revenue failed to establish the allegation of smuggling with any cogent evidence; internal trade within the country of exotic species is not found in any schedule of the Wildlife Protection Act and was never prohibited; mere acquisition, purchase or possession of exotic birds and mammals does not violate provisions under the Customs Act; it is only at the entry point, at the time of import, that any consignment of exotic birds and mammals intercepted upon establishing violation of the statutory provisions would be liable for confiscation; the Revenue failed to prove their case through tangible and corroborative evidence; accordingly, the confiscation of the exotic birds and mammals is set aside – The appeals are disposed of - Sustainability of penalties under Section 112 of the Customs Act - Whether penalties can be sustained when the Revenue fails to prove the illicit importation of the goods – HELD - As the Revenue has failed to prove their case regarding the smuggled nature of the goods, no penalty can be imposed on the Appellant in the facts and circumstances of the case; the Tribunal found no infirmity in the setting aside of the penalty imposed on the Respondent as the Revenue could not establish the illegal procurement or smuggling of the exotic birds and mammals; accordingly, the penalty imposed on the Appellant is set aside and the setting aside of the penalty on the Respondent is upheld - Liability of a vehicle for confiscation under Section 115 of the Customs Act - Vehicle was seized and ordered for confiscation on the belief it was used for the carriage of smuggled exotic birds and mammals from a domestic air cargo terminal - Whether the vehicle is liable for confiscation when the goods carried are not proved to be smuggled – HELD - The vehicle in question is not liable for confiscation because the Revenue failed to prove their case regarding the illicit nature of the goods transported; the Tribunal directed the release of the vehicle without the imposition of any redemption fine thereon; accordingly, the confiscation of the vehicle is set aside and the vehicle is directed to be released. [Read less]

Central Excise - Determination of Date of export - Appellant exported goods vide Are-1 with Bill of lading on the same date and filed the Export General Manifest within one month thereof, but the Customs Preventive Officer delayed certification of the export details by approximately nine months, resulting in certification occurring beyond the six-month period from the date of factory clearance - Revenue issued show cause notice and demand excise duty payment on such exported consignment - Whether the actual date of export as evidenced by contemporaneous documents or the delayed date of certification by the Customs Preventi... [Read more]

Central Excise - Determination of Date of export - Appellant exported goods vide Are-1 with Bill of lading on the same date and filed the Export General Manifest within one month thereof, but the Customs Preventive Officer delayed certification of the export details by approximately nine months, resulting in certification occurring beyond the six-month period from the date of factory clearance - Revenue issued show cause notice and demand excise duty payment on such exported consignment - Whether the actual date of export as evidenced by contemporaneous documents or the delayed date of certification by the Customs Preventive Officer determines excise duty liability – HELD - The date of issuance of the Let Export Order, being coincident with the date of factory clearance, constitutes the date of export and the Export General Manifest filed within one month thereafter provides documentary evidence that the goods were exported within the statutory period prescribed - The delayed certification by the Customs Preventive Officer does not alter the factual position regarding the actual date of export and cannot form the basis for imposing a duty demand where contemporaneous documentary evidence establishes compliance with the statutory requirements – The impugned order is set aside and the appeal is allowed [Read less]

GST - Refund of Unutilized Input Tax Credit - Applicability of Amended Rule 89(5) of the CGST Rules, 2017 – Denial of refund of unutilized input tax credit attributable to input services on the basis of Rule 89(5) of the CGST Rules. The Petitioner claimed that the definition of Net ITC retrospectively introduced in Rule 89(5) restricting refund only to inputs and not input services is held to be ultra-vires Section 54(3) of the CGST Act and amended Rule 89(5) introduced through Notification dated 05.07.2022 is applicable retrospectively – HELD - The subsequent development in law relating to Rule 89(5) and the decision... [Read more]

GST - Refund of Unutilized Input Tax Credit - Applicability of Amended Rule 89(5) of the CGST Rules, 2017 – Denial of refund of unutilized input tax credit attributable to input services on the basis of Rule 89(5) of the CGST Rules. The Petitioner claimed that the definition of Net ITC retrospectively introduced in Rule 89(5) restricting refund only to inputs and not input services is held to be ultra-vires Section 54(3) of the CGST Act and amended Rule 89(5) introduced through Notification dated 05.07.2022 is applicable retrospectively – HELD - The subsequent development in law relating to Rule 89(5) and the decisions of the Supreme Court and Coordinate Bench were not controverted by the learned Senior Standing Counsel - The Coordinate Bench has held the applicability of the amended Rules by Notification No. 14/2022 is applicable retrospectively as the amendment brought in Rule 89(5) of the CGST Rules is curative and classificatory in nature. Accordingly, the same would be applied for rectification application filed within two years as per the time period prescribed under Section 54(1) of the CGST Act, 2017 - The respondent to process the claim of refund in light of the decision of the Supreme Court and as per the Notification dated 05.07.2022 - The writ petition stands allowed [Read less]

