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GST - Demand based on mismatch between GSTR-3B and GSTR-2A - Demand of input tax credit on the ground that credit in GSTR-3B exceeded credit in GSTR-2A for 2017-18 - Appellant issued credit notes for goods returned by customers and added the tax on them to ITC in GSTR-3B instead of reducing its output tax, and the annual return showed the credit notes in the relevant table - Proper officer treated the entire difference between GSTR-3B and GSTR-2A as wrongly availed credit and confirmed the demand - Whether the demand can be sustained on the ground stated in the show cause notice - HELD - The difference was the tax on the c... [Read more]

GST - Demand based on mismatch between GSTR-3B and GSTR-2A - Demand of input tax credit on the ground that credit in GSTR-3B exceeded credit in GSTR-2A for 2017-18 - Appellant issued credit notes for goods returned by customers and added the tax on them to ITC in GSTR-3B instead of reducing its output tax, and the annual return showed the credit notes in the relevant table - Proper officer treated the entire difference between GSTR-3B and GSTR-2A as wrongly availed credit and confirmed the demand - Whether the demand can be sustained on the ground stated in the show cause notice - HELD - The difference was the tax on the credit notes declared in the annual return and not credit on purchases, since the credit on purchases from registered suppliers was within the credit shown in GSTR-2A - The Appellant had paid output tax on the full value of its sales and took the deduction only once. Clause (aa) of Section 16(2) came into force only on 01.01.2022, and the Circular recognises that for 2017-18 a difference between GSTR-3B and GSTR-2A calls for verification of facts and is not proof of excess credit - GSTR-2A shows only inward supplies reported by suppliers, and the tax on a credit note issued by the Appellant to its own customer can never appear in it. The proper officer compared totals across the taxes together and split the difference equally between central tax and State tax without tracing it to any head, did not examine the annual return and ignored the explanation, despite Sections 73(9) and 75(6) requiring consideration of the representation and the basis of decision - The records on the common portal, such as the annual return, the statements of outward supplies and the monthly returns, could have been verified, and specific records could have been called for - The FAA went beyond the record by holding that suppliers had not filed returns, which the notice never alleged, did not deal with the main ground, and failed to record reasons as required by Section 107(12). The Appellant also shares the blame for not filing its reply in the prescribed form on the portal and for not appearing before the appellate authority, but the appeal was decided on merits - The demand cannot be sustained on a difference that the Revenue never examined. No interest under Section 50(3) or penalty under Section 73(9) where no tax is due; amount paid under protest to release frozen bank account is refundable - The Order-in-Appeal is set aside and the appeal is allowed - Reporting tax on credit notes as input tax credit - Effect of reporting tax on credit notes issued for goods returned as input tax credit instead of reduction of output tax - Appellant showed the tax on credit notes issued to its own customers as input tax credit in GSTR-3B, while the credit notes were declared in the annual return for the same year - Whether the amount becomes payable because it was reported in the wrong table of the return - HELD - A credit note issued by the Appellant records a reduction in the value of its own outward supply and is not a supply made to the Appellant. The tax on it is not input tax under Sections 2(62) and 16(1), and the Appellant erred in reporting it as such in the self-assessed return - However, Section 34 allows a supplier who issues a credit note for goods returned to reduce its tax liability if it declares the credit note in its return within the time fixed, and the credit notes were declared in the year in which they were issued. The Appellant did not also use the credit notes to reduce its output tax, and the tax paid to the Government would have been the same had the output tax been reduced in the correct table - A substantive condition must be met, but failure to observe a procedural condition does not defeat the benefit where the substance is satisfied. The mistake of table is a matter of form, and the amount placed in its correct table is a reduction of output tax under Section 34 and not credit wrongly availed. Section 155 governs a claim to input tax credit and does not apply, and a self-assessed return stands unless questioned in the manner provided by the Act. The genuineness of the credit notes was never questioned by any authority - The error in reporting does not make the amount payable - Conditions of Section 34 urged at the appellate stage - Reliance by the Revenue at the appellate stage on conditions of Section 34 of the CGST Act, 2017 not raised in the show cause notice - The Revenue contended that the Appellant had not shown that the goods came back, that the incidence of tax was not passed on or that its customers reversed their credit - Whether the demand can be sustained on these grounds - HELD - None of these grounds is in the notice. Under Section 75(7), no demand shall be confirmed on grounds other than those specified in the notice, and the Department cannot travel beyond the show cause notice - The Appellant cannot be faulted for not proving what it was never asked to prove. The plea also fails on its own terms, as the proviso to Section 34(2) as it stood for 2017-18 barred the reduction only where the incidence of tax had been passed on to another person, and the credit notes show the value and tax credited to the purchasers. The reversal of credit by the customer was not a condition for the supplier's reduction for 2017-18 - The plea of the Revenue is rejected - Limitation for filing appeal before the Appellate Tribunal under Section 112(1) of the CGST Act, 2017 - The order of the first appellate authority was communicated on the date it was passed, and the appeal was filed before the Tribunal with the pre-deposit under Section 112(8) after the normal period of three months - Whether the appeal is within time - HELD - Section 112(1) provides for appeal within three months from the date of communication of the order or the date notified by the Government on the recommendations of the Council, whichever is later. By notification, the Government notified a later date for filing appeals against orders communicated before 01.04.2026. The Appellant filed the appeal before that date along with the pre-deposit - The appeal is within time. [Read less]

Central Excise - Admissibility of CENVAT credit on capital goods (moulds) sent to job-workers under job work challans - Appellant, a manufacturer of batteries, availed CENVAT credit on moulds and supplied them to job-workers under job work challans, while the polypropylene granules were sold to the job-workers after reversing the credit, and the job-workers returned the finished containers and lids to the Appellant on payment of duty, the duty being availed as credit - The Department alleged that the moulds were not used in the factory of the manufacturer, that they were sent to independent manufacturers instead of job-wor... [Read more]

Central Excise - Admissibility of CENVAT credit on capital goods (moulds) sent to job-workers under job work challans - Appellant, a manufacturer of batteries, availed CENVAT credit on moulds and supplied them to job-workers under job work challans, while the polypropylene granules were sold to the job-workers after reversing the credit, and the job-workers returned the finished containers and lids to the Appellant on payment of duty, the duty being availed as credit - The Department alleged that the moulds were not used in the factory of the manufacturer, that they were sent to independent manufacturers instead of job-workers, and that this amounted to double credit - Whether the Appellant was entitled to the CENVAT credit on the moulds - HELD - How material is sent to the job-worker is the outlook of the manufacturer. Reversing credit on the granules avoided the hassle of reconciling consumption, scrap and quantities at the end of the job-worker - The moulds are capital goods of the Appellant and the intellectual property connected to them belongs to the Appellant, who therefore preferred to send them on job work basis and account for them properly in its books. There is no contravention of the Cenvat Credit Rules, 2004 in the procedure adopted. The transaction does not result in double credit benefit. Had the Appellant reversed the credit on the moulds, the job-worker could have taken the credit and reversed it again while sending the goods back, and the Appellant would claim it back on return of the moulds, resulting in a revenue neutral situation - The job work procedure under Notification No.214/86 was devised to avoid such multiple reversals. An order of the Commissioner (Appeals) on the identical issue in favour of the Appellant's other unit was not appealed by the Revenue and attained finality - No case is made out by the Revenue, the impugned order is set aside and the appeal is allowed - Central Excise - Invocation of extended period of limitation for demand of CENVAT credit in a revenue neutral situation - Show cause notice was issued by invoking the extended period for recovery of credit availed on moulds sent to job-workers - Whether the demand for the extended period is sustainable - HELD - The facts of availing CENVAT credit on the granules, reversing it, availing credit on the moulds and removing them under job work challans were well within the knowledge of the Range and Divisional officials. The allegation of suppression with intent to evade duty cannot be sustained. The transaction would also result in a revenue neutral situation if the Appellant were made to reverse the credit on the moulds. It has been held that where the exercise is revenue neutral, as the job-worker would be entitled to take the credit of the same, there cannot be any intention to evade payment of duty - The confirmed demand for the extended period is not sustainable on account of time bar. [Read less]

GST - Validity of order in Form GST MOV-09 passed without considering objections and without personal hearing - Appellant despatched transformer oil drums with a delivery challan and e-way bill, the conveyance was intercepted - Copies of tax e-invoices and e-way bills were furnished to the proper officer before issue of notice in Form GST MOV 07 - The notice granted seven days to submit objections and fixed a personal hearing, but the order in Form GST MOV 09 was passed on the same date as the notice - Whether the order in Form GST MOV 09 violates the principles of natural justice - HELD - The reasons given for rejecting t... [Read more]

GST - Validity of order in Form GST MOV-09 passed without considering objections and without personal hearing - Appellant despatched transformer oil drums with a delivery challan and e-way bill, the conveyance was intercepted - Copies of tax e-invoices and e-way bills were furnished to the proper officer before issue of notice in Form GST MOV 07 - The notice granted seven days to submit objections and fixed a personal hearing, but the order in Form GST MOV 09 was passed on the same date as the notice - Whether the order in Form GST MOV 09 violates the principles of natural justice - HELD - The reasons given for rejecting the explanation were identical to those in the show cause notice and the objections filed by the Appellant were not referred to. The order does not disclose application of mind to the objections. The proper officer had a statutory duty to refer to and consider the taxpayer's explanations before resorting to Section 129 - The order was passed without granting a personal hearing as required by the statute. No reason was furnished for passing the order on the same date as the notice. The Appellate Authority did not consider this plea although it was raised before it - The principles of natural justice were violated and the order in Form GST MOV 09 cannot be sustained - Order in Form GST MOV 09 beyond the scope of the notice - Section 75(7) of the CGST Act - The notice in Form GST MOV 07 proposed a penalty lower than the penalty demanded in the order in Form GST MOV 09. The Respondent contended that the penalty leviable was the higher amount and that the notice showed the lower amount due to a clerical error - Whether the order is beyond the scope of the show cause notice and violates Section 75(7) of the Act - HELD - Section 75(7) provides that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice, and no demand will be confirmed on grounds other than those specified in the notice - The statute is very clear and the quantum of penalty demanded in the order shall not exceed the amount specified in the notice. The provision does not make any exception for clerical errors. Nothing prevented the officer from issuing an erratum to the notice disclosing the exact penalty amount, especially when the notice granted seven days to submit objections and a personal hearing was also fixed. The Appellate Authority did not consider this plea although it was raised before it - The order in Form GST MOV 09 is beyond the scope of the notice in Form GST MOV 07 and violates Section 75(7) of the Act - Non-compliance with procedure in Circular No. 41/15/2018-GST - Effect on validity of order - Clause (h) of the Circular requires the proper officer to upload the order in Form GST MOV 09 on the common portal and to add the demand to the electronic liability register - Whether violation of the procedure laid down by the Board in the Circular affects the validity of the order of the proper officer - HELD - the lapse, if any, was a technical lapse only and the order cannot be set-aside on that ground. The procedural lapse of not following the Board's circular does not warrant setting aside the order on that ground alone - Invocation of Section 129 of the CGST Act for goods transported in batches - Rule 55(5) of the CGST Rules - Transformer oil forming part of the remaining material of transformers already supplied was transported under a delivery challan referring to seven earlier tax invoices, and an e-way bill. Penalty was imposed on the ground that item-wise invoices showed that goods were not supplied in batches, that the description in the delivery challan and the e-way bill was mismatched, and that the original invoice was not produced - Whether invocation of Section 129 is just and proper in the facts and circumstances of the case - HELD - The supplier had issued the complete invoices before dispatch of the first consignment, as the delivery challan referred to seven invoices issued earlier, and the invoices reflected charging of integrated tax from the recipient. The Purchase Order established that the recipient ordered transformers along with spare transformer oil whose price was included in the contractual price, and these facts remained undisputed. Item-wise tax invoices cannot be a ground for holding that goods were not supplied in batches, as no provision in the Act supports such reasoning - The fact that a commercial transaction contains separately described items does not establish that each item must be transported in the same consignment or that subsequent consignments are impermissible. The delivery challan could have been worded differently to avoid confusion, but the statement therein that the ‘price of all material was already included in the referred invoices’ comes to the aid of the Appellant. Rule 55(5) does not require submission of the original invoice to the proper officer - So long as the delivery challan contains all details required under Rule 55, a minor omission cannot be treated as a violation. No intention to evade tax and no violation of the Act or the Rules was established - Imposition of penalty under Section 129 is invalid and unjustified, the order-in-appeal is set aside and the appeal is allowed. [Read less]

GST - Parallel proceedings under Section 129 and adjudication for the same cause of action - The Appellant was found unloading goods from a vehicle during a search without any legal documents. Proceedings under Section 129 of the CGST Act were initiated for release of the goods and tax and penalty were collected, while a show cause notice was also issued and tax and penalty were imposed in adjudication - While FAA reduced the liability by the amount levied and collected in the Section 129 proceedings, the Revenue neither filed an appeal nor a memorandum of cross objection against that finding - Whether the First Appellate ... [Read more]

GST - Parallel proceedings under Section 129 and adjudication for the same cause of action - The Appellant was found unloading goods from a vehicle during a search without any legal documents. Proceedings under Section 129 of the CGST Act were initiated for release of the goods and tax and penalty were collected, while a show cause notice was also issued and tax and penalty were imposed in adjudication - While FAA reduced the liability by the amount levied and collected in the Section 129 proceedings, the Revenue neither filed an appeal nor a memorandum of cross objection against that finding - Whether the First Appellate Authority legally reduced the liability on account of the parallel proceedings - HELD - On allegation of the goods which were being unloaded from tempo, parallel proceedings u/s 129 of was initiated against taxpayer and for releasing the goods tax and as penalty were levied and collected from taxpayer. That amount was reduced by FAA from the total amount levied by ld. adjudicating officer. Revenue has not challenged that finding recorded either by filling appeal or memorandum of cross objection. Therefore, the Tribunal of the view that ld. FAA has legally reduced the tax liability on taxpayer as for the same cause of action and two parallel proceedings cannot be allowed to be initiated against taxpayer under the same legislation – Ordered accordingly - Rejection of belatedly produced manual invoices for goods found without documents in transit - The Appellant failed to produce the invoice, e-way bill and transporter's bilty at the time of search, and explained that the transporter had mistakenly left the papers at its office. No valid paper was submitted even with the reply to the show cause notice. Two manual invoices were produced before the adjudicating officer after more than three months - Whether the authorities rightly discarded the tax invoices, bilty, bank statement and e-way bill filed by the Appellant in respect of the goods unloaded at the time of search - HELD - Section 68 read with Rules 138 and 138A mandates that the person in charge of a vehicle carrying goods above the prescribed value must carry the prescribed documents including the tax invoice and a valid e-way bill - Generation of an e-way bill prior to commencement of movement is a strict statutory requirement. A manual invoice produced three months after interception, without electronic upload on the GST portal, has no evidentiary credibility. Post-interception generation or manual creation of transit documents is a procedural afterthought which cannot retrospectively validate illegal transportation or cure a substantive breach - The goods were sensitive and high value commodities susceptible to tax evasion through unrecorded parallel trade, which creates a strong presumption of intention to evade tax that the taxpayer failed to rebut by relevant and reliable evidence - The concurrent findings discarding the manual invoices are well reasoned and upheld - The second appeal is dismissed [Read less]

Service Tax – Validity of demand founded on comparison of returns with payment challans without independent verification – Show Cause Notice alleged short-payment of Service Tax for April 2015 to March 2017 on the basis of discrepancies between the ST-3 Returns, the GAR-7 challans and the Statement of Accounts. The demand was confirmed in de novo adjudication after the Tribunal remanded the matter to examine the revised ST-3 Returns. The adjudicating authority held that the revised Returns were already considered in the Show Cause Notice – Whether a demand formulated on a mere comparison of figures, without independe... [Read more]

