More Judgements

1. Home
2. More Judgements

Customs - Conversion of Free Shipping Bills into Advance Authorization Shipping Bills - Time limit prescribed by Board's Circular - Appellant obtained Advance Authorization for import of specified items for manufacture and export of goods and fulfilled the export obligation, but the Customs House Agents had filed Free Shipping Bills instead of Advance License Shipping Bills - Appellant's request for amendment of the Shipping Bills was rejected and the Tribunal remanded the matter to the Commissioner to examine afresh - The Commissioner again rejected the request on the grounds that there was no further examination of the g... [Read more]

Customs - Conversion of Free Shipping Bills into Advance Authorization Shipping Bills - Time limit prescribed by Board's Circular - Appellant obtained Advance Authorization for import of specified items for manufacture and export of goods and fulfilled the export obligation, but the Customs House Agents had filed Free Shipping Bills instead of Advance License Shipping Bills - Appellant's request for amendment of the Shipping Bills was rejected and the Tribunal remanded the matter to the Commissioner to examine afresh - The Commissioner again rejected the request on the grounds that there was no further examination of the goods at the port, the endorsements on ARE were contradictory, no examination report endorsed by the Central Excise Officer was submitted and the request was filed with delay as against the time limit in the Board's Circular - Whether the rejection of the request for conversion of Shipping Bills is in order - HELD - There is no dispute as to the availability of the Advance Authorization or the fulfilment of the export obligation. The co-ordinate Bench, in the Appellant's own case relating to the very same Advance Authorization, examined similar factual matrices and allowed the conversion of Shipping Bills - There is no reason to take a different view on the very same factual matrices. The time limit prescribed by the Circular relied upon by the authorities below has been held to be ultra vires the statute, and the rejection of the request on the ground of delay cannot be sustained - The impugned order rejecting the request for conversion of Shipping Bills is set aside and the appeal is allowed [Read less]

GST - Concessional rate on works contract services to co-operative societies - Sl. No. 3(vi) of Notification No. 11/2017-Central Tax (Rate) - Appellant, a Government contractor and builder, executed works contracts for the construction of factory buildings of co-operative spinning mills under projects sanctioned and monitored by the State Textile Department, and discharged tax at 12% treating the recipients as Government Entities - SCN was issued after audit and the proper officer confirmed the differential tax at 18% with interest and penalty, which the FAA partly upheld - Whether the supplies to the societies were liable... [Read more]

GST - Concessional rate on works contract services to co-operative societies - Sl. No. 3(vi) of Notification No. 11/2017-Central Tax (Rate) - Appellant, a Government contractor and builder, executed works contracts for the construction of factory buildings of co-operative spinning mills under projects sanctioned and monitored by the State Textile Department, and discharged tax at 12% treating the recipients as Government Entities - SCN was issued after audit and the proper officer confirmed the differential tax at 18% with interest and penalty, which the FAA partly upheld - Whether the supplies to the societies were liable to tax at the concessional rate under Sl. No. 3(vi) - HELD - The burden lies on the Appellant who claims the concession to bring the supply within the entry, which turns on the status of the recipient and the use for which the works are meant. The rate is fixed by notification under Section 9(1) and no department of the State can alter it by administrative decision. The minutes and letters of the Department settling the GST component of the contract price are decisions on price and not a determination of the rate. The presumption that official acts are regularly performed cannot give a departmental minute the force of a notification - The first limb of the definition of ‘Government Entity’ is not attracted as a body registered under the Co-operative Societies Act is not set up by an Act of Parliament or State Legislature. The second limb requires a body established by any Government with 90 per cent or more participation by way of equity or control, and a society formed under a scheme and registered under the general law is not established by the Government. Government sponsorship cannot take the place of the tests prescribed in the definition - Independently, the test under item (a) is the use for which the structure is meant, judged objectively. Either finding is sufficient to deny the concession and the supplies are taxable at 18% under item (xii) - The differential tax is rightly confirmed. The appeal is dismissed - Interest and penalty on differential tax - Sections 50(1) and 73(9) of the CGST Act - Appellant contended that the dispute was one of classification, that it acted on written directions of the Textile Department, and invoked promissory estoppel and legitimate expectation to seek waiver of interest and penalty - Whether bona fides displace interest under Section 50(1) and penalty under Section 73(9) - HELD - Section 50(1) charges interest for the period for which the tax payable remains unpaid and makes no reference to the state of mind of the taxpayer - Interest is compensatory in character and is computed on tax payable and not paid, and not on tax collected. Section 73 applies to cases without fraud, wilful misstatement or suppression and the circumstances relied upon by the Appellant are what bring the case within it. The penalty is fixed at ten per cent of the tax or ten thousand rupees, whichever is higher, and sub-section (8) provides the route to avoid it by payment of tax with interest within thirty days of the notice, which the Appellant did not make. Sub-section (9) leaves no discretion to reduce or waive the penalty on a finding of bona fides. Promissory estoppel fails as no document purported to fix the rate of tax, any representation was made by the sanctioning department and not by the authorities administering the tax, and there can be no estoppel against a liability imposed by statute. Section 50(1) makes no provision for waiver. Interest and penalty are sustained - Computation of differential tax on cum-tax basis - Section 15(1) of the CGST Act, 2017 - Appellant prayed in the alternative that the receipts be treated as inclusive of tax since it collected no amount beyond 12% - Whether the differential tax is to be recomputed on a cum-tax basis - HELD - Under Section 15(1) the value is the transaction value, being the price actually paid or payable for the supply. The invoices of the Appellant state the contract receipts as exclusive of taxes and charge central tax and State tax over and above them, and the sales register records the receipts as exclusive with nil under inclusive. Where the tax is charged over and above the price, there is no occasion to treat the price as inclusive of tax - The prayer for recomputation on a cum-tax basis is rejected - Disallowance of input tax credit not reflected in FORM GSTR-2A - Section 16(2)(c) and Section 155 of the CGST Act, 2017 - Input tax credit claimed in FORM GSTR-3B was disallowed as it was not reflected in FORM GSTR-2A, the Appellant having produced no ledger confirmation or supplier certificate as required by the Circular - Appellant contended that the transactions were genuine, that the mismatch was due to supplier-side reporting, and that denial would result in double taxation - Whether the disallowance of input tax credit with interest under Section 50(3) calls for interference - HELD - The burden of proving the claim of input tax credit lies on the person claiming it under Section 155. The Circular does not alter the conditions of Section 16(2), and for a supplier-wise difference up to the prescribed limit it called for a certificate from the supplier that the supplies were made and the tax paid in its return. The Appellant had ample opportunity but did not produce such certificates, and the documents filed did not identify the invoices making up the difference or establish that the supplies were declared in the supplier's return and tax paid thereon - A printout showing that a supplier filed a return says nothing about whether the supplies to the Appellant were declared in it. The disallowance does not rest on a finding that the purchases were fictitious but on failure to show that the tax charged was paid to the Government as required by Section 16(2)(c). The denial is not double taxation as the credit is denied because the fact of payment has not been established. Remand for verification is declined as the evidence is in the hands of the Appellant or obtainable from its suppliers and it had every opportunity to produce it. The interest under Section 50(3) rests on the disallowance, which has failed - The disallowance with interest and penalty is upheld and the appeal is dismissed. [Read less]

Central Excise - Condonation of delay in filing appeal before the FAA - Section 35(1) of the CEA, 1944 - Appellant, a manufacturer, challenged the disallowance of CENVAT credit on input services, and its appeal before the FAA was rejected on the ground of limitation without examining the merits, the delay being only a few days - Appellant explained that it attempted to file the appeal within the prescribed period at the appellate sub-office mentioned in the Order-in-Original but was informed that the office had been shifted, and the appeal was then filed at the new location - Whether the FAA was justified in refusing to co... [Read more]

Central Excise - Condonation of delay in filing appeal before the FAA - Section 35(1) of the CEA, 1944 - Appellant, a manufacturer, challenged the disallowance of CENVAT credit on input services, and its appeal before the FAA was rejected on the ground of limitation without examining the merits, the delay being only a few days - Appellant explained that it attempted to file the appeal within the prescribed period at the appellate sub-office mentioned in the Order-in-Original but was informed that the office had been shifted, and the appeal was then filed at the new location - Whether the FAA was justified in refusing to condone the short delay in filing the appeal - HELD - Section 35(1) provides a period of 60 days for filing an appeal before the FAA, with a further period of 30 days within which the delay may be condoned upon sufficient cause being shown. The appeal was filed within the condonable period, and the FAA is empowered to condone the delay where sufficient cause is shown. The explanation that the appellate sub-office mentioned in the Order-in-Original had been shifted was specific and plausible. The mere absence of an official record of the attempted filing cannot by itself be treated as conclusive evidence of absence of bona fides. The expression sufficient cause must receive a justice-oriented interpretation so that substantial justice is not defeated by a technical approach to limitation. There was nothing to indicate that the delay was deliberate or mala fide. The discretion conferred by the statute must be exercised judiciously, and the FAA adopted an unduly technical approach in declining to condone such a short delay - The order rejecting the appeal on limitation is set aside, the delay is condoned, the matter is remanded to the FAA to decide the appeal afresh on merits after affording a reasonable opportunity of hearing, and the appeal is allowed by way of remand. [Read less]

Central Excise - Special additional duty exemption on imported components - Rule 8 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - Appellant, a manufacturer of computers, imported components without payment of special additional duty under exemption notifications subject to the procedure of the 1996 Rules - A portion of the components was cleared as such from the factory to service centres for free warranty replacement, while the quarterly returns declared that all components were consumed in the factory - Department demanded the duty foregone with interest and... [Read more]

