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GST - Effect of omission of Rule 96(10) of CGST Rules, 2017 on pending proceedings - Refund of IGST on exports made under Advance Authorisation licenses between October 2017 and March 2022 - Authorities issued notice alleging contravention of Rule 96(10) of the CGST Rules, 2017, which prescribed restrictions on claiming refund of integrated tax paid on exports for persons who had availed exemption notifications on procurement of inputs. Subsequently, the Notification No. 20/2024 dated 08.10.2024, omitting Rule 96(10) from the statute - Whether pending proceedings initiated under Rule 96(10) of the CGST Rules can be continu... [Read more]

GST - Effect of omission of Rule 96(10) of CGST Rules, 2017 on pending proceedings - Refund of IGST on exports made under Advance Authorisation licenses between October 2017 and March 2022 - Authorities issued notice alleging contravention of Rule 96(10) of the CGST Rules, 2017, which prescribed restrictions on claiming refund of integrated tax paid on exports for persons who had availed exemption notifications on procurement of inputs. Subsequently, the Notification No. 20/2024 dated 08.10.2024, omitting Rule 96(10) from the statute - Whether pending proceedings initiated under Rule 96(10) of the CGST Rules can be continued and concluded after the Rule has been omitted from the statute by notification dated 8th October, 2024, in the absence of any saving clause – HELD - Once the Rule 96(10) has been omitted, all pending proceedings based on contravention of that Rule must stand closed and cannot be continued. The Section 6 of the General Clauses Act applies only to repeals of Central Acts or Regulations and not to omissions of Rules. Consequently, when a Rule is omitted without any saving clause, no proceedings can be instituted or continued in respect of alleged contraventions of that Rule. The omission operates prospectively and affects all pending proceedings that have not reached finality. The Courts in Kolhapur Canesugar Works Ltd., Hikal Limited, and Addwrap Packaging cases, consistently held that following omission of a Rule, all pending proceedings including undisposed show-cause notices and orders not yet finalized stand lapsed. Since the Notification omitting Rule 96(10) does not contain any saving clause to preserve pending proceedings, such proceedings cannot survive the omission – The impugned notice and orders are quashed and the writ petition is allowed [Read less]

GST - Works Contract, Construction of road, Toll forming part of the deferred annuity payment for construction services - Taxability of Construction Services under BOT Concession Agreement - Petitioner-concessionaire enters into a Build-Operate-Transfer (BOT) concession agreement with the NHAI to construct, operate and maintain a highway section and was granted the right to collect toll during the concession period, along with an obligation to pay annual premium - Dept raised demand for GST on the construction services, treating the toll collection rights as deferred annuity payments constituting consideration for works co... [Read more]

GST - Works Contract, Construction of road, Toll forming part of the deferred annuity payment for construction services - Taxability of Construction Services under BOT Concession Agreement - Petitioner-concessionaire enters into a Build-Operate-Transfer (BOT) concession agreement with the NHAI to construct, operate and maintain a highway section and was granted the right to collect toll during the concession period, along with an obligation to pay annual premium - Dept raised demand for GST on the construction services, treating the toll collection rights as deferred annuity payments constituting consideration for works contract service – Petitioners challenge the demand contending that no supply exists between itself and the NHAI as the construction is executed through a sub-contractor and that the toll collection is exempted under Entry 23 of the Notification No. 12/2017–Central Tax (Rate) dated 28.06.2017 – HELD - The concession agreement constitutes a taxable supply falling within the definition of “works contract” under Section 2(119) and Entry 6, Schedule II of the CGST Act, 2017 as the petitioner-concessionaire supplies construction and maintenance services to the authority (NHAI) and in return receives the right to collect toll, license to the site, and right of way, which collectively constitute consideration under Section 2(31) in the form of barter – The petitioner has been awarded the right to collect the toll by the NHAI in consideration of the construction services rendered by the petitioner on a DBFOT basis. Since there is a promise of fulfilling the obligation on the part of the petitioner to construct and maintain the road, vis-à-vis the corresponding promise of NHAI to permit the petitioner to collect toll for the road in question during the subsistence of the contract, the transaction squarely falls within the statutory framework of ‘supply’ and ‘consideration’ - While the Entry 23 of Notification No. 12/2017-CT(R) exempts services by way of access to roads through toll charges simpliciter, the exemption does not extend to toll collected as consideration for construction services, which fall under the construction services heading and not the supporting services heading specified in the exemption notification - The CBIC Circular dated 17.06.2021 clarifies that construction of road services are taxable even when consideration is received in deferred annual payments or annuity form, and that such toll collection constitutes annuity for construction services. In the present case, the collection of toll is one of the consideration which is being received by the petitioner and essentially amounts to annuity. Thus, the same does not fall within the ambit of the exemption clause - The impugned orders raising demand for GST along with interest and penalty is upheld and the writ petition is dismissed - Argument regarding double taxation - The petitioner’s argument regarding double taxation is rejected as there exists no contractual privity between the NHAI and the sub-contractor. There are two distinct contracts, one executed between the NHAI and the petitioner (concessionaire), and the other between the petitioner and the sub-contractor i.e. IRB Infrastructure Developers Limited - As far as the work undertaken by the sub-contractor is concerned, the sub-contractor has provided works contract services to the petitioner and has deposited the due output tax liability. The services rendered by the sub-contractor attracted tax liability and are distinct from the contract between the petitioner and the NHAI - The tax liability of the sub-contractor on construction services does not preclude tax liability of the concessionaire-petitioner on the works contract services supplied to the NHAI. [Read less]

Central Sales Tax Act, 1956 - Stock Transfer vs Inter-State Sale - Movement of goods from manufacturing unit to buffer and satellite depots in other States pursuant to distribution and consignment agreement – Transfer of goods under stock transfer notes and lorry receipts - Whether the movement of goods from the State of Maharashtra to buffer and satellite depots in other States constitutes inter-State sale liable to Central Sales Tax under Section 3(a) of the CST, 1956 or merely constitutes stock transfer by the manufacturer to its own depots – HELD - For a transaction to be inter-State sale under section 3(a), there ... [Read more]

Central Sales Tax Act, 1956 - Stock Transfer vs Inter-State Sale - Movement of goods from manufacturing unit to buffer and satellite depots in other States pursuant to distribution and consignment agreement – Transfer of goods under stock transfer notes and lorry receipts - Whether the movement of goods from the State of Maharashtra to buffer and satellite depots in other States constitutes inter-State sale liable to Central Sales Tax under Section 3(a) of the CST, 1956 or merely constitutes stock transfer by the manufacturer to its own depots – HELD - For a transaction to be inter-State sale under section 3(a), there must be a sale of goods and such sale should occasion the movement of goods from one state to another. The agreement and MoU merely provide a broad framework and constitute a standing offer, not a binding contract of sale. The agreement does not mandate purchase of any specified quantity, specify product specifications, or determine price. Appropriation of goods occurs only at depot level upon placement and acceptance of purchase orders from the distributor and other buyers - The several precedents relied upon by the State are distinguished as in those cases there were binding agreements specifying quantity and destination prior to movement, whereas here goods moved for inventory replenishment based on market estimation without linkage to any prior purchase order - An open purchase orders lacking specified quantity do not constitute contracts of sale but are standing offers, and movement of goods to depots constitutes mere stock transfer. The goods at satellite depots form a common indistinguishable stock comprising goods manufactured at different units, and source cannot be traced with certainty, further supporting that appropriation occurs only at depot level upon specific purchase order - The Form F submitted by the appellant cannot be rejected for minor procedural defects when the manufacturer possessed lorry receipts constituting valid proof of dispatch under section 6A of the Central Sales Tax Act - The impugned orders passed by Maharashtra Sales Tax Tribunal are set aside and the appeals are allowed [Read less]

Service Tax - Refund claim for service tax paid on manpower supply services, claiming exemption under Mega Exemption Notification No. 25/2012-ST – Rejection of refund on the ground that it was barred by limitation - Whether the refund claim filed beyond one year from the date of deposit of service tax is barred by the time limit prescribed under Section 11B of the Central Excise Act, 1944, and whether such limitation applies even when the service tax was not legally payable in the first place – HELD - The provisions of Section 11B of the Central Excise Act, 1944 are applicable to the present case. Refund is a statutory... [Read more]

Service Tax - Refund claim for service tax paid on manpower supply services, claiming exemption under Mega Exemption Notification No. 25/2012-ST – Rejection of refund on the ground that it was barred by limitation - Whether the refund claim filed beyond one year from the date of deposit of service tax is barred by the time limit prescribed under Section 11B of the Central Excise Act, 1944, and whether such limitation applies even when the service tax was not legally payable in the first place – HELD - The provisions of Section 11B of the Central Excise Act, 1944 are applicable to the present case. Refund is a statutory right, not a Constitutional right, and the legislature through statute can decide how refunds are to be granted. The refund claims before departmental authorities must be governed by the statutory time limit and not the general law of limitation - When amounts are credited to revenue under the head "Service Tax" through TR-6 challans, they constitute service tax and remain subject to Section 11B's time limit for refund purposes. Taxes are intended for immediate expenditure for the common good of the State, and it would be unjust to require repayment after such funds have been expended - The limitation bars the judicial remedy while it does not extinguish the right, and therefore, the appellant's own negligence in not claiming the refund in time rendered the remedy unavailable - The appeal is dismissed and the impugned order is upheld [Read less]

Customs - Valuation and Reassessment – Appellant-importer of polyester knitted fabrics filed Bills of Entry with self-assessed duty based on negotiated invoiced prices from foreign suppliers – Authorities sought to enhance the declared transaction value based on data from the NIDB and obtained written acceptance letters from the importer under pressure to avoid delays in clearance of consignments - Whether an importer who submits a letter of acceptance regarding enhancement of assessable value under Section 17(5) of the Customs Act, 1962 and Rule 12(2) of the Customs Valuation Rules, 2007, can subsequently challenge th... [Read more]

Customs - Valuation and Reassessment – Appellant-importer of polyester knitted fabrics filed Bills of Entry with self-assessed duty based on negotiated invoiced prices from foreign suppliers – Authorities sought to enhance the declared transaction value based on data from the NIDB and obtained written acceptance letters from the importer under pressure to avoid delays in clearance of consignments - Whether an importer who submits a letter of acceptance regarding enhancement of assessable value under Section 17(5) of the Customs Act, 1962 and Rule 12(2) of the Customs Valuation Rules, 2007, can subsequently challenge the reassessment by filing appeals before the Commissioner (Appeals) – HELD - The Section 17(5) confines the waiver or concession to the speaking order which the proper officer is obliged to frame in affirmation of the provisional opinion formed under Section 17(4). The concession made in respect of the opinion harbored by the proper officer cannot be construed as detracting from or depriving the importer of the statutory right to question the correctness of the decision of the proper officer – The Rule 12(2) does not contemplate any concession or waiver in explicit terms and merely stipulates that the proper officer would intimate to the importer the grounds for doubting the declared value at its request. The exchange of communications between the importer and the proper officer, including letters of acceptance obtained under duress or to avoid delays in clearance, cannot amount to a waiver or abandonment of the right to question and assail the reassessment in further proceedings in accordance with the procedure prescribed under the Act. An importer cannot be said to have abandoned the statutory right to question the valuation merely by submitting an acceptance letter; and that valuation addition based solely on NIDB data would be wholly unwarranted and any reassessment would have to be shored by independent and cogent evidence - The impugned orders rejecting the importer's appeals are set aside and the appeals are allowed [Read less]