Service Tax – Validity of demand founded on comparison of returns with payment challans without independent verification – Show Cause Notice alleged short-payment of Service Tax for April 2015 to March 2017 on the basis of discrepancies between the ST-3 Returns, the GAR-7 challans and the Statement of Accounts. The demand was confirmed in de novo adjudication after the Tribunal remanded the matter to examine the revised ST-3 Returns. The adjudicating authority held that the revised Returns were already considered in the Show Cause Notice – Whether a demand formulated on a mere comparison of figures, without independent investigation and without examining the revised Returns as directed in remand, is sustainable – HELD – A comparison of figures in the Returns with the challans may be a starting point but cannot by itself constitute the investigation. The Department was required to ascertain the underlying transactions, the nature of the services, the status of the recipients and the governing statutory provisions. The Show Cause Notice gave no service-wise quantification and no computation showing how the distinct allegations culminated in the aggregate demand. The observation that the revised Returns were considered in the notice is factually incorrect, as they were filed about one year after its issuance. Once a matter is remanded for examination of a particular aspect, it must be addressed with a reasoned finding, and mechanical reiteration of the demand is impermissible. An allegation based on identical taxable values in two categories is a clerical error and is untenable without further investigation. The deficiencies strike at the foundation of the liability and the demand is set aside – Appeal allowed - Service Tax – Manpower recruitment or supply agency service – Reverse charge under Notification No. 07/2015-S.T. dated 01.03.2015 – Appellant, a proprietorship concern registered for manpower supply, contended that the services were rendered to body corporates, so the liability stood shifted to the recipients. The Respondent proceeded on gross figures in the Returns without examining individual transactions – Whether the Appellant is liable to pay Service Tax on manpower supply services rendered to body corporates – HELD – The sample invoices describe the service as charges for providing manpower towards dismantling and mechanical erection work. This establishes that the services are manpower supply services rendered to body corporates. The Respondent produced no contrary evidence, and the benefit cannot be rejected merely on gross figures in the Returns. The liability stands shifted to the service recipient under Notification No. 07/2015-S.T. – Demand on this count is not sustainable - Service Tax – Classification of erection, commissioning or installation service as works contract service – Partial reverse charge and valuation under Rule 2A of the Service Tax (Determination of Value) Rules, 2006 – Appellant contended that the services declared as erection, commissioning or installation service were works contract services, the classification in the Returns being a clerical error. The Respondent relied on an earlier Show Cause Notice to hold otherwise – Whether the services are works contract services eligible for partial reverse charge and valuation for original works – HELD – The sample invoices and work orders show that materials were involved, and consideration was linked to placement of material on the foundation. The Respondent brought no independent material to show why the contracts necessarily fell within erection, commissioning or installation service. The services including materials are classifiable as works contract service, so the partial reverse charge under Notification No. 07/2015-S.T. is available and the entire liability cannot be fastened on the Appellant. The nature of the work reflects substantive structural modification, so the claim of valuation for original works carries weight. The CENVAT Credit availed is to be reversed as undertaken by the Appellant. The adjudicatory process cannot commence with a conclusion – Demand on this count is not sustainable - Service Tax – Services rendered in relation to Special Economic Zone unit – Exemption – Procedural lapse – Appellant rendered services at the premises of an SEZ unit through a contractor and produced certificates from the Assistant Development Commissioner and the contractor with the list of invoices, but not Forms A1 and A2. The Respondent denied the exemption for want of documents – Whether the exemption can be denied for want of Forms A1 and A2 – HELD – The certificates substantially support the claim that the services were rendered in connection with the authorised operations of the SEZ unit. The Respondent produced no evidence that the services were outside authorised operations or were diverted to the Domestic Tariff Area. A substantive benefit cannot be denied for procedural infractions when the other requirements are fulfilled. The Tribunal had also set aside the demand on services in the same SEZ area in the Appellant's own case. The services are exempt – Demand on this count is not sustainable - Service Tax – Reconciliation statement supported by Chartered Accountant's Certificate – Evidentiary value – Appellant furnished a reconciliation statement giving effect to the revised Returns, the reverse charge, the works contract classification, the valuation provisions and the SEZ exemption, supported by a Chartered Accountant's Certificate – Whether the reconciliation can be accepted to hold that no further liability remains – HELD – A reconciliation statement is not conclusive proof by itself. The Certificate, however, represents a professional's considered certification after verification of books and records, and cannot be rejected without cogent reasons or verified factual errors. The reconciliation proceeds from the very records on which the Respondent founded the demand and is not a bald denial of liability. The reconciled computation merits acceptance, and the demand is unsustainable on the substantive merits as well - Service Tax – Pre-Show Cause Notice consultation – Mandatory requirement under Board's Instruction dated 21.12.2015 and clarification dated 10.03.2017 – Show Cause Notice was issued on 10.04.2018 without pre-consultation. The adjudicating authority found force in the objection but declined to decide it, as the Department had appealed against the judgment of the Delhi High Court in Amadeus India – Whether the Show Cause Notice issued without mandatory pre-consultation is vitiated – HELD – Pre-consultation was mandatory during the relevant period and was made non-mandatory in cases involving suppression only by the Circular dated 11.11.2021. The mere pendency of an appeal, without any stay or contrary binding decision, does not efface the legal position in Jay Mahakali Industrial Service and SIS Ltd. The Appellant had responded to the initial communication and furnished the documents called for, and the discrepancies were later shown to be capable of explanation. The denial of consultation caused manifest prejudice and is not a mere procedural irregularity. The failure goes to the root of the proceedings and vitiates the Show Cause Notice. The demand along with interest and penalties is set aside and the appeal is allowed with consequential relief, if any. [Read less]

Service Tax – Taxability of manufacture of liquor on behalf of the brand owner – Appellant, engaged in manufacturing of liquor, entered into an agreement with the brand owner to manufacture and sell liquor under the brand name on revenue sharing basis. The raw material was procured as per the instructions of the brand owner. Show cause notices were issued alleging that the Appellant provided business auxiliary service of bottling and packing on job work basis for the period April 2010 to June 2017. The demand of service tax and penalties were confirmed and upheld by the Commissioner (Appeals). The Appellant contended t... [Read more]

Service Tax – Taxability of manufacture of liquor on behalf of the brand owner – Appellant, engaged in manufacturing of liquor, entered into an agreement with the brand owner to manufacture and sell liquor under the brand name on revenue sharing basis. The raw material was procured as per the instructions of the brand owner. Show cause notices were issued alleging that the Appellant provided business auxiliary service of bottling and packing on job work basis for the period April 2010 to June 2017. The demand of service tax and penalties were confirmed and upheld by the Commissioner (Appeals). The Appellant contended that being a manufacturer it was excluded from business auxiliary service and that, under the negative list regime, processes amounting to manufacture are exempt – Whether the activity of manufacturing of liquor by the Appellant on behalf of the brand owner is liable to service tax – HELD – Section 66D of the Finance Act, 1994 contains the negative list of services, and with effect from 01.06.2015 it covers services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption. Manufacture of alcoholic liquor for human consumption is therefore outside the ambit of the exemption. The Delhi High Court in Carlsberg India Pvt. Ltd. held that manufacturing by an entity for itself is not a service, whereas manufacture of alcoholic liquor by one entity for another by way of job work is a service within the meaning of Section 65B(44) and is amenable to service tax. As the Delhi High Court is the jurisdictional High Court, the Tribunal is bound to follow the same. The decision of the Madhya Pradesh High Court in Maa Sharda Wine Traders is not applicable, as the High Court had no occasion to examine the negative list regime. The Tribunal decisions relied upon by the Appellant merely followed that decision and are also not applicable. The activity of manufacturing of liquor on behalf of others is a taxable service and the Appellant is liable to pay service tax – The appeals are dismissed [Read less]

Customs – Suspension of Customs Broker licence – Regulation 10(d), (e), (m) and (n) of Customs Brokers Licensing Regulations, 2018 – Bills of Entry filed by the Appellant, a Customs Broker, for an importer appeared to involve mis-declaration of classification and value. The officers told the Appellant not to proceed with the Bills of Entry, and the Appellant neither proceeded with them nor issued a NOC to the importer. The Commissioner suspended the Appellant's licence and continued the suspension. The Appellant contended that it had obtained the KYC, IEC, GST and other documents, that there was no evidence of collus... [Read more]

Customs – Suspension of Customs Broker licence – Regulation 10(d), (e), (m) and (n) of Customs Brokers Licensing Regulations, 2018 – Bills of Entry filed by the Appellant, a Customs Broker, for an importer appeared to involve mis-declaration of classification and value. The officers told the Appellant not to proceed with the Bills of Entry, and the Appellant neither proceeded with them nor issued a NOC to the importer. The Commissioner suspended the Appellant's licence and continued the suspension. The Appellant contended that it had obtained the KYC, IEC, GST and other documents, that there was no evidence of collusion or mens rea, and that its reply and the decisions relied upon were not considered – Whether the suspension of the Customs Broker licence for alleged violation of Regulation 10(d), (e), (m) and (n) is sustainable – HELD – The Commissioner did not record the Appellant's submissions relying on various decisions. He reproduced Regulation 10(d), (e), (m) and (n) and held the Customs Broker guilty in a very cursory manner, without discussing any evidence showing how the provisions were violated. The allegations and findings were of a general nature and were not substantiated. Suspension entails loss of livelihood of the Customs Broker and the dependent employees, and must be done with utmost precaution and for valid reasons supported by evidence. It is enough if the Customs Broker satisfies himself of the genuineness of the importer, which the Appellant did by obtaining statutory documents. He is not expected to physically verify the premises of the importer, and has no role in deciding the transaction value – The impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law - Customs – Suspension of Customs Broker licence – Mandatory timelines under Customs Brokers Licensing Regulations, 2018 – The Appellant's licence was suspended, and the suspension was continued by a subsequent order. More than eight months had elapsed without any show cause notice being issued or the suspension being revoked, contrary to Regulation 17 of the Regulations – Whether the suspension of the licence can continue when the timelines prescribed under the Regulations have not been adhered to – HELD – Courts have consistently held that the timelines prescribed under the Regulations are mandatory, and each timeline is sacrosanct. The Revenue cannot overlook the timelines by citing reasons on merits. The order suspending the licence cannot continue indefinitely, and must yield to the procedure prescribed under the Regulations. Strict timelines have been specified so that the work of the Customs Broker is not suspended indefinitely. It is not prudent for the Revenue to accuse the Customs Broker of violation of the Regulations when it does not itself adhere to them. Where a statute provides for a thing to be done in a particular manner, it has to be done in that manner and in no other manner. The Appellant had also suffered enough due to the suspension, and no penalty was imposed – The impugned order cannot be sustained, it is set aside, and the appeal is allowed with consequential relief, if any, as per law. [Read less]

Customs – Binding effect of High Court decision during pendency of Larger Bench reference before Tribunal - Appellant, engaged in manufacture, claimed refund under Section 27(1)(a) of the Customs Act, 1962 of interest paid on surrendering the IGST exemption benefit availed under Advance Authorisation Scheme - Matter was referred to Larger Bench due to conflicting Tribunal views on whether delayed payment of IGST attracts interest, without the referring bench having the benefit of the later decision of the Bombay High Court on the same issue - Whether the Tribunal should await the decision of Larger Bench or follow the de... [Read more]

Customs – Binding effect of High Court decision during pendency of Larger Bench reference before Tribunal - Appellant, engaged in manufacture, claimed refund under Section 27(1)(a) of the Customs Act, 1962 of interest paid on surrendering the IGST exemption benefit availed under Advance Authorisation Scheme - Matter was referred to Larger Bench due to conflicting Tribunal views on whether delayed payment of IGST attracts interest, without the referring bench having the benefit of the later decision of the Bombay High Court on the same issue - Whether the Tribunal should await the decision of Larger Bench or follow the decision of the High Court, which became available after the reference was made - HELD - The decision of the High Court touches upon and covers the same issue which was referred to the Larger Bench, though it was not available when the reference was made. The Larger Bench decision is still awaited. The ruling of the higher authority being available, the same shall prevail over any decision of the Tribunal. The reference has therefore lost its relevance in view of the later ruling of the High Court, and it is proper to follow the same as per judicial discipline - The Tribunal follows the decision of the High Court and does not await the Larger Bench decision - Customs – Interest on delayed payment of IGST on surrender of Advance Authorisation benefit - Appellant surrendered the benefit of IGST exemption availed under Notification No. 79/2017-Cus and paid the IGST along with interest for the period from July 2017 to March 2020, then claimed refund of the interest paid - Whether interest is leviable on delayed payment of IGST for the period prior to the legislative amendment, when there was no specific provision in the statute for such interest - HELD - The Tribunal is concerned with the period prior to the date of amendment, when no specific provision existed in the statute regarding interest on delayed payment of IGST. The High Court, on the same issue, has taken the view that no interest could be levied. The said decision clearly applies to the matter in hand and is followed as per judicial discipline. The impugned order is not sustainable in relation to the legal proposition - The appeals are allowed with consequential relief - Customs – Limitation for refund of interest under Section 27 of the Customs Act, 1962 - Appellant claimed refund of interest paid on delayed payment of IGST on surrender of Advance Authorisation benefit - Whether the limitation period of two years applies to the refund claim - HELD - The limitation of two years will not apply, as it is not a case of refund of duty but of deposit. The ruling of the High Court of Gujarat holding that the limitation under Section 27 does not apply to such deposits, which view has also been upheld subsequently, is applicable. The impugned order cannot be sustained on the point of limitation as well - The appeals are allowed with consequential relief. [Read less]

GST - Confirmation of tax demand under Section 74(1) of the CGST Act, 2017 by the FAA after holding Section 74 to be inapplicable - Show cause notice proposed disallowance of input tax credit on the ground that the invoices were not reflected in GSTR-2A, and the demand was confirmed under Section 74 - The FAA held that there was no fraud, willful misstatement, collusion or suppression, but upheld the demand of tax and interest - Whether the demand of tax confirmed under Section 74(1) can be sustained when the appellate authority itself found Section 74 to be inapplicable - HELD - The appellate authority made a clear-cut an... [Read more]

GST - Confirmation of tax demand under Section 74(1) of the CGST Act, 2017 by the FAA after holding Section 74 to be inapplicable - Show cause notice proposed disallowance of input tax credit on the ground that the invoices were not reflected in GSTR-2A, and the demand was confirmed under Section 74 - The FAA held that there was no fraud, willful misstatement, collusion or suppression, but upheld the demand of tax and interest - Whether the demand of tax confirmed under Section 74(1) can be sustained when the appellate authority itself found Section 74 to be inapplicable - HELD - The appellate authority made a clear-cut and well-reasoned finding on non-applicability of Section 74, which was not challenged by the Revenue either by way of appeal or cross-objections. Upholding the demand under Section 74(1) is in contradiction to its own findings and is a classic case of non-application of mind - The Revenue contended that no prejudice was caused as the demand would have sustained even if re-determined under Section 73 within limitation. The Revenue having issued a show cause notice under Section 74 cannot be permitted to plead at the second appellate stage that the demand can still be confirmed under Section 73 on a ground or section which was not invoked in the notice. The demand remains unsustainable notwithstanding that it would have been within limitation under Section 73 - The demand of tax is set aside and the appeal is allowed - Penalty under Section 73(9) beyond the SCN - Penalty imposed by the appellate authority under Section 73(9) of the CGST Act, 2017 when the show cause notice proposed penalty under Section 74(1) - Whether the appellate authority could impose penalty under a section different from the one invoked in the show cause notice - HELD - The appellate authority, having found the penalty under Section 74(1) not sustainable, ought to have stopped right there. The show cause notice contained no charge with regard to the imposition of penalty under Section 73(9). The act of the appellate authority is dehors the charges laid out in the notice and travels beyond its scope. The Appellant was never asked to show cause why penalty should not be levied under Section 73(9). Once the penalty in the appellate order has been passed under a different section than that with which the Appellant was charged, it is null and void, and the Revenue cannot plead that the penalty is much less and therefore in order. On these jurisdictional grounds alone the Appellant is entitled to succeed and the other grounds need not be discussed - The penalty is set aside, the order in appeal is set aside and the appeal is allowed. [Read less]

GST - Penalty under Section 74 of the CGST Act, 2017 on a vague show cause notice - Appellant paid the tax and part of the interest for non-payment of value of supply to suppliers within the stipulated period, and contested only the penalty under Section 74, which the notice sought to impose on the ground that the Appellant had wilfully suppressed material facts and contravened Section 16(2) - Whether penalty under Section 74 is leviable on the basis of the show cause notice - HELD - The show cause notice has not specified what are the material facts wilfully suppressed and is vague and lacking in specificity. The notice s... [Read more]