Central Excise - Special additional duty exemption on imported components - Rule 8 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - Appellant, a manufacturer of computers, imported components without payment of special additional duty under exemption notifications subject to the procedure of the 1996 Rules - A portion of the components was cleared as such from the factory to service centres for free warranty replacement, while the quarterly returns declared that all components were consumed in the factory - Department demanded the duty foregone with interest and penalty - Whether the Appellant lost the benefit of the exemption on components transferred to service centres for free warranty replacement - HELD - An exemption may be made subject to a condition that is to be fulfilled after clearance, and the obligation that the goods be actually put to the intended use comes from the procedure of the 1996 Rules. The intended purpose under the scheme is the manufacture, in the registered factory, of the excisable goods for which registration was granted. Use of the components as replacement parts under warranty is not use in the manufacture of computers. The inclusion of goods used for free warranty in the definition of input in the CENVAT Credit Rules, 2004 was made through a distinct limb for the limited purpose of credit and cannot be transposed into a customs exemption governed by its own conditions. An exemption notification is to be interpreted strictly - The doctrine of intended use protects a bona fide importer against accidents of transit and process but cannot protect a deliberate allocation of exempted goods to a purpose outside the exemption. The end use certificates were issued under rules made under the Customs Act and certified only a fact on the basis of the Appellant's own incomplete returns, and they cannot bar recovery under Rule 8. The levy of SAD is attracted on importation and does not depend on whether tax is later payable on a sale of the goods. Revenue neutrality does not efface a liability that has arisen under the statute - The duty foregone on the components transferred to service centres is recoverable under Rule 8 of the 1996 Rules and the demand is upheld - Limitation for recovery under Rule 8 - Section 28 of the Customs Act, 1962 - SCN invoked Section 28(4) of the Customs Act for recovery of the duty foregone, and the Appellant contended that the extended period was unavailable and the demand was barred - Whether the demand under Rule 8 is governed by the periods in Section 28 of the Customs Act or is barred by limitation - HELD - Rule 8 of the 1996 Rules does not prescribe any period of limitation and provisions of Section 28 cannot be resorted to for this purpose. The notice must therefore be issued within a reasonable period, judged on the facts, bearing in mind that actual use takes place much after import. Earlier Tribunal decisions treating Section 28 as the only route of recovery and Rule 8 as having no independent operation cannot survive the binding law declared subsequently. The reference to Section 28(4) in the SCN does not vitiate the demand since a wrong reference to the power does not vitiate an action which can be justified under the power actually available. The transfers came to the knowledge of the Department through the audit query and the Appellant's reply, the duty was paid thereafter, and the SCN was issued within a year of the Department learning of the actual use. The SCN was issued within about five years even when measured from the earliest transfer - The demand was raised within a reasonable period and is not barred - Suppression with intent to evade duty - Revenue neutrality - The allegation in the SCN was that the Appellant misdeclared in its quarterly returns that all components were consumed in the factory and secured end use certificates and cancellation of bonds - Appellant contended that the entire exercise was revenue neutral as the duty would have been available as credit - Whether the non-levy was occasioned by collusion, wilful misstatement or suppression of facts with intent to evade duty - HELD - The burden of establishing intent lies on the Revenue. Mere non-payment of duty is not equivalent to wilful misstatement or suppression, and suppression means deliberate withholding of correct information to escape payment of duty. The Appellant stood to gain nothing from the omission since credit of the additional duty was available under Rule 3(1) of the CENVAT Credit Rules, 2004, goods used for providing free warranty are inputs under Rule 2(k)(ii), and the second proviso to Rule 3(5) dispensed with any payment on removal of inputs for free warranty. The exercise was therefore wholly revenue neutral. The components transferred formed a small proportion of the imports, the clearances were declared in the monthly returns, the credit of countervailing duty on them was reversed, and the Appellant admitted the transfers when queried and paid the duty before the SCN. The incorrect returns were the product of a mistaken understanding of the end use condition and not of any design to escape duty. A finding of intent to evade cannot rest on facts assumed against the assessee and contrary to the record - The Revenue has not established collusion, wilful misstatement or suppression of facts with intent to evade duty - Admissibility of CENVAT credit on SAD paid - Rule 9(1)(b) of the CENVAT Credit Rules, 2004 - Appellant paid the duty on the components through challans and took credit of the same, and the Department denied the credit on the ground that the duty had become recoverable by reason of misdeclaration, also seeking payment under Rule 3(5) on inputs removed as such - Whether the credit taken on the duty so paid is admissible - HELD - The challans evidencing payment of additional duty are documents on which credit may be taken under Rule 9(1)(b) in terms of the Explanation to that clause. The exception in the clause is attracted only where the additional duty became recoverable by reason of fraud, collusion, wilful misstatement, suppression or contravention with intent to evade payment of duty. Since no such intent is established, the exception is not attracted and the credit of the duty paid on inputs received in the factory is admissible under Rule 3(1). The alternative ground of payment under Rule 3(5) is answered by its second proviso which dispenses with payment where inputs are removed outside the factory for providing free warranty for final products - The denial and recovery of credit along with interest are set aside and the credit is held admissible - Interest on duty foregone - Rule 8 of the 1996 Rules - The Appellant contended that interest could not survive without the principal, should run from the date of removal to service centres, and that proceedings stood concluded under Section 28(2) of the Customs Act - Whether interest is payable on the duty foregone - HELD - The liability to interest arises from Rule 8 itself and is part of the price of the conditional exemption availed. Rule 8 fixes the date of importation as the starting point and the reference to the Section under which the rate is fixed only determines the rate. The reference to a different Section for interest in the SCN makes no difference to the source of the liability. Since the principal is payable and Section 28 does not govern a recovery under Rule 8, the objections fail - Interest under Rule 8 is sustained subject to adjustment of the amount already paid - Penalty on special additional duty - Section 114A of the Customs Act, 1962 - Penalty equal to the duty was imposed under Section 114A on the allegation of wilful misstatement and suppression - Whether penalty under Section 114A is sustainable - HELD - Section 114A applies where duty has not been levied by reason of collusion, wilful misstatement or suppression of facts, and these ingredients a [Read less]

GST - Transition of TDS credit through Form GST TRAN-1 - Demand on grounds beyond the SCN - Section 73 and Section 75(7) of CGST Act, 2017 - Respondent, a works contractor, claimed in Form GST TRAN-1 transitional credit consisting of a small purchase-credit component and a large component of tax deducted at source from its works-contract receipts under the UPVAT Act. SCN under Section 73 alleged a mismatch between the TRAN-1 claim and the credit shown in the VAT return, and non-furnishing of particulars of Forms C - Whether a ruling on the eligibility of VAT TDS for transition can be given in the absence of a properly fram... [Read more]

GST - Transition of TDS credit through Form GST TRAN-1 - Demand on grounds beyond the SCN - Section 73 and Section 75(7) of CGST Act, 2017 - Respondent, a works contractor, claimed in Form GST TRAN-1 transitional credit consisting of a small purchase-credit component and a large component of tax deducted at source from its works-contract receipts under the UPVAT Act. SCN under Section 73 alleged a mismatch between the TRAN-1 claim and the credit shown in the VAT return, and non-furnishing of particulars of Forms C - Whether a ruling on the eligibility of VAT TDS for transition can be given in the absence of a properly framed allegation and component-wise determination - HELD - The SCN is the foundation of the Revenue's case. The SCN identified only the return mismatch and the Form C objection. It did not separately identify an amount as TDS or allege that such an amount was incapable of transition because it arose from deductions from outward receipts. The Form C ground was dropped in the adjudication order. The rejection on the ground that TDS is not input tax was a distinct charge introduced for the first time in the order. Mere reference to Section 140 and Rule 117 does not meet the requirement of natural justice in the absence of a specific allegation - Section 75(7) confines confirmation of demand to the grounds specified in the notice, and the adjudicating order cannot repair a missing substantive charge. The order also did not reconcile the TDS component with the purchase-credit component, which is contrary to Section 75(6) requiring the order to state the relevant facts and its basis. The Revenue produced no completed VAT assessment or refund-disposal order to show that the legacy balance was rejected or exhausted, and such an order cannot be presumed. Remand merely to construct a fresh charge beyond the SCN would not cure the defects. As the appeal is decided on the validity of the notice and the proof of the demand, the question whether TDS can in principle be included in TRAN-1 is left open - The demand cannot be restored and the Revenue appeal is dismissed - Interest and penalty - Section 50 and Section 73(9) of CGST Act, 2017 - Interest and penalty were confirmed along with the tax demand on the transitional credit. The Respondent contended that the credit had been used before the notice and that there was no fraud, wilful misstatement or suppression - Whether the interest and penalty confirmed can be sustained - HELD - Interest must have a statutory basis and a verifiable computation. Interest on credit wrongly availed and utilised under Section 50(3) is computed under Rule 88B, while interest on unpaid output tax under Section 50(1) requires identification of the liability and the period of default. These distinct bases cannot be interchanged without reasons. The material did not supply the dates, rate, ledger-based utilisation and period supporting the interest, and the statement of the Respondent that credit was used before the notice is no substitute for that working - Section 75(9) does not dispense with proof of the facts required to establish and compute interest. Absence of fraud alone does not exclude liability or penalty arising under Section 73, but the penalty rests on the tax determination, which has not been sustained. The statutory conditions for a penalty provision must first exist before it can be imposed - The determination of interest and the penalty are unsustainable and cannot be restored. [Read less]

GST - Demand confirmed on grounds not stated in the SCN - Section 75(4) and Section 75(7) of CGST Act, 2017 - SCN under Section 73(1) alleged that the Appellant had not issued any credit notes against the sales returns claimed, resulting in escapement of turnover and short payment of tax. The Appellant furnished sample credit notes and offered to produce the complete set on requisition. The order in original did not call for the remaining credit notes, held that the credit notes were issued on the same day as the sales invoices and examined their values against the invoices, and confirmed the demand with interest and penal... [Read more]