Central Excise - Reversal of CENVAT credit on inputs and input services attributable to electricity sold to sister concerns – applicability of Rule 6 of CENVAT Credit Rules, 2004 - Appellant reversed the proportionate CENVAT credit in respect of inputs and input services attributable to power sold to sister concerns and informed the department of all reversals from time to time through defence replies and show cause responses – Dept confirmed the demand for payment at the rate of 5-6% of the value of electricity wheeled out, invoking Rule 6(3A) of CENVAT Credit Rules, despite acceptance of one such reversal payment in ... [Read more]

Central Excise - Reversal of CENVAT credit on inputs and input services attributable to electricity sold to sister concerns – applicability of Rule 6 of CENVAT Credit Rules, 2004 - Appellant reversed the proportionate CENVAT credit in respect of inputs and input services attributable to power sold to sister concerns and informed the department of all reversals from time to time through defence replies and show cause responses – Dept confirmed the demand for payment at the rate of 5-6% of the value of electricity wheeled out, invoking Rule 6(3A) of CENVAT Credit Rules, despite acceptance of one such reversal payment in an earlier show cause notice - Whether the appellant, having reversed the proportionate CENVAT credit on inputs and input services attributable to electricity sold to sister concerns, remains liable to pay demand under Rule 6(3A) of CENVAT Credit Rules – HELD – The reversal of CENVAT credit availed on inputs and input services attributable to electricity sold is equivalent to non-availing of credit itself. The Supreme Court in Chandrapur Magnets Private Limited versus Collector of Central Excise, Nagpur and Commissioner of Central Excise and Customs versus Precot Meridian Limited established the principle that reversal of credit amounts to not taking credit at all - Once proportionate reversal of CENVAT credit takes place, it tantamount to non-availing of the input service credit, which signifies compliance with Rule 6(3A) - The decision relied upon by the revenue is not applicable as it pertains to the earlier provision of CENVAT Credit Rules prior to amendment by Finance Act, 2010. The appellant's monthly reversals, even if done at a later stage, constitute compliance with the mandatory requirements of Rule 6(3A), and therefore no demand can be sustained against the appellant - The impugned orders are set aside and the appeals are allowed [Read less]

Jurisdiction and right of appeal is statutory in nature and does not depend on prior participation, the CGST authorities have locus standi to file appeal against an advance ruling even when they did not participate in the advance ruling proceedings.

GST - Anti-profiteering - Limitation under Rule 128 of the CGST Rules, 2017 - Whether a delay in referring a matter to the investigating authority beyond the statutory timeline prescribed under Rule 128 vitiates the entire proceedings – HELD - The time limits prescribed under Rule 128 for the Standing Committee to refer a matter are directory and not mandatory in nature. Anti-profiteering provisions constitute beneficial legislation enacted to protect consumer interests, and beneficial statutes must receive liberal construction that favors the consumer. Since the Rules do not provide any prescribed consequence for lapse ... [Read more]

GST - Anti-profiteering - Limitation under Rule 128 of the CGST Rules, 2017 - Whether a delay in referring a matter to the investigating authority beyond the statutory timeline prescribed under Rule 128 vitiates the entire proceedings – HELD - The time limits prescribed under Rule 128 for the Standing Committee to refer a matter are directory and not mandatory in nature. Anti-profiteering provisions constitute beneficial legislation enacted to protect consumer interests, and beneficial statutes must receive liberal construction that favors the consumer. Since the Rules do not provide any prescribed consequence for lapse of such timelines, procedural delays by a statutory authority cannot defeat the substantive rights of consumers – The procedural delays by statutory functionaries do not render proceedings invalid in the absence of an express statutory consequence - The objection regarding limitation is rejected, and the proceedings are not barred by limitation - Anti-profiteering - Inclusion of GST in profiteered amount - Whether the GST component corresponding to the profiteered amount should be excluded from the total amount to be refunded to consumers – HELD - The profiteered amount is part of the higher consideration that the supplier collected from buyers inclusive of GST. By not passing on the benefit of additional input tax credit, the supplier has effectively retained the GST component as well, which rightfully belongs to the recipients. Both the Central and State Government had no intent of collecting additional GST on the higher price as they had sacrificed their revenue in favor of the buyer. Compelling buyers to pay additional GST on a higher price defeats the intent of the governments and acts against consumer interests. Therefore, the GST collected on the additional realization has rightly been included in the profiteered amount - Anti-profiteering - Levy of interest on profiteered amount - Whether interest under Rule 133(3)(b) of the CGST Rules, 2017 is leviable on the profiteered amount, and whether it can be applied retrospectively to conduct preceding the amendment – HELD – The Section 171 of the CGST Act, 2017 is broad enough to empower the Central Government to prescribe penalty and interest to ensure that suppliers are deterred from retaining benefits meant for consumers. The width and amplitude of the section encompasses the power to ensure that conduct leading to profiteering does not take place. Rule 133(3)(b) providing for interest at eighteen percent per annum is a valid and enabling provision that gives effect to the mandate of the parent statute. The provision for interest was already in existence prior to the cited amendment date. Therefore, the interest liability is not a new provision being applied retrospectively - The respondent is liable to pay interest at 18% per annum on the profiteered amount from the respective dates of collection of the higher amount from each eligible buyer - Anti-profiteering - Penalty under Section 171(3A) - Whether penalty under Section 171(3A) of the CGST Act is attracted in anti-profiteering cases – HELD - Penalty under Section 171(3A) applies where the authority, after holding examination, concludes that any registered person has profiteered. Since the period of contravention extends beyond the date when the provision came into force, penalty is attracted for the period from that date onwards. However, the proviso to the section provides that no penalty is leviable if the profiteered amount is deposited within thirty days of the date of passing the order. This provision grants an opportunity to the supplier to avoid penalty by depositing the entire amount within the prescribed period - The respondent is liable to pay penalty equivalent to ten percent of the profiteered amount for the applicable period, provided the entire profiteered amount is not deposited within thirty days from the date of the order. [Read less]

Central Excise - Refund of Duty, Bar of Unjust Enrichment - Whether the bar of unjust enrichment applies to refund claims where the assessee has booked excise duty as expenditure in profit and loss account but produced documentary evidence through Chartered Accountant certificate establishing that the duty incidence was not passed on to customers and goods were sold below cost of production – HELD - Mere booking of duty elements as revenue expenditure in the profit and loss account does not establish that the duty incidence has been passed on to customers. The accounting treatment in the books of accounts is immaterial a... [Read more]

Central Excise - Refund of Duty, Bar of Unjust Enrichment - Whether the bar of unjust enrichment applies to refund claims where the assessee has booked excise duty as expenditure in profit and loss account but produced documentary evidence through Chartered Accountant certificate establishing that the duty incidence was not passed on to customers and goods were sold below cost of production – HELD - Mere booking of duty elements as revenue expenditure in the profit and loss account does not establish that the duty incidence has been passed on to customers. The accounting treatment in the books of accounts is immaterial and irrelevant for determining whether duty burden has been passed to consumers. Where goods are sold below cost of production, the question of recovery of excise duty from customers does not arise - The CA Certificate, which is based on detailed scrutiny of financial statements and demonstrates that total sales realization was less than the reasonably expected price, constitutes sufficient evidence to prove that the burden of duty was borne by the manufacturer alone and not passed on to buyers - Revenue cannot rely solely on accounting entries to establish unjust enrichment when cogent documentary evidence to the contrary is placed on record - The refund claims along with interest are upheld and the recovery proceedings are set aside – The appeal is allowed [Read less]

Service Tax - Refund claim, Limitation period - Refund applications under Rule 5 of CCR, 2004 on export of services. The applications were initially rejected on the ground that the services did not qualify as exports. The appellant challenged these orders, and the Tribunal in its final order accepted that the services rendered constituted export of services and allowed the appeal. Subsequently, the appellant submitted a letter requesting processing of the refund claims – Dept treated this letter as a fresh refund application and rejected it on the ground of limitation, computing the period from the Tribunal's final order... [Read more]

Service Tax - Refund claim, Limitation period - Refund applications under Rule 5 of CCR, 2004 on export of services. The applications were initially rejected on the ground that the services did not qualify as exports. The appellant challenged these orders, and the Tribunal in its final order accepted that the services rendered constituted export of services and allowed the appeal. Subsequently, the appellant submitted a letter requesting processing of the refund claims – Dept treated this letter as a fresh refund application and rejected it on the ground of limitation, computing the period from the Tribunal's final order - Whether a refund claim stands barred by limitation when the original applications were filed within the prescribed period but the Department seeks to re-adjudicate the matter after the Tribunal has decided the issue of entitlement in the appellant's favour – HELD - The refund claims filed within the prescribed period are not barred by limitation merely because the appellant submitted a follow-up letter requesting processing of the claims after the Tribunal's decision. The Tribunal's final order dated 16.03.2017 conclusively decided the issue of entitlement, and the department was bound by such decision and required to process the refund claims suo moto. The letter dated 13.08.2018 was a request for implementation of the tribunal's decision and not a fresh refund application - Once the Tribunal decides the entitlement of a refund claim, the lower authorities cannot re-adjudicate the issue afresh or impose the limitation bar by computing the period from the tribunal's decision. The authorities must implement the Tribunal's decision in letter and spirit without further delay - The impugned order rejecting the refund claim as time-barred is set aside and the appeal is allowed [Read less]

Service Tax - Invocation of Extended Period of Limitation - Whether the extended period of limitation can be invoked for issuing a subsequent show cause notice for the following periods when an earlier show cause notice for the preceding period, based on the same set of facts relating to suppression of facts, has already been decided in favor of the assessee – HELD - The extended period of limitation cannot be invoked for issuing a second show cause notice for subsequent periods when a prior show cause notice for the preceding period on the same or similar set of facts has already been decided by the tribunal in favor of... [Read more]

Service Tax - Invocation of Extended Period of Limitation - Whether the extended period of limitation can be invoked for issuing a subsequent show cause notice for the following periods when an earlier show cause notice for the preceding period, based on the same set of facts relating to suppression of facts, has already been decided in favor of the assessee – HELD - The extended period of limitation cannot be invoked for issuing a second show cause notice for subsequent periods when a prior show cause notice for the preceding period on the same or similar set of facts has already been decided by the tribunal in favor of the appellant. Once authorities have considered facts in an earlier notice and those facts were already within their knowledge, they cannot subsequently treat the same facts as suppression of facts to extend the period of limitation for a later notice. Where the appellant had already contested the same issues in the preceding period and obtained a favorable decision, the department cannot reopen the substantive issues or invoke extended limitation for the subsequent periods based on facts already known to the authorities – The impugned order-in-appeal is set aside and the appeal is allowed [Read less]

Customs - Classification of Optical Network Terminals/Units (ONT/ONU) and Optical Line Terminals (OLT) under Customs Tariff – Appellant classified Optical Network Terminals/Units and Optical Line Terminals under Customs Tariff items relating to subscriber end equipment and claimed exemption from duty, whereas the revenue authority classified them under machines for reception, conversion and transmission of data - Whether the ONT/ONUs and OLTs imported by the appellant are classifiable under CTI 8517 62 90, as held in the impugned order or under CTI 8517 69 50 (OLT), as asserted by the appellant - HELD - Since the functio... [Read more]