GST - Penalty under Section 74 of the CGST Act, 2017 on a vague show cause notice - Appellant paid the tax and part of the interest for non-payment of value of supply to suppliers within the stipulated period, and contested only the penalty under Section 74, which the notice sought to impose on the ground that the Appellant had wilfully suppressed material facts and contravened Section 16(2) - Whether penalty under Section 74 is leviable on the basis of the show cause notice - HELD - The show cause notice has not specified what are the material facts wilfully suppressed and is vague and lacking in specificity. The notice suggests that mere contravention of Section 16(2) would render the taxpayer liable for penalty under Section 74. This is not backed by any statutory provision, and the notice itself states elsewhere that contravention of Section 16(2) renders the taxpayer liable for penalty under Section 73 - The applicability of Section 74 was not established either in fact or in law at the notice stage, and the proceedings in respect of penalty are void ab initio. If the allegations are not specific and are vague, lack details or are unintelligible, that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations. The proceedings are vitiated by breach of the basic principles of natural justice - The penalty under Section 74 is not sustainable and set aside – The appeal is allowed - Finding of suppression for invoking Section 74 of the CGST Act, 2017 on the basis of detection by audit and absence of evidence disproving wilfulness - The FAA held that the violation was unearthed only during audit, that there was no evidence to disprove the allegation of wilful contravention, and that the ingredients of Section 74 existed - Whether suppression is established so as to attract penalty under Section 74 - HELD - The ground that the violation was unearthed only during audit is not found in the show cause notice. The order in appeal cannot introduce fresh grounds. Non-payment discovered by audit does not give rise to an automatic presumption of wilful suppression, since otherwise every case of detection by audit would result in proceedings under Section 74. By holding that there is no evidence to disprove wilful contravention, the appellate authority reversed the burden of proof - Unless there is a clear-cut statutory provision to the contrary, the burden of proof is always on the Revenue and cannot be shifted to the Appellant - The finding of suppression is not established and is not legally sustainable - Introduction of new contentions by the Revenue at the second appellate stage to support penalty under Section 74 - The Authorised Representative of the Revenue argued before the Tribunal that the Appellant failed to report the ineligible input tax credit in the returns for non-payment to suppliers, which amounted to suppression under Explanation 2 to Section 74 - Whether the Revenue can rely at the Tribunal stage on grounds not found in the show cause notice, order in original or order in appeal - HELD - Though the arguments have considerable force, they are not part of the show cause notice, order in original or order in appeal. A show cause notice or adjudication order has to stand on its own merit and cannot be improved upon or embellished through submissions made by the Revenue at the second appellate stage. The Supreme Court has held that when an authority has issued a notice or order, the requirements to make it valid should be contained in the notice or order itself and cannot be supplanted by a counter affidavit in court - The submissions cannot help the Revenue when no case is made out for invocation of penalty under Section 74 in the SCN, and the appeal is allowed as regards penalty. [Read less]

Service Tax - Adjustment of demand of service tax and recovery of CENVAT credit against balance lying in CENVAT credit account - Appellant, a provider of construction of residential complex service, was demanded service tax for short payment under the Point of Taxation Rules, 2011, for wrongly availed CENVAT credit and for non-reflection of value of services in the ST-3 return for April 2017 to June 2017 - Appellant contended that it had sufficient balance in its CENVAT credit account on 30.06.2017 against which the entire demand could be adjusted - Whether the demand of service tax and recovery of CENVAT credit could be a... [Read more]

Service Tax - Adjustment of demand of service tax and recovery of CENVAT credit against balance lying in CENVAT credit account - Appellant, a provider of construction of residential complex service, was demanded service tax for short payment under the Point of Taxation Rules, 2011, for wrongly availed CENVAT credit and for non-reflection of value of services in the ST-3 return for April 2017 to June 2017 - Appellant contended that it had sufficient balance in its CENVAT credit account on 30.06.2017 against which the entire demand could be adjusted - Whether the demand of service tax and recovery of CENVAT credit could be adjusted against the credit balance available in the CENVAT credit account - HELD - Admittedly the Appellant had not filed the service tax return for the period April 2017 to June 2017 and had not paid the service tax although it had sufficient CENVAT credit balance in its CENVAT account on 30.06.2017. This does not mean that the Appellant is not required to file the service tax return. Since the Appellant had sufficient balance to meet the demands in both the show cause notices, the demands are to be adjusted against the CENVAT credit balance in the CENVAT credit account, as held by this Tribunal in the case of Uttaranchal Cable Networks. Consequently no demand of service tax is sustainable and no interest is payable - Adjustment is allowed and the appeals are disposed of - Imposition of penalty under Section 78 of the Finance Act, 1994 where demand is adjusted against CENVAT credit balance - Appellant had not filed the ST-3 returns for the period April 2017 to June 2017 and had not declared its taxable service although the demand of service tax stood adjusted against the balance in the CENVAT credit account - Whether penalty is imposable on the Appellant when no demand of service tax survives - HELD - As the Appellant had not filed the ST-3 returns in time and had not declared its taxable service, penalty under Section 78 is imposable. The penalty is reduced to 25% of the service tax payable by the Appellant - Penalty under Section 78 is imposed at the reduced rate and the appeals are disposed of accordingly. [Read less]

Central Excise - Invocation of extended period of limitation for demand of duty on cement allegedly sold below cost of production - Appellant, working under the Area Based Exemption scheme, was demanded duty by invoking the extended period on the basis of Board Circular issued after the Supreme Court judgment in Fiat India, on the allegation that cement was sold below the cost of production shown in CAS-4 - Whether the extended period of limitation could be invoked to demand central excise duty - HELD - Duty paid under the Area Based Exemption scheme is refundable, and the Department grants the refund after being satisfied... [Read more]

Central Excise - Invocation of extended period of limitation for demand of duty on cement allegedly sold below cost of production - Appellant, working under the Area Based Exemption scheme, was demanded duty by invoking the extended period on the basis of Board Circular issued after the Supreme Court judgment in Fiat India, on the allegation that cement was sold below the cost of production shown in CAS-4 - Whether the extended period of limitation could be invoked to demand central excise duty - HELD - Duty paid under the Area Based Exemption scheme is refundable, and the Department grants the refund after being satisfied with the duty payment upon proper assessment. Suppression of valuation therefore never arose - The Department failed to adduce any evidence that the Appellant received any money as flow back. The Board Circular does not mean that the extended period is invocable in all cases. It applies to situations involving valuation of goods where the sale has taken place below the approved price, as in Fiat India, and the cost of production arrived at by CAS-4 cannot be considered as approved price. The circumstances mentioned in the Circular are non-existent in this case. The Circular also stipulates that the extended period should not be invoked where an alternate interpretation was taken by the assessee before the Supreme Court judgment - All records maintained by the Appellant were verified by the officers before sanctioning the refund claims, and the allegation of suppression with intention to evade tax is devoid of merit. Since the demand is not sustained, interest and penalty also do not arise - The demand of duty confirmed by invoking the extended period is set aside along with interest and penalty – The appeal is disposed of - Liability on freight collected in excess of actual freight incurred - Appellant, a manufacturer registered for payment of service tax under GTA service, charged freight from buyers for delivery of goods at the buyer's end, and in some cases the freight charged was more than the actual freight incurred - Whether service tax is payable on the excess amount realised for the period up to 30.06.2012 - HELD - The excess amount charged is the profit on the transportation activity rendered by the Appellant. Under Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994, the Appellant was required to pay service tax on the freight charges paid by it and not on the amount realised in excess of the freight incurred. The question of payment of service tax on such excess amount is not supported by any provision of law. The first appellate authority itself admitted that no service tax is payable from 01.07.2012, when the Rule came into effect, and there is no change in the Rule for the period prior to 01.07.2012. Upholding the service tax up to 30.06.2012 is not supported by any provision of the Act or Rules. As the demand cannot be sustained, interest and penalty under Section 78 do not arise - The demand of service tax for the period prior to 01.07.2012 is set aside along with interest and penalty - Demand of erroneously sanctioned refund by invoking extended period of limitation - Show cause notice was served by invoking the extended period for recovery of refund pertaining to an earlier year, and the Appellant operated under area based exemption - Whether the demand of erroneous refund with interest and penalty could be confirmed by invoking the extended period - HELD - The Appellant operates under area based exemption and all the records maintained by it are verified by the officers before sanctioning the refund claim. Considering these facts, the allegation of suppression of facts with intention to evade tax does not exist in this case - The demand confirmed along with interest and penalty by invoking the extended period is not sustainable and is set aside - The penalty imposed under Section 77 is upheld - All penalties imposed under Section 78 are set aside, the penalty under Section 77 is upheld, and the appeal is disposed of. [Read less]

GST - Adjustment of excess IGST paid against CGST and SGST liability - Sections 39, 49 and 54 of CGST Act, 2017 and Rule 92 of CGST Rules, 2017 - Respondent initially added the tax on credit notes received to the output tax liability instead of reversing input tax credit, then in a later month reversed the credit and adjusted the excess IGST paid against its CGST and SGST liability on its own in GSTR-3B, without claiming refund - Audit alleged short payment, and the adjudicating authority confirmed the demand with interest and penalty under Section 73 - FAA set aside the demand, and the Department appealed - Whether the Re... [Read more]

GST - Adjustment of excess IGST paid against CGST and SGST liability - Sections 39, 49 and 54 of CGST Act, 2017 and Rule 92 of CGST Rules, 2017 - Respondent initially added the tax on credit notes received to the output tax liability instead of reversing input tax credit, then in a later month reversed the credit and adjusted the excess IGST paid against its CGST and SGST liability on its own in GSTR-3B, without claiming refund - Audit alleged short payment, and the adjudicating authority confirmed the demand with interest and penalty under Section 73 - FAA set aside the demand, and the Department appealed - Whether the Respondent was right in utilising the excess IGST of one tax period against the liability of CGST and SGST of the following tax period - HELD - During July 2017 to March 2018 there was no provision under the Act or Rules requiring the recipient to reduce input tax credit on account of credit notes. The Respondent reported only the net figures in GSTR-3B for the month in which the error was noticed, which is the manner clarified in Para 4 of the Circular No. 26/26/2017-GST - The Respondent had not claimed refund of the excess IGST or retained it for adjustment against IGST liability of subsequent months. Had refund been claimed, the amount would have been restored to the electronic credit ledger under Rule 92 as IGST credit, and such credit could be utilised towards CGST and SGST under Section 49(5) - The only issue was that the procedure for refund and re-credit was not followed. The decisions relied upon by the Respondent, which dealt with tax paid under a wrong head, were found not to apply directly, as this was a case of utilisation of excess IGST against CGST and SGST. The principle that an assessee should not suffer for technical errors where there is no loss of revenue, however, supports the Respondent. The initial payment and subsequent reversal showed a bona fide act, and the adjustment was done suo motu after noticing the excess payment. The adjustment led to no revenue loss and was only a procedural infraction - A bona fide and inadvertent errors deserve a lenient view, particularly in the first year of GST implementation, a lenient view is taken - No interference is called for in the order of the First Appellate Authority. The demand of tax, interest and penalty confirmed by the adjudicating authority is set aside - The appeal of the Department is dismissed [Read less]

GST - Interest under Section 50 of CGST Act, 2017 on differential tax paid through debit notes issued under Section 142(2)(a) on upward price revision of pre-GST clearances - Respondent cleared goods under the erstwhile regime and, pursuant to contractual price escalation, issued debit notes and supplementary invoices after the GST regime came into effect and voluntarily discharged the differential tax. The adjudicating authority demanded interest under Section 50 - FAA set aside the demand holding that the due date for discharging tax on supplementary invoices is the 20th of the month following their issuance - Whether in... [Read more]

GST - Interest under Section 50 of CGST Act, 2017 on differential tax paid through debit notes issued under Section 142(2)(a) on upward price revision of pre-GST clearances - Respondent cleared goods under the erstwhile regime and, pursuant to contractual price escalation, issued debit notes and supplementary invoices after the GST regime came into effect and voluntarily discharged the differential tax. The adjudicating authority demanded interest under Section 50 - FAA set aside the demand holding that the due date for discharging tax on supplementary invoices is the 20th of the month following their issuance - Whether interest under Section 50 is payable on differential tax paid through debit notes issued under Section 142(2)(a) for a retrospective upward price revision - HELD - The Supreme Court in Steel Authority case held that where a price escalation has retrospective operation, the later finalised price becomes the true value of the goods even at the time of original removal - The deeming fiction in Section 142(2)(a) serves a purely procedural and administrative purpose and provides the gateway for the taxpayer to report the differential transaction, issue a GST-compliant debit note and discharge tax through the portal. It is merely a transitional bridge and not a fresh charging event or a legal time-machine that erases the time-value of money enjoyed by the assessee in the interim period, so the enhanced value relates back to the original clearance period and mandatory interest under Section 50 attaches automatically - Just as Rule 8 of Central Excise could not shift the accrual date, Section 39(7) and Section 34(4) are purely procedural and administrative reporting mechanisms for the electronic portal. They provide the gateway to report transactions and file GSTR-3B, but they do not rewrite economic history or alter the original time when the value accrued - Whether a price is subject to a contractual escalation clause or formal provisional assessment, an upward price revision is retrospective, and the tax was legally due from inception - The findings of the FAA on non-sustainability of interest are set aside and the demand of interest under Section 50 is restored and upheld – The appeal is partly allowed - Penalty under Section 122 of CGST Act, 2017 - Bona fide belief in transitional provisions - Differential tax voluntarily paid on price revision - The adjudicating authority imposed penalty under Section 122 on the Respondent in respect of differential tax paid through debit notes issued under Section 142(2)(a), and the first Appellate Authority dropped the penalty. The Revenue contended that the penalty was dropped solely because no tax was deemed due, which is flawed as tax was due from the date of actual supplies - Whether penalty under Section 122 is imposable on the Respondent - HELD - The differential tax liability did not arise from any suppression of facts, fraud, wilful misstatement or evasion of tax, but purely out of a contractual price escalation clause during the legislative transition from the Central Excise regime to GST. The applicability of Section 142(2)(a) and the effect of supplementary invoices on pre-existing contracts involved intricate questions of statutory interpretation, and the Respondent acted under a bona fide belief regarding the transitional mechanism. Penalties under fiscal statutes are designed to punish deliberate infractions or contumacious conduct, and in the absence of suppression or deliberate non-compliance, and given that the differential tax was voluntarily discharged upon finalisation of prices, imposition of penalty under Section 122 is unwarranted - The quashing of penalty by the first Appellate Authority is upheld and the appeal of the Revenue is partly allowed only to the extent of restoring the interest demand [Read less]

GST - Refund of accumulated ITC on zero-rated supplies - Credit notes under Section 34 in computation of adjusted total turnover under Rule 89(4) of CGST Rules, 2017 - Respondent, a supplier of tea exporting without payment of tax, claimed refund of accumulated ITC under Section 54(3)(i) of the CGST Act, 2017 - Revenue appeal on the ground that the first Appellate Authority wrongly excluded the credit notes issued during the refund period from the adjusted total turnover - Whether credit notes issued under Section 34 are to be excluded from the adjusted total turnover for computing refund under Rule 89(4) and whether credi... [Read more]

GST - Refund of accumulated ITC on zero-rated supplies - Credit notes under Section 34 in computation of adjusted total turnover under Rule 89(4) of CGST Rules, 2017 - Respondent, a supplier of tea exporting without payment of tax, claimed refund of accumulated ITC under Section 54(3)(i) of the CGST Act, 2017 - Revenue appeal on the ground that the first Appellate Authority wrongly excluded the credit notes issued during the refund period from the adjusted total turnover - Whether credit notes issued under Section 34 are to be excluded from the adjusted total turnover for computing refund under Rule 89(4) and whether credit notes issued beyond the time limit in Section 34(2) can be so excluded - HELD - On a plain reading of Section 34(1), a credit note is issued where the taxable value is found to exceed the amount payable, or where the goods supplied are returned or found deficient, and when a credit note is issued the taxable turnover needs to be adjusted since the returned goods are no more part of the supply. Such credit notes are therefore deducted from the turnover for the purpose of refund calculation under Rule 89(4) - The Chartered Accountant's certificate and the GSTR-1 voucher register matched the credit notes declared in the returns for the refund period, and the major credit notes related to invoices raised during the refund period, so the contention of the Revenue that the credit notes could not be related to the period does not inspire confidence - However, three credit notes issued in a later month relating to invoices of an earlier financial year were beyond the time limit prescribed in Section 34(2), and the statute does not permit issuance of credit notes beyond the permissible time limit, so such credit notes are not liable to be excluded and form part of the adjusted total turnover - On recomputing the maximum refund under the formula in Rule 89(4) with the modified adjusted total turnover, the refund amount claimed by the Respondent remains below the maximum permissible refund - The refund already allowed by the FAA is proper and as per law, and the appeal of the Revenue is dismissed [Read less]