GST - Demand confirmed on grounds not stated in the SCN - Section 75(4) and Section 75(7) of CGST Act, 2017 - SCN under Section 73(1) alleged that the Appellant had not issued any credit notes against the sales returns claimed, resulting in escapement of turnover and short payment of tax. The Appellant furnished sample credit notes and offered to produce the complete set on requisition. The order in original did not call for the remaining credit notes, held that the credit notes were issued on the same day as the sales invoices and examined their values against the invoices, and confirmed the demand with interest and penalty. No personal hearing was recorded - Whether the order in original confirming the demand on grounds not contained in the SCN and without personal hearing is sustainable - HELD - The foundational premise of the SCN that no credit notes were issued was contradicted by the order in original itself, which dealt with credit notes issued on the same day as the sales invoices. The order then tested the credit notes against Section 34, which was not invoked in the SCN, and examined their dates and values, which were never put to the Appellant. The Revenue itself appeared unsure of the basis of the SCN. Section 75(7) provides that no demand shall be confirmed on grounds other than the grounds specified in the notice. Section 75(4) requires an opportunity of hearing where an adverse decision is contemplated, and a personal hearing also allows the adjudicating authority to clarify its doubts. Where the Appellant offered to produce all credit notes and the officer never called for them, the Revenue cannot contend that the Appellant filed samples and withheld the rest. The plea of absence of prejudice cannot be accepted when the fresh grounds became known only after the order was issued - The order in original violates the principles of natural justice and Section 75(4) and Section 75(7) and is null and void - Findings of FAA on grounds beyond the SCN - Section 107(11) and Section 75(7) of CGST Act, 2017 - FAA dismissed the appeal on the grounds of non-disclosure of credit notes within the time limit under Section 34, non-reflection in annual returns, simultaneous generation of credit notes and invoices, and improbability of exchanges within a few days. None of these grounds was raised in the SCN. The Revenue contended that FAA could make further inquiry under Section 107(11), that the core finding of unproved sales returns was common to all orders, and that the Appellant had full opportunity before the Tribunal - Whether the order of FAA based on grounds beyond the SCN can be sustained - HELD - The order in appeal is founded on theories of the economics of the jewellery trade and the behaviour of consumers, and these cannot supplant evidence and legal principles. Further inquiry under Section 107(11) must also be conducted within the framework of natural justice. The appellate authority cannot enter a finding without first putting it to the Appellant, recording the contentions and passing a speaking order. There was no evidence that such an inquiry was conducted. A finding in the order in original on a ground not contained in the SCN does not attain any sanctity, and it was the duty of the appellate authority to rectify such errors, which it instead compounded by adding further grounds. The remarks on reporting time limits are not harmless, as they were used to discredit the credit notes. The plea that the Appellant has full opportunity before the Tribunal cannot compensate for the lack of opportunity before the lower authorities, since the Appellant has a vested right to a full opportunity at every stage. As the orders are quashed on these grounds, examination of the merits is unnecessary - The order in appeal is set aside and the appeal is allowed. [Read less]

GST - Cancellation of registration without notice of the ground - Rule 21(d) read with Rule 10A of the CGST Rules, 2017 - Petitioner was granted GST registration, filed returns for a period and thereafter discontinued business for financial constraints - The registration was cancelled by an order passed after an SCN on the allegation that the Petitioner violated Rule 21(d) by not furnishing bank account details as required under Rule 10A - Petitioner sought restoration of the proceedings with an opportunity to respond, undertaking to produce the bank statement, file the pending returns and pay tax, interest and penalty - W... [Read more]

GST - Cancellation of registration without notice of the ground - Rule 21(d) read with Rule 10A of the CGST Rules, 2017 - Petitioner was granted GST registration, filed returns for a period and thereafter discontinued business for financial constraints - The registration was cancelled by an order passed after an SCN on the allegation that the Petitioner violated Rule 21(d) by not furnishing bank account details as required under Rule 10A - Petitioner sought restoration of the proceedings with an opportunity to respond, undertaking to produce the bank statement, file the pending returns and pay tax, interest and penalty - Whether the order cancelling the registration can be sustained and the proceedings restored with opportunity to the Petitioner - HELD - The Petitioner has been out of business from the stated month and is now willing to offer all taxes, pay penalty and interest and file the necessary returns. The Respondent itself fairly submitted that the Petitioner was not put on notice regarding the alleged failure to furnish bank account details under Rule 10A. In these circumstances the proceedings are to be restored with an opportunity to the petitioner to file a reply to the SCN - The order of cancellation is quashed, the petitioner is to file its response with documents by the stipulated date, and the Respondent is directed to consider the response, the returns filed and the willingness of the Petitioner to pay tax, penalty and interest and pass just orders – The petition is allowed [Read less]

GST - Maintainability of writ petition against SCN and order under Section 74, Secondment of employees by overseas company - Alternate statutory remedy under CGST Act, 2017 - Petitioner, a subsidiary of an overseas company, had employees seconded from the overseas company under a dispatch agreement, with part of the salary paid in India and the foreign part paid abroad and recovered from the Petitioner through quarterly debit notes - Department treated the secondment as import of manpower supply service, and the order confirmed the tax under reverse charge, denied input tax credit and imposed penalty and interest by invoki... [Read more]

GST - Maintainability of writ petition against SCN and order under Section 74, Secondment of employees by overseas company - Alternate statutory remedy under CGST Act, 2017 - Petitioner, a subsidiary of an overseas company, had employees seconded from the overseas company under a dispatch agreement, with part of the salary paid in India and the foreign part paid abroad and recovered from the Petitioner through quarterly debit notes - Department treated the secondment as import of manpower supply service, and the order confirmed the tax under reverse charge, denied input tax credit and imposed penalty and interest by invoking Section 74 - Respondents objected to maintainability on the ground of the statutory remedy of appeal - HELD - The power under Article 226 is wide but discretionary, and an alternate remedy does not take it away, but courts restrain themselves where the statute provides an effective remedy. A writ may lie despite an alternate remedy only for enforcing a fundamental right, for breach of natural justice, against an order wholly without jurisdiction, or to challenge the vires of a statute, and the Petitioner must show that its case truly falls within one of these exceptions - The CGST Act is a self-contained code providing for adjudication, first appeal, appeal to the Tribunal and appeal on a substantial question of law to the High Court. Whether a secondment is a supply depends on the whole arrangement read with the actual conduct of the parties and is a mixed question rooted in facts - The statutory authorities have the tools to examine the facts and further inquiry by the appellate authority - The scheme is a legislative choice under which facts are found by the adjudicating authority, the appellate authority and the Tribunal, and the High Court comes in only on a substantial question of law. The scheme also protects the taxpayer as recovery of the balance stands stayed on payment of the pre-deposit - The writ petition is dismissed on the ground of an efficacious alternate remedy - Notice and order issued by the same officer - Sections 74(1) and 74(9) of the CGST Act, 2017 - Petitioner contended that the SCN and the order were signed by the same officer, who was thus accuser and judge and that the appeal would be futile as the appellate authority would follow the earlier decision mechanically - Whether the issue of notice and passing of order by the same officer is a breach of natural justice bringing the case within the exception to the rule of alternate remedy - HELD - Section 74(1) empowers the proper officer to serve the SCN and Section 74(9) directs the same proper officer to consider the representation and determine the tax, interest and penalty. The statute itself places both functions on the proper officer, and this is the design of the law and not a lapse by the officer - The rule against bias strikes at personal interest or a real likelihood of prejudgment, and no personal interest or malice was alleged. An officer who issues a notice forms only a prima facie view, which is what the statute requires before any person is called upon to answer, and the question is whether the officer kept his mind open to the reply. The Petitioner was heard, filed replies and further submissions, and its real grievance that the submissions were not accepted or not dealt with well enough is a complaint about the quality of reasoning, which is a ground of appeal and not a denial of hearing - The fear that the appellate authority will not apply its mind is speculative, as the appeal lies to a separate authority which must give reasons under Section 107(12), with further remedies before the Tribunal and the High Court - The ground of breach of natural justice is rejected and the writ petition is dismissed. [Read less]

Service Tax - Denial of CENVAT credit on common input services - Rule 14 of the CCR, 2004 - Appellant, a manufacturer with three manufacturing units, availed CENVAT credit on common input services at one unit, which was also its registered office - Department alleged that the credit attributable to the other two units ought to have been distributed through the Input Service Distributor mechanism and confirmed the demand with interest and penalty - Appellant had already reversed the credit attributable to the other units along with interest and had informed the Department - Whether the Appellant was entitled to avail CENVAT... [Read more]

Service Tax - Denial of CENVAT credit on common input services - Rule 14 of the CCR, 2004 - Appellant, a manufacturer with three manufacturing units, availed CENVAT credit on common input services at one unit, which was also its registered office - Department alleged that the credit attributable to the other two units ought to have been distributed through the Input Service Distributor mechanism and confirmed the demand with interest and penalty - Appellant had already reversed the credit attributable to the other units along with interest and had informed the Department - Whether the Appellant was entitled to avail CENVAT credit on common input services at a unit not registered as an ISD - HELD - There was no finding that the services were not received, that service tax was not discharged by the service providers or that credit was availed in excess of the tax paid. The dispute concerned only the manner of accounting for and distribution of credit amongst the units of the same legal entity and not the substantive eligibility of the credit. Rule 7 of the CCR, 2004, as it stood during the relevant period, did not restrict the quantum of credit that could be distributed. The requirement of proportionate distribution was introduced subsequently and cannot be applied retrospectively to the earlier period. Absence of Input Service Distributor registration is a procedural irregularity and cannot convert genuine and admissible credit into inadmissible credit where the services were received, the credit was supported by documents and no excess or double benefit was established. The reversal made without prejudice to the Appellant's contention is not an admission of liability - The demand confirmed by the lower authorities is set aside – The appeal is allowed - Extended period of limitation - Section 11A of the Central Excise Act, 1944 - SCN was issued after the normal period of one year and the extended period was invoked on the allegation that the Appellant failed to disclose availment of common input service credit at that unit - Appellant contended that the credit was reflected in its records and that its accounts were audited by the Department earlier - Whether the extended period of limitation and the penalty under Rule 15(2) of the CCR, 2004 read with Section 11AC of the CEA, 1944 are sustainable - HELD - The credit was reflected in the Appellant's records and supported by invoices. Where the relevant records were available to the Department, the Revenue must establish the particular material fact which was deliberately withheld or suppressed. There was no allegation of fabricated invoices, parallel records or concealment of receipt of services. The reversal of credit had been intimated to the Department before issuance of the SCN. Mere omission or wrong availment does not by itself amount to suppression, and deliberate suppression, wilful misstatement or intent to evade was not established. The extended period was therefore not invocable and the entire demand is barred by limitation - The demand, consequential interest and penalty are set aside. [Read less]