Customs - Classification of Optical Network Terminals/Units (ONT/ONU) and Optical Line Terminals (OLT) under Customs Tariff – Appellant classified Optical Network Terminals/Units and Optical Line Terminals under Customs Tariff items relating to subscriber end equipment and claimed exemption from duty, whereas the revenue authority classified them under machines for reception, conversion and transmission of data - Whether the ONT/ONUs and OLTs imported by the appellant are classifiable under CTI 8517 62 90, as held in the impugned order or under CTI 8517 69 50 (OLT), as asserted by the appellant - HELD - Since the function and purpose of the disputed goods is to receive broadband internet connection through optical fiber and transmit it to various devices of the subscriber, they constitute machines for reception and transmission of data. The Customs tariff sub-heading covering subscriber end equipment is a residual category that can only apply to goods not falling under more specific headings relating to machines for transmission and reception of data - Even though subscriber end equipment is a specific heading, it cannot override the more specific classification if the goods clearly perform the function of receiving and transmitting data. Once it is accepted that the ONTs/ONU are meant for reception and transmission of data, the irresistible conclusion is that they fall under CTI 8517 62 and, therefore, they cannot be fall under CTI 8517 69. Accordingly, the classification of both Optical Network Terminals/Units and Optical Line Terminals deserve to be classified CTHS 8517 62 and cannot be classified under CTHS 8517 69 which is the residual category - the appeal is partly allowed and partly remanded – Ordered accordingly - Classification of optical line terminal (OLT) – HELD - These are the equipment which are installed at the end of the internet service providers and they provide the link between the ISP and the subscriber to provide the broadband. These are also machines which receive and transmit data and, therefore, they deserve to be classified under six digit CTSH 8517 62. Only goods which are not machines for reception or transmission of data will fall under the residual category of “others” (CTSH 8517 69). The appellant’s claim of classification of these OLTs under CTI 8517 69 90 cannot be accepted - Whether the appellant was entitled to the benefit of the Notification No. 24/2005-Cus as amended (S.No. 13A) on ONT/ONU and Notification No. 57/2017-Cus (S.No. 20) on OLT – HELD - Denial of exemption notification No. 24/2005-Cus dated 01.03.2005 (as amended) (Sr. No. 13B) on the ground that the goods were Optical Transport Network Products is remanded back to the Commissioner to consider the report of the Telecom Expert submitted by the appellant which specifically states that the ONT/ONU were not optical transport network products. The Commissioner may examine/ cross examine the expert and decide this question - Invocation of Extended Period of Limitation under Section 28(4) of the Customs Act – HELD - The extended period of limitation cannot be invoked merely because the importer changed the classification of goods under different bills of entry. The court reasons that although the importer had initially classified goods under one tariff item and subsequently changed the classification in disputed bills of entry, this change by itself does not prove collusion, willful misstatement or suppression of facts, which are the essential ingredients for invoking the extended period of limitation. Claiming a particular classification or notification based on the importer's understanding, even if later found to be incorrect, does not amount to willful misstatement or suppression of facts. Accordingly, the extended period of limitation is set aside and the demand is restricted to the normal period of limitation - Imposition of Penalties under Sections 114A and 114AA of the Customs Act - Whether penalties under sections 114A and 114AA can be sustained when the extended period of limitation has been found to be incorrectly invoked – HELD - Since the elements required for imposing penalty under Section 114A are identical to those required for invoking extended period of limitation, and the extended period of limitation has been found to be unjustifiable, the penalty under section 114A cannot be sustained. With respect to section 114AA, the penalty cannot be imposed because classification of goods is a matter of opinion and interpretation, not a statement of fact - Misstatement requires declaration of wrong facts, whereas classification differences represent differing interpretations of the correct Customs tariff item. Accordingly, penalties under both sections are set aside. [Read less]

GST - Bail in GST Evasion Cases - Right to bail in non-bailable offences under GST Act where investigation is completed and trial is not likely to commence within reasonable time – Applicant is arrested in connection with alleged creation of fake GST-registered firms and fraudulent availment of input tax credit through issuance of invoices without actual supply of goods - Whether bail should be granted to an accused under Section 132 of the CGST Act, 2017, notwithstanding the seriousness of the alleged offence and prima facie evidence against him – HELD - Bail is a rule and jail is an exception. Even in cases of non-ba... [Read more]

GST - Bail in GST Evasion Cases - Right to bail in non-bailable offences under GST Act where investigation is completed and trial is not likely to commence within reasonable time – Applicant is arrested in connection with alleged creation of fake GST-registered firms and fraudulent availment of input tax credit through issuance of invoices without actual supply of goods - Whether bail should be granted to an accused under Section 132 of the CGST Act, 2017, notwithstanding the seriousness of the alleged offence and prima facie evidence against him – HELD - Bail is a rule and jail is an exception. Even in cases of non-bailable offences under the GST Act, bail must be granted where the investigation is completed, charge is not framed, the trial is triable by a Magistrate, the maximum punishment is limited, the accused has no criminal antecedents, and there is no risk of tampering with evidence or intimidating witnesses. The detention pending trial cannot be punitive in nature and prolonged custody without trial commencement violates the constitutional guarantee of personal liberty - The absence of exceptional circumstances warranting denial of bail, combined with the likelihood that the trial would not conclude within a reasonable period, necessitates release on bail - Bail is granted to the applicant on furnishing personal bond and two sureties, subject to conditions including non-tampering with evidence, non-intimidation of witnesses, regular appearance before the trial court, and prohibition from leaving India without court permission – The bail application is allowed [Read less]

Service Tax - Education Services under ICT Scheme - Bundled Services - Exemption under Negative List and Mega Exemption Notification – Implementation of Information and Communication Technology scheme in Government schools along with supply of hardware, software, installation and commissioning services, maintenance services, and computer-aided education to students and teachers – Demand of service tax contending that the services were not covered under the negative list or the exemption notification - Whether bundled services comprising supply, installation and commissioning of computer hardware and software along with... [Read more]

Service Tax - Education Services under ICT Scheme - Bundled Services - Exemption under Negative List and Mega Exemption Notification – Implementation of Information and Communication Technology scheme in Government schools along with supply of hardware, software, installation and commissioning services, maintenance services, and computer-aided education to students and teachers – Demand of service tax contending that the services were not covered under the negative list or the exemption notification - Whether bundled services comprising supply, installation and commissioning of computer hardware and software along with imparting computer-aided education to students in government schools fall within the scope of education services covered under section 66D(l) of the Finance Act, 1994 (negative list regime until 13.05.2016) and subsequently under Entry 9 of the Mega Exemption Notification No. 25/2012-S.T. (from 14.05.2016), thereby exempting such services from service tax liability - HELD - The services rendered by the appellant under the ICT scheme include systematic instruction and training of students through technology as part of the school curriculum, constitutes education within the ordinary meaning of the term. The services involve providing infrastructure as a medium for delivering education which forms the predominant nature of the bundled service. The services are naturally bundled in the ordinary course of business under section 66F(3)(a) of the Finance Act, with the essential character being education - The services fall squarely within section 66D(l)(i) being education upto higher secondary school level and section 66D(l)(ii) being education as part of a curriculum for obtaining a qualification recognised by law - When section 66D(l) was omitted with effect from 14.05.2016, the exemption was not withdrawn but was moved from the statute to the notification through amendment, making the transition revenue-neutral - The appellant qualifies as an educational institution under the amended clause 2(oa) of the Notification and exempt under entry 9(a) of the notification as services provided by an educational institution to its students - The demand for service tax is set aside - The appeal of the assessee is allowed and the revenue appeal is dismissed [Read less]

Service Tax - Liability on construction of residential complex comprising individual houses, Merit of Macro Marvel Projects Ltd. vs CST case - Interpretation of "residential complex" definition under Section 65(91a) of the Finance Act, 1994 - Whether individual houses built as part of a layout with common facilities constitute a residential complex liable to service tax – HELD – The individual houses, being residential units as defined in the explanation to Section 65(91a), when constructed as part of a complex with more than twelve units and common facilities within an approved layout, squarely fall within the definit... [Read more]

Service Tax - Liability on construction of residential complex comprising individual houses, Merit of Macro Marvel Projects Ltd. vs CST case - Interpretation of "residential complex" definition under Section 65(91a) of the Finance Act, 1994 - Whether individual houses built as part of a layout with common facilities constitute a residential complex liable to service tax – HELD – The individual houses, being residential units as defined in the explanation to Section 65(91a), when constructed as part of a complex with more than twelve units and common facilities within an approved layout, squarely fall within the definition of residential complex. The explanation to the definition, inserted to remove doubts, explicitly declares that residential unit means a single house or a single apartment, and therefore the earlier judicial interpretation in Macro Marvel that individual houses do not qualify as residential complex is based on an incomplete reproduction of the definition and is contrary to the explicit statutory explanation. The finding in Macro Marvel that the law makers did not want individual residential houses to be subject to levy of service tax is contrary to the explicit explanation in the definition itself which was inserted to remove any doubts – The Revenue is correct in its submission that individual houses with some common facilities squarely fall in the definition of residential complex and the explanation in the definition for removal of doubts will remove any shadow of doubt on this issue. Since there are several decisions which followed Macro Marvel, this matter has to be referred to a larger bench to decide - During the relevant period, Macro Marvel order of this Tribunal was already issued, hence, it was reasonable for any assessee to presume that no service tax was payable on its activities if there was an order or judgment to that effect on the question. Therefore, extended period of limitation could not have been invoked in the present case - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Denial of cenvat credit based on statements of transporters without cross-examination – Violation of Natural justice - Whether cenvat credit can be denied to the appellant merely on the basis of uncross-examined statements of transporters when there is no other corroborative evidence on record to substantiate the allegation of non-receipt of raw materials – HELD - The allegations against the appellant is substantiated by the adjudicating authority on the basis of the statement of the owners/authorised persons of the vehicles. There is no other corroborative evidence available on record to substantiate ... [Read more]

Central Excise - Denial of cenvat credit based on statements of transporters without cross-examination – Violation of Natural justice - Whether cenvat credit can be denied to the appellant merely on the basis of uncross-examined statements of transporters when there is no other corroborative evidence on record to substantiate the allegation of non-receipt of raw materials – HELD - The allegations against the appellant is substantiated by the adjudicating authority on the basis of the statement of the owners/authorised persons of the vehicles. There is no other corroborative evidence available on record to substantiate the allegations of non-receipt of the raw material into the factory. Thus, the owners/authorised persons needs to be cross examined and in the absence of cross-examination, their statements cannot be relied upon - The principle of natural justice requires that when statements of witnesses form the sole basis of an adverse order against an assessee, the assessee must be given an opportunity to cross-examine such witnesses. The absence of cross-examination renders the statements unreliable and constitutes a serious breach of natural justice, thereby making the order a nullity - The impugned order is set aside and the matter is remanded back to the adjudicating authority with directions to allow cross-examination of the vehicle owners and authorised persons whose statements were relied upon and thereafter pass an appropriate order – The appeal is allowed by remand [Read less]

Customs - Misclassification of Food Testing Kits – Appellants imported food testing kits such as ELISA tests for detecting fungal toxins, allergens, and veterinary drug residues in food items and wrongly declared them as diagnostic test kits claiming benefit of exemption Notification no. 50/2017-Cus dated 30.6.2017 for life-saving drugs and diagnostic test kits - Whether the Food Testing Kits were correctly classifiable under customs tariff item 3822 00 90 or 3822 00 19 and whether the importer was entitled to exemption notification benefits – HELD - The kits were clearly not intended for human or animal diagnostics bu... [Read more]

Customs - Misclassification of Food Testing Kits – Appellants imported food testing kits such as ELISA tests for detecting fungal toxins, allergens, and veterinary drug residues in food items and wrongly declared them as diagnostic test kits claiming benefit of exemption Notification no. 50/2017-Cus dated 30.6.2017 for life-saving drugs and diagnostic test kits - Whether the Food Testing Kits were correctly classifiable under customs tariff item 3822 00 90 or 3822 00 19 and whether the importer was entitled to exemption notification benefits – HELD - The kits were clearly not intended for human or animal diagnostics but were exclusively meant for food testing purposes. The declaration as "diagnostic use only" was a deliberate misrepresentation with full knowledge that the goods were food testing kits and not diagnostic use items - Considering that the test kits were clearly not intended for diagnostics but were actually meant for food testing and were wrongly indicated as ‘Diagnostic use only’, there was a clear mis-declaration with full knowledge - The invocation of extended period of limitation and imposition of penalties on the importer and its Directors call for no interference – The appeals are dismissed [Read less]