GST - Adjustment of sanctioned refund under Section 54 of the CGST Act, 2017 against demand stayed on payment of pre-deposit - Petitioner had made pre-deposit at the time of the first appeal against the demand raised in the assessment order, the first appeal was rejected, and the Petitioner communicated its intention to file appeal before the Appellate Tribunal when it becomes functional - Petitioner later deposited the further pre-deposit through the Electronic Credit Ledger, thereby paying the entire pre-deposit contemplated by the statute, and filed the appeal before the Tribunal - Respondent determined the net eligible... [Read more]

GST - Adjustment of sanctioned refund under Section 54 of the CGST Act, 2017 against demand stayed on payment of pre-deposit - Petitioner had made pre-deposit at the time of the first appeal against the demand raised in the assessment order, the first appeal was rejected, and the Petitioner communicated its intention to file appeal before the Appellate Tribunal when it becomes functional - Petitioner later deposited the further pre-deposit through the Electronic Credit Ledger, thereby paying the entire pre-deposit contemplated by the statute, and filed the appeal before the Tribunal - Respondent determined the net eligible refund and adjusted the entire amount against the outstanding demand of the earlier financial years - Respondent also objected that the Petition was not maintainable as the trade name in the GST records differed from the name of the Petitioner - Whether the refund can be adjusted against the demand in respect of which the entire pre-deposit has been paid and recovery stands stayed - HELD - On payment of the entire pre-deposit, recovery of the balance demand stands deemed to be stayed by operation of Section 112(8) and 112(9) of the CGST Act, 2017 read with the CBIC Circular No. 224/18/2024 dated 11/07/2024 a clarifying that recovery shall remain stayed upon payment of the prescribed pre-deposit. The Petitioner having paid the pre-deposit, there was no question of effecting recovery on the basis of the demand raised in the assessment order and it was not open to the Respondent to adjust the refund towards the alleged outstanding demand - As regards the objection on the trade name, the name of the entity gets auto-populated in the GST system when the registration number is inserted, the registration number being the only unique controlling number which has always been the same, and the Petitioner has always been registered under the same legal as well as trade name. This aspect can be gone into by the Tribunal and does not bar the Petition - The appropriation of the refund against the demand cannot be sustained and shall stand reversed, the refund amount is to be restored to the Petitioner – The writ petition is allowed [Read less]

GST - Non-consideration of manually filed reply to Demand-cum-Show Cause Notice under Section 74 and premature passing of Order-in-Original - Petitioner filed a detailed reply manually during the personal hearing, which was received and acknowledged by signature – Petitioner was allowed time to furnish documents on an adjourned date. The Order-in-Original was passed before that date, recording that the Petitioner did not appear on any scheduled date and did not file the reply on the portal - Whether the Order-in-Original is sustainable when the reply received manually was not considered and the order was passed before th... [Read more]

GST - Non-consideration of manually filed reply to Demand-cum-Show Cause Notice under Section 74 and premature passing of Order-in-Original - Petitioner filed a detailed reply manually during the personal hearing, which was received and acknowledged by signature – Petitioner was allowed time to furnish documents on an adjourned date. The Order-in-Original was passed before that date, recording that the Petitioner did not appear on any scheduled date and did not file the reply on the portal - Whether the Order-in-Original is sustainable when the reply received manually was not considered and the order was passed before the time granted for production of documents - HELD - Section 74(9) read with Rule 142(4) of the CGST Rules, 2017 does not restrict consideration of a reply, explanation, written objection or representation merely because it is submitted manually, as the words uploaded electronically appear only in respect of Form GST DRC-01 and not Form GST DRC-06 - Form GST DRC-06 is a procedural tool to facilitate the Authority in considering the explanation and cannot be used as an absolute bar to deprive a taxpayer of the statutory right to defend. The Proper Officer cannot adopt a hyper-technical approach to treat the matter as if no reply was filed. It is the duty of the adjudicating authority to consider the reply even if the noticee was not present at the hearing - The Proper Officer must demonstrate in writing how each point raised was dealt with, assigning reasons for acceptance or rejection. The acknowledged receipt of the reply creates an undeniable record that the explanation was in possession of the Superintendent before the order - The order was passed prematurely despite time granted for production of documents, and the Superintendent became functus officio after disposing of the proceeding, yet received the documents later. The jurisdictional objection was not dealt with, and non-observance of natural justice is itself prejudice, since the authority cannot presume that a hearing would serve no purpose - The Order-in-Original is set aside for violation of the principles of natural justice and the matter is remitted to the Superintendent for fresh consideration of the objection as to jurisdiction and the reply, with liberty to the Petitioner to raise all pleas and submit documents - the writ petition stands disposed of - Maintainability of writ petition against order under Section 74 despite alternate statutory remedy - Petitioner challenged the Order-in-Original and the Demand-cum-Show Cause Notice issued under Section 74 of the CGST Act, 2017 alleging violation of principles of natural justice - Whether the writ petition is maintainable despite the availability of an alternate remedy under the GST Act - HELD - Where valuable civil rights are taken away by violation of the principles of natural justice, the Court cannot fold its hands and look on as a helpless onlooker asking the party to approach the remedy available in the statute. The rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion, and writ courts may exercise jurisdiction despite an alternative remedy where there is a violation of the principles of natural justice, where the order is wholly without jurisdiction, or where vires of an Act is challenged - Non-consideration of the reply, explanation and objection as to jurisdiction to initiate the proceeding under Section 74 strikes at the root of the matter and deserves the exercise of power under Articles 226 and 227 of the Constitution. Where disputed questions of fact need adjudication, the matter is best left to the competent forum, but no such question arose here as the receipt of the reply was undisputed - The writ petition is maintainable. [Read less]

Service Tax – Construction of residential units for individual buyers prior to 01.07.2010 – Section 65(105)(zzzh) of Finance Act, 1994 – The Appellant, a builder and developer, constructed residential units for individual buyers and for landowners under a development arrangement, with consideration received during construction. The Department confirmed the demand under Works Contract Service on the ground that property in goods was transferred in execution of the contracts – Whether such construction is liable to Service Tax for the period prior to 01.07.2010 – HELD – Transfer of property in goods does not by i... [Read more]

Service Tax – Construction of residential units for individual buyers prior to 01.07.2010 – Section 65(105)(zzzh) of Finance Act, 1994 – The Appellant, a builder and developer, constructed residential units for individual buyers and for landowners under a development arrangement, with consideration received during construction. The Department confirmed the demand under Works Contract Service on the ground that property in goods was transferred in execution of the contracts – Whether such construction is liable to Service Tax for the period prior to 01.07.2010 – HELD – Transfer of property in goods does not by itself determine the taxable entry or the point of taxation, and the provisions applicable during each period must be examined separately. The Explanation deeming construction of a new building intended for sale to be a service provided by the builder to the buyer was inserted with effect from 01.07.2010, and it operates prospectively. Its effect cannot be applied to receipts relating to the earlier period. Construction by a builder for the ultimate owner prior to completion and transfer of the property was in the nature of self-service, as clarified by the Board Circular. The flats transferred to landowners in a project completed before 01.07.2010 also could not be taxed when the applicable entry did not cover such construction – The demand for the period prior to 01.07.2010 on residential construction for individual buyers and on the landowners' share is set aside - Service Tax – Construction for an educational institution – Section 65(105)(zzzza) of Finance Act, 1994 – The Appellant constructed a building for an educational institution, and the adjudicating authority held the activity taxable on the ground that education is an industry – Whether such construction is taxable as construction primarily for the purposes of commerce or industry – HELD – The expression "primarily for the purposes of commerce or industry" must be construed in the context of the Finance Act, 1994 and the predominant purpose and use of the building. The decision holding education to be an industry arose under the Industrial Disputes Act, and it does not determine the meaning of the expression in the Finance Act. Charging of fees by an educational institution cannot establish the statutory requirement. As per the Board Circular, constructions for institutions established solely for educational purposes and not for profit are non-commercial. The adjudicating authority recorded no independent finding on the actual nature or use of the building – The demand relating to construction for the educational institution is set aside - Service Tax – Valuation of works contracts – Composition Scheme and Rule 2A of Service Tax (Determination of Value) Rules, 2006 – Rule 3(3) of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 – The Appellant exercised the composition option during adjudication, and the Department contended that the option had to be exercised before payment of Service Tax and that consideration had been received earlier – Whether the composition option can be rejected on the basis of the date of receipt of consideration, and whether the entire gross receipts can be taxed on such rejection – HELD – The requirement of Rule 3(3) that the option be exercised before payment of Service Tax is binding. Receipt of consideration earlier does not by itself establish that Service Tax had been paid, so the actual payments have to be verified contract-wise. Where Service Tax had been paid before the option, Rule 3(3) precludes the option. Where no such payment was made, the option cannot be rejected merely because consideration was received earlier. Rejection of the composition scheme cannot result in taxation of the entire gross receipts, as composition and Rule 2A are distinct mechanisms. The service portion must be determined under the valuation provision applicable to the period. The proviso to Rule 2A substituted with retrospective effect from 08.05.2013, reducing the taxable service portion from 40% to 25% in qualifying cases, must be given effect to wherever its conditions are satisfied – The matter is remanded for re-quantification of the surviving demand contract-wise and period-wise, with credit for Service Tax already paid - Service Tax – Extended period and penalties – Proviso to Section 73(1), Sections 77 and 78 of Finance Act, 1994 – The show cause notice invoked the extended period on the ground that the Appellant had not filed ST-3 returns after a certain date and had not discharged Service Tax. The Appellant was registered, had filed returns earlier and had disclosed its construction activity – Whether the extended period can be invoked, and whether penalty under Section 78 is sustainable – HELD – Failure to file returns does not by itself establish wilful suppression or misstatement with intent to evade Service Tax. The dispute concerned interpretation of successive statutory provisions, classification of composite construction activities and valuation of works contracts, in respect of a registered assessee whose transactions were reflected in its records. There was no evidence of deliberate concealment or a positive act with intent to evade, and the extended period is not invocable. Penalty under Section 78 is accordingly set aside. Interest under Section 75 shall be recomputed only on the tax finally determined for the normal period. Penalty under Section 77 relates to independent statutory defaults, and shall be reconsidered with reference to Section 80 – The invocation of the extended period and the penalty under Section 78 are set aside - Service Tax – Rejection of application for rectification under Section 74 of Finance Act, 1994 – Appellate jurisdiction under Section 86 – The Appellant's application under Section 74 contended that the value of goods had been taxed, the abatement notification was not considered and the composition option had been exercised. The Department relied on decisions holding that rectification is not a substitute for appeal – Whether rejection of the Section 74 application bars the Tribunal from granting relief on valuation – HELD – Section 74 is not a substitute for appeal. The Tribunal, in exercise of its appellate jurisdiction under Section 86, can independently examine whether the demand as confirmed is legally sustainable and correct the valuation and tax consequences. Rejection of the application does not cure an otherwise incorrect valuation, which is a substantive appellate issue – The Tribunal can grant appropriate relief on valuation, and the appeal is allowed by way of remand. [Read less]

Central Excise – Entitlement to claim Transitional Credit in TRAN-1 after withdrawal of refund claim - Carry forward of CENVAT credit through TRAN-1 after withdrawal of refund claim - Appellant, a 100% EOU, filed a refund claim of unutilised CENVAT credit on input services used for export under Rule 5 of Cenvat Credit Rules, 2004. After show cause notice was issued, the Appellant requested that the claim be treated as withdrawn and carried forward the credit to its GST account by filing TRAN-1. The adjudicating authority rejected the refund and the Commissioner (Appeals) upheld the rejection and directed recovery of the ... [Read more]

Central Excise – Entitlement to claim Transitional Credit in TRAN-1 after withdrawal of refund claim - Carry forward of CENVAT credit through TRAN-1 after withdrawal of refund claim - Appellant, a 100% EOU, filed a refund claim of unutilised CENVAT credit on input services used for export under Rule 5 of Cenvat Credit Rules, 2004. After show cause notice was issued, the Appellant requested that the claim be treated as withdrawn and carried forward the credit to its GST account by filing TRAN-1. The adjudicating authority rejected the refund and the Commissioner (Appeals) upheld the rejection and directed recovery of the TRAN-1 credit with interest - Whether the Appellant who withdrew the refund claim is entitled to retain the CENVAT credit carried forward in TRAN-1 - HELD - Filing a refund claim is a voluntary statutory right and the Appellant possesses the right to withdraw such claim at any stage prior to its final adjudication. Upon opting to withdraw the refund claim, the claim becomes nonest and the Appellant is legally entitled to retain and carry forward the accumulated CENVAT credit into TRAN-1 - There is no allegation in the show cause notice or in the impugned order regarding ineligibility of the CENVAT credit claimed under the refund application. In the absence of any valid reason for denying the credit and of any condition to comply with the conditions of Notification No. 27/2012-CE (NT) to carry forward the credit into TRAN-1, the direction to reverse the transitional credit along with interest is unsustainable - The impugned order directing reversal of transitional credit with interest is set aside and the appeal is allowed [Read less]

Central Excise - Clandestine Manufacture - Goods cleared as traded goods alleged to be manufactured goods - SSI exemption - Appellant-company availed SSI exemption under Notification No. 08/2003-C.E. The Revenue alleged that the goods shown as traded were manufactured by the Appellant and cleared without payment of duty - Whether the allegation of clandestine manufacture and clearance is sustainable - HELD - Out of the vendors on record, summons were issued to only a few, the statements of the vendors who appeared and accepted the sales were not relied upon, and the inability to locate some vendors at an address does not e... [Read more]

Central Excise - Clandestine Manufacture - Goods cleared as traded goods alleged to be manufactured goods - SSI exemption - Appellant-company availed SSI exemption under Notification No. 08/2003-C.E. The Revenue alleged that the goods shown as traded were manufactured by the Appellant and cleared without payment of duty - Whether the allegation of clandestine manufacture and clearance is sustainable - HELD - Out of the vendors on record, summons were issued to only a few, the statements of the vendors who appeared and accepted the sales were not relied upon, and the inability to locate some vendors at an address does not establish that they were non-existent or that the transactions were fictitious, particularly when registration certificates and municipal certificates were produced and payments were made through account-payee cheques. The statement of the transporter was not shown to have been tested as per Section 9D of the Central Excise Act, 1944 and cannot be elevated into substantive evidence - Nothing was brought on record from the purchasers to show that they placed orders requiring the Appellant to manufacture the spare parts. Higher value of spare parts compared to equipment is a mere surmise without any statutory or evidentiary basis. Presence of a logo cannot by itself establish the place, source or manner of manufacture - Clandestine manufacture is a serious allegation requiring cogent, tangible and affirmative evidence such as excess raw materials, electricity consumption, labour, production capacity, transportation and flow back of funds, none of which was brought on record, and the electricity consumption was wholly incongruous with the scale of manufacture alleged. The Chartered Accountant's certificate bifurcating manufacturing and trading clearances, founded on the books and records, was accepted in the absence of any material showing it to be incorrect - For the years in which the manufacturing clearances were below the threshold limit, the Appellant is entitled to SSI exemption, and for the later two years the Appellant is eligible for exemption up to the prescribed limit as the clearances in the preceding year had not exceeded the threshold limit - Demand for the years in which clearances were within the threshold limit is not sustainable, and the matter is remanded to the adjudicating authority only for the limited purpose of verifying the payment of duty by the Appellant for the later two years – The appeal is disposed of - Invocation of extended period where earlier show cause notice was issued on the same allegation - An earlier show cause notice had been issued to the Appellant-company for an earlier period on the self-same allegation of manufacture of spares under the guise of trading, and the Appellant had from time to time intimated the Department about its manufacturing activities and availment of SSI exemption. The extended period of limitation was invoked in the present notice alleging suppression - Whether the extended period of limitation is invocable - HELD - The very nature of the Appellant's activities was within the knowledge of the Department much prior to the initiation of the present proceedings. Where the material facts were already within the knowledge of the Department and an earlier notice had been issued on substantially the same factual foundation, the allegation of deliberate suppression of facts with intent to evade duty cannot be sustained merely by reproducing such allegation in the subsequent notice. Once the relevant facts were within the knowledge of the Department at the time of the earlier notice, the extended period cannot subsequently be invoked on the same set of facts by alleging suppression. This finding does not confer on the Appellant any right to claim refund of duty already paid or otherwise payable on the manufacturing clearances of the later two years - Invocation of the extended period of limitation is not legally sustainable - Penalty under Section 11AC of Central Excise Act, 1944 - Consequence of failure of the demand on clandestine manufacture - Penalty equivalent to the duty was imposed on the Appellant-company under Section 11AC on the allegation of clandestine manufacture and clearance with intent to evade duty - Whether penalty under Section 11AC can be sustained - HELD - There being no sustainable finding of clandestine manufacture and deliberate evasion on the scale alleged in the impugned order, and the demand having been found unsustainable except to the limited extent of the actual manufacturing liability for the later two years, the foundation for imposition of penalty under Section 11AC does not survive - The penalty imposed on the Appellant-company under Section 11AC is set aside - Penalty on Director under Rule 26 of Central Excise Rules, 2002 - Penalty was imposed on the Director of the Appellant-company under Rule 26 on the allegation that he was personally responsible for the affairs of the company and for the unauthorised production and unaccounted clearance of goods - Whether penalty under Rule 26 can be sustained on the Director in the absence of established clandestine manufacture - HELD - The penalty provision necessarily requires a legally established foundation connecting the concerned individual with the acts rendering the goods liable to confiscation or otherwise attracting the statutory ingredients of the provision. In the absence of cogent evidence establishing clandestine manufacture and clearance, the mere designation of the co-appellant as Director cannot furnish a sufficient basis for sustaining the penalty - The penalty imposed on the Director under Rule 26 is set aside - Penalty under Rule 27 of Central Excise Rules, 2002 - Non-maintenance of statutory records at the factory - Penalty was imposed on the Appellant-company under Rule 27 for non-maintenance of statutory records and documents at the factory premises - Whether the penalty under Rule 27 survives when the principal demand on clandestine manufacture fails - HELD - The penalty relates to an independent procedural contravention and is not dependent upon the sustainability of the principal demand on clandestine manufacture. The finding regarding non-maintenance of the prescribed records has not been satisfactorily rebutted - The penalty imposed under Rule 27 is upheld [Read less]