Service Tax - Classification of services as Consulting Engineer Service or Real Estate Agent Service - Appellant, registered under Consulting Engineer's Service, provided services of preparation of bills of quantities, quantity take-off, verification of specifications and analysis of rates to an overseas associated enterprise for a project in India - Department classified the services as Real Estate Agent Service, treated them as provided in India, and confirmed the demand - Whether the services are classifiable as Consulting Engineer Service or Real Estate Agent Service - HELD - The services were advice, consultancy or te... [Read more]

Service Tax - Classification of services as Consulting Engineer Service or Real Estate Agent Service - Appellant, registered under Consulting Engineer's Service, provided services of preparation of bills of quantities, quantity take-off, verification of specifications and analysis of rates to an overseas associated enterprise for a project in India - Department classified the services as Real Estate Agent Service, treated them as provided in India, and confirmed the demand - Whether the services are classifiable as Consulting Engineer Service or Real Estate Agent Service - HELD - The services were advice, consultancy or technical assistance in relation to design, development and construction of real estate, and sale, purchase or leasing is not necessary for a service to fall within real estate agent service. The same services also fall within consulting engineer service as technical assistance in a discipline of engineering. Since the service is prima facie classifiable under two sub-clauses, Section 65A(2) applies. Clause (a) does not resolve the dispute because the services are specific both from the engineering view and from the real estate view, and clause (b) does not apply as there is no composite service. Under clause (c) the sub-clause which occurs first among those equally meriting consideration is to be adopted, and Consulting Engineer Service under Section 65(105)(g) occurs before Real Estate Agent Service. The place of provision of service is therefore the location of the service recipient outside India and no service tax is payable - The demand on this count is set aside - Service tax on reimbursable expenses - Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 - Department alleged short payment of service tax on reimbursable expenses in terms of Rule 5(1) - Entire period of dispute was before the amendment of Section 67 - Whether service tax is payable on reimbursable expenses for the period of dispute - HELD - During the relevant period Section 67 provided for service tax only on the consideration received for the services. Rule 5(1) which provided for levy on reimbursable expenses was ultra vires the Act. Section 67 was amended to make reimbursable expenses taxable only with effect from 14.05.2015. Since the entire period of dispute was before that date, no service tax was payable on reimbursable expenses - The demand on this count is set aside - Short payment of service tax on debtors reconciliation difference - Section 73(1) of the Finance Act, 1994 - Department, on audit, reconciled the debtors under the mercantile system of accounting and alleged unreported income on the basis of a difference between opening balance plus billing less receipts and the closing balance - Appellant contended that service tax was considered in the balances and in billing but was ignored in receipts, and that accounting adjustments were not considered - Whether the demand on the reconciliation difference is sustainable - HELD - Under the mercantile system the opening balance, billings, receipts and closing balance must tally, but the figures must be correctly considered. The difference arose because the service tax received from the service recipients was not considered among the receipts while the service tax billed was considered. Service tax law does not stipulate any manner of maintenance of accounts apart from the statutory returns and records. If the Department seeks to establish short payment on the basis of reconciliation, it must establish that the Appellant received greater consideration than what it declared. It is not open to the Department to ignore some figures or to insist on the records being maintained in any particular fashion - The demand on this count is set aside - Extended period of limitation - Proviso to Section 73(1) of the Finance Act, 1994 - SCN invoked the extended period alleging deliberate misclassification, non-inclusion of reimbursable expenses and incorrect value in the ST-3 returns, which came to light only on reconciliation of records - Appellant was registered, maintained its accounts and filed ST-3 returns regularly - Whether the extended period of limitation was correctly invoked - HELD - The Revenue's case is essentially that the Appellant did not correctly self-assess and pay service tax. Section 72 provides that where a person fails to assess the tax correctly the Central Excise Officer may call for accounts and records and make the assessment. All the data on which the SCN was based was in the records of the Appellant, and had the officer scrutinised the returns the SCN could have been issued within time. The extended period can be invoked only if one of the elements of fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade is established, and it cannot be presumed merely because the assessee operates under self-assessment. Incorrect self-assessment by itself does not establish wilful suppression with intent to evade. There was no evidence of any such element and the responsibility for time bar rests with the officer who failed to scrutinise the returns in time - The extended period is not invocable, the Appellant succeeds on merits and on limitation, and the appeal is allowed. [Read less]

Service Tax - Invocation of extended period of limitation - Proviso to Section 73(1) of the Finance Act, 1994 - Appellant, a trade and industry organisation, was proceeded against for alleged short payment or non-payment of service tax under Mandap Keeper Service, Commercial Training or Coaching Service, Club or Association Service and Business Exhibition Service, and the Department alleged suppression with intent to evade - Department had earlier issued successive SCNs on Club or Association Service covering overlapping periods - Whether the demand is barred by limitation - HELD - The extended period can be invoked only i... [Read more]

Service Tax - Invocation of extended period of limitation - Proviso to Section 73(1) of the Finance Act, 1994 - Appellant, a trade and industry organisation, was proceeded against for alleged short payment or non-payment of service tax under Mandap Keeper Service, Commercial Training or Coaching Service, Club or Association Service and Business Exhibition Service, and the Department alleged suppression with intent to evade - Department had earlier issued successive SCNs on Club or Association Service covering overlapping periods - Whether the demand is barred by limitation - HELD - The extended period can be invoked only in cases of fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade payment of service tax, and the burden lies on the Department. Limitation must be examined with reference to the respective return periods in terms of Section 73(6). Mere non-payment or non-inclusion of a receipt in the ST-3 return does not establish suppression. Non-filing of returns may be relevant for determining the relevant date but does not by itself establish intent to evade. The Department was already aware of the Appellant's activities through the earlier proceedings, the liability was being contested in continuing litigation, and the differential liability was worked out from the Appellant's own financial records. No new concealed activity or receipt was shown. The Department has therefore not established deliberate suppression and the demands beyond the normal period cannot be sustained - The demands beyond the normal period are set aside and the remaining questions on taxability are not examined as they are academic - Penalty under Section 78 - Section 78 of the Finance Act, 1994 - Penalty was imposed under Section 78 along with the demand invoking the extended period - Whether penalty under Section 78 is sustainable - HELD - The penalty under Section 78 is consequential upon the invocation of the extended period and is founded upon the circumstances specified in the proviso to Section 73(1). Since the Department failed to establish fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade payment of service tax, the statutory foundation for the penalty is absent - The penalty imposed under Section 78 is set aside - Penalty for failure to obtain registration - Section 77(1)(a) of the Finance Act, 1994 - SCN alleged that the Appellant failed to obtain registration for Club or Association Service, Commercial Coaching or Training Service and Business Exhibition Service, contravening Section 69 read with Rule 4 of the Service Tax Rules, 1994 - Appellant was already registered for certain other services - Whether penalty under Section 77(1)(a) is sustainable when the extended period is not available - HELD - The allegation was not of complete non-registration but of failure to obtain registration for the additional taxable services. The penalty under Section 77(1)(a) has to be examined independently of the extended period invoked for recovery of service tax. Unavailability of the extended period does not obliterate an independently established failure to obtain registration. The Department specifically identified the services for which registration was not obtained and the contravention of Section 69 read with Rule 4, and the ingredients of Section 77(1)(a) stood established - The penalty under Section 77(1)(a) is sustained - Penalty for failure to file returns - Section 77(2) of the Finance Act, 1994 - SCN alleged that the Appellant failed to assess the tax due and to furnish the prescribed ST-3 returns under Section 70 read with Rule 7 of the Service Tax Rules, 1994, and the FAA recorded a specific finding of non-filing of returns - Whether penalty under Section 77(2) is sustainable - HELD - The default under Section 77(2) is a procedural contravention distinct from the substantive liability to service tax. The absence of material to invoke the extended period cannot erase the separate obligation under Section 70 to furnish the prescribed returns. The Appellant did not demonstrate that the prescribed returns for the relevant periods were filed, and the contravention attracting Section 77(2) stood established - The penalty under Section 77(2) is sustained - Service tax on advances received for Mandap Keeper Service - Section 73(1) of the Finance Act, 1994 - The demand on advances received for a period falling within the normal period of limitation survived for examination on merits - Appellant had paid part of the tax before issuance of the SCN and produced payment particulars for the balance along with interest, which were brought to the notice of the adjudicating authority - Whether any service tax remains recoverable on the advances - HELD - The dispute was essentially regarding the timing of payment of service tax on such advances. The Appellant did not dispute the liability and demonstrated by specific payment particulars that the tax demanded had been discharged. The Department cannot recover the demand again without giving credit for the amounts already paid. The payments are to be appropriated against the tax demand and the interest paid is to be appropriated against the corresponding interest liability - The demand stands discharged and is set aside, and the appeal is partly allowed. [Read less]

Service Tax - Inclusion of reimbursed cost of diesel in taxable value - Section 67 of the Finance Act, 1994 - Assessee provided Management, Maintenance or Repair Service to telecom companies under contracts for procuring diesel, transporting it to sites and filling it into mobile towers, and claimed reimbursement of the cost of diesel from the service recipients - Department alleged that the cost of diesel was includable in the taxable value in terms of Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 and the Commissioner confirmed a part of the demand with penalty - Both the Assessee and the Revenue filed... [Read more]