GST - Binding nature of Advance Ruling, Validity of Show Cause Notice issued in conflict with Advance Ruling, Classification of “Roof Mounted AC Package Unit” – The Advance Ruling Authority order classified “Roof Mounted AC Package Unit” manufactures as per the specifications provided by the Railways and supplied to the Indian Railways under Chapter 86.07 of the GST Tariff – The AAR Order was never assailed or questioned by the Department and thus attained finality – Respondents issued notice demanding GST in contradiction to the AAR Order - Whether the show cause notice issued in conflict with a settled and ... [Read more]

GST - Binding nature of Advance Ruling, Validity of Show Cause Notice issued in conflict with Advance Ruling, Classification of “Roof Mounted AC Package Unit” – The Advance Ruling Authority order classified “Roof Mounted AC Package Unit” manufactures as per the specifications provided by the Railways and supplied to the Indian Railways under Chapter 86.07 of the GST Tariff – The AAR Order was never assailed or questioned by the Department and thus attained finality – Respondents issued notice demanding GST in contradiction to the AAR Order - Whether the show cause notice issued in conflict with a settled and final Advance Ruling is sustainable – HELD – The Advance Ruling was valid subject to the provisions of Section 103(2) of the CGST Act, 2017, unless and until it was declared void under Section 104(1) of the Act. The Department has neither disputed, nor assailed or questioned the Advance Ruling before any forum and being a settled proposition of law, the Advance Ruling is binding upon the Authorities – In view of the finality attached to the Advance Ruling between the parties, the show cause notice was without foundation and not sustainable in law. It is a fit case where discretion under Article 226 of the Constitution of India can be exercised for quashing the impugned notice issued in conflict with the settled law. Accordingly, the show cause notice is quashed and set aside – The writ petition is allowed [Read less]

Customs - Levy of Customs duty on supply of MS scrap to SEZ unit –Whether Customs duty can be levied and collected on goods supplied to an authorized unit operating in SEZ – HELD – The Division Bench of the Tribunal in Cummins Turbo Technology vs. Commissioner of Customs, Central Excise & Central Tax, Indore has held that no Customs duty can be levied on goods supplied to an authorized SEZ unit as the charging sections under the Customs Act are overridden by the Special Economic Zone Act, 2005 - Once the duty demand is set aside, interest cannot be charged and penalties under sections 114 and 114AA cannot be imposed ... [Read more]

Customs - Levy of Customs duty on supply of MS scrap to SEZ unit –Whether Customs duty can be levied and collected on goods supplied to an authorized unit operating in SEZ – HELD – The Division Bench of the Tribunal in Cummins Turbo Technology vs. Commissioner of Customs, Central Excise & Central Tax, Indore has held that no Customs duty can be levied on goods supplied to an authorized SEZ unit as the charging sections under the Customs Act are overridden by the Special Economic Zone Act, 2005 - Once the duty demand is set aside, interest cannot be charged and penalties under sections 114 and 114AA cannot be imposed - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Estoppel through unconditional acceptance of enhanced assessable value, challenge enhancement after voluntary acceptance and payment of duty - Whether an importer can challenge the enhancement of assessable value before the appellate authority after having unconditionally accepted the enhanced value, paid the duty without protest, and cleared the goods – HELD - It is not open to an importer to challenge the enhanced value after unconditionally accepting it. The principles established in Niraj Silk Mills are distinguishable because in that case, the importer had registered multiple protests, sought expeditious c... [Read more]

Customs - Estoppel through unconditional acceptance of enhanced assessable value, challenge enhancement after voluntary acceptance and payment of duty - Whether an importer can challenge the enhancement of assessable value before the appellate authority after having unconditionally accepted the enhanced value, paid the duty without protest, and cleared the goods – HELD - It is not open to an importer to challenge the enhanced value after unconditionally accepting it. The principles established in Niraj Silk Mills are distinguishable because in that case, the importer had registered multiple protests, sought expeditious clearance to avoid demurrages, and had expressly indicated that the payment and acceptance were made under protest with a reservation of right to question the assessment - In the present case, there was an unqualified and unconditional acceptance of the enhanced value without any protest, conditional letter, or reservation of rights to challenge the assessment. The importer cannot be permitted to accept the enhanced value, clear the goods, and subsequently challenge the enhancement in an appeal - The Tribunal relied on the decision of a Division Bench of the Tribunal in Commissioner of Customs (Preventive), Jaipur vs. CMR Nikkei India Pvt. Ltd., which establishes that an importer is estopped from challenging an enhanced value after such unconditional acceptance - The appeal is dismissed [Read less]

Customs – Imposition of Penalty on the basis of Third-Party Documents and Statements - Penalty under section 112(b) of the Customs Act for alleged clandestine purchase of goods – Appellant alleged to have received M.S. Ingots from a SEZ unit without payment of Customs duty - Based on ledger entries and statements of transporters recovered from third-party premises during search operations, Dept imposed penalty without recovering any incriminating evidence from the appellant's factory premises - Whether penalty under section 112(b) of the Customs Act can be imposed on the basis of third-party documents and statements - ... [Read more]

Customs – Imposition of Penalty on the basis of Third-Party Documents and Statements - Penalty under section 112(b) of the Customs Act for alleged clandestine purchase of goods – Appellant alleged to have received M.S. Ingots from a SEZ unit without payment of Customs duty - Based on ledger entries and statements of transporters recovered from third-party premises during search operations, Dept imposed penalty without recovering any incriminating evidence from the appellant's factory premises - Whether penalty under section 112(b) of the Customs Act can be imposed on the basis of third-party documents and statements - HELD - Penalty under section 112(b) of the Customs Act cannot be imposed as the statements recorded under section 108 of the Customs Act were relied upon without following the procedure contemplated under section 138B of the Customs Act, thereby rendering such statements irrelevant and unreliable - Further, third-party ledger entries and computer print-outs, being records of a third party neither belonging to nor maintained by the appellant, cannot form the basis for penalty imposition in the absence of independent corroboration and physical evidence recovered from the appellant's own premises. Additionally, the two mandatory conditions for imposing penalty, namely acquiring possession or being concerned with goods liable for confiscation and possessing knowledge or belief about such goods being liable for confiscation, are not satisfied as there exists no documentary, physical, or corroborative evidence establishing purchase, receipt, or dealing in the alleged goods by the appellant - The impugned order imposing penalty is set aside and the appeal is allowed [Read less]

Customs - Penalty under Customs Act for alleged duty evasion – Reliance on statements recorded without following procedure under Section 138B and third-party records – HELD - The Commissioner's order relied upon statements recorded under section 108 of the Customs Act without following the mandatory procedure prescribed under section 138B of the Customs Act, which renders such statements inadmissible and unreliable as evidence. Further, the order also placed reliance on ledger entries and computer print-outs belonging to a third party which neither belonged to nor were maintained by the appellant, and in the absence of... [Read more]

Customs - Penalty under Customs Act for alleged duty evasion – Reliance on statements recorded without following procedure under Section 138B and third-party records – HELD - The Commissioner's order relied upon statements recorded under section 108 of the Customs Act without following the mandatory procedure prescribed under section 138B of the Customs Act, which renders such statements inadmissible and unreliable as evidence. Further, the order also placed reliance on ledger entries and computer print-outs belonging to a third party which neither belonged to nor were maintained by the appellant, and in the absence of any independent corroboration, such third-party records cannot form the basis for imposing penalty under section 112(b) - Additionally, for imposing penalty under section 112(b), two essential conditions must be satisfied namely, the accused must have acquired possession or been concerned with goods liable for confiscation, and must possess knowledge or belief about such goods being liable for confiscation under section 111. In the present case, neither condition was satisfied as the appellant had not dealt with the goods in question nor was there anything to demonstrate that the appellant had any knowledge or belief that the goods were liable for confiscation, therefore the penalty is set aside - The appeal is allowed [Read less]

GST - Writ Jurisdiction, Validity of a consolidated show cause notice – Challenge to legality and validity of a consolidated SCN, covering multiple financial years and the consequent adjudication order – HELD - The substantive issue regarding consolidated show cause notices is pending before a larger bench of another High Court and hence judicial propriety demands restraint from expressing opinion on merits at the current stage – Further, the writ petition is not maintainable as an efficacious alternative statutory remedy exists in the form of appeal before the appellate authority - The petitioner having failed to ch... [Read more]

GST - Writ Jurisdiction, Validity of a consolidated show cause notice – Challenge to legality and validity of a consolidated SCN, covering multiple financial years and the consequent adjudication order – HELD - The substantive issue regarding consolidated show cause notices is pending before a larger bench of another High Court and hence judicial propriety demands restraint from expressing opinion on merits at the current stage – Further, the writ petition is not maintainable as an efficacious alternative statutory remedy exists in the form of appeal before the appellate authority - The petitioner having failed to challenge the show cause notice at the first instance and approached the Court only after the adjudication order, which appears to be a belated attempt to stall the adjudicatory process envisaged under the statute, and no exceptional circumstances warranting interference under Article 226 of the Constitution are established - The petition stands dismissed on the ground of availability of efficacious alternative statutory remedy [Read less]

Service Tax – Demand based on third party data and financial statements - Department initiated proceedings based on third party data and financial statements to demand service tax - Whether the appellant is liable to pay service tax when the same is already paid by the service recipient – HELD - The Appellant being a service provider is not liable to pay Service Tax when the same is already paid by the service recipient under RCM – Further, the demand raised by invoking longer period of limitation is solely based upon the financial statements submitted by the appellant and the third party data, which has consistently... [Read more]

Service Tax – Demand based on third party data and financial statements - Department initiated proceedings based on third party data and financial statements to demand service tax - Whether the appellant is liable to pay service tax when the same is already paid by the service recipient – HELD - The Appellant being a service provider is not liable to pay Service Tax when the same is already paid by the service recipient under RCM – Further, the demand raised by invoking longer period of limitation is solely based upon the financial statements submitted by the appellant and the third party data, which has consistently been held to be as not proper by Tribunal in various decisions - The impugned order is not sustainable on limitation itself. Accordingly, demand and penalties imposed are set aside and the appeal is allowed [Read less]

Service Tax - Bar of Limitation to issue second Show Cause Notice - Bar of limitation for issuance of subsequent show cause notice invoking extended period on identical grounds – Appellant was issued two consecutive show cause notices for service tax demands for the financial years 2015-16 and 2016-17. The first notice for 2015-16 was subsequently dropped by the additional commissioner. The second notice for 2016-17 was issued invoking the extended period of limitation on the basis of information provided by the income tax department, alleging suppression of facts - Whether the second show cause notice invoking the exten... [Read more]

Service Tax - Bar of Limitation to issue second Show Cause Notice - Bar of limitation for issuance of subsequent show cause notice invoking extended period on identical grounds – Appellant was issued two consecutive show cause notices for service tax demands for the financial years 2015-16 and 2016-17. The first notice for 2015-16 was subsequently dropped by the additional commissioner. The second notice for 2016-17 was issued invoking the extended period of limitation on the basis of information provided by the income tax department, alleging suppression of facts - Whether the second show cause notice invoking the extended period of limitation can be sustained when the department had full knowledge of the facts and activities of the appellant at the time of issuing the first notice – HELD – The suppression of facts cannot be alleged against the assessee if all relevant facts were already in the knowledge of the Department when the first notice was issued. The appellant was regularly filing returns and therefore the same set of facts could not be taken as suppression of facts in the subsequent notice. The Commissioner (appeals) is completely silent on the limitation issue in his order. A subsequent notice invoking extended period of limitation on similar and identical grounds is not sustainable when the Department possessed all necessary information at the time of the first notice - The impugned order is set aside and the appeal is allowed [Read less]