GST - Disallowance of Input Tax Credit on mismatch - Violation of natural justice - Department disallowed the ITC on the ground of mismatch - Adjudicating authority confirmed the demand of ITC proposed in the show cause notice, and the FAA dismissed the appeal by an ex-parte order when the adjournment sought by email for the second date of hearing was not granted - Whether the appellant is entitled to ITC when the lower authorities disallowed it on the ground of mismatch without furnishing the details of mismatch and without sufficient opportunity of hearing - HELD - The SCN did not give the details of mismatch fully so as... [Read more]

GST - Disallowance of Input Tax Credit on mismatch - Violation of natural justice - Department disallowed the ITC on the ground of mismatch - Adjudicating authority confirmed the demand of ITC proposed in the show cause notice, and the FAA dismissed the appeal by an ex-parte order when the adjournment sought by email for the second date of hearing was not granted - Whether the appellant is entitled to ITC when the lower authorities disallowed it on the ground of mismatch without furnishing the details of mismatch and without sufficient opportunity of hearing - HELD - The SCN did not give the details of mismatch fully so as to enable the Appellant to explain its case. The detailed chart of mismatch was submitted by the Authorised Representative of the Respondent only during the hearing before the Tribunal and was not before the adjudicating authority. The FAA also did not give sufficient opportunity of personal hearing to the Appellant. On these undisputed facts, there is gross violation of the principles of natural justice at every stage, that is, at adjudication as well as at the appellate stage. The entire matter therefore needs to be reconsidered on all aspects by the adjudicating authority, which shall grant sufficient opportunities to the Appellant to explain its case after the details of mismatch are provided. Since other issues have not been examined, all the issues are kept open - The impugned order is set aside, the matter is remanded to the adjudicating authority for passing a reasoned order - The appeal is disposed of [Read less]

Customs - Description of imported goods as Crude Palm Oil or RBD Palmolein - Evidentiary value of loading records, e-mail correspondence and laboratory reports - Appellant declared the entire cargo as Crude Palm Oil under Tariff Item 1511 1000 and claimed the concessional rate under Serial No. 57 of Notification No. 50/2017-Customs. The Department relied on the Loading Time Log, Ship's Ullage Report, e-mail correspondence, statements and reports of three Government Laboratories to allege that part of the cargo was RBD Palmolein loaded in separate tanks. The Appellant contended that beta-carotene deteriorates with time, tha... [Read more]

Customs - Description of imported goods as Crude Palm Oil or RBD Palmolein - Evidentiary value of loading records, e-mail correspondence and laboratory reports - Appellant declared the entire cargo as Crude Palm Oil under Tariff Item 1511 1000 and claimed the concessional rate under Serial No. 57 of Notification No. 50/2017-Customs. The Department relied on the Loading Time Log, Ship's Ullage Report, e-mail correspondence, statements and reports of three Government Laboratories to allege that part of the cargo was RBD Palmolein loaded in separate tanks. The Appellant contended that beta-carotene deteriorates with time, that the Visakhapatnam laboratory reported the samples as Crude Palm Oil, and that the electronic records were inadmissible - Whether the disputed quantity was Crude Palm Oil and whether the loading records, e-mail correspondence and laboratory reports could be relied upon - HELD - The Loading Time Log and Ullage Report were prepared in the ordinary course of loading operations and contained tank-wise detail. The Appellant produced no contemporaneous document from the foreign supplier, vessel owner, surveyor or Port Authority showing that the disputed tanks held Crude Palm Oil. The consistency between the loading documents and contemporaneous correspondence is a material circumstance which cannot be disregarded. The laboratory reports, though not uniform, corroborate the existence of two distinct categories of Palm Oil. The Visakhapatnam reports represented only a limited number of tanks. The demand is not founded exclusively on beta-carotene content, and the Appellant produced no independent technical opinion that the variations were solely due to delay or storage. Food Safety standards do not by themselves determine classification under the Customs Tariff. Here the finding rests primarily on the vessel and loading records and is corroborated by the test reports. A procedural defect in certification does not destroy the evidentiary value of an electronic record where authenticity is not genuinely in dispute and the record is supported by surrounding evidence. The Department established on the standard of preponderance of probabilities that the disputed quantity was not Crude Palm Oil - The finding is upheld. The appeal is partly allowed - Customs - Eligibility to concessional rate under Serial No. 57 of Notification No. 50/2017-Customs after omission of the explanation prescribing acid value and total carotenoid parameters - Whether the omission entitles refined palmolein to the concessional rate meant for Crude Palm Oil - HELD - Eligibility cannot be denied solely because the goods fail to satisfy conditions which no longer form part of the notification. However, the omission cannot be construed to mean that every form of Palm Oil, including refined, bleached, deodorised or fractionated palmolein, must be treated as Crude Palm Oil. The concession applies only when the goods are first shown to be Crude Palm Oil. The notification did not amend Heading 1511 or the GRI. The legal identity of Crude Palm Oil under the Tariff did not disappear upon deletion of the explanation. A person claiming exemption must first establish that the goods fall within the description covered by the notification - The denial of the concession in respect of the disputed quantity is upheld - Customs - Classification of RBD Palmolein under Tariff Item 1511 9090 - The Adjudicating Authority classified the disputed quantity under Others on the ground that it was mixed with Crude Palm Oil during discharge - Whether the classification can be sustained on that ground - HELD - Once it is found that the goods were RBD Palmolein at the time of importation, classification must be determined according to that identity and condition. A post-import event cannot ordinarily alter the tariff identity of the goods as imported. The observation that the goods became neither RBD Palmolein nor Crude Palm Oil after discharge is not a satisfactory basis for classification. However, the defect in reasoning does not invalidate the classification if RBD Palmolein falls within that entry. Heading 1511 covers Palm Oil and its fractions, whether or not refined, but not chemically modified. The tariff separately identifies Crude Palm Oil and places other forms under the remaining entries - The classification under Tariff Item 1511 9090 is upheld on the ground that the goods were RBD Palmolein at the time of importation - Customs - Applicable rate of Basic Customs Duty and re-computation of differential duty - The Appellant contended that the applicable rate for Tariff Item 1511 9090 was lower than the rate applied - Whether the differential duty has been correctly quantified - HELD - The applicable rate must be determined with reference to the notification and tariff rate in force on the relevant date of importation. A higher rate cannot be applied unless supported by the notification operative on that date. The material before the Tribunal did not contain a complete examination of the competing notifications. The issue is one of notification-based verification and does not require reopening the finding on ineligibility for the concessional rate - The matter is remitted to the Adjudicating Authority for the limited purpose of verifying the rate and re-computing the differential duty after a hearing. Interest under Section 28AA is payable on the recomputed duty. The amount deposited during investigation shall be appropriated to the amounts finally payable and any excess shall be refunded with applicable interest - Customs - Invocation of extended period - The Bills of Entry declared the entire cargo as Crude Palm Oil although the loading records described part of it as RBD Palmolein - Appellant contended that it was a technical dispute on classification with no deliberate mis-declaration or suppression - Whether the invocation of Section 28(4) is sustainable - HELD - The importer was responsible for making a complete and correct declaration under the self-assessment system. The difference was not a debatable choice between two closely competing tariff entries based upon a disclosed description. A substantial part of the cargo was described in the shipping documents as RBD Palmolein, whereas it was declared as Crude Palm Oil for claiming a materially lower rate of duty. No satisfactory explanation was furnished. The cumulative evidence establishes a material mis-declaration resulting in wrongful availment of a concessional rate - There is no reason to interfere with the invocation of Section 28(4) - Customs - Confiscation under Sections 111(m) and 111(o), redemption fine under Section 125 and penalties under Sections 114A and 114AA - Whether confiscation, redemption fine and the penalties are sustainable - HELD - Section 111(m) applies where goods do not correspond in a material particular with the entry made. The description as Crude Palm Oil was material to classification, eligibility to exemption and assessment of duty. Confiscation under Section 111(m) is sustainable. The goods were imported by claiming a conditional concessional rate and the conditions were not fulfilled. Confiscation under Section 111(o) is also sustainable. Redemption fine must bear a reasonable relationship to the value of the goods and the gravity of the contravention. The goods were edible Palm Oil and were not prohibited goods. The dispute relates primarily to description, classification and rate of duty. The fine is excessive and is reduced. The incorrect description resulted in short-payment of duty, so the ingredients for penalty under Section 114A are present. The penalty must correspond to the duty finally determined, and the statutory option of reduced penalty remains available. Every incorrect declaration resulting in a demand under Section 28(4) and penalty under Section 114A does not automatically justify an additional penalty under Section 114AA. The Authority must identify the particular false docume [Read less]

Central Excise – Short payment of cesses, short payment of interest, utilisation of CENVAT credit for payment of arrears of duty and penalties – Audit noticed short payments, irregular availment of CENVAT credit and short payment of interest. The Order-in-Original confirmed short payment of Education Cess and Secondary and Higher Education Cess with interest and equivalent penalty, and imposed other penalties under the Central Excise Act, 1944. The Commissioner (Appeals) upheld the order. The Appellant had short paid duties in several months and adjusted the amount from CENVAT credit earned in the succeeding months by ... [Read more]

Central Excise – Short payment of cesses, short payment of interest, utilisation of CENVAT credit for payment of arrears of duty and penalties – Audit noticed short payments, irregular availment of CENVAT credit and short payment of interest. The Order-in-Original confirmed short payment of Education Cess and Secondary and Higher Education Cess with interest and equivalent penalty, and imposed other penalties under the Central Excise Act, 1944. The Commissioner (Appeals) upheld the order. The Appellant had short paid duties in several months and adjusted the amount from CENVAT credit earned in the succeeding months by declaring the same as payment of arrears. The Appellant contended that such payment is permissible under Rule 8(3A) of the Central Excise Rules, 2002 as amended w.e.f. 11.07.2014 and that the delay was due to financial constraints. The Revenue contended that, as per the proviso to Rule 3(4) of the CENVAT Credit Rules, 2004, credit can be utilised only to the extent available on the last day of the month, and that the Appellant, having accepted the liability for the cesses, is liable to equivalent penalty under Section 11AC - Whether the penalties imposed for delayed payment of duty, short payment of interest and short payment of cesses are sustainable - HELD - The Appellant had paid the entire amount along with interest as applicable. The issue of delayed payment and penalty was considered in the Appellant's own case, wherein it was held that Rule 8(3A) was held ultra vires as unconstitutional by the High Court in Indsur Global Ltd, which was followed by the Jurisdictional High Court and by the Tribunal. Following judicial discipline, the demand under Rule 8(3A) could not be sustained. Considering the facts and the ratio of the decision in the Appellant's own case, the appropriation of the amount paid by the Appellant is upheld and the penalties are set aside - The appeal is partly allowed [Read less]

GST - Levy of tax on assignment of leasehold rights in plots allotted by Gujarat Industrial Development Corporation - Binding effect of jurisdictional High Court judgment - Department demanded GST under reverse charge mechanism from the Respondents, who were assignees of leasehold rights in plots of land allotted on lease by the industrial development corporation - Department appeal before Tribunal, stating that it had filed a Special Leave Petition against that judgment, which was dismissed, and that it was in the process of filing a review petition - Whether GST is leviable on assignment of leasehold rights in plots of l... [Read more]

GST - Levy of tax on assignment of leasehold rights in plots allotted by Gujarat Industrial Development Corporation - Binding effect of jurisdictional High Court judgment - Department demanded GST under reverse charge mechanism from the Respondents, who were assignees of leasehold rights in plots of land allotted on lease by the industrial development corporation - Department appeal before Tribunal, stating that it had filed a Special Leave Petition against that judgment, which was dismissed, and that it was in the process of filing a review petition - Whether GST is leviable on assignment of leasehold rights in plots of land allotted by the corporation to a third party for consideration - HELD - The case is squarely covered by the judgment of the Gujarat High Court in Gujarat Chamber of Commerce and Industry, which held that assignment by sale and transfer of leasehold rights of the plot of land allotted by the corporation to the lessee in favour of a third-party assignee for a consideration is assignment, sale or transfer of benefits arising out of immovable property, so that Section 7(1)(a) read with clause 5(b) of Schedule II and clause 5 of Schedule III would not be applicable and the transaction is not subject to levy of GST under Section 9. The Bombay High Court agreed with this view, and the Supreme Court dismissed the Special Leave Petitions of the Department against both judgments. The judgment of the jurisdictional High Court holds the field and binds the Tribunal - The stated intention of the Department to seek a review does not dilute its binding effect, there being no order staying or recalling it. In view of this finding, the questions whether Sections 74 and 122(2)(b) were rightly invoked and whether the reverse charge mechanism is applicable do not survive for consideration - GST is not leviable on the transactions in question, the appeals filed by the Department are dismissed and the Orders-in-Appeal are upheld – The appeal is dismissed [Read less]

GST - Maintainability of writ petition against penalty order without exhausting statutory appeal before the Appellate Tribunal - Petitioner sought release of the frozen bank account, without filing the further appeal under Section 112 - Whether the writ petition under Article 226 is maintainable when the efficacious statutory remedy of appeal to the Appellate Tribunal under Section 112 has not been availed - HELD - The statutory appellate structure under the CGST Act is sequential, with an appeal under Section 107 against the adjudication order, a further appeal to the Appellate Tribunal under Section 112, and an appeal to... [Read more]

GST - Maintainability of writ petition against penalty order without exhausting statutory appeal before the Appellate Tribunal - Petitioner sought release of the frozen bank account, without filing the further appeal under Section 112 - Whether the writ petition under Article 226 is maintainable when the efficacious statutory remedy of appeal to the Appellate Tribunal under Section 112 has not been availed - HELD - The statutory appellate structure under the CGST Act is sequential, with an appeal under Section 107 against the adjudication order, a further appeal to the Appellate Tribunal under Section 112, and an appeal to the High Court under Section 117 only against the order of the Appellate Tribunal on a substantial question of law. The Petitioner has not reached the stage contemplated by Section 117, and the remedy presently available is under Section 112 - The existence of an alternative remedy is a rule of judicial discretion and self-restraint and a writ petition can be entertained in exceptional circumstances such as breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction or challenge to the vires of the statute. None of these exceptions is established - The writ petition is dismissed as not maintainable [Read less]

GST - Priority of dues of secured creditor over GST dues - Petitioner, a secured creditor, challenged the letter issued by the Respondent-Dept directing the society not to issue No Objection Certificate in respect of flats which were secured assets - Respondent relied on provisional attachment of the property under Section 83 of the CGST Act, 2017 - Whether the dues of the secured creditor have priority over the dues claimed by the GST authorities when the charge of the authorities is not registered with the Central Registry - HELD - With the amendment of the Securitisation Act with effect from 24.01.2020 and the introduct... [Read more]