Service Tax - Inclusion of reimbursed cost of diesel in taxable value - Section 67 of the Finance Act, 1994 - Assessee provided Management, Maintenance or Repair Service to telecom companies under contracts for procuring diesel, transporting it to sites and filling it into mobile towers, and claimed reimbursement of the cost of diesel from the service recipients - Department alleged that the cost of diesel was includable in the taxable value in terms of Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 and the Commissioner confirmed a part of the demand with penalty - Both the Assessee and the Revenue filed appeals - Whether the cost of diesel reimbursed to the Assessee is includable in the gross amount charged for the taxable service under Section 67 of the Finance Act, 1994 - HELD - Service tax is leviable on the value of the taxable services actually rendered, and Section 67 refers to the gross amount charged for providing such taxable service. Any amount which is not calculated for providing such taxable service cannot be a part of that valuation. Rule 5 went beyond the mandate of Section 67 and the Department cannot go beyond the contract value merely because of the use of the word gross in Section 67. The word charged refers to the amount billed by the service provider to the service recipient. The value of diesel was in the nature of reimbursement, the service tax had been paid on the element of service involved, and no service was rendered corresponding to the value of diesel. Diesel cannot be considered an input for the service for which a separate consideration was provided in the contract - The impugned order is modified, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed [Read less]

Customs - Bank Guarantee condition in Provisional Release - Section 110A read with Section 110 of the Customs Act, 1962 - Appellant imported goods declared as Distillate Marine Oil, which were seized on the basis of a laboratory report stating that the sample is most akin to High Flash High Speed Diesel, an item restricted for import - The Respondent permitted provisional release subject to end use bond, bond for the full assessable value and Bank Guarantee for ten percent of the assessable value to cover fine, penalty and differential duty that may arise - Appellant challenged the Bank Guarantee condition - Whether the Ba... [Read more]

Customs - Bank Guarantee condition in Provisional Release - Section 110A read with Section 110 of the Customs Act, 1962 - Appellant imported goods declared as Distillate Marine Oil, which were seized on the basis of a laboratory report stating that the sample is most akin to High Flash High Speed Diesel, an item restricted for import - The Respondent permitted provisional release subject to end use bond, bond for the full assessable value and Bank Guarantee for ten percent of the assessable value to cover fine, penalty and differential duty that may arise - Appellant challenged the Bank Guarantee condition - Whether the Bank Guarantee condition is sustainable - HELD - The Respondent himself recorded that the sample is not identical to High Flash High Speed Diesel for the limited purpose of provisional release, that deliberate mixing could not be ascertained, and that the sample matches fully with Distillate Marine Fuel and only partially with High Flash High Speed Diesel for the tested parameters. The second laboratory described the product only as diesel fraction and did not endorse the conclusion that it is most akin to High Flash High Speed Diesel - The Bank Guarantee was sought to cover a contingent liability, while the Appellant had already executed the bond and agreed to the end use conditions. Seeking Bank Guarantee in similar circumstances is against the directions of the jurisdictional High Court, which held that the test reports were not definitive and that cloud point cannot be the sole basis for seizure, and against the Tribunal's decision in a similar matter - The Bank Guarantee condition is set aside, the Bank Guarantee shall be returned on production of the end use certificates and a bond, and the appeal is allowed [Read less]

Customs - Confiscation of Gold under Section 111(b) and Section 111(d) of the Customs Act, 1962 - Reasonable belief under Section 110 and burden under Section 123 - Respondents were intercepted in a town seizure with gold pieces which did not bear any foreign markings, and the Department alleged that the gold was of foreign origin and smuggled. The Commissioner (Appeals) set aside the confiscation and penalties, and Revenue is in appeal - Whether the gold recovered in a town seizure without foreign markings is liable to confiscation when its foreign origin is not established - HELD - The seizure was neither made at an inte... [Read more]

Customs - Confiscation of Gold under Section 111(b) and Section 111(d) of the Customs Act, 1962 - Reasonable belief under Section 110 and burden under Section 123 - Respondents were intercepted in a town seizure with gold pieces which did not bear any foreign markings, and the Department alleged that the gold was of foreign origin and smuggled. The Commissioner (Appeals) set aside the confiscation and penalties, and Revenue is in appeal - Whether the gold recovered in a town seizure without foreign markings is liable to confiscation when its foreign origin is not established - HELD - The seizure was neither made at an international border nor within a notified customs area, and the gold did not bear any foreign markings. The expression reasonable belief under Section 110 cannot be equated with mere suspicion or conjecture, and it must be founded upon tangible material and objective circumstances available at the time of seizure. The purity of the gold cannot by itself be a determinative circumstance, as gold of comparable purity is also available in the domestic market - In the absence of reasonable belief, the burden under Section 123 cannot be shifted to the person from whose possession the goods were recovered. The initial burden to establish the foreign origin and smuggled character of the gold continues to rest on the Department - The Department failed to discharge this burden, and the order setting aside the confiscation is upheld - Evidentiary value of retracted statements recorded under Section 108 of the Customs Act, 1962 - The Department relied on the statements of the Respondents stating that the gold was of foreign origin and smuggled. The Respondents contended that the statements were recorded under duress and coercion, and that one statement was retracted at the earliest opportunity - Whether the confiscation of gold can be sustained on the basis of the retracted statements - HELD - A retracted statement has no evidentiary value unless it is corroborated by independent evidence. Apart from the statements, no independent material was brought on record, and the follow-up searches yielded no incriminating material - The alleged confession was very general in nature. The officers did not ask how the gold was smuggled, the place of crossing or the mode of transport. As the gold had no foreign markings, the onus was on the Department to prove its smuggled nature, which was not discharged. Section 138B was not complied with and the sanctity of the statements recorded under Section 108 was lost - The statements cannot be the sole basis to hold that the gold is smuggled, and the finding of the Commissioner (Appeals) on their non-reliability is upheld - Legal procurement of gold supported by invoices - Allegation of fabricated documents - The Respondents maintained that the gold was purchased from domestic sources, and produced tax invoices and bank account details. The Department alleged that the invoices were fabricated as the copy recovered from the supplier's office differed in printed layout from the copy produced by the Respondents - Whether the documentary evidence of legal procurement can be rejected on the basis of the alleged discrepancies - HELD - The allegation of fabrication of invoices is baseless and unsubstantiated. The statement of the third party relied upon by the Department is self-serving and lacks independent corroboration. Every material particular of the two copies of the invoice was identical, and the difference was confined to the printed layout, which is attributable to the internal billing practice and software configuration of the supplier. The absence of stock registers at a particular point of time cannot constitute evidence of illicit activity - The Respondent was in legal possession of the gold, and the finding of the Commissioner (Appeals) is upheld - Penalty under Section 112(b) of the Customs Act, 1962 - Commissioner (Appeals) set aside the penalties imposed on the Respondents - Whether penalty is imposable when the confiscation of gold is not sustained - HELD - There is no evidence on record to implicate the Respondents in the alleged offence of smuggling of gold. As the confiscation has not been sustained, no penalty is imposable on the Respondents - The setting aside of the penalties is upheld and the appeals filed by Revenue are rejected. [Read less]

GST - Refund of unutilised Input Tax Credit lying in Electronic Credit Ledger - Section 54 of CGST Act, 2017 - Respondent, an SEZ unit, filed refund application under the category of "any other" for unutilised ITC lying in its Electronic Credit Ledger. SCN issued and the refund claim was rejected under Rule 92(3) of CGST Rules, 2017. FAA allowed the appeals filed by the Respondent - The Revenue filed appeals before the Tribunal. Respondent took an additional stand that the refund claimed is of excess tax paid by it and not of unutilised ITC under Section 54(3) - Whether the refund claim falls under the category of refund o... [Read more]

GST - Refund of unutilised Input Tax Credit lying in Electronic Credit Ledger - Section 54 of CGST Act, 2017 - Respondent, an SEZ unit, filed refund application under the category of "any other" for unutilised ITC lying in its Electronic Credit Ledger. SCN issued and the refund claim was rejected under Rule 92(3) of CGST Rules, 2017. FAA allowed the appeals filed by the Respondent - The Revenue filed appeals before the Tribunal. Respondent took an additional stand that the refund claimed is of excess tax paid by it and not of unutilised ITC under Section 54(3) - Whether the refund claim falls under the category of refund of unutilised ITC lying in the Electronic Credit Ledger or refund of excess tax paid by the supplier - HELD - The SCN itself records that the refund application was filed under the category of "any other" for ITC remaining unutilised in the Electronic Credit Ledger. The order of the FAA records that the claim relates to unutilised ITC in respect of credit distributed by the Input Service Distributor and in some cases tax paid on inward supplies by suppliers. This was never questioned or controverted by the Respondent at any stage - The additional stand that the refund is of excess tax paid is not backed by any documentary evidence or law. The supplier paid the tax voluntarily for a long time and it cannot be assumed that the tax was paid by mistake or under duress or coercion. Both the Revenue and the Respondent are on the same page that the refund claims pertain to unutilised ITC availed on the basis of credit distributed by the Input Service Distributor - The claim is held to be a refund of unutilised ITC distributed by the Input Service Distributor and the additional plea of refund of excess tax paid is not accepted - Refund of ITC distributed by Input Service Distributor to SEZ unit - Section 54 of CGST Act, 2017 read with Rule 89 of CGST Rules, 2017 – Respondent-SEZ claimed refund of unutilised ITC lying in its Electronic Credit Ledger, being credit distributed by the Input Service Distributor - Revenue contended that under the proviso to Rule 89(1) the application for refund in respect of supplies to an SEZ unit is to be filed by the supplier. It was further contended that the SEZ unit is not liable to pay tax on such supplies, and that credit distributed by the ISD cannot be equated with tax paid on supplies made to the SEZ unit - Whether the refund of unutilised ITC distributed by the Input Service Distributor can be claimed by an SEZ unit as the recipient of the services - HELD - The Input Service Distributor, as defined in Section 2(61) of the CGST Act, is an office of the supplier which receives tax invoices towards input services and issues a prescribed document for distributing the credit. In such a case it is not possible for the supplier of goods and services to file a refund application for the input tax credit distributed by the Input Service Distributor. As there is no specific supplier who can claim the refund, the stand of the Revenue that the SEZ unit is not entitled to seek refund of the ITC paid in connection with goods or services supplied to it is not tenable - The proviso to Rule 89 does not use the word "only", and no word can be inserted into a Rule by interpretation. The restriction read into the proviso by the Revenue is therefore misplaced. An SEZ unit cannot be denied refund of ITC solely on the ground that it is not the supplier. No decision contrary to this position was cited by the Revenue - The contention of the Revenue is rejected and the SEZ unit is held entitled to claim refund of the unutilised ITC distributed by the Input Service Distributor - Relevance of Board circulars on manual filing of refund claims - Circular No. 17/17/2017-GST and Circular No. 24/24/2017-GST - Revenue submitted that the refund claim could not be processed under any of the categories of refund specified in the circulars prescribing manual filing and processing of refund claims, and therefore the claim was rightly rejected - Whether the Board circulars restrict the right of the SEZ unit to claim refund - HELD - The Circulars were issued due to non-availability of the refund module on the common portal and prescribe the procedure for manual filing and processing of refund claims. They did not bring any substantial change in the law relating to the right of refund to SEZ units and do not in any manner circumscribe the right of the SEZ unit to claim refund - The reliance of the Revenue on the Circulars is rejected, no fault is found with the orders of the FAA, the orders are affirmed – The appeals filed by the Revenue are dismissed [Read less]