Central Excise - Valuation of Prototype Vehicles – Applicability of Rule 8 versus Rule 4 of Central Excise Valuation Rules – The appellant, engaged in manufacture of prototype commercial vehicles, removed goods to its other manufacturing unit for testing and computed Central Excise duty liability under Rule 4 of the Central Excise Valuation Rules, 2000 -Department contended that the value should be determined under Rule 8 at 110% of the cost of production. The original order dropped the Department's proposals, but the Commissioner (Appeals-I) allowed the Revenue's appeal and set aside the original order – Whether Rul... [Read more]

Central Excise - Valuation of Prototype Vehicles – Applicability of Rule 8 versus Rule 4 of Central Excise Valuation Rules – The appellant, engaged in manufacture of prototype commercial vehicles, removed goods to its other manufacturing unit for testing and computed Central Excise duty liability under Rule 4 of the Central Excise Valuation Rules, 2000 -Department contended that the value should be determined under Rule 8 at 110% of the cost of production. The original order dropped the Department's proposals, but the Commissioner (Appeals-I) allowed the Revenue's appeal and set aside the original order – Whether Rule 8 or Rule 4 of Central Excise Valuation Rules, 2000 applies to the valuation of prototype vehicles removed for testing purposes – HELD – The Rule 8 is not applicable as the primary condition for its invocation is consumption of goods in manufacture of another article. Prototype vehicles subject to testing under Rule 126 of the Central Motor Vehicle Rules, 1989, cannot be said to be consumed in further manufacture, as commercially manufactured similar vehicles are copies of prototypes. The value of comparable goods under Rule 4 of the Central Excise Valuation Rules, 2000, therefore applies. The issue being identical to an issue already decided by the Co-ordinate Bench in an earlier case, the matter was no more res integra and different interpretation could not be placed – The impugned order is set aside and the appeals are allowed [Read less]

Service Tax - Limitation for passing order - Section 73(4B) of Finance Act, 1994 - Appellant providing architectural services filed returns showing zero turnover despite receiving income, which was later discovered through cross-verification with Income Tax authorities - Department issued multiple notices to which appellant did not respond and only submitted reply after the last notice, following which order-in-original was passed within three months - Whether the order passed beyond the prescribed period of one year from the date of the Show Cause Notice renders it invalid – HELD - The statutory period prescribed under ... [Read more]

Service Tax - Limitation for passing order - Section 73(4B) of Finance Act, 1994 - Appellant providing architectural services filed returns showing zero turnover despite receiving income, which was later discovered through cross-verification with Income Tax authorities - Department issued multiple notices to which appellant did not respond and only submitted reply after the last notice, following which order-in-original was passed within three months - Whether the order passed beyond the prescribed period of one year from the date of the Show Cause Notice renders it invalid – HELD - The statutory period prescribed under Section 73(4B) is intended to ensure proceedings are concluded without unnecessary delay and curtail executive lethargy, however, the expression 'where it is possible to do so' in the provision does not operate as an absolute bar preventing authorities from passing orders when justifiable reasons for delay exist. The intendment of the statute is to curb lethargy, not to be used as a thumb rule preventing authorities from acting despite valid grounds for delay - On the facts, Department issued repeated notices which appellant did not respond to, and only after the last notice did appellant submit reply, following which order was passed within three months, therefore, no violation of the prescribed limitation was found - Appeal dismissed at the stage of admission itself [Read less]

Service Tax - Construction of multi-level parking for local authority – Demand of service tax on construction of a multi-level parking built for Municipal Corporation to provide parking facilities to the public – Revenue case that the activity was commercial in nature and not covered by Notification No. 25/2012 whereas Respondent contended the construction was for public benefit and fell within the exemption provisions for services provided to local authorities for construction of original works meant for use other than commerce, industry or business - Whether construction of a multi-level parking for a local authority... [Read more]