GST - Priority of dues of secured creditor over GST dues - Petitioner, a secured creditor, challenged the letter issued by the Respondent-Dept directing the society not to issue No Objection Certificate in respect of flats which were secured assets - Respondent relied on provisional attachment of the property under Section 83 of the CGST Act, 2017 - Whether the dues of the secured creditor have priority over the dues claimed by the GST authorities when the charge of the authorities is not registered with the Central Registry - HELD - With the amendment of the Securitisation Act with effect from 24.01.2020 and the introduction of Section 26E, upon the security interest of the secured creditor being registered with the Central Registry, its dues have first priority. The Full Bench in the case of Jalgaon Janta Sahakari Bank Limited has held that the dues of the secured creditor have priority over all other dues, including all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. It was also held that attachment orders issued after 24.01.2020, if not filed with the Central Registry, require the department to wait till the secured creditor mops up its secured dues by sale of the immovable property - The security interest of the Petitioner is registered with the Central Registry, and the Respondent has not been able to show that its charge is registered. There is no legal basis for the Respondent to have issued the letter directing that No Objection Certificate could not be issued for the secured assets - The impugned letter is quashed and the writ petition is allowed [Read less]

GST - Order under Section 73 of the CGST Act passed without fixing date of personal hearing - Petitioner challenged the order on the sole ground that the show cause notice did not fix any date of personal hearing, which is a mandatory requirement under Section 75(4) - Whether the order is vitiated for non-compliance with Section 75(4) - HELD - It is not disputed that no date for personal hearing was fixed in the show cause notice and that none was provided to the Petitioner at any stage before passing the impugned order. There is therefore clear violation of the requirement of Section 75(4), which vitiates the order. As th... [Read more]

GST - Order under Section 73 of the CGST Act passed without fixing date of personal hearing - Petitioner challenged the order on the sole ground that the show cause notice did not fix any date of personal hearing, which is a mandatory requirement under Section 75(4) - Whether the order is vitiated for non-compliance with Section 75(4) - HELD - It is not disputed that no date for personal hearing was fixed in the show cause notice and that none was provided to the Petitioner at any stage before passing the impugned order. There is therefore clear violation of the requirement of Section 75(4), which vitiates the order. As the principles of natural justice have been violated, the objection regarding the slight delay on the part of the Petitioner in approaching the Court is overruled - The order is quashed, leaving it open to the Respondent to pass a fresh order after providing opportunity of hearing to the Petitioner strictly in accordance with law - The Writ Petition stands disposed of [Read less]

Service Tax – Taxability of portal services as Online Information and Database Access or Retrieval service – Appellant, a joint venture formed to develop and manage the State Government's e-governance portal, provided a network through which citizens and government officers accessed and used government data, and collected fees on behalf of government departments, educational institutions and utility companies – Whether the services provided by the Appellant through the portal are Online Information and Database Access or Retrieval service for the period October 2009 to 30.06.2012 - HELD - OIDAR services can be allege... [Read more]

Service Tax – Taxability of portal services as Online Information and Database Access or Retrieval service – Appellant, a joint venture formed to develop and manage the State Government's e-governance portal, provided a network through which citizens and government officers accessed and used government data, and collected fees on behalf of government departments, educational institutions and utility companies – Whether the services provided by the Appellant through the portal are Online Information and Database Access or Retrieval service for the period October 2009 to 30.06.2012 - HELD - OIDAR services can be alleged to have been provided only if the data belongs to the service provider. The service provider cannot provide access to data which it does not itself possess. The Appellant provided only a network through which the data of the State Government could be accessed by the officers of the State Government and by the citizens. Therefore, it cannot be said that the Appellant provided any OIDAR services. This view is supported by the decision of the Tribunal in United Telecom Ltd, against which the Revenue's appeal was rejected by the High Court, and by the decision of the Larger Bench of the Tribunal in Air India Ltd - The demand under OIDAR service is set aside and the appeal is allowed - Service Tax – Taxability of services to Government departments and educational institutions as business auxiliary service or business support service – Appellant collected utility bill payments and fees for Government departments, universities and educational institutions through the portal, and also provided data digitisation services to the State Urban Services Corporation – Whether the services provided to Government departments and to universities and educational institutions before 01.07.2012 are chargeable to service tax under business auxiliary service or business support service - HELD - The services provided to Government departments for collection of utility bills and to universities and educational institutions before 01.07.2012 were support services. These services were not provided to business entities. Therefore, they would not fall under the category of business auxiliary service or business support service. Hence, no service tax was payable on them. The services to corporations such as telecom companies and insurers were chargeable to service tax both before and after 01.07.2012, and the Appellant had paid service tax on the commission received on them. The fees charged from kiosk operators were construed as franchise fee on which the Appellant had paid service tax both before and after 01.07.2012 - The demand on these services is set aside and the appeal is allowed - Service Tax – Exemption to services provided to educational institutions after 01.07.2012 – Appellant provided portal services to universities and educational institutions for admissions and conducting examinations – Whether service tax is payable after 01.07.2012 on the portal income received from educational institutions - HELD - After 01.07.2012, all services became exigible to service tax except those in the negative list. Services provided to universities were covered by Exemption Notification No. 25/2012-ST, Entry No. 9(d). Therefore, no service tax was payable on them even after 01.07.2012 - The demand on portal income from educational institutions is set aside and the appeals are allowed - Service Tax – Taxability of interest on Fixed Deposits – Appellant collected utility bill payments, fees and statutory charges and was required to transfer the amounts to the concerned departments and institutions after one day or five days, and during this period it held surplus funds in fixed deposits which earned interest – Whether interest earned on Fixed Deposits is exigible to service tax during the pre negative list and post negative list regime - HELD - Since the Appellant was required to transfer the amounts collected only after one day or five days, it had at any point of time a lot of money in its fixed deposits and earned interest on the same. Interest is the time value for money. It is the consideration received for the money deposited with the bank and it is not consideration received for any service. Therefore, it is not exigible to service tax either during the pre negative list or post negative list regime - The demand on interest earned on Fixed Deposits is set aside and the appeals are allowed. [Read less]

Service Tax – Taxability of food and beverages served in hotel rooms – Period 01.07.2012 to 31.03.2013 – Audit alleged that the Appellant, a hotel, did not pay Service Tax on income from room service and grand room service, being serving of food and beverages in hotel rooms. The Respondent relied on a Board Circular and contended that it is an indivisible service. The Appellant contended that a hotel room cannot be equated with a restaurant and that food was separately charged and served from a separate service area – Whether serving of food and beverages in hotel rooms is a taxable service – HELD – Restaurant ... [Read more]

Service Tax – Taxability of food and beverages served in hotel rooms – Period 01.07.2012 to 31.03.2013 – Audit alleged that the Appellant, a hotel, did not pay Service Tax on income from room service and grand room service, being serving of food and beverages in hotel rooms. The Respondent relied on a Board Circular and contended that it is an indivisible service. The Appellant contended that a hotel room cannot be equated with a restaurant and that food was separately charged and served from a separate service area – Whether serving of food and beverages in hotel rooms is a taxable service – HELD – Restaurant service under Section 65(105)(zzzzv) is taxable only when food and beverages are served in the premises of an air-conditioned restaurant having a licence to serve alcoholic beverages. A hotel room cannot be called a restaurant, and the Respondent produced no evidence that the food was served from the restaurant. The Circular clarifies that service tax cannot be charged on food served in the room, even under short term accommodation, if the bill is raised separately. There is no evidence that the value of food was included in the value of room service, and the invoices show that food was charged separately. Sale of goods is excluded from the definition of service under Section 65B(44) – Demand not sustainable - Service Tax – Amounts received from liquor manufacturers under branding and promotion contracts – Business auxiliary service and sponsorship service – Period 2010-11 to 2014-15 – Appellant received fixed amounts from liquor companies for displaying branded table accessories and giving exclusivity to their brands. The Appellant contended that the amounts were trade incentives in lieu of purchase discounts – Whether the amounts received are consideration for a taxable service – HELD – The contracts, by their terms, are for branding, promotion and listing exclusively of the brands of the companies, and the Appellant is restrained from tie-ups with other companies. The Appellant is bound to display the branded accessories at all venues. The contracts are therefore not for purchase of liquor but for promotion and branding. For the pre negative list period, the activity is covered by the meaning of sponsorship, which includes displaying the sponsor's logo or trade name and giving exclusive rights. For the post negative list period, the activity is a service under Section 65B(44) and is not in the negative list under Section 66D. The amounts received are consideration for a promotional activity – Demand confirmed for the normal period - Service Tax – Electricity charges recovered from tenants on actual consumption – Renting of immovable property – Appellant let out office spaces and shops after installing a sub-meter in each premises. Electricity charges were collected as per the sub-meter reading and deposited with the electricity supply agencies – Whether electricity charges recovered from tenants form part of the taxable value – HELD – The Appellant merely collected the charges on actual consumption as landlord and paid the same to the electricity supply agencies. The amount cannot be called consideration for a taxable service. Such amounts could be included in the taxable value only under Rule 5(1) of the Service Tax (Determination of Value) Rules, which has been held ultra vires by the Supreme Court in Intercontinental Consultants and Technocrats – Demand not sustainable - Service Tax – Extended period of limitation – Suppression – Show Cause Notice proposed a demand for the period 2010-11 to 2014-15, most of which was beyond the normal period. The Appellant contended that no suppression was alleged – Whether the extended period was rightly invoked – HELD – There is nothing on record to prove any intentional act of suppression of facts by the Appellant, and the Show Cause Notice did not invoke the proviso to Section 73(1). Mere failure to declare does not amount to wilful suppression, as there must be some positive act on the part of the assessee. The demand for the extended period is set aside. The order is set aside except for the demand on sponsorship services for the normal period, and the appeal is partly allowed. [Read less]

Service Tax – Construction of hospital for a society as commercial or industrial construction service – Appellant, registered for construction services, had not filed returns nor paid service tax, and constructed a hospital for a welfare society during April 2012 to June 2012 – Whether construction of the hospital is not commercial or industrial construction service in view of the CBIC Circular dated 17.09.2004 – HELD - The Appellant was engaged in construction of commercial or industrial structures in both periods, and these services were chargeable to service tax. Hospitals can be charitable or commercial. Unless... [Read more]

Service Tax – Construction of hospital for a society as commercial or industrial construction service – Appellant, registered for construction services, had not filed returns nor paid service tax, and constructed a hospital for a welfare society during April 2012 to June 2012 – Whether construction of the hospital is not commercial or industrial construction service in view of the CBIC Circular dated 17.09.2004 – HELD - The Appellant was engaged in construction of commercial or industrial structures in both periods, and these services were chargeable to service tax. Hospitals can be charitable or commercial. Unless there is evidence that the hospital was meant to be a charitable hospital, its construction would qualify as commercial or industrial construction service, as running hospitals is a big source of commerce. The Appellant is not entitled to exemption - The demand is upheld, as abatement was already allowed and liability was reduced where the service recipient was to discharge the tax - Service Tax – Works contract service – Valuation under Rule 2A of the Service Tax (Determination of Value) Rules, 2006 – Appellant provided works contract services during July 2012 to March 2013 and contended that tax is to be determined under Rule 2A by deducting the actual value of goods or on presumptive basis – Whether the demand was correctly determined having regard to abatement and Notification No. 30/2012-ST – HELD - Under Rule 2A, the value of goods is excluded from the gross amount charged if possible, and if not, tax is charged on the prescribed percentage. As per Notification No. 30/2012-ST, 50% of the tax liability is discharged by the service recipient. The Commissioner had calculated the tax after considering the abatement and the recipient's 50% liability wherever applicable. Nothing was shown to prove that the actual value of goods used exceeded the abatement allowed - There is no infirmity in the impugned order and the demand is upheld - Service Tax – Free of cost material supplied by service recipients in works contract – Demand was confirmed on the value of free of cost material supplied by customers while allowing abatement under works contract – Whether such value is includible in the gross amount charged for the works contract – HELD - Following the decision of the Larger Bench of the Tribunal in Bhayana Builders Pvt Ltd vs Commissioner of Service Tax, Delhi, the value of free of cost material supplied by customers cannot be included in the gross amount charged - The demand on such material is set aside and the appeal is allowed to this extent - Service Tax – Classification of services as exclusive service contracts or works contracts – Commissioner treated certain contracts as exclusive service contracts and confirmed demand, whereas Appellant contended that these were works contracts – Whether such services can be treated as works contracts without substantiation – HELD - There is nothing in the appeal to substantiate the assertion that these services were works contracts, and the Commissioner is not shown to have erroneously considered them as services simpliciter - The demand on this part is upheld - Service Tax – Appropriation of amounts deposited during investigation – Appellant contended that amounts deposited through challans during investigation need to be appropriated against the confirmed demand – Whether such amounts are to be appropriated – HELD - This is a matter of verification. If the amounts have indeed been deposited as service tax, they shall be appropriated towards the confirmed demand - Service Tax – Penalty under section 76 of the Finance Act, 1994 – Appellant had not paid the service tax, nor filed returns, nor declared the services provided, and everything came to light only as a result of investigation – Whether penalty under section 76 can be set aside – HELD - Since the Appellant neither paid the tax, filed returns nor declared the services, and the facts came to light only through investigation, there is no reason to set aside the penalty - The penalty is upheld, the impugned order is modified only to set aside the demand on free of cost materials, the rest is upheld and the appeal is allowed to that extent. [Read less]

Service Tax – Interest on refund of amounts deposited during investigation – Respondent deposited the amounts during the course of investigation in 2008-2009. The Tribunal later allowed the Respondent's appeal and set aside the confirmed demand. The Revenue's appeal before the Apex Court was dismissed. The refund was sanctioned only in 2024, after more than 16 years from the date of deposit. The Commissioner (Appeals) held that the Respondent is eligible for interest on the refund from the date of deposit till the refund is granted. The Revenue contended that interest, if any, is payable only for the refund claim filed... [Read more]

Service Tax – Interest on refund of amounts deposited during investigation – Respondent deposited the amounts during the course of investigation in 2008-2009. The Tribunal later allowed the Respondent's appeal and set aside the confirmed demand. The Revenue's appeal before the Apex Court was dismissed. The refund was sanctioned only in 2024, after more than 16 years from the date of deposit. The Commissioner (Appeals) held that the Respondent is eligible for interest on the refund from the date of deposit till the refund is granted. The Revenue contended that interest, if any, is payable only for the refund claim filed after the issue was finalised at the Apex Court level – Whether the Respondent is entitled to interest on the refund of the deposited amounts from the date of deposit till the date of refund - HELD - The deposits were made in 2008 and the refund was sanctioned only in 2024. The Tribunal had set aside the confirmed demand. This means that the deposit collected from the Respondent was not liable to be paid by it right from day one. After the Tribunal's decision, the Revenue took another 4 years before the Apex Court, which dismissed its appeal. This affirms the decision of the Tribunal holding that the confirmed demand is illegal ab initio. Therefore, the Revenue cannot keep the money belonging to the Respondent from 2008 and return the same without any interest in 2024. The Bench followed its recent decision, which had considered the decisions of the Apex Court in Ranbaxy Laboratories and Sandvik Asia, the High Court decision in Riba Textiles, and the Tribunal decision in Berger Paints. Those decisions hold that the Revenue is liable to pay interest on amounts wrongly withheld from the assessee. The ratio laid down in the said decision is squarely applicable to the facts of the present case - The order of the Commissioner (Appeals) granting interest on the refund from the date of deposit is upheld and the appeal filed by the Revenue is dismissed [Read less]

GST - Maintainability of departmental appeal before GSTAT in view of monetary limit under Section 120 of the UPGST Act, 2017 - Whether a departmental appeal where the disputed amount is below the monetary limit Rs. 20,00,000/- can be admitted and heard on merits when the Revenue has not established any recognised exception - HELD - Admission of an appeal is not a mere formality and the Tribunal must be satisfied that the appeal is maintainable and meets the conditions for admission before considering the merits. The right of appeal is created by statute and may be subject to conditions, provided they are not so onerous tha... [Read more]