GST - Service of notice – Assessee filed an appeal before the GSTAT against an order passed by the Respondent-authority - Registry attempted to serve notice on the respondent through the official portal and email, but the respondent fails to acknowledge receipt or provide necessary credentials for verification of documents. Despite multiple reminder communications, no response is forthcoming from the respondent through any channel – HELD - Where service through the portal and email contemplated under the statute proves unsuccessful despite reasonable attempts and reminders, service may be effected through additional mo... [Read more]

GST - Service of notice – Assessee filed an appeal before the GSTAT against an order passed by the Respondent-authority - Registry attempted to serve notice on the respondent through the official portal and email, but the respondent fails to acknowledge receipt or provide necessary credentials for verification of documents. Despite multiple reminder communications, no response is forthcoming from the respondent through any channel – HELD - Where service through the portal and email contemplated under the statute proves unsuccessful despite reasonable attempts and reminders, service may be effected through additional modes including registered post and speed post in accordance with the statutory provisions relating to service of notices. The service upon the respondent shall be effected not only through the portal and email but also through registered post and speed post in accordance with Section 169 of the CGST Act, 2017, to ensure proper service and compliance with procedural requirements – Ordered accordingly [Read less]

Central Excise - Delayed Payment of Excise Duty - Department invoked Rule 8(3A) of the Central Excise Rules, 2002, which provided that manufacturers failing to pay duty within 30 days from the due date must pay excise duty on a consignment basis without utilizing Cenvat credit. The company had utilized Cenvat credit for subsequent months following the delayed payment - Whether the demand for recovery of duty and consequential penalty can be sustained when Rule 8(3A) of the Central Excise Rules, 2002 has been declared ultra vires – HELD - The issue is no longer res integra as the Gujarat High Court has already held that t... [Read more]

Central Excise - Delayed Payment of Excise Duty - Department invoked Rule 8(3A) of the Central Excise Rules, 2002, which provided that manufacturers failing to pay duty within 30 days from the due date must pay excise duty on a consignment basis without utilizing Cenvat credit. The company had utilized Cenvat credit for subsequent months following the delayed payment - Whether the demand for recovery of duty and consequential penalty can be sustained when Rule 8(3A) of the Central Excise Rules, 2002 has been declared ultra vires – HELD - The issue is no longer res integra as the Gujarat High Court has already held that the provisions of Rule 8(3A) are ultra vires. Subsequently, the appeal filed by the Union of India against this judgment was dismissed by the Apex Court - When the provision itself has been declared ultra vires, the demand cannot sustain on the basis of that provision. The appellant has relied on various judicial precedents establishing that Cenvat credit utilization was equivalent to account current payment, making the transaction revenue neutral - The demand for recovery of duty is set aside along with the equal penalty under Section 11AC. However, liability of interest due to delayed payment of excise duty, if any, sustains – The appeal is partly allowed - Penalty for Late Filing of Returns - Whether the levy of penalty for late filing of excise returns under Rule 27 is justified – HELD - The appellant delayed the filing of the two returns. The Rule 27 of the Central Excise Rules, 2002 provides that breach of Rules shall be punishable with a penalty which may extend to five thousand rupees. The adjudicating authority has rightly imposed the penalty for the breach of the filing obligation, as the returns were filed beyond their due dates - The penalty imposed by the adjudicating authority under Rule 27 for late filing of returns is upheld - Personal Penalty on Authorized Signatory for Misstatement in Returns - Whether a personal penalty can be imposed on an authorized signatory acting in his capacity as an employee of the company for deliberate misstatement and suppression of information in monthly returns – HELD - The authorized signatory was fully aware that the amount had not been paid on the date claimed in the return. His own statement clearly establishes that he intentionally misdeclared the payment particulars and that the misstatement was made purposefully to mislead the department about the payment of duty, with the intention to continue utilizing the Cenvat account and evade the requirement of paying duty on a consignment basis during the default period. This constitutes a deliberate act of misrepresentation and suppression with knowledge and intent, which distinguishes this case from situations where an employee acts merely in an official capacity without personal culpability. The adjudicating authority was justified in imposing the penalty under Rule 26. [Read less]

Service Tax - Construction of Roads in Private Industrial Park – Exemption from Service Tax and CENVAT Credit Eligibility – Construction services for development of industrial park with internal roads connecting to existing public roads as per approved master plan – CENVAT Credit on input services used for road construction after paying service tax under partial reverse charge, treating the work as 'Original Works' with 60% abatement – Dept denied CENVAT Credit as an ineligible input service - Whether roads constructed within a private industrial park, which are integrated with the public road network and serve gen... [Read more]

Service Tax - Construction of Roads in Private Industrial Park – Exemption from Service Tax and CENVAT Credit Eligibility – Construction services for development of industrial park with internal roads connecting to existing public roads as per approved master plan – CENVAT Credit on input services used for road construction after paying service tax under partial reverse charge, treating the work as 'Original Works' with 60% abatement – Dept denied CENVAT Credit as an ineligible input service - Whether roads constructed within a private industrial park, which are integrated with the public road network and serve general public access, qualify as roads for use by general public under the exemption notification, thereby making the service provider ineligible to claim CENVAT Credit on input services – HELD - Merely because roads are constructed inside a private industrial park does not render them private roads with restricted entry; the fact that roads are crossed by master plan routes and connected with existing public roads means they are for utility of general public and consequently fall within the scope of exemption notification for construction of roads for use by general public. The fact that roads in question are for the utility of the general public the same would fall within the scope of the exemption Notification No.25/2012–ST dated June 20, 2012 and therefore, the appellant is not entitled to take CENVAT Credit of service tax on the exempted services as per the provisions of Rule 6 of CENVAT Credit Rules, 2004 - The impugned order is upheld on merits regarding exemption applicability but remands the matter for recalculation of recoverable CENVAT Credit for the normal period only, setting aside the extended period of limitation as the issue involves interpretation rather than suppression of facts – The appeal is partly allowed - Demand invoking extended period on the ground that the appellant had suppressed the fact of wrongful availment of CENVAT Credit – HELD - The appellant bonafide believed that the roads built by them were for specific use for Industrial Park and therefore, would fall in the category of private use, which is beyond the scope of the applicability of the exemption notification. In fact the appellant would have benefited by availing the exemption from payment of service tax under the Notification. By not claiming the exemption under the notification, they paid the service tax and if service tax was not payable, in the event the Department would have been liable to refund the said amount with interest. Therefore, it would have been a case of revenue neutral rather than a case of suppression of facts. [Read less]

Customs - Appellant is Director of a foreign company incorporated outside India was alleged to have issued dual invoices reflecting actual transaction value and suppressed values for Customs purposes, with differential amounts being remitted through unofficial channels - Appellant contended that as a Director of a foreign entity, no proceedings could be initiated against him without making the company itself a noticee, and that the Customs Act had no extraterritorial jurisdiction prior to amendment in 2018 - Whether a Director of a foreign company can be held liable for Customs offences relating to undervaluation of import... [Read more]

Customs - Appellant is Director of a foreign company incorporated outside India was alleged to have issued dual invoices reflecting actual transaction value and suppressed values for Customs purposes, with differential amounts being remitted through unofficial channels - Appellant contended that as a Director of a foreign entity, no proceedings could be initiated against him without making the company itself a noticee, and that the Customs Act had no extraterritorial jurisdiction prior to amendment in 2018 - Whether a Director of a foreign company can be held liable for Customs offences relating to undervaluation of imported goods – HELD - The Customs Act is fully applicable to a person who consciously and deliberately participates in fraudulent importation into India, irrespective of whether the principal company is incorporated outside India or whether the Customs Act had explicit extraterritorial provisions at the material time. The taxable event under Customs law is importation into India, and once manipulated invoices are knowingly prepared and utilized for Customs clearance within Indian territory, the offence attains territorial nexus with India and stands completed within Indian territory. A person situated outside India cannot claim immunity merely because the conspiracy originated outside India - The doctrine that where a person knowingly engages in acts contravening statutory provisions and such acts have operative effect within India, he remains personally answerable under law irrespective of nationality or place of incorporation of his associated entity, applies to the present circumstances – The Section 112(a) of the Customs Act uses the expression "any person" which is intentionally broad and encompasses every person who knowingly participates in fraudulent importation or undervaluation irrespective of designation or geographical location - The penalties imposed under Section 112(a) and Section 114AA of the Customs Act, 1962 are sustained and the appeal is dismissed [Read less]

GST - Jurisdiction of transit State GST Authorities over Inter-State goods in transit, Scope of cross-empowerment of Central and State Authorities – Jurisdiction to pass penalty orders by the SGST authorities of a transit State against goods originating in one State and destined for another State - Petitioners contend that the transit State authorities lack jurisdiction to detain goods and impose penalties for inter-state transactions where the supply originates and terminates outside the transit State - Revenue authorities argue that cross-empowerment provisions under Section 6 of the Central Act and Section 4 of the IG... [Read more]

GST - Jurisdiction of transit State GST Authorities over Inter-State goods in transit, Scope of cross-empowerment of Central and State Authorities – Jurisdiction to pass penalty orders by the SGST authorities of a transit State against goods originating in one State and destined for another State - Petitioners contend that the transit State authorities lack jurisdiction to detain goods and impose penalties for inter-state transactions where the supply originates and terminates outside the transit State - Revenue authorities argue that cross-empowerment provisions under Section 6 of the Central Act and Section 4 of the IGST Act read with Sections 68 and 129 of the State Act confer jurisdiction on transit State authorities to detain goods and impose penalties for any anomaly in the transaction – HELD - While transit State authorities are empowered to stop, inspect and physically verify goods in transit as a regulatory measure to enforce compliance with prescribed documentation requirements, such power is limited to the extent of noting and reporting deficiencies. The cross-empowerment under Section 6 of the CGST Act and Section 4 of the IGST Act operates only between Central and State authorities with respect to taxable transactions in that State and not between authorities of different States. Since no tax incidence arises in a pure transit State where goods originate and terminate outside such state, no levy of IGST, SGST or CGST can occur in that transit State. Therefore, the transit State authorities cannot impose penalties for violations in inter-state transactions where neither the supply origin nor destination lies within that transit State – Further, permitting transit States to impose penalties would expose goods traversing multiple States to repeated penalties by various State authorities, thereby violating the Constitutional protection of inter-State trade guaranteed under Article 301 of the Constitution. The appropriate action for transit State authorities is to communicate discrepancies noticed to the competent authorities in the origin and destination States while allowing goods to complete their journey unimpeded - The penalty orders are quashed, and goods and vehicles are directed to be released forthwith. The writ petitions are allowed - Issuance of physical tax invoice instead of e-Invoice, Penalty on purchasing dealer – HELD - Issuance of e-Tax Invoice is linked to turnover. That fact is in the special knowledge of the supplier. The purchase/recipient may neither have the means, nor he may be burdened to enquire about the same, before transacting a purchase. That may be a wholly unreasonable burden cast on the recipient/purchaser. To the extent the physical Tax Invoice is not bogus and its issuance is not doubted, the recipient/purchaser may not be penalised, for no fault. [Read less]