Service Tax - Construction of multi-level parking for local authority – Demand of service tax on construction of a multi-level parking built for Municipal Corporation to provide parking facilities to the public – Revenue case that the activity was commercial in nature and not covered by Notification No. 25/2012 whereas Respondent contended the construction was for public benefit and fell within the exemption provisions for services provided to local authorities for construction of original works meant for use other than commerce, industry or business - Whether construction of a multi-level parking for a local authority for providing public parking facilities constitutes a taxable service or qualifies for exemption under the notification – HELD - The construction of a multi-level parking by a local authority for providing parking facilities to the public at large is not a commercial activity and therefore not subject to service tax. Providing public parking facilities is one of the main objectives of a Municipal Corporation and constitutes a welfare measure for public convenience aimed at public benefit rather than profit generation. Even though nominal fee may be collected from users, such collection does not convert the activity into a commercial undertaking as providing public amenity cannot be for generating profit – The services provided to a local authority for construction of original works meant predominantly for use other than for commerce, industry or business are expressly exempted under para 12A of Notification No. 25/2012 - The issue is well-settled by consistent Tribunal decisions in similar cases involving construction of multi-level parking for development authorities - The impugned order of Commissioner (Appeals) is upheld and the Revenue's appeals are dismissed [Read less]

Service Tax - Exemption to railway projects - Liability of project management consultant acting as agent - Appellant was engaged as project management consultant and power of attorney holder for a public sector undertaking to supervise construction of a railway siding by executing agencies - Department issued a show cause notice contending that services relating to railway infrastructure provided by contractor to the public sector undertaking, with Appellant acting as intermediary, constitute taxable services and Appellant is liable to service tax - Whether a project management consultant acting as power of attorney holder... [Read more]

Service Tax - Exemption to railway projects - Liability of project management consultant acting as agent - Appellant was engaged as project management consultant and power of attorney holder for a public sector undertaking to supervise construction of a railway siding by executing agencies - Department issued a show cause notice contending that services relating to railway infrastructure provided by contractor to the public sector undertaking, with Appellant acting as intermediary, constitute taxable services and Appellant is liable to service tax - Whether a project management consultant acting as power of attorney holder on behalf of a disclosed principal for railway construction activities is liable to service tax – HELD - Service tax is not leviable on railway projects and the exemption from tax is available to railways irrespective of whether the railway is for public or private purpose. There is no distinction between railway for private purpose and railway for public service in the Finance Act, 1994, and any such distinction cannot be artificially contrived to suit tax administration. The term ‘railways’ in Notification No. 25/2012 is to be understood according to common parlance as there is no definition provided in the Finance Act or Notification, and definitions from other statutes such as the Railways Act, 1989 cannot be imported. The use of public includes use by PSUs and corporations and not merely individuals. Accordingly, the impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Cenvat credit and suo motu re-credit - Rebate on export of goods under Rule 18 of the Central Excise Rules read with Section 11B of the Central Excise Act - Petitioner prayed for sanction of the rebate claim or alternatively allowing re-credit of Cenvat credit amount said to have been wrongly utilized - Since the Revision Application remained undecided, petitioner suo motu re-credited the amount in the Cenvat Account and informed the respondent authorities - The Revision Application was rejected by holding that the suo motu credit taken by the applicants needs to be recovered from them - Whether there is p... [Read more]

Central Excise - Cenvat credit and suo motu re-credit - Rebate on export of goods under Rule 18 of the Central Excise Rules read with Section 11B of the Central Excise Act - Petitioner prayed for sanction of the rebate claim or alternatively allowing re-credit of Cenvat credit amount said to have been wrongly utilized - Since the Revision Application remained undecided, petitioner suo motu re-credited the amount in the Cenvat Account and informed the respondent authorities - The Revision Application was rejected by holding that the suo motu credit taken by the applicants needs to be recovered from them - Whether there is provision in law for suo motu re-crediting of the amount into the Cenvat Account and whether such action is backed up by any provision of law in the Statute - HELD - It is true that there is no provision under the Statute for suo motu re-crediting the amount to Cenvat Account but ultimately it appears that the Petitioner got frustrated in view of the pendency of the Revision Application and after informing the respondent authorities the re-credit was taken and deposited in the Cenvat Account - When an assessee reverses the credit there is only an account entry reversal and factually there is no outflow of funds from the assessee to result in filing application claiming refund of duty - The contention of the Revenue that even in reversal of the entry there is bound to be an unjust enrichment has no substance or based on any legal principle - In view of the fact that the rebate claim of the Petitioner is not disputed and in order to salvage the situation and lay quietus to the litigation the Court approved the action of the Petitioner in taking the suo motu credit of Cenvat credit with a clarification that the present order shall not be treated as a precedent - The writ petition is allowed [Read less]

Central Excise - Applicability of Rule 6 of Central Excise Valuation Rules to Related-Party Transactions – Receipt of Lump Sum Compensation – The appellant received a lump sum compensation from its related subsidiary company for development of market and business transfer purposes. The Department contended that such compensation should be treated as additional consideration on which Central Excise duty was payable under Rule 6 of the Central Excise Valuation Rules, 2000, and confirmed a demand of excise duty - Whether Rule 6 of the Central Excise Valuation Rules, 2000 applies to lump sum compensation received in a rela... [Read more]