GST - Maintainability of departmental appeal before GSTAT in view of monetary limit under Section 120 of the UPGST Act, 2017 - Whether a departmental appeal where the disputed amount is below the monetary limit Rs. 20,00,000/- can be admitted and heard on merits when the Revenue has not established any recognised exception - HELD - Admission of an appeal is not a mere formality and the Tribunal must be satisfied that the appeal is maintainable and meets the conditions for admission before considering the merits. The right of appeal is created by statute and may be subject to conditions, provided they are not so onerous that the right becomes practically illusory. Under the circular, where tax is disputed, with or without interest or penalty, only the aggregate disputed tax is taken into account, and interest and penalty are not added to it - An exception cannot be presumed merely because the Department wishes to pursue the appeal, and the Revenue must identify the exception, state the facts supporting it and show the statutory or administrative basis for invoking it. If the Revenue relies on the Commissioner's residual power to contest a matter in the interest of justice or revenue, it must produce the order or recorded opinion showing that the Commissioner exercised that power in the particular case. A bare statement that the appeal has been filed with the Commissioner's permission is not sufficient - The appeal is dismissed at the threshold on the ground of the prescribed monetary limit and the Revenue's failure to establish an applicable exception – Ordered accordingly [Read less]

GST - Dismissal of first appeal without hearing the Appellant under Section 107(8) - The First Appellate Authority rejected the adjournment sought on behalf of the Appellant and dismissed the appeal without a hearing on the grounds of delay, defective authority of the signatory and non-payment of an admitted amount - Whether the First Appellate Authority could dismiss the appeal without hearing the Appellant - HELD - Section 107(8) is short and unqualified. It draws no line between a decision on the merits and a decision on a threshold objection - The First Appellate Authority reasoned that a hearing is unnecessary where t... [Read more]

GST - Dismissal of first appeal without hearing the Appellant under Section 107(8) - The First Appellate Authority rejected the adjournment sought on behalf of the Appellant and dismissed the appeal without a hearing on the grounds of delay, defective authority of the signatory and non-payment of an admitted amount - Whether the First Appellate Authority could dismiss the appeal without hearing the Appellant - HELD - Section 107(8) is short and unqualified. It draws no line between a decision on the merits and a decision on a threshold objection - The First Appellate Authority reasoned that a hearing is unnecessary where the appeal fails for “absence of authority to entertain” it. The statute does not support that view - Even if the adjournment was rightly refused, the First Appellate Authority had to give the Appellant another date before dismissing the appeal. The adjournment could not be refused because the authorisation in favour of the consultant firm was not signed by all the persons named. That document concerns the relationship between the company and its advisers and has nothing to do with the right of the company to be heard - The Order-in-Appeal was passed in breach of Section 107(8) and the principles of natural justice and cannot stand - Condonation of delay in filing the first appeal under Section 107(4) - The first appeal was filed beyond three months by a period within the further one month allowed. The Appellant filed a petition for condonation along with the appeal stating that the delay was due to the illness of the consultant and the time taken to gather documents. The First Appellate Authority held that no application for condonation was filed along with an affidavit - Whether the delay ought to have been condoned - HELD - Section 107(4) empowers the Appellate Authority to condone a delay up to one month beyond the three months if sufficient cause is shown. The finding that no application for condonation was filed is contrary to the record. Form GST APL-01 itself asks whether the appeal is filed late and the reasons for the delay - Neither the Act nor Rule 108 prescribes a separate application or an affidavit. The First Appellate Authority imposed a requirement that has no statutory source and did not consider the petition filed. Sufficient cause must receive a liberal construction to advance substantial justice. The length of delay is not decisive and what matters is whether the explanation is acceptable. Condonation is not a matter of right, but the Appellant made out its own case. The cause shown was ordinary, plausible and uncontradicted. Nothing suggested a dilatory motive and the Revenue suffered no prejudice - The delay in filing the first appeal is condoned - Validity of signing and verification of the first appeal on behalf of a company by its General Manager - The First Appellate Authority held that the General Manager signed the appeal without a certified board resolution or a notarised power of attorney. The Appellant relied on a General Power of Attorney executed by its Managing Director authorising the General Manager to represent, sign and file applications on all tax matters before tax authorities - Whether the appeal was validly signed and verified on behalf of the company - HELD - Rule 108 read with Rule 26 provides that the appeal of a company is to be signed by its Chief Executive Officer or authorised signatory and verified by digital signature - The appeal was filed on the portal under the Appellant's own registration. The General Manager held a General Power of Attorney executed for the company by its Managing Director. The company has prosecuted the second appeal through him - A company can ratify the act of an officer who has signed and verified on its behalf, and ratification may be inferred from its conduct in pursuing the proceeding. Procedural defects which do not go to the root of the matter should not defeat a just cause. The decision on the authority of a person to institute a suit on behalf of a company is distinguishable as there the authority was not shown to flow from the company. The fact that another authorised signatory signed the reply does not show that the General Manager lacked authority. The observation that he could not depose to the facts confuses the merits of a plea with the authority of the person who makes it. If the First Appellate Authority doubted the authority, the proper course was to point out the defect and call for proof - The appeal was validly signed and verified. Any omission to file proof of authority was a curable defect - Whether the appeal is barred under Section 107(6) for non-payment of an “admitted” amount or pre-deposit where only interest was confirmed - HELD - The reply to the show cause notice, read as a whole, is not an admission. It opened by stating that the appellant was “not liable to pay interest or penalty” - A statement made during the audit, in answer to a higher figure and while seeking relief from the whole interest, accepts the method of computation but does not concede that interest is owed. It is not an admission in a pleading and is not conclusive. The adjudicating authority adopted the arithmetic does not turn it into an admission of liability. Clause (b) of Section 107(6) requires a sum of ten per cent of the remaining amount of tax in dispute. Interest is not tax. As no tax was confirmed, no pre-deposit was payable - The Appellant admitted no amount within the meaning of Section 107(6)(a) and no pre-deposit was payable under Section 107(6)(b). The first appeal was validly filed - Power of the Tribunal under Section 113(1) to decide the merits of the first appeal instead of remanding - The First Appellate Authority dismissed the first appeal on threshold grounds. The Tribunal set aside that order. The record was complete and the parties had argued the merits - Whether the Tribunal should decide the merits of the first appeal - HELD - Section 113(1) empowers the Tribunal to confirm, modify or annul the order appealed against. The power to refer the case back is discretionary and is to be used where the record does not allow a decision on merits. The audit report, the show cause notice, the reply with annexures and the computation in the Order-in-Original were on record. No fact was in dispute and no further inquiry was required. Neither party asked for a remand. The dispute concerned a single year and interest alone and had been pending for a long time - The Tribunal decides the merits of the first appeal in the order - Interest under Section 50(1) on differential tax paid late through Form GST DRC-03 after the rate of tax on works contract services was increased - The Appellant contended that its customer did not pay the differential tax, that it paid from its own funds, that the supply was continuous with tax falling due as payment fell due, and that the consideration should be treated as cum-tax under Rule 35 - Whether interest is payable on the differential tax paid through DRC-03 and whether Rule 35 reduces it - HELD - Liability to interest arises from the failure to pay tax within the period prescribed. Interest is compensatory and makes good to the exchequer the use of money it should have had. Payment of differential tax through DRC-03 does not extinguish the liability to interest. The Appellant accepted the higher rate and paid tax at that rate. The customer's failure to pay does not affect liability. Tax falls due at the time of supply fixed by the Act and not when the customer pays - The Act does not give any authority the power to waive interest on the ground of hardship. The only statutory waiver is in Section 128A and it is confined to the period from 01.07.2017 to 31.03.2020. The parties to a contract may agree on who finally bears the tax, but this does not alter liability to the Government - Where the invoice is issued within the prescribed period, Section 13(2)(a) fixes the time of supply as the date of invoice or receipt [Read less]

GST - Leviability of GST on assignment of leasehold rights in industrial plot allotted by State Industrial Development Corporation - Department filed appeals against Orders-in-Appeal which upheld the orders dropping the demand raised on the Respondents for transferring, for consideration, leasehold rights in plots of land allotted on lease by the Corporation to a third party - Whether GST is leviable on assignment of leasehold rights of plots allotted by the Corporation - HELD - The Authorised Representative did not dispute that the case is squarely covered by the judgment of the jurisdictional High Court. The Court held t... [Read more]

GST - Leviability of GST on assignment of leasehold rights in industrial plot allotted by State Industrial Development Corporation - Department filed appeals against Orders-in-Appeal which upheld the orders dropping the demand raised on the Respondents for transferring, for consideration, leasehold rights in plots of land allotted on lease by the Corporation to a third party - Whether GST is leviable on assignment of leasehold rights of plots allotted by the Corporation - HELD - The Authorised Representative did not dispute that the case is squarely covered by the judgment of the jurisdictional High Court. The Court held that assignment of leasehold rights of the plot for consideration is assignment/sale/transfer of benefits arising out of immovable property by the lessee-assignor in favour of the third-party assignee. Section 7(1)(a) read with Clause 5(b) of Schedule II and Clause 5 of Schedule III is therefore not applicable, and the transaction is not subject to levy of GST under Section 9 - The judgment of the jurisdictional High Court holds the field and binds the Tribunal. The Department's stated intention to seek review does not dilute its binding effect, as there is no order staying or recalling it. Since GST is not leviable, the question whether Section 74 and Section 122(1) were rightly invoked does not survive - The appeals filed by the Department are dismissed [Read less]

GST - Demand under Section 74 on the ground that supplier firm was bogus or non-existent - The Respondent's inward supply was shown from a firm which, on verification on the GST portal, was found to be bogus or non-existent - Revenue alleged that no goods were purchased and the supply was shown only to claim input tax credit - The First Appellate Authority allowed the Respondent's appeal, holding that the proper officer had passed an erroneous order without considering the relevant papers - Whether the First Appellate Authority was right in allowing the appeal and setting aside the demand of tax and penalty - HELD - A firm... [Read more]

GST - Demand under Section 74 on the ground that supplier firm was bogus or non-existent - The Respondent's inward supply was shown from a firm which, on verification on the GST portal, was found to be bogus or non-existent - Revenue alleged that no goods were purchased and the supply was shown only to claim input tax credit - The First Appellate Authority allowed the Respondent's appeal, holding that the proper officer had passed an erroneous order without considering the relevant papers - Whether the First Appellate Authority was right in allowing the appeal and setting aside the demand of tax and penalty - HELD - A firm can be said to be bogus only if it is in non-existence. The firm was registered with a GSTIN and was found to exist with its premises, and its business was manufacturing of different items. For the relevant year, GSTR-1 and GSTR-3B were filed - The Revenue's two grounds were non-existence of the firm and non-availability of goods at its premises at the relevant time, both were not established - Revenue failed to show that the Respondent had evaded any tax. The proper officer did not consider the facts and circumstances in proper perspective and according to law - The First Appellate Authority rightly allowed the appeal and set aside the demand of tax and penalty – The Revenue appeal is dismissed [Read less]

U.P. Value Added Tax Act, 2008 - Condonation of delay in filing revision under Section 58 of the UPVAT Act - Revisionist, a private limited company and registered dealer, filed the revision against the order of the Tribunal and the rectified order of the Tribunal after a delay of about five years - Revisionist averred in the affidavit that the counsel engaged to file the revision did not file it, another counsel was engaged who also did not file it, the order of the Tribunal was misplaced in the office of the counsel, and the Revisionist remained under the belief that the revision had been filed - Respondent contended that... [Read more]

U.P. Value Added Tax Act, 2008 - Condonation of delay in filing revision under Section 58 of the UPVAT Act - Revisionist, a private limited company and registered dealer, filed the revision against the order of the Tribunal and the rectified order of the Tribunal after a delay of about five years - Revisionist averred in the affidavit that the counsel engaged to file the revision did not file it, another counsel was engaged who also did not file it, the order of the Tribunal was misplaced in the office of the counsel, and the Revisionist remained under the belief that the revision had been filed - Respondent contended that negligence is not a ground for condonation and that there was nothing on record except bald and vague statements - Whether the delay in filing the revision can be condoned under Section 5 of the Limitation Act on the grounds stated - HELD - The grounds set forth in the affidavit do not inspire the confidence of the Court, particularly when it is only stated that the counsel engaged to file the revision did not file it, another counsel engaged also did not file it, and then the earlier counsel was assigned the task again. A litigant is not required to be in deep slumber but is to be vigilant and diligent towards his rights. Merely on asking, delay cannot be condoned, and there have to be specific grounds explaining the day to day delay - The delay is of an enormous period of approximately five years and the paragraph in the application does not portray any ground to condone it. It is not a case where the Revisionist is rustic, uneducated or unaware of its rights, since a private limited company in common parlance engages a legal assistant as well as a lawyer to give it legal advice. It is also not the case of the Revisionist that it was not aware of the order passed by the Tribunal - The case is not a fit for condoning the delay - The delay condonation application is rejected [Read less]

Customs – Finalisation of provisional assessment and release of bank guarantees –Petitioner imported goods and cleared them on provisional assessment under Section 18 of the Customs Act, 1962 on furnishing bonds and bank guarantees. The Petitioner approached the High Court complaining that the provisional assessments had remained unfinalised for more than nine years. It sought release of the bank guarantees and a writ of prohibition against finalisation. During the pendency of the Writ Petition, Orders-in-Original were passed in respect of the remaining Bills of Entry. An Order-in-Original directing absolute confiscati... [Read more]

Customs – Finalisation of provisional assessment and release of bank guarantees –Petitioner imported goods and cleared them on provisional assessment under Section 18 of the Customs Act, 1962 on furnishing bonds and bank guarantees. The Petitioner approached the High Court complaining that the provisional assessments had remained unfinalised for more than nine years. It sought release of the bank guarantees and a writ of prohibition against finalisation. During the pendency of the Writ Petition, Orders-in-Original were passed in respect of the remaining Bills of Entry. An Order-in-Original directing absolute confiscation and imposing penalties had already been passed in respect of one Bill of Entry before the Writ Petition was filed, and it was not disclosed - Whether to keep Writ Petition pending in view of the Supreme Court order in GMR Airport Infrastructure Ltd on delay in adjudication - HELD - The direction of the Supreme Court has to be understood in the context in which it was made, namely a challenge to the High Court judgment on delay in adjudication and a large number of connected matters. It cannot be construed as a direction that every proceeding in which delay had at any stage been alleged must be kept pending irrespective of subsequent developments. The present case has travelled considerably beyond the stage of mere pendency of adjudication, as adjudication orders have already been passed. The controversy before the Supreme Court and the controversy which now survives are not identical - No useful purpose would be served by keeping the Writ Petition pending to await the outcome of the proceedings before the Supreme Court - Customs – Maintainability of Writ Petition when Orders-in-Original are passed – Alternative remedy of appeal under Section 128(1) of the Customs Act, 1962 – Non-disclosure of material fact – Whether the Petitioner ought to be relegated to the statutory appellate remedy and whether a writ of mandamus for release of bank guarantees or a writ of prohibition can be granted - HELD - Once an adjudication order has been passed, the Act provides a statutory appellate mechanism under Section 128(1). The adjudication orders are not merely formal orders recording finalisation of provisional assessments, as in one case absolute confiscation was ordered and penalties were imposed. The controversy now involves the legality of adjudicatory determinations, which are ordinarily required to be examined first by the statutory appellate authority. The question of delay is not rendered incapable of examination merely because adjudication orders have been passed, and the Petitioner can urge it before the appellate forum - The relief of mandamus for release of the bank guarantees cannot be considered in isolation from the adjudication orders. A party invoking jurisdiction under Article 226 must make full and candid disclosure of all material facts. The non-disclosure of the Order-in-Original passed before the institution of the Writ Petition is material, since prohibition was sought against finalisation of the very assessment already adjudicated. The Court expressed no opinion on the merits of the orders or on the consequence of the delay, which are left open - The Writ Petition is dismissed as not maintainable in its present form, with liberty to avail the statutory remedy of appeal under Section 128(1). [Read less]

Central Excise – Exemption to Bhujia under Serial No. 37 of Notification No. 12/2012-C.E. – Appellant manufactured Bhujia classifiable under Tariff Item 2106 9099 and cleared it in sealed retail packages. The Revenue denied the nil rate of duty under Serial No. 37 and contended that the goods are covered only by Serial No. 38, which applies to food preparations not cleared in sealed containers. Demand of duty with interest and penalties under Section 11AC was confirmed – Whether Bhujia cleared in sealed retail pouches is entitled to the nil rate of duty under Serial No. 37 of Notification No. 12/2012-C.E. dated 17.03... [Read more]