GST - Validity of cancellation of registration under Rule 21(e) where SCN rests on oral intimation and does not disclose supplier details or grounds - Appellant's registration was cancelled on the allegation of wrongful availment of ITC in contravention of Section 16 of the CGST Act, 2017, on the basis of invoices issued by supplier firms whose registrations had been cancelled, and the FAA confirmed the cancellation - The SCN alleged that the Appellant was violating Section 16(2) by claiming ITC - Whether the cancellation is sustainable when the SCN does not specify the suppliers, the GSTIN, the period or the particulars o... [Read more]

GST - Validity of cancellation of registration under Rule 21(e) where SCN rests on oral intimation and does not disclose supplier details or grounds - Appellant's registration was cancelled on the allegation of wrongful availment of ITC in contravention of Section 16 of the CGST Act, 2017, on the basis of invoices issued by supplier firms whose registrations had been cancelled, and the FAA confirmed the cancellation - The SCN alleged that the Appellant was violating Section 16(2) by claiming ITC - Whether the cancellation is sustainable when the SCN does not specify the suppliers, the GSTIN, the period or the particulars of inadmissible ITC, and does not refer to Section 29 - HELD - The SCN issued by the adjudicating authority must contain all details necessary under law. An SCN which does not specify the grounds or sufficient factual particulars violates natural justice. The requirements necessary to sustain the validity of a notice or order must be contained therein, and any deficiency in the SCN cannot subsequently be cured - The SCN did not disclose who the supplier was, what the GSTIN was or in which period inadmissible ITC was claimed. The recommendation for cancellation was based merely on an oral intimation, and no other formal communication was made to the Proper Officer for initiating cancellation proceedings. A mere reference to an oral intimation allegedly given by an officer cannot by itself constitute a valid and sufficient ground for cancellation in the absence of specific allegations supported by the relevant statutory provisions - Proceedings under Rule 21(e) and proceedings under Section 74A are distinct and materially different in nature, scope and legal consequences, and the cancellation had to be examined strictly within its own scope, without any finding on the Section 74A proceedings. Section 29 read with Rule 22 provides the framework for cancellation, but neither the SCN nor the cancellation order referred to it, and its invocation by the FAA cannot cure the fundamental defects as the taxpayer must be afforded a fair and effective opportunity to meet the allegations - The cancellation order and the Order-in-Appeal suffer from legal infirmities the cancellation is revoked and the registration stands restored - The appeal is allowed - Powers of FAA to rely on material not mentioned in the SCN while confirming cancellation of registration - The FAA confirmed the cancellation of registration on the basis of an enquiry report and details of the Form DRC-01A, which were not mentioned in the SCN issued for cancellation, after seeking clarification from the Proper Registering Authority - Whether the FAA can confirm the cancellation on the basis of evidence not produced at the time of passing the cancellation order and without giving the Appellant an opportunity of rebuttal - HELD - The FAA went beyond the SCN and acted as if collecting evidence at the appellate stage. Additional evidence can be produced only in rare circumstances, and where the authority wants additional evidence, a proper opportunity of rebuttal must be given to the Appellant. The order of the FAA did not mention any effective and reasonable opportunity of rebuttal and hearing. Under Rule 112, additional evidence is admissible only in the circumstances specified therein. The Appellate Authority must record specific reasons for admitting or rejecting such evidence, and a personal hearing must be provided in case of rejection. Before admitting such evidence, reasonable opportunity must be given to the adjudicating authority to examine and rebut it. Appellate proceedings should not, as a matter of ordinary practice, be converted into a fresh investigation merely to remedy deficiencies in the original adjudication - The Order-in-Appeal confirming the cancellation on the basis of an enquiry report not mentioned in the SCN is not sustainable in law. The appeal is allowed [Read less]

GST - Validity of cancellation of registration where Show Cause Notice rests on oral intimation and does not disclose supplier details or grounds - Appellant's registration was cancelled on the allegation of wrongful availment of Input Tax Credit (ITC) in violation of Section 16(2) of the CGST Act, 2017 and the First Appellate Authority (FAA) confirmed the cancellation by invoking Section 29 of the Act - SCN alleged that the Appellant was claiming ITC in violation of Section 16(2), referred to an intimation notice under Section 74A and to an oral communication by an officer, and directed the Appellant to explain why regis... [Read more]

GST - Validity of cancellation of registration where Show Cause Notice rests on oral intimation and does not disclose supplier details or grounds - Appellant's registration was cancelled on the allegation of wrongful availment of Input Tax Credit (ITC) in violation of Section 16(2) of the CGST Act, 2017 and the First Appellate Authority (FAA) confirmed the cancellation by invoking Section 29 of the Act - SCN alleged that the Appellant was claiming ITC in violation of Section 16(2), referred to an intimation notice under Section 74A and to an oral communication by an officer, and directed the Appellant to explain why registration should not be cancelled - Whether the cancellation of registration is sustainable when the SCN does not specify the suppliers, the GSTIN, the period or the particulars of inadmissible ITC, and does not refer to Section 29 - HELD - The SCN issued by the adjudicating authority must contain all details necessary under law, and an SCN which does not specify the grounds or sufficient factual particulars violates natural justice - The requirements necessary to sustain the validity of a notice or order must be contained therein, and any deficiency in the SCN cannot subsequently be cured. The SCN did not disclose who the supplier was, what the GSTIN was or in which period inadmissible ITC was claimed. The recommendation for cancellation was based merely on an oral intimation, and no other formal communication was made to the Proper Officer for initiating cancellation proceedings - A mere reference to an oral intimation allegedly given by an officer cannot by itself constitute a valid and sufficient ground for cancellation in the absence of specific allegations supported by the relevant statutory provisions. Proceedings for cancellation of registration and proceedings under Section 74A are distinct and materially different in nature, scope and legal consequences, and the cancellation had to be examined strictly within its own scope, without any finding on the Section 74A proceedings - Section 29 read with Rule 22 provides the framework for cancellation, but neither the SCN nor the cancellation order referred to it, and its invocation by the FAA cannot cure the fundamental defects as the taxpayer must be afforded a fair and effective opportunity to meet the allegations - The cancellation order and the Order-in-Appeal suffer from legal infirmities. The cancellation is revoked and the registration stands restored - The appeal is allowed - GST - Powers of FAA to rely on material not mentioned in the SCN while confirming cancellation of registration - The FAA confirmed the cancellation of registration on the basis of an enquiry report and details of the Form DRC-01A, which were not mentioned in the SCN issued for cancellation, after seeking clarification from the Proper Registering Authority - Whether the FAA can confirm the cancellation on the basis of evidence not produced at the time of passing the cancellation order and without giving the Appellant an opportunity of rebuttal - HELD - The FAA went beyond the SCN and acted as if collecting evidence at the appellate stage. Additional evidence can be produced only in rare circumstances, and where the authority wants additional evidence, a proper opportunity of rebuttal must be given to the Appellant. The order of the FAA did not mention any effective and reasonable opportunity of rebuttal and hearing. Under Rule 112, additional evidence is admissible only in the circumstances specified therein. The Appellate Authority must record specific reasons for admitting or rejecting such evidence, and a personal hearing must be provided in case of rejection. Before admitting such evidence, reasonable opportunity must be given to the adjudicating authority to examine and rebut it. Appellate proceedings should not, as a matter of ordinary practice, be converted into a fresh investigation merely to remedy deficiencies in the original adjudication - The Order-in-Appeal confirming the cancellation on the basis of an enquiry report not mentioned in the SCN is not sustainable in law. The appeal is allowed [Read less]

GST - Demand of cess on clerical error in FORM GSTR-1 - Short payment alleged on comparison of FORM GSTR-1 with FORM GSTR-3B - Appellant declared in FORM GSTR-1 for a month an amount of cess which was higher than the cess actually paid in FORM GSTR-3B – Demand of the differential cess with interest and penalty - Appellant contended that the amount in FORM GSTR-1 was wrongly entered through a clerical mistake, which can be verified from the supply value and the GST liability - Whether the differential cess is recoverable as short payment where the higher amount was declared in FORM GSTR-1 on account of a clerical error - ... [Read more]