Central Excise - Excisability of waste/residual products generated during manufacture - During the manufacture of barley malt and malt extract, certain waste and residual products such as wet bhoosi, chilka, dundli, and malt sprouts are generated and sold in the market - Whether these waste/residual products are liable to excise duty and Rule 6 of the CENVAT Credit Rules, 2004 applies to them, requiring reversal of proportionate CENVAT credit or payment of duty amount – HELD - Waste and residual products generated during the manufacturing process are not manufactured products and therefore are not liable to excise duty. ... [Read more]

Central Excise - Excisability of waste/residual products generated during manufacture - During the manufacture of barley malt and malt extract, certain waste and residual products such as wet bhoosi, chilka, dundli, and malt sprouts are generated and sold in the market - Whether these waste/residual products are liable to excise duty and Rule 6 of the CENVAT Credit Rules, 2004 applies to them, requiring reversal of proportionate CENVAT credit or payment of duty amount – HELD - Waste and residual products generated during the manufacturing process are not manufactured products and therefore are not liable to excise duty. The issue stands settled by the Supreme Court judgment in Union of India v. DSCL Sugar Ltd., wherein it has been categorically held that bagasse, being a waste product, is not a manufactured product and consequently Rule 6 of the CENVAT Credit Rules, 2004 has no application to such products - The waste/residual products are not classifiable under the Central Excise Tariff and prior to March 1, 2015, Rule 6 of the CENVAT Credit Rules, 2004 was not applicable to such waste/residual products - The impugned order dropping the demand is confirmed and the appeal filed by the Revenue is dismissed [Read less]

GST - Discriminatory Assessment – Petitioner is assessed to tax for a particular period on the basis of facts for which the Revenue authority has already granted refunds by treating petitioner as an exporter in respect of other tax periods - The appellate authority upheld the refund orders in the petitioner's favour by accepting the appeals - Whether the assessment order for the impugned period can be sustained when there is no distinction on facts or in law between the impugned assessment and the earlier periods for which refunds have been granted and the appellate orders have been complied with by the revenue – HELD ... [Read more]

GST - Discriminatory Assessment – Petitioner is assessed to tax for a particular period on the basis of facts for which the Revenue authority has already granted refunds by treating petitioner as an exporter in respect of other tax periods - The appellate authority upheld the refund orders in the petitioner's favour by accepting the appeals - Whether the assessment order for the impugned period can be sustained when there is no distinction on facts or in law between the impugned assessment and the earlier periods for which refunds have been granted and the appellate orders have been complied with by the revenue – HELD - The assessment order is discriminatory and cannot be sustained, as there is no reason forthcoming from revenue to distinguish the issue on the basis of facts or law with regard to the rendering of services by the petitioner for the impugned period as against the other periods - When the revenue itself has accepted the petitioner as an exporter and released refunds for similar facts in other periods in compliance with the appellate orders, it would be discriminatory and arbitrary to tax the petitioner for the impugned period on the same set of facts - The impugned assessment order is quashed and the petition is allowed [Read less]

GST – Taxability of Preferential Location charges on residential/commercial properties, Retrospective application of Circular No. 234/28/2024-GST dated 11.10.2024 – Petitioner sought Advance Ruling as to whether the charges collected by the petitioner against preferential location of its flats are to be taxed independently or along with its main activity of construction/development – The lower authorities ruled that the charges collected against preferential location of the flats are to be taxed independent of the charges received by the petitioner towards development/construction - Whether charges collected by devel... [Read more]

GST – Taxability of Preferential Location charges on residential/commercial properties, Retrospective application of Circular No. 234/28/2024-GST dated 11.10.2024 – Petitioner sought Advance Ruling as to whether the charges collected by the petitioner against preferential location of its flats are to be taxed independently or along with its main activity of construction/development – The lower authorities ruled that the charges collected against preferential location of the flats are to be taxed independent of the charges received by the petitioner towards development/construction - Whether charges collected by developers against preferential location of flats are to be taxed independently or as part of construction services – HELD - The GST Council, in its 54th meeting recommended that choice of location of an apartment is an integral part of supply of construction services and therefore location charges should not be taxed separately but should attract the same rate of GST as applicable to construction services. The Government accepted this recommendation and issued a clarification vide Circular dated 11.10.2024 clarifying that choice of location of an apartment is an integral part of composite supply of construction services and the charges collected by developers against preferential location of an apartment would attract GST at the same rate as applicable to construction services before issuance of completion certificate - The clarification issued by the Government under Section 168(1) of the CGST Act, 2017 binds the tax authorities and has retrospective application. Accordingly, the orders of the Advance Ruling Authority and the Appellate Authority Advance Ruling, which had held that preferential location charges were to be taxed separately from construction service charges are set aside – The writ petition is allowed [Read less]

Service Tax - Maintainability of Writ Petition - Service tax liability under Reverse Charge on payments made towards rural infrastructure and road development tax and forest transit fee charged by State Government - Show cause notice proposing service tax demand on payments, contending that such payments constitute consideration for services rendered by the Government and are thus liable to service tax under RCM – HELD - The Madhya Pradesh Gramin Avsanrachna Tatha Sadak Vikash Adhiniyam, 2005 enacted by the State Government provides for additional financial resources for development of infrastructure and roads in rural a... [Read more]

Service Tax - Maintainability of Writ Petition - Service tax liability under Reverse Charge on payments made towards rural infrastructure and road development tax and forest transit fee charged by State Government - Show cause notice proposing service tax demand on payments, contending that such payments constitute consideration for services rendered by the Government and are thus liable to service tax under RCM – HELD - The Madhya Pradesh Gramin Avsanrachna Tatha Sadak Vikash Adhiniyam, 2005 enacted by the State Government provides for additional financial resources for development of infrastructure and roads in rural areas with special emphasis on backward and mining areas. The tax is levied on all mineral bearing land and the proceeds are utilised for improvement and development of infrastructure and roads in rural areas, backward areas and mining areas. Mining leaseholders being direct beneficiaries of such development constitute a service provided to them for which the tax is collected. The respondent-Authority has rightly observed that the petitioners being mining holders, would be beneficiaries of this development. Hence, it is a "Service" provided to them for which this tax is being collected - The competency of the tax authority has not been challenged while passing the orders. The interpretation of the amount collected and its utilisation are matters liable to be re-examined by the appellate authority, making such examination a matter requiring alternate remedy rather than writ jurisdiction - The writ petitions are dismissed as not maintainable for want of an alternate and efficacious remedy of appeal, with liberty granted to the petitioners to file an appeal before the appellate authority – The writ petition is dismissed [Read less]

Service Tax - Reimbursable Expenditure – Appellant received legal and professional services for trademark registration/renewal from foreign service providers and made payments in foreign currency, but excluded reimbursable amounts from the taxable value - Whether service tax under RCM can be levied on reimbursable expenditure and costs incurred by the service provider for legal and professional services received from places outside India in respect of trademark registration and renewal, for the period prior to May 2015 – HELD – The reimbursable expenditure can be included in the value of taxable services only after t... [Read more]

Service Tax - Reimbursable Expenditure – Appellant received legal and professional services for trademark registration/renewal from foreign service providers and made payments in foreign currency, but excluded reimbursable amounts from the taxable value - Whether service tax under RCM can be levied on reimbursable expenditure and costs incurred by the service provider for legal and professional services received from places outside India in respect of trademark registration and renewal, for the period prior to May 2015 – HELD – The reimbursable expenditure can be included in the value of taxable services only after the amendment in May 2015. Prior to May 2015, the decision of the Delhi High Court applies, which has been affirmed by the Supreme Court, that Rule 5(1) of the Service Tax (Determination of Value) Rules 2006 is repugnant to Sections 66 and 67 of the Finance Act, 1994 - The Section 67 mandates that only the consideration for the taxable service itself can be evaluated and charged to service tax, and nothing more and nothing less. By including reimbursable expenditure and costs, the Rule goes beyond the charging provisions. Since the period in dispute is prior to May 2015, service tax on the reimbursable amount has wrongly been confirmed - The issue stands decided in favour of the appellant to the extent of setting aside the confirmation of short-paid service tax on reimbursable amounts – The appeal is partly allowed - Proportionate CENVAT Credit Denial for Common Input Services - Whether the appellant is eligible for CENVAT credit on common input services used in both taxable output services (franchise service) and exempted output services (trading activity), without maintaining separate accounts or reversing proportionate credit – HELD - Although the appellant maintained separate records under Rule 6 of CENVAT Credit Rules 2004, it took credit of entire service tax paid on the common input service under reverse charge mechanism without following the provisions of Rule 6(3). In terms of Rule 2(e), trading is an exempt service, and Rule 6(1) explicitly provides that CENVAT credit shall not be allowed on input services used for provision of exempted services. The composite credit cannot be granted for activities subject to different tax regimes. The appellant, being conscious of its trading activities and its liability to service tax, deliberately availed full CENVAT credit without proportionate reversal, demonstrating suppression of material facts with intent to evade tax liabilities - The reversal of proportionate CENVAT credit is upheld, and the issue stands decided in favour of the revenue/department - Invocation of Extended Period of Limitation and Penalty - Whether the extended period of limitation is invokable and whether penalties imposed are sustainable when a service provider with knowledge of both taxable and exempted activities suppresses material facts regarding the exempted activity – HELD - The appellant was well aware of its trading activities and the fact that CENVAT credit proportionate to the exempted non-taxable activity should not have been availed. The deliberate failure to include amounts earned from trading business in returns while availing full CENVAT credit on input services used for both activities constitutes suppression of material facts with an intent to evade tax liabilities. This conscious omission and selective reporting of activities demonstrates a deliberate attempt to circumvent tax obligations, thereby justifying invocation of extended period and imposition of penalties - The issue stands decided in favour of the revenue/department, with both the extended period invocation and penalties being upheld. [Read less]

GST – Tamil Nadu AAR - Import of services, Applicability of GST under reverse charge mechanism on Commission paid to foreign national Director for marketing and sourcing of orders – Applicant pays commission at 15% of invoice value to its Director who is a foreign national located outside India for marketing and sourcing of orders. The Director owns 99% shares of the company and is not paid any separate salary - Whether GST is payable on commission paid to a foreign national director for providing marketing and sourcing services – HELD - The supplier of service, being the Director, is located outside India and the re... [Read more]

GST – Tamil Nadu AAR - Import of services, Applicability of GST under reverse charge mechanism on Commission paid to foreign national Director for marketing and sourcing of orders – Applicant pays commission at 15% of invoice value to its Director who is a foreign national located outside India for marketing and sourcing of orders. The Director owns 99% shares of the company and is not paid any separate salary - Whether GST is payable on commission paid to a foreign national director for providing marketing and sourcing services – HELD - The supplier of service, being the Director, is located outside India and the recipient, being the applicant company, is located in India, satisfying the conditions under Section 2(11) of the IGST Act, 2017 for import of services. The place of supply of services is India as per Section 13(2) of the IGST Act, 2017, being the location of the recipient. As the supplier is located in a non-taxable territory and the recipient is located in a taxable territory, the conditions laid down in Notification No. 10/2017-Integrated Tax (Rate) dated 28.6.2017 are fulfilled, making the services supplied attract GST under RCM - The applicant is liable to pay GST under reverse charge on commission paid to the foreign national Director – Ordered accordingly - Commission paid to foreign marketing agents for sourcing orders, Intermediary services – Place of supply – Applicant pays commission at 20% of invoice value to foreign marketing agents who facilitate sourcing of orders. These agents are not employees or directors of the applicant and invoices are raised in the name of the buyer only - Whether GST is payable on commission paid to foreign marketing agents for facilitating supply of goods - HELD - GST is not payable on commission paid to foreign marketing agents as they constitute intermediaries as defined under Section 2(13) of the IGST Act, 2017. While the supplier is located outside India and the recipient is located in India, the third condition for import of services is not satisfied. For intermediary services, Section 13(8) of the IGST Act, 2017 stipulates that the place of supply shall be the location of the supplier of services, not India. Therefore, the services do not fall within the definition of "import of services" under Section 2(11) of the IGST Act, 2017, and consequently do not attract RCM - GST is not payable on commission paid to foreign marketing agents - Charges paid to foreign clearing and forwarding agents for logistics services – Applicability of GST under reverse charge mechanism – The Applicant utilizes clearing and forwarding agents in foreign countries for further shipment of goods in instances of multiple consignors in a single export shipment. The foreign agents charge for various services including arrival charges, customs clearance charges, and terminal handling charges - Whether GST is payable on charges paid to foreign clearing and forwarding agents for logistics services performed outside India – HELD - The clearing and forwarding agents supply logistics services on their own account in non-taxable territory, constituting import of services as per Section 2(11) of the IGST Act, 2017. The supplier is located outside India, the recipient is located in India, and the place of supply is India as per Section 13(2) of the IGST Act, 2017. The conditions specified in Notification No. 10/2017-Integrated Tax (Rate) dated 28.6.2017 are satisfied, making these services liable to tax under RCM - The applicant is liable to pay GST under reverse charge on charges paid to foreign clearing and forwarding agents. [Read less]