Central Excise - Applicability of Rule 6 of Central Excise Valuation Rules to Related-Party Transactions – Receipt of Lump Sum Compensation – The appellant received a lump sum compensation from its related subsidiary company for development of market and business transfer purposes. The Department contended that such compensation should be treated as additional consideration on which Central Excise duty was payable under Rule 6 of the Central Excise Valuation Rules, 2000, and confirmed a demand of excise duty - Whether Rule 6 of the Central Excise Valuation Rules, 2000 applies to lump sum compensation received in a related-party transaction under Section 4(1)(b) of the Central Excise Act, 1944, when no specific goods are identified as being attributable to such compensation – HELD – The Rule 6 Valuation Rules, 2000, by its express terms, applies only to cases governed under Section 4(1)(a) of the Central Excise Act, 1944, and therefore cannot be applied to related-party transactions which fall under Section 4(1)(b). Additionally, since excise duty is a duty levied on the manufacture of excisable goods, and the Department had failed to identify the specific goods against which the lump sum compensation was made, the valuation rules cannot apply. A one-time lump sum payment cannot be attributed to any particular goods for purposes of determining transaction value – The impugned order is set aside and the appeal is allowed [Read less]

GST – Re-Transportation of machine for testing is under the cover of delivery challans, but without E-way bills - Appellant purchased hydraulic fixtures and tooling body machines which were delivered to its unit and thereafter customized machineries were sent back to the seller for performing testing under cover of delivery challans but without E-way bills - Dept intercepted the said vehicle and issued detention order with notice under Section 129(3) of the CGST Act, 2017 – Respondents issued ex parte order confirming the demand - Whether the re-transportation of machinery for performing testing purposes without genera... [Read more]

GST – Re-Transportation of machine for testing is under the cover of delivery challans, but without E-way bills - Appellant purchased hydraulic fixtures and tooling body machines which were delivered to its unit and thereafter customized machineries were sent back to the seller for performing testing under cover of delivery challans but without E-way bills - Dept intercepted the said vehicle and issued detention order with notice under Section 129(3) of the CGST Act, 2017 – Respondents issued ex parte order confirming the demand - Whether the re-transportation of machinery for performing testing purposes without generation of E-way bill attracts levy and collection of tax or whether the transaction is exempted from generating E-way bills - HELD – In the present case, the re-transportation of machinery to the seller for testing did not involve consideration and the instant transaction does not come within the purview of Section 7(1)(a) of CGST Act - The Rule 55(1) of CGST Rules defines transportation of goods without issue of invoice but on delivery challan for certain categories of supply including transportation of goods for reasons other than by way of supply but with generation of E-way bill as contemplated under Rule 138 of CGST Rules. The CGST Act and Rules provide for certain exemptions from generating E-way bills in certain cases. However, the same does not cover the subject re-transportation, therefore there is breach on the part of appellant and the same is liable to pay penalty as contemplated under the second part of Section 129(1)(a) of the Act - The writ appeal is found to lack merit and accordingly dismissed [Read less]

Central Excise – Bail, Evasion of duty - Appellant was arrested for manufacturing pan masala while claiming to manufacture scented supari thereby causing tax evasion by misclassifying the product under different HSN code. The prosecution alleged deliberate suppression of actual nature of product, use of undeclared machines and evasion of GST and HSNS Cess - Whether continued incarceration of the petitioner is justified in view of seized documentary evidence, completion of investigation and nature of offence - HELD - While economic offences are serious in nature and affect economy, neither earlier precedents laying down g... [Read more]

Central Excise – Bail, Evasion of duty - Appellant was arrested for manufacturing pan masala while claiming to manufacture scented supari thereby causing tax evasion by misclassifying the product under different HSN code. The prosecution alleged deliberate suppression of actual nature of product, use of undeclared machines and evasion of GST and HSNS Cess - Whether continued incarceration of the petitioner is justified in view of seized documentary evidence, completion of investigation and nature of offence - HELD - While economic offences are serious in nature and affect economy, neither earlier precedents laying down gravity of such offences establish absolute proposition that bail must invariably be refused irrespective of facts. Even in economic offences, grant or refusal of bail must be determined on settled parameters such as nature of accusation, requirement of custodial interrogation, likelihood of tampering with evidence, possibility of absconding and overall facts. The offences prescribed imprisonment up to five years, case is triable by JMFC, prosecution case rests on documentary evidence already seized, seizure panchnama does not indicate recovery of tobacco products though prosecution alleges manufacture of pan masala which remains matter for trial. The triple test for bail is satisfied – The application is allowed, bail granted on personal bond with surety and specified conditions. [Read less]