GST - Demand of cess on clerical error in FORM GSTR-1 - Short payment alleged on comparison of FORM GSTR-1 with FORM GSTR-3B - Appellant declared in FORM GSTR-1 for a month an amount of cess which was higher than the cess actually paid in FORM GSTR-3B – Demand of the differential cess with interest and penalty - Appellant contended that the amount in FORM GSTR-1 was wrongly entered through a clerical mistake, which can be verified from the supply value and the GST liability - Whether the differential cess is recoverable as short payment where the higher amount was declared in FORM GSTR-1 on account of a clerical error - HELD - The Appellant declared the taxable value along with Central tax and State tax in FORM GSTR-1, and the same amounts of Central tax and State tax were declared and paid in FORM GSTR-3B. The cess paid in FORM GSTR-3B corresponds to the declared taxable value and tax, while the higher amount entered in FORM GSTR-1 does not correspond to any taxable value, central tax or State tax. The claim of a clerical error is therefore believable - There is no allegation or evidence of suppression of the quantity or value of outward supply or of short payment of central tax or State tax. Bald allegations of short payment of cess cannot be accepted when the explanation of clerical mistake is supported by the figures on record - The adjudicating authority should have dealt with the issue on facts and could have condoned the mistake as there was no material to suggest any short payment of tax or cess - The order of the FAA is quashed and the appeal is allowed [Read less]

GST - Penalty for non-sequential invoice numbering during transit - Section 129 of the CGST Act, 2017 read with Rule 46(b) of the CGST Rules, 2017 - Goods were dispatched by a registered supplier to a registered recipient in another State, and the vehicle was intercepted in transit with a tax invoice, e-way bill and consignment note - On verification, earlier tax invoices of the supplier were found to be not in sequential order as required under Rule 46(b), and the proper officer detained the vehicle and goods and imposed penalty under Section 129(3), which was deposited under protest - Whether non-consecutive issuance of ... [Read more]

GST - Penalty for non-sequential invoice numbering during transit - Section 129 of the CGST Act, 2017 read with Rule 46(b) of the CGST Rules, 2017 - Goods were dispatched by a registered supplier to a registered recipient in another State, and the vehicle was intercepted in transit with a tax invoice, e-way bill and consignment note - On verification, earlier tax invoices of the supplier were found to be not in sequential order as required under Rule 46(b), and the proper officer detained the vehicle and goods and imposed penalty under Section 129(3), which was deposited under protest - Whether non-consecutive issuance of tax invoices detected during transit verification warrants detention, seizure and penalty under Section 129(3) or is a mere technical breach attracting at most the general penalty under Section 125 - HELD - The movement of goods between two registered dealers was genuine and backed by valid documents, and the quantity and description of goods matched perfectly. Section 129 applies only when goods are transported in contravention of the provisions of the Act and the Rules, and it is intended to penalise tax evaders, clandestine removal and movement of goods without proper documentation. Where the e-way bill, quantity and goods match and the transaction is fully recorded in the books of both registered entities, there is no intention to evade tax or mens rea. A clerical or sequential error in invoice numbering is a technical irregularity and does not transform a legitimate transaction into an illegal or untaxed transit movement, and the transaction was revenue neutral. Venial and technical breaches should not be visited with severe financial penalties unless a substantive contravention or loss of revenue is established - If the Department wished to penalise a technical infraction of Rule 46, the appropriate recourse was Section 125 and not detention and seizure under Section 129, and even under Section 125 deliberate non-compliance must be established, which is absent. The authorities of the recipient State also have no jurisdiction to adjudicate a violation of Rule 46(b) by a supplier registered in another State - The order of the FAA quashing the penalty under Section 129(3) is upheld and the appeal of the Department is dismissed [Read less]

GST - Penalty for mismatch in place of dispatch - Section 129 of the CGST Act, 2017 - Vehicle carrying areca nuts was intercepted and the driver produced e-invoices and e-way bills showing the place of dispatch in Assam, while the driver's statement and the transporter's goods receipt mentioned Kolkata as the place of dispatch - The goods were seized and penalty was imposed under Section 129 on the ground of breach of law, and the FAA dismissed the appeal - Appellant, the recipient, contended that the discrepancy was minor and that the goods had been dispatched by rail from the supplier's location to Kolkata and thereafter... [Read more]

GST - Penalty for mismatch in place of dispatch - Section 129 of the CGST Act, 2017 - Vehicle carrying areca nuts was intercepted and the driver produced e-invoices and e-way bills showing the place of dispatch in Assam, while the driver's statement and the transporter's goods receipt mentioned Kolkata as the place of dispatch - The goods were seized and penalty was imposed under Section 129 on the ground of breach of law, and the FAA dismissed the appeal - Appellant, the recipient, contended that the discrepancy was minor and that the goods had been dispatched by rail from the supplier's location to Kolkata and thereafter transported by road, the transporter having mentioned Kolkata in the goods receipt - Whether a mere mismatch in the place of dispatch without intention to evade tax amounts to violation or breach attracting penalty under Section 129 - HELD - The recipient is based in Uttar Pradesh and the tax in respect of the transactions accrued to that State. The documents produced at the time of interception, read with the returns filed by the supplier and the recipient, establish that both consignments were duly accounted for and the applicable tax had been discharged. The transactions were reflected in GSTR-2A and there was no basis to allege any intention to evade tax. A mere technical error in the dispatch location mentioned in the e-way bill, in the absence of intent to evade tax or discrepancy in goods, does not warrant seizure or imposition of penalty under Section 129. Procedural lapses without substantive irregularities should not lead to punitive consequences - The orders of the adjudicating authority and the FAA are quashed, the penalty if paid is to be refunded, and the appeal is allowed [Read less]

Central Excise - Eligibility to CENVAT credit on General Insurance Service - Rule 2(l) of the CENVAT Credit Rules, 2004 - Respondent, a manufacturer of excisable goods, availed CENVAT credit of service tax paid on General Insurance Service for the period from January 2010 to January 2015 - Department alleged that after deletion of the words activities relating to business from the definition of input service with effect from 01.04.2011, General Insurance was not used directly or indirectly in relation to the manufacture of final products, and the Order-in-Original confirmed the demand with interest and penalty - The Tribun... [Read more]

Central Excise - Eligibility to CENVAT credit on General Insurance Service - Rule 2(l) of the CENVAT Credit Rules, 2004 - Respondent, a manufacturer of excisable goods, availed CENVAT credit of service tax paid on General Insurance Service for the period from January 2010 to January 2015 - Department alleged that after deletion of the words activities relating to business from the definition of input service with effect from 01.04.2011, General Insurance was not used directly or indirectly in relation to the manufacture of final products, and the Order-in-Original confirmed the demand with interest and penalty - The Tribunal set aside the Order-in-Original and the Appellant-Revenue filed an appeal under Section 35G of the Central Excise Act, 1944 - Whether the Respondent is eligible to avail CENVAT credit on General Insurance Service and whether any substantial question of law arises from the order of the Tribunal - HELD - A comparison of Rule 2(l) before and after the amendment shows that the only difference is the deletion of the words activities relating to business. The Department's own clarification records that the definition of input service was aligned with the definition of input so that services related to goods excluded from inputs are also excluded from input services, and that the expression activities relating to business was deleted while specific services were added to the list. The amendment was thus brought only with a view to harmonise the definition of input and input service. The services excluded by the amended definition do not include General Insurance Service of the kind availed by the Respondent. The clarification on activities relating to business concerned services such as sale of dutiable goods on commission basis and did not extend to the service availed by the Respondent. The Tribunal, following consistent decisions, held that General Insurance Service is directly or indirectly related to the manufacture of the final product and is admissible as input service, and no substantial question of law arises from that view - The Revenue appeal is dismissed [Read less]

GST - Classification of non-alcoholic fermented fruit beverage - Chapter 22 of the Customs Tariff - Applicant manufactured a beverage from black grapes, water, sugar and yeast through fermentation and sold it as non-alcoholic red wine. It had been paying tax at the higher rate. It sought classification as a fruit pulp or fruit juice based drink, as its competitors were doing. It produced an old government laboratory certificate that showed alcohol content, and a fresh report from a private laboratory - Whether the beverage is classifiable as a fruit pulp or fruit juice based drink under HSN 2202 9920, and the correct HSN c... [Read more]

GST - Classification of non-alcoholic fermented fruit beverage - Chapter 22 of the Customs Tariff - Applicant manufactured a beverage from black grapes, water, sugar and yeast through fermentation and sold it as non-alcoholic red wine. It had been paying tax at the higher rate. It sought classification as a fruit pulp or fruit juice based drink, as its competitors were doing. It produced an old government laboratory certificate that showed alcohol content, and a fresh report from a private laboratory - Whether the beverage is classifiable as a fruit pulp or fruit juice based drink under HSN 2202 9920, and the correct HSN code and rate of tax for the beverage - HELD - Yeast converts the sugars of the fruit into alcohol, which distinguishes wine from fruit juice. The use of yeast in fermentation, coupled with the sale of the product as non-alcoholic red wine, shows that it cannot be termed as fruit juice. Wine is defined in the Food Safety and Standards (Alcoholic Beverages) Regulations as the beverage produced by alcoholic fermentation of the juice of grapes. The product is therefore a fermented beverage and not a fruit pulp or fruit juice based drink - Chapter Note 3 to Chapter 22 treats a beverage as non-alcoholic only if its alcoholic strength by volume does not exceed the prescribed limit. The old government laboratory certificate was more than a decade old and showed alcohol content. The fresh report was issued by a private laboratory and not by a certified government laboratory authorised for such testing. The alcohol content cannot be determined without valid documentary evidence - In the absence of valid documentary proof, the correct HSN code and the rate of tax cannot be determined – Ordered accordingly [Read less]