GST – Anti-Profiteering - Failure to pass on Input Tax Credit Benefit - Whether the Respondent is liable to pass on the additional Input Tax Credit benefit derived consequent to introduction of GST to homebuyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017, and if so, what is the quantum of such benefit required to be passed on along with applicable interest – HELD - The builder has derived additional benefit of Input Tax Credit consequent to introduction of GST and is statutorily obligated under Section 171 of the Act to pass on such benefit to recipients by way of commensur... [Read more]

GST – Anti-Profiteering - Failure to pass on Input Tax Credit Benefit - Whether the Respondent is liable to pass on the additional Input Tax Credit benefit derived consequent to introduction of GST to homebuyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017, and if so, what is the quantum of such benefit required to be passed on along with applicable interest – HELD - The builder has derived additional benefit of Input Tax Credit consequent to introduction of GST and is statutorily obligated under Section 171 of the Act to pass on such benefit to recipients by way of commensurate reduction in prices. The builder has contravened this provision by not passing on the benefit uniformly and completely to all homebuyers. The amount not passed on is required to be refunded - The refund shall carry interest at 18% per annum from the date of collection of excess amount till actual refund, as mandated by Rule 133(3)(b) to ensure adequate deterrent effect against profiteering conduct – Ordered accordingly [Read less]

Service Tax - Exemption under General Notification - Demand based on income tax returns indicating unreported taxable services - Appellant claimed eligibility for exemption under Notification No. 33/2012-S.T. dated 20.06.2012, which provides general exemption from service tax on aggregate value of taxable services not exceeding Rs. 10,00,000 in any financial year, subject to certain exclusions and conditions. The lower authorities rejected the exemption claim on the presumption, without substantiation or evidence, that the appellant had already availed the benefit of exemption for the year in which service tax registration... [Read more]

Service Tax - Exemption under General Notification - Demand based on income tax returns indicating unreported taxable services - Appellant claimed eligibility for exemption under Notification No. 33/2012-S.T. dated 20.06.2012, which provides general exemption from service tax on aggregate value of taxable services not exceeding Rs. 10,00,000 in any financial year, subject to certain exclusions and conditions. The lower authorities rejected the exemption claim on the presumption, without substantiation or evidence, that the appellant had already availed the benefit of exemption for the year in which service tax registration was allotted – HELD - The appellant, being an individual providing taxable services without any allegation of availing CENVAT credit on input services or providing services under a brand name or trade name, fulfills all essential requirements and conditions for claiming the general exemption. The unsupported presumption of the lower authorities lacked legal backing and proper substantiation - Further, the aggregate taxable value of services, after deducting the amount received as salary was well below the threshold limit of Rs. 10,00,000 prescribed under the exemption notification. Accordingly, no service tax is payable in the present case - The impugned order upholding the confirmation of the tax demand is set aside and the appeal is allowed [Read less]

Customs - Customs Notification 32/97 – Job Work Import – Diversion of Duty-Free Goods – Willful Suppression of Material Facts – Respondents imports betel nuts under job work scheme claiming duty exemption under Customs Notification 32/97 for manufacturing and exporting betel nut tannin - The investigation reveals that the goods were diverted to local market instead of being utilized for the stated purpose, the shipping bills for export were filed under wrong scheme code to evade EDI system scrutiny, waste disposal permission was obtained but not properly acted upon, and false claims were made regarding waste percen... [Read more]

Customs - Customs Notification 32/97 – Job Work Import – Diversion of Duty-Free Goods – Willful Suppression of Material Facts – Respondents imports betel nuts under job work scheme claiming duty exemption under Customs Notification 32/97 for manufacturing and exporting betel nut tannin - The investigation reveals that the goods were diverted to local market instead of being utilized for the stated purpose, the shipping bills for export were filed under wrong scheme code to evade EDI system scrutiny, waste disposal permission was obtained but not properly acted upon, and false claims were made regarding waste percentage and tannin content extraction – Whether the onus lies on the Department to prove that the permission for destruction of waste material was not acted upon by the importer in respect of the claimed wastage – HELD - The importers have violated the post-import conditions stipulated in Notification 32/97, particularly the condition that goods shall be utilized only for discharge of export obligation and none thereof shall be sold, loaned, transferred or otherwise used or disposed of - The Tribunal's reliance on mere permission granted for waste destruction without establishing actual compliance with the procedure is superficial and insufficient; the deliberate filing of shipping bills under wrong scheme code to circumvent the EDI system intervention, coupled with the absence of even a single correct shipping bill transaction, demonstrates wilful suppression of material information and not a bona fide mistake - The Tribunal erred in treating the consistent misrepresentation of scheme codes across all transactions as an inadvertent mistake by the Customs House Agent, when the Commissioner specifically found that the importer failed to produce even a single transaction with the correct scheme code, demonstrating a pattern rather than an isolated error - The importer's deliberate use of wrong scheme code enabled evasion of duty by deceiving the Government and preventing legitimate departmental checks and scrutiny through the EDI system's built-in intervention mechanism. The Tribunal's casual treatment of this willful suppression and its reliance on waste disposal permission to offset the incriminating materials regarding fraud is unsustainable without proper examination of both the order-in-original and SCN – The appeals filed by the Dept are allowed, the Tribunal's order is set aside, and the order-in-original passed by the Commissioner is restored [Read less]

Customs - Classification of Molybdenum Curved Mirrors and Shields – Respondent-importer declared curved molybdenum mirrors and shields used in automobile lights as plates, sheets, strips and foils classifiable under tariff heading 81029590 attracting basic Customs Duty at 5% - Dept contends same should be classified as other articles of molybdenum under tariff heading 81029900 attracting duty at 10% - Whether the imported goods constitute flat-surfaced products eligible for classification under heading 81029590 or finished articles falling under the residual heading 81029900 – HELD - Once a molybdenum sheet is cut, cur... [Read more]

Customs - Classification of Molybdenum Curved Mirrors and Shields – Respondent-importer declared curved molybdenum mirrors and shields used in automobile lights as plates, sheets, strips and foils classifiable under tariff heading 81029590 attracting basic Customs Duty at 5% - Dept contends same should be classified as other articles of molybdenum under tariff heading 81029900 attracting duty at 10% - Whether the imported goods constitute flat-surfaced products eligible for classification under heading 81029590 or finished articles falling under the residual heading 81029900 – HELD - Once a molybdenum sheet is cut, curved and shaped to function as a shield or distributor of light beam in automobile lamps, it ceases to retain the character of a sheet and becomes a finished article of molybdenum. The importer's own admission that the molybdenum sheets were curved to act as shields establishes that the product is no longer a flat-surfaced product - Although Chapter Note 1(g) of Chapter 74 (applicable mutatis mutandis to Chapter 81) defines plates and sheets as flat-surfaced products that may have some modifications, the curvature here transforms the fundamental character of the product into a specialized reflective or protective article, analogous to how a glass mirror acquires distinct identity from a glass sheet - Applying the General Rules of Interpretation sequentially, since both available tariff headings under Chapter 8102 are equally general descriptions without specific application, Rule 3(c) appropriately applies, requiring classification under the heading occurring last in numerical order - The imported goods are correctly classifiable under heading 81029900 rejecting the distinction drawn between flat-surfaced and flat products - The order of the Commissioner of Appeals setting aside the original orders of assessment is set aside, and the findings of the original adjudicating authority affirming classification under heading 81029900 are upheld - The Departmental appeals are allowed [Read less]

Central Excise - Penalty for Suppression of facts, Payment of duty component before the issuance of show cause notice. The assessing authority imposed penalty, which was upheld by both the appellate authority and the Tribunal - Applicability of proviso to Section 11AC(1)(a) applies to exempt the assessee from penalty when duty was paid before the show cause notice and interest was paid after the adjudicating authority's order - Whether the penalty imposed on the assessee for wrongly availing CENVAT credit can be considered bad on the ground that the show cause notice did not specify under which limb of Section 11AC of the ... [Read more]

Central Excise - Penalty for Suppression of facts, Payment of duty component before the issuance of show cause notice. The assessing authority imposed penalty, which was upheld by both the appellate authority and the Tribunal - Applicability of proviso to Section 11AC(1)(a) applies to exempt the assessee from penalty when duty was paid before the show cause notice and interest was paid after the adjudicating authority's order - Whether the penalty imposed on the assessee for wrongly availing CENVAT credit can be considered bad on the ground that the show cause notice did not specify under which limb of Section 11AC of the Central Excise Act 1944 the penalty was being imposed – HELD - The case does not fall within Section 11AC(1)(a) but squarely falls within Section 11AC(1)(c) which pertains to penalty for suppression of facts. Although the show cause notice did not explicitly mention the specific limb of Section 11AC, reading of the entire show cause notice, adjudicating authority's order, appellate authority's order, and the Tribunal's order clearly indicates that the penalty was sought to be imposed on the ground of suppression of facts - The assessee was aware throughout the proceedings that it was facing proceedings for suppression of facts and misrepresentation, as evidenced by its own action of paying the duty component upon being informed of the violation - The reference to Rule 15(2) of CENVAT Credit Rules read with Section 11AC in the SCN makes it evident that penalty was sought for suppression of facts. The fact that only the duty component was paid before the issue of SCN while the interest was paid only after the adjudicating authority's order means that the conditions for the proviso to Section 11AC(1)(a) are not satisfied. The proviso applies only when both duty and interest are paid either before the show cause notice or within thirty days of its issuance. When a case falls within Section 11AC(1)(c), the proviso to Section 11AC(1)(a) does not apply. The applicable provision in such cases is Section 11AC(1)(d), which provides for a reduced penalty of fifteen percent of the duty demanded if the duty and interest are paid within thirty days of the SCN. The assessee cannot take advantage of an incorrect reference to Section 11AC(1)(a) made by the Tribunal and must be judged on the actual content and substance of the order - The imposition of penalty by the assessing authority, as confirmed by the appellate authority and the Tribunal, stands upheld. The appeal is dismissed [Read less]

Service Tax - Cenvat Credit on Deposit Insurance Premium – Eligibility Cenvat credit of Service Tax paid on the premium amount for the Insurance Service received from ‘Deposit Insurance and Credit Guarantee Corporation’ - Whether Respondents-banks are eligible to avail Cenvat credit of service tax paid on the premium amount for insurance services received from the deposit insurance and credit guarantee corporation – HELD – The High Court of Kerala answered the questions in favour of the assessee and against the Revenue by affirming the order of the Larger Bench of the CESTAT holding that banks are entitled to tre... [Read more]