GST – Classification of Supply, erection, testing and commissioning of fire protection system - Composite supply under Section 2(30) of the CGST Act, 2017 - Applicant supplied fire protection systems comprising pumps, pipes, valves, fittings, hydrant components and compressors to private industries and Government institutions, along with installation, testing and commissioning. Under the sample work order, the Applicant was required to supply the items, clear the site, build RCC pedestals and platforms, and erect, test and commission the system - Whether the supply, erection, testing and commissioning of the fire protect... [Read more]

GST – Classification of Supply, erection, testing and commissioning of fire protection system - Composite supply under Section 2(30) of the CGST Act, 2017 - Applicant supplied fire protection systems comprising pumps, pipes, valves, fittings, hydrant components and compressors to private industries and Government institutions, along with installation, testing and commissioning. Under the sample work order, the Applicant was required to supply the items, clear the site, build RCC pedestals and platforms, and erect, test and commission the system - Whether the supply, erection, testing and commissioning of the fire protection system constitutes a composite supply under Section 2(30) - HELD - A composite supply means two or more taxable supplies of goods or services which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. In the contract for the fire protection system, the supply of goods and the erection, testing and commissioning services are naturally bundled and supplied in conjunction with each other. The supply is a composite supply - Ordered accordingly - Fire protection system - Movable or immovable property for levy of GST - Applicant contended that the system is not permanently attached to the earth, that it can be dismantled and assembled as per the needs of the recipient, and that installation involves no earth work - Whether the fire protection system is movable or immovable property for the purpose of levy of GST - HELD - The Applicant is required to get the designated spot ready by clearing bushes and trees, build the necessary RCC pedestals and platforms, do the electric wiring, install the pipes, valves and gauges, connect the whole system, and carry out testing and commissioning. The components installed at the building or premises are intended to provide a permanent fire-protection infrastructure for the facility. They are not meant to be removed and relocated without substantial dismantling. The completed system therefore assumes the character of immovable property for the purpose of levy of GST - The fire protection system is regarded as immovable property - Works contract under Section 2(119) of the CGST Act, 2017 - Classification under SAC 9954 and applicable rate - Applicant sought to know whether the contract is a works contract covered under SAC 9954 and chargeable at 12%. The Applicant also supplied the system to Government institutions - Whether the contract for supply, erection, testing and commissioning of the fire protection system is a works contract covered under SAC 9954 and chargeable at the rate of 12% - HELD - A works contract means a contract for erection, installation, fitting out or commissioning of any immovable property wherein transfer of property in goods is involved in the execution of such contract. The fire protection system involves transfer of property in goods and erection, testing and commissioning of an immovable property. The contract is therefore a composite supply of works contract, which is treated as a supply of services under para 6 of Schedule II - Heading 9954 covers construction services. The electrical installation work, including fire alarm installation, is covered under SAC 995461. The firefighting water piping, sprinkler and hydrant network installation is covered under SAC 995462 - As regards the rate, the entry for composite supply of works contract provided to Government involves predominantly earth work. The sample work order requires excavation and backfilling, which are part of earth work. However, the charges for the same are minuscule in relation to the total contract amount. The works contract services therefore do not get covered under that entry, and the rate of 6% sought by the Applicant is not applicable - The contract is a works contract covered under SAC 9954. It is not chargeable at 12% and is not covered under Serial No. 3(vii) of Notification No. 11/2017-Central Tax (Rate). [Read less]

Central Excise - Reversal of CENVAT credit on shortage of raw materials - Rule 14 of the CENVAT Credit Rules, 2004 - Respondent-assessee, a manufacturer, found shortage of raw materials in physical stock verification after a theft was detected and reported to the police, and shortages were adjusted in the SAP system through a particular movement entry - Department alleged that the shortages were unreconciled, that the entry was a fictitious book entry, and that the Respondent had not used the inputs on which credit was taken, and the demand was confirmed - The Tribunal set aside the Order-in-Original and the Appellant-Reve... [Read more]

Central Excise - Reversal of CENVAT credit on shortage of raw materials - Rule 14 of the CENVAT Credit Rules, 2004 - Respondent-assessee, a manufacturer, found shortage of raw materials in physical stock verification after a theft was detected and reported to the police, and shortages were adjusted in the SAP system through a particular movement entry - Department alleged that the shortages were unreconciled, that the entry was a fictitious book entry, and that the Respondent had not used the inputs on which credit was taken, and the demand was confirmed - The Tribunal set aside the Order-in-Original and the Appellant-Revenue filed an appeal under Section 35G of the Central Excise Act, 1944 - Whether CENVAT credit attributable to raw materials found short in physical stock verification is required to be reversed, and whether the Tribunal wrongly placed the burden of proof on the Revenue contrary to Rule 9(5) - HELD - The Tribunal recorded findings of fact that only one event of theft was detected and reported, that there was no evidence as to where and when the raw material moved out of the factory, and that the Department merely assumed that the shortage was due to theft or removal. There was no allegation that the original credit taken was incorrect or improper - The SAP entry was made only to tally the physical stock with the inventory in the software, as the shortage caused by mis-handling of accounts could not be entered in the SAP accounting at a later stage, and the adjustment was made on stock taking at the time of implementation of the SAP system - The statement relied upon by the Revenue was interpreted in a truncated manner without considering that the entry was made only to see that the physical stock tallied with the inventory. There was no positive evidence that the inputs found short were disposed of otherwise than in the manufacture of final products, and a demand cannot be based on assumption and presumption without tangible evidence. Improper accounting of inputs cannot be a ground to demand CENVAT credit. The decision relied upon by the Revenue for the burden of proof under the Rules is not applicable where the demand itself rests on assumption and presumption - No substantial question of law arises and the Revenue appeal is dismissed - Reliance on statements of third party without cross-examination - Principles of natural justice - Department relied upon the statement of a person who stated that he arranged CENVATABLE invoices for the Respondent without actual supply of materials, and the request of the Respondent for cross-examination was rejected on the ground that the person was a co-noticee and that the statement was only corroborative of the admissions of employees - Whether the Department could rely on the statement for confirming the demand of CENVAT credit without affording cross-examination - HELD - The person making the statement produced no documentary evidence in support of his averments and did not give details of the invoices or the period to which they belonged. No reliance can be placed on the oral statement of a person who has not been subjected to cross-examination during adjudication. The denial of cross-examination was fatal to the reliance placed on the statement. The statement of the former employee related to the adjustment of shortages found in stock taking in the SAP system and was in a different context, and it could not corroborate the allegation of invoices arranged without actual supply of materials. The cross-examination of the person would not have incriminated him in respect of the demand of CENVAT credit - The Tribunal was justified in holding that without affording cross-examination the statement could not be relied upon - The appeal is dismissed. [Read less]

GST - Classification of Kraft paper bags - Chapter Sub-Heading 4819 of the Customs Tariff - Applicant manufactured Kraft paper bags by using Kraft paper and adhesive glue. The bags were plain or printed, uncoated, without lamination or plastic content, unbranded and without handles. They were supplied for packaging in pharmaceutical stores, grocery shops and by small traders - Whether the Kraft paper bags are classifiable under tariff item 4819 3000 or under any other entry of Sub-Heading 4819 - HELD - Sub-Heading 4819 covers cartons, boxes, cases, bags and other packing containers of paper, and the impugned bags being pap... [Read more]

GST - Classification of Kraft paper bags - Chapter Sub-Heading 4819 of the Customs Tariff - Applicant manufactured Kraft paper bags by using Kraft paper and adhesive glue. The bags were plain or printed, uncoated, without lamination or plastic content, unbranded and without handles. They were supplied for packaging in pharmaceutical stores, grocery shops and by small traders - Whether the Kraft paper bags are classifiable under tariff item 4819 3000 or under any other entry of Sub-Heading 4819 - HELD - Sub-Heading 4819 covers cartons, boxes, cases, bags and other packing containers of paper, and the impugned bags being paper bags are covered by it. The bags are made of Kraft paper, are unbranded and without handles, and do not have the base width prescribed for tariff item 4819 3000. Correlating these characteristics with the HSN notes to Sub-Heading 4819, the bags find a specific entry under tariff item 4819 4000 covering other sacks and bags, including cones. The bags are classified under HSN 48194000 – Ordered accordingly - Exemption from tax and applicability of Serial No. 319 of Schedule I to Notification No. 9/2025-CT (Rate) - Paper sacks and bags - Applicant claimed that the bags, being eco-friendly and compostable, should attract the concessional rate under Serial No. 319 of Schedule I and not the rate under Serial No. 185 of Schedule II - Whether the Kraft paper bags are exempt from GST or are covered by Serial No. 319 of Schedule I, and the rate of tax applicable - HELD - The exemption notification for intra-State supplies of goods does not contain an entry for tariff item 4819 4000. The bags are therefore not exempt from GST. Two competing entries are found for the paper bags, one under Serial No. 319 of Schedule I and the other under Serial No. 185 of Schedule II. Serial No. 319 covers paper sacks and bags and biodegradable bags falling under Chapters 39 and 48, and it takes into account the taxability of both - The reduced rate reflects the Government's push towards eco-friendly alternatives to plastics. Paper made from natural plant fibres biodegrades through the action of microorganisms without leaving toxic microplastics in the environment. On a plain reading, paper bags manufactured using Kraft paper and adhesive glue are squarely covered by Serial No. 319 of Schedule I - The bags are not exempt from GST. They attract GST at the rate of 5% under Serial No. 319 of Schedule I - Eligibility to Input Tax Credit - Applicant manufactured Kraft paper bags taxable at the concessional rate - Whether the Applicant is eligible to avail Input Tax Credit on the inputs and input services used in the manufacture of the bags - HELD - The eligibility and conditions for availing Input Tax Credit are specified under Section 16 of the CGST Act. Since the bags are taxable at 5%, the Applicant is eligible to avail ITC on the inputs and input services used in the manufacture of the outward supply, subject to satisfying all the conditions prescribed under Section 16 - The Applicant is eligible to avail Input Tax Credit subject to Section 16 conditions. [Read less]