Service Tax - Cenvat Credit on Deposit Insurance Premium – Eligibility Cenvat credit of Service Tax paid on the premium amount for the Insurance Service received from ‘Deposit Insurance and Credit Guarantee Corporation’ - Whether Respondents-banks are eligible to avail Cenvat credit of service tax paid on the premium amount for insurance services received from the deposit insurance and credit guarantee corporation – HELD – The High Court of Kerala answered the questions in favour of the assessee and against the Revenue by affirming the order of the Larger Bench of the CESTAT holding that banks are entitled to treat insurance services provided by the deposit insurance authority as an input service and are therefore eligible to take Cenvat credit of service tax paid upon receipt of such service - The High Court of Kerala has given substantial consideration to the nature of compliance required by banks under the regulatory framework governing banking licenses and the mandatory nature of deposit insurance for the functioning of banks - Similar questions have also been answered in favour of the assessee by another High Court. The questions raised in these appeals are no longer res integra and stand answered by the judgment of the High Court of Kerala. There is no reason to take a different view from the view taken by the High Court of Kerala – The Revenue appeals are dismissed [Read less]

Service Tax – Exemption to Health Care Services - Determination of Tax Liability must precede Assessment - Petitioner, a diagnostic centre and hospital, provided health care services which were expressly exempted under Notification No. 25/2012-Service Tax dated 20.06.2012 - Dept issued a show cause notice alleging suppression of taxable value based solely on information collected from Form 26AS - Demand by invoking the extended period of limitation under section 73(1) of the Finance Act, 1994 – HELD - Before any assessment can be made and tax demanded, there must first be a declaration of liability under the statute. T... [Read more]

Service Tax – Exemption to Health Care Services - Determination of Tax Liability must precede Assessment - Petitioner, a diagnostic centre and hospital, provided health care services which were expressly exempted under Notification No. 25/2012-Service Tax dated 20.06.2012 - Dept issued a show cause notice alleging suppression of taxable value based solely on information collected from Form 26AS - Demand by invoking the extended period of limitation under section 73(1) of the Finance Act, 1994 – HELD - Before any assessment can be made and tax demanded, there must first be a declaration of liability under the statute. The determination of whether a service is taxable or exempted is a threshold question that must be conclusively decided before invoking extended period of limitation. Form 26AS merely reflects income tax deducted at source and cannot ipso facto determine service tax liability, as a receipt liable to income tax may not be liable to service tax due to exemptions granted under the Finance Act or because the liability may rest on the recipient under reverse charge mechanism - The revenue authorities' action in levying service tax based solely on Form 26AS without examining the nature of services and applicability of exemption was contrary to law and amounted to assumption of jurisdiction - The extended period of limitation under section 73(1) can be invoked only when the preconditions prescribed in the proviso are satisfied, namely: fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade payment of service tax. These are not mere procedural requirements but substantive conditions that demand conclusive findings by the revenue authorities based on facts and circumstances - The assumption of jurisdiction by the authorities without fulfilling the mandatory preconditions prescribed by the statute itself was unauthorized and colourable - The impugned demand cum show cause notice and order-in-original are set aside and quashed - The writ petition is allowed [Read less]

GST - Budgetary Support Scheme under GST - Eligibility of By-products - Scrap arising from manufacturing process qualifies as specified goods – Petitioner engaged in production of TMT bars applies for reimbursement of State taxes under the budgetary support scheme notified under GST regime – Rejection of claim on the ground that M.S. scrap does not fall within the category of "specified goods" as the unit is registered only for manufacture of TMT bars and not scrap - Whether non-standard sized pieces of the principal product (TMT/CTD Bars) that are sold as scrap fall within the definition of specified goods for purpose... [Read more]

GST - Budgetary Support Scheme under GST - Eligibility of By-products - Scrap arising from manufacturing process qualifies as specified goods – Petitioner engaged in production of TMT bars applies for reimbursement of State taxes under the budgetary support scheme notified under GST regime – Rejection of claim on the ground that M.S. scrap does not fall within the category of "specified goods" as the unit is registered only for manufacture of TMT bars and not scrap - Whether non-standard sized pieces of the principal product (TMT/CTD Bars) that are sold as scrap fall within the definition of specified goods for purposes of claiming budgetary support under the State notifications when the unit is registered only for manufacturing the principal product – HELD - Where a manufacturing unit is registered for production of a particular item and the scrap in question is an inherent and necessary residue of that manufacturing process, having undergone the identical manufacturing process and retaining the essential character of the primary product, such scrap qualifies as specified goods under the Scheme – The scrap constituting non-standardized lengths of the principal product retains the essential character of such product and has undergone the identical manufacturing process as the standard-sized finished products for which the unit is registered - The exclusionary list in the notification is intended to disentitle only those units manufacturing goods specifically enumerated therein, and since scrap is not enumerated in the exclusionary list and is an inevitable byproduct of the authorized manufacturing process, the exclusion does not apply – The respondent's refusal to grant reimbursement solely on the ground that the unit is registered for manufacturing specified products and not scrap is not justified in law. Accordingly, the order refusing reimbursement is quashed and the Respondent is directed to reconsider the claim afresh in accordance with applicable regulations – The writ petitions are disposed of [Read less]

GST - Anti-profiteering – Passing on of benefit of Input Tax Credit in Construction Services - Whether the respondent contravened the provision of Section 171 of the CGST Act, 2017, by not passing on the benefit of Input Tax Credit to home-buyers upon introduction of GST – HELD – The DGAP report concludes that while the company initially benefitted from additional Input Tax Credit of 4.19 percent in the post-GST period as compared to the pre-GST period, resulting profiteering. The company has substantially passed on a total benefit of Input Tax Credit to home-buyers. Since the complainants have received their calcula... [Read more]

GST - Anti-profiteering – Passing on of benefit of Input Tax Credit in Construction Services - Whether the respondent contravened the provision of Section 171 of the CGST Act, 2017, by not passing on the benefit of Input Tax Credit to home-buyers upon introduction of GST – HELD – The DGAP report concludes that while the company initially benefitted from additional Input Tax Credit of 4.19 percent in the post-GST period as compared to the pre-GST period, resulting profiteering. The company has substantially passed on a total benefit of Input Tax Credit to home-buyers. Since the complainants have received their calculated differential amounts along with interest and have acknowledged the same, and no other home-buyer has raised any objection, the matter stands resolved with the company having complied with its obligation under Section 171 of the Act – Ordered accordingly [Read less]

GST - Natural Justice – Vide the impugned order the High held these issues such as, denial of opportunity to respond, non-supply of relied upon documents (RUDs), by their very nature, fall within the appellate framework. Mere dissatisfaction with the manner in which the adjudicating authority has dealt with the record cannot, by itself, furnish a ground to bypass the statutory remedy and invoke the extraordinary jurisdiction. The High Court held that there is no cause to interfere with the impugned OIO and the petitioner is granted liberty to avail of such remedies as may be available to it in accordance with law. The pe... [Read more]

GST - Natural Justice – Vide the impugned order the High held these issues such as, denial of opportunity to respond, non-supply of relied upon documents (RUDs), by their very nature, fall within the appellate framework. Mere dissatisfaction with the manner in which the adjudicating authority has dealt with the record cannot, by itself, furnish a ground to bypass the statutory remedy and invoke the extraordinary jurisdiction. The High Court held that there is no cause to interfere with the impugned OIO and the petitioner is granted liberty to avail of such remedies as may be available to it in accordance with law. The petition is dismissed – Assessee in appeal – SC HELD - not inclined to interfere with the impugned judgment and order passed by the High Court. However, if the petitioner exercises its statutory remedy, the appeal may be permitted to be filed without reference to delay in approaching the Tribunal – Ordered accordingly [Read less]

Central Sales Tax Act, 1956 - Exemption under Section 5(3) of the CST Act, 1956 - Deemed export - Requisite conditions and documentary evidence to establish supply was effected pursuant to pre-existing export order - Non-production of the agreement entered into between the Indian exporter and the foreign buyer - Whether a dealer can claim exemption under Section 5(3) of the Central Sales Tax Act, 1956 on the basis of a purchase agreement between the dealer and the exporter, without production of the export agreement between the exporter and the foreign buyer, and whether Form H and bill of lading are sufficient evidence to... [Read more]

Central Sales Tax Act, 1956 - Exemption under Section 5(3) of the CST Act, 1956 - Deemed export - Requisite conditions and documentary evidence to establish supply was effected pursuant to pre-existing export order - Non-production of the agreement entered into between the Indian exporter and the foreign buyer - Whether a dealer can claim exemption under Section 5(3) of the Central Sales Tax Act, 1956 on the basis of a purchase agreement between the dealer and the exporter, without production of the export agreement between the exporter and the foreign buyer, and whether Form H and bill of lading are sufficient evidence to establish the nexus between the goods and the export transaction – HELD - The exemption under Section 5(3) of the Central Sales Tax Act cannot be claimed merely on the basis of a purchase agreement between the dealer and the exporter. The provision requires that the sale transaction must be effected in pursuance of, and for compliance with, an agreement or order for export existing between the exporter and the foreign buyer - The statutory Form H mandates disclosure of the export agreement or order number and date, signifying that the sale must have a direct nexus with the export transaction. The production of Form H and bill of lading is insufficient without the export agreement establishing the link between the goods supplied and the export obligation - Additionally, the purchase contract dated 01.01.2008 but notarized only on 20.05.2014, pertaining to the assessment year 2007-08, raises serious doubts regarding its genuineness and acceptability. The requirements under Section 5(3) read with Rule 12(10)(a) are both substantive and evidentiary in nature, and non-fulfillment of these requirements proves fatal to the dealer's case - The orders passed by the Tribunal, First Appellate Authority, and the adjudicating authority are upheld - The Sales Tax Revision Petition stands dismissed [Read less]

SVLDRS, 2019 - Credit of deposits made under different accounting heads – Petitioner filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 claiming credit for deposits made in various instalments towards outstanding tax dues - Designated Committee rejected the claim on the ground that such payments were recorded under different accounting heads (interest and other receipts) instead of duty - Whether deposits made towards tax dues but recorded under different accounting heads during enquiry, investigation or audit must be credited while computing the amount payable under the Scheme – HELD -... [Read more]

SVLDRS, 2019 - Credit of deposits made under different accounting heads – Petitioner filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 claiming credit for deposits made in various instalments towards outstanding tax dues - Designated Committee rejected the claim on the ground that such payments were recorded under different accounting heads (interest and other receipts) instead of duty - Whether deposits made towards tax dues but recorded under different accounting heads during enquiry, investigation or audit must be credited while computing the amount payable under the Scheme – HELD - The deposits made during enquiry, investigation or audit must be deducted when finalising computation under section 124(2) of the Finance Act, 2019, irrespective of the accounting head under which they are recorded. The accounting methodology is merely procedural and hyper-technical in nature and cannot stand in the way of substantive relief otherwise available to the assessee - The entries are hardly relevant to arrive at the true nature of a transaction and accounting standards and methods are only formulated to aid proper recording of transactions with limited relevance in deciding substantive issues. The object of the scheme is to resolve legacy disputes and facilitate recovery of dues while granting relief to the declarant, and such technical objections cannot be sustained - The impugned statement in Form SVLDRS-3 is declared illegal insofar as it fails to account for the deposits made under other heads, and it is declared that no further amount remains payable by the petitioner in respect of the arrears in question - The writ petition is allowed [Read less]