Central Excise – Exemption to Bhujia under Serial No. 37 of Notification No. 12/2012-C.E. – Appellant manufactured Bhujia classifiable under Tariff Item 2106 9099 and cleared it in sealed retail packages. The Revenue denied the nil rate of duty under Serial No. 37 and contended that the goods are covered only by Serial No. 38, which applies to food preparations not cleared in sealed containers. Demand of duty with interest and penalties under Section 11AC was confirmed – Whether Bhujia cleared in sealed retail pouches is entitled to the nil rate of duty under Serial No. 37 of Notification No. 12/2012-C.E. dated 17.03.2012 - HELD - Bhujia finds specific and express mention in Serial No. 37, which covers sweetmeats, namkeen, Bhujia, mixture, chabena or similar edible preparations in ready-to-consume form. The entry does not incorporate any condition that the goods must not be cleared in sealed containers. In the presence of a more specific entry, there is no merit in the claim of the Revenue that the goods would be covered only by Serial No. 38. The issue has already been considered by the Tribunal in the Appellant's own case on the same exemption entry and the same commodity, and the issue is no more res integra. The demand was raised by importing into Serial No. 37 a restriction which is not there - The demand along with interest and penalties is set aside and the appeals are allowed - Central Excise – Exemption to Cheese Balls under Serial No. 29 of Notification No. 03/2006-C.E. – Appellant manufactured Cheese Balls classifiable under Tariff Item 2106 9099 and cleared them in sealed retail pouches. The Revenue treated the goods as ready-to-eat packaged food under Serial No. 30 and denied the nil rate of duty under Serial No. 29 – Whether Cheese Balls cleared in sealed retail pouches are covered by the specific nil-rate entry in Serial No. 29 or by Serial No. 30 for the period governed by Notification No. 03/2006-C.E. dated 01.03.2006 - HELD - The question cannot be determined merely by noticing that the goods are ready-to-eat and packaged. Serial No. 29 itself employs the expression similar edible preparations in ready for consumption form, which condition is satisfied by the goods. The fact that such preparations are subsequently placed in retail packaging cannot obliterate the specific description under which the goods otherwise fall. The distinction sought to be drawn by the Revenue would render the latter part of Serial No. 29 otiose wherever the goods are commercially packaged for sale. In Parle Products, the Tribunal held a similar product to be namkeen in common parlance and, in the alternative, covered by the wider expression similar edible preparations in ready-for-consumption form. As per the Board Circular, Serial No. 30 operates as the residual entry for ready-to-eat packaged food which does not answer the specific description in Serial No. 29. It does not displace Serial No. 29 merely because the goods are packaged. Having regard to the nature of the product, its composition and manufacturing process and its ready-to-consume character, the goods are covered by Serial No. 29 - The Cheese Balls are entitled to the nil rate of duty under Serial No. 29, the demand with interest and penalties is set aside and the appeals are allowed - Central Excise – Exemption to Cheese Balls under Serial No. 37 of Notification No. 12/2012-C.E. – Appellant cleared Cheese Balls in sealed retail pouches during the period governed by Notification No. 12/2012-C.E. The Revenue denied the exemption under Serial No. 37 and also held that the goods do not satisfy Serial No. 38 as they were cleared in sealed containers – Whether Cheese Balls cleared in sealed retail pouches are entitled to the nil rate of duty under Serial No. 37 independent of Serial No. 38 - HELD - Serial No. 37 reproduces, in substance, the same description which appeared under Serial No. 29 of the erstwhile notification. Where the same description is carried forward into the successor notification, the exemption cannot be construed as having undergone a substantive restriction in the absence of language expressly manifesting such an intention. A restriction which the notification does not contain cannot be imported into it by interpretation. The requirement that the goods should not be cleared in sealed containers occurs in the distinct and separately worded Serial No. 38. Such a condition cannot be read into Serial No. 37. The Appellant's entitlement under Serial No. 37 is independent of the availability of Serial No. 38. Serial No. 38 is not a gateway through which the Appellant is required to pass before claiming Serial No. 37. If the goods satisfy the description of Serial No. 37, the fact that they may not satisfy the separate conditions of Serial No. 38 does not disentitle them from the specific exemption. The Revenue's reasoning proceeds on an erroneous conflation of two distinct exemption entries - The Cheese Balls are entitled to the nil rate of duty under Serial No. 37, the demand with interest and penalties cannot be sustained and the appeals are allowed - Central Excise – Scope of Tariff Sub-heading 2106 90 in exemption entries vis-à-vis Tariff Item 2106 9099 – The Revenue contended that the specific exemption entries referring to Tariff Sub-heading 2106 90 do not extend to goods classified under Tariff Item 2106 9099 – Whether goods classifiable under Tariff Item 2106 9099 are outside the scope of the expression 2106 90 occurring in Serial No. 29 of Notification No. 03/2006-C.E. and Serial No. 37 of Notification No. 12/2012-C.E. - HELD - The departmental interpretation does not appreciate the hierarchical structure of the Central Excise Tariff. Heading 2106 covers food preparations not elsewhere specified or included. Sub-heading 2106 90 covers the other goods falling within that heading. Tariff Item 2106 9099 is an eight-digit tariff item situated within and forming part of the said sub-heading. The two expressions are not mutually exclusive classifications. Supplementary Note 6 to Chapter 21 provides that Tariff Item 2106 9099 includes products commonly known as namkeen, mixture, Bhujia and chabena, or called by any other name. The Revenue's construction would require reading into the entries a restriction which is not expressed therein. Had the legislative intention been to confine the benefit to a particular tariff item, the notification could have employed the specific eight-digit description. Having used the broader expression 2106 90, the exemption cannot be curtailed by importing a limitation which the notification does not contain - Classification under Tariff Item 2106 9099 does not take the goods outside the scope of the exemption entries, provided the goods answer the substantive description stipulated therein. The impugned order is set aside and the appeals are allowed. [Read less]

GST - Limitation for filing appeal under Section 107(1) of the CGST Act, 2017 - Uploading of order on GST portal, Communication of order – Cancellation of registration with retrospective effect for non-filing of returns. On coming to know of the cancellation, the Petitioner filed all pending returns, discharged the dues and filed an appeal under Section 107(1). The Appellate Authority dismissed the appeal as barred by limitation, computing the delay from the effective date of cancellation - Revenue contended that uploading of the order on the common portal under Section 169 is sufficient compliance and the Petitioner is ... [Read more]

GST - Limitation for filing appeal under Section 107(1) of the CGST Act, 2017 - Uploading of order on GST portal, Communication of order – Cancellation of registration with retrospective effect for non-filing of returns. On coming to know of the cancellation, the Petitioner filed all pending returns, discharged the dues and filed an appeal under Section 107(1). The Appellate Authority dismissed the appeal as barred by limitation, computing the delay from the effective date of cancellation - Revenue contended that uploading of the order on the common portal under Section 169 is sufficient compliance and the Petitioner is deemed to have knowledge of the order - Whether uploading of order on GST portal amounts to communication of order - HELD - Section 107(1) provides limitation of three months from the date on which the order is communicated to the person aggrieved. The expression "communication" is not defined, and must be given contextual meaning. Where the provision is intended to provide a remedy to the person adversely affected, limitation commences from the date of communication of the order - The Adjudicating Authority is obliged to comply strictly with Section 107(1) read with Section 169(1) and to communicate the order - Where the manner of doing an act is prescribed by statute, it must be done in that manner or not at all. Merely uploading the order on the GST Portal does not amount to communication of the order in terms of Section 107(1) - The petitioner was never communicated with the order passed by the Adjudicating Authority in order to enable him to file the appeal. As such, the period of limitation of three months would not start running unless the order in question is served by the Adjudicating Authority - The Statute under Section 107 mandates communication of the order to the person aggrieved by registered post/ e-mail, etc. The Rules cannot circumscribe the modes provided under the Statute, and cannot be limited to electronic modes - The provision for communication is mandatory, and limitation does not start running unless the order is communicated - The provision contained in Section 107(1) of the Act of 2017 qua communication to the affected party is mandatory in nature and unless the order is communicated to affected person, the period of limitation would not start running - The order of the Appellate Authority holding the appeal barred by limitation is set aside, the delay is condoned and the matter is remanded for deciding the appeal on merits – The writ petition is allowed [Read less]

Central Excise - CENVAT Credit of concessional additional duty of customs paid on imported steam coal under Customs Notification No. 12/2012-Cus - Rule 3(1)(i) and Rule 3(1)(vii) of CENVAT Credit Rules, 2004 - Respondent-assessee, a manufacturer of zinc and lead concentrates, paid additional duty of customs at the concessional rate on imported steam coal used in generation of electricity at its captive thermal power plant and availed CENVAT credit of the same under Rule 3(1)(vii). Dept denied the credit on the ground that it contravened Rule 3 of the CCR, 2004 - Tribunal set aside the demand - Whether additional duty of c... [Read more]

Central Excise - CENVAT Credit of concessional additional duty of customs paid on imported steam coal under Customs Notification No. 12/2012-Cus - Rule 3(1)(i) and Rule 3(1)(vii) of CENVAT Credit Rules, 2004 - Respondent-assessee, a manufacturer of zinc and lead concentrates, paid additional duty of customs at the concessional rate on imported steam coal used in generation of electricity at its captive thermal power plant and availed CENVAT credit of the same under Rule 3(1)(vii). Dept denied the credit on the ground that it contravened Rule 3 of the CCR, 2004 - Tribunal set aside the demand - Whether additional duty of customs paid at the concessional rate under the Customs Notification is not the duty of excise specified under the Central Excise Tariff Act and whether CENVAT credit of such duty is admissible to the assessee - HELD - Rule 3(1)(i) allows credit of the duty of excise specified in the First Schedule to the Excise Tariff Act subject to the conditions in its provisos, whereas Rule 3(1)(vii) independently allows credit of the additional duty leviable under Section 3 of the Customs Tariff Act. The Commissioner mixed up Rule 3(1)(i) and Rule 3(1)(vii) and imported the conditions of Rule 3(1)(i) into Rule 3(1)(vii) - The assessee had not paid duty of excise specified in the First Schedule, nor availed the benefit of the Central Excise notifications referred to in the provisos, but had paid additional duty of customs by availing the benefit under the Customs Notification. The finding of the Tribunal could not be substantially questioned by the Revenue and is supported by the minutes of the Regional Advisory Committee which clarified that credit of CVD paid on imported coal under the Customs Notification is eligible, and by the view of the High Court which dismissed the appeal of the Revenue on the same question - The assessee is entitled to CENVAT credit of the additional duty of customs paid on the imported coal – The question of law is answered in favour of the assessee and against the Revenue, the appeals are dismissed [Read less]

Service Tax - Taxability of amount claimed on premature cancellation of lease agreement - Appellant, owner of a hotel, leased it to a lessee for eleven years on monthly rent with a condition that either party cancelling the agreement could recover the rent for the entire period. The lessee vacated the premises well before the term. The Appellant served a legal notice claiming the rent for the remaining period. The matter was finally settled by a compromise agreement under which no compensation, claim or damages were payable by either party. The Revenue demanded service tax on the claimed amount and contended that agreeing ... [Read more]

Service Tax - Taxability of amount claimed on premature cancellation of lease agreement - Appellant, owner of a hotel, leased it to a lessee for eleven years on monthly rent with a condition that either party cancelling the agreement could recover the rent for the entire period. The lessee vacated the premises well before the term. The Appellant served a legal notice claiming the rent for the remaining period. The matter was finally settled by a compromise agreement under which no compensation, claim or damages were payable by either party. The Revenue demanded service tax on the claimed amount and contended that agreeing to tolerate an act or situation is a declared service under Section 66E(e) of the Finance Act, 1994 - Whether service tax is leviable on the amount claimed on premature cancellation - HELD - The amount was never received, and a compromise agreement was reached under which neither party was to pay any damages to the other. An amount received for default of a contract is in the nature of compensation for breach of contract and is not in the nature of rent. The nature of the payment cannot be rent because the premises would have already been vacated when the agreement was breached. The amount is, in essence, compensation for reneging on the contract. At any rate, when the amount has not been paid, service tax cannot be demanded on such amount - The demand on the legal claim is set aside - Service Tax - Taxability of rent accrued from lessee who vacated premises - Threshold exemption - The Appellant had paid service tax on rent actually received for part of the period after claiming the threshold exemption available to small service providers. For the month in which the lessee vacated, no rent was paid. The Revenue contended that non-recovery of consideration does not negate taxability once the rent has accrued - Whether service tax is payable on rent not received and whether the threshold exemption is to be reckoned - HELD - There is no evidence that rent was paid for the month in which the premises were vacated. Service tax cannot be charged on rent not paid. If the Appellant is entitled to the exemption available to small service providers, it cannot be denied. The service tax payable, after considering the rent actually received and the exemption available, needs to be re-computed, subject to verification - The demand for the month in which no rent was received is set aside, the threshold exemption is to be reckoned and any service tax already deposited is to be appropriated towards the confirmed demand - Service Tax - Undervaluation of rent under rival agreements with second lessee - The Revenue relied on an agreement providing a higher monthly rent and the statement of the lessee's director confirming it. The Appellant relied on a subsequent agreement showing a much lower rent and contended that the higher rent agreement was not enforceable - Whether service tax is payable on the higher rent - HELD - Both agreements are on stamp papers and bear the signatures of the parties. The lessee confirmed in his statement that the higher rent was correct. The rent was substantially higher when the hotel was let to the first lessee. After the premises were vacated, the rent could have been reduced to attract another tenant. A rent nowhere comparable to the previous rent is not realistic, while the higher rent appears more realistic - The demand on the higher rent paid by the second lessee is upheld - Service Tax - Extended period of limitation - Revenue alleged that the Appellant suppressed the actual lease agreements, filed incorrect returns and created agreements to undervalue the services - Whether extended period of limitation is invocable and whether interest and penalty are sustainable - HELD - In the factual matrix of the case, there are sufficient grounds to invoke the extended period of limitation. As the demand stands reduced, the interest and penalty under Section 78 shall be reduced proportionally - The extended period is upheld and the appeals are partly allowed. [Read less]

Customs – Refund of duty paid twice against one Bill of Entry – Section 27 and Section 27A of Customs Act, 1962 – Public Notice No. 62/2012 – Appellant paid Customs duty through a bank, but no challan was generated in the ICEGATE system. Appellant had to pay the duty again for clearance of goods. Appellant filed a refund application for the first payment with a bank certificate and other documents. The refund was rejected, and the Commissioner (Appeals) upheld the rejection as self-attested photocopies of both challans were not submitted – Whether refund of duty paid twice can be rejected for non-production of th... [Read more]

Customs – Refund of duty paid twice against one Bill of Entry – Section 27 and Section 27A of Customs Act, 1962 – Public Notice No. 62/2012 – Appellant paid Customs duty through a bank, but no challan was generated in the ICEGATE system. Appellant had to pay the duty again for clearance of goods. Appellant filed a refund application for the first payment with a bank certificate and other documents. The refund was rejected, and the Commissioner (Appeals) upheld the rejection as self-attested photocopies of both challans were not submitted – Whether refund of duty paid twice can be rejected for non-production of the challan for the first payment, when the challan was never generated in the ICEGATE system of the Department, and whether interest is payable – HELD – There was no dispute regarding the eligibility of the Appellant to get refund of one of the double payments. It was improbable to ask the Appellant to produce the challan for the first payment when its entire claim was that the challan could not be generated. Rejecting the refund on that ground was improper, since the failure was in the ICEGATE system of the Department, and the Appellant could not be made to suffer for it. Under Public Notice No. 62/2012, the Appellant was required to produce a bank letter, a copy of the cyber receipt and the bank-attested scroll. The verification from the PAO and the challan enquiry on the ICEGATE website were to be done by the proper officer. Production of copies of both challans was not a requirement under the said Public Notice. The Appellant had complied with all requirements, and the bank had declared that the amount debited was not reversed. Such double payment is a deposit with the Government that is refundable under Section 27. Interest under Section 27A applies automatically when the refund is not made within three months – The order of the Commissioner (Appeals) is set aside, the appeal is allowed, and the Respondent is directed to refund the amount with applicable interest within two months of receipt of the order. [Read less]

Central Excise – Clandestine removal and undervaluation – Evidentiary value of private records, computer printouts and statements – Appellant, a manufacturer of Non-Alloy Steel Ingots, was alleged to have cleared goods without payment of duty and to have undervalued goods, based on documents and computer printouts recovered during search from its office premises and from the premises of a dealer, statements recorded during investigation, excess electricity consumption and an FIR for theft of electricity. The Commissioner confirmed the demand of duty with interest and imposed penalty under Section 11AC – Whether the... [Read more]

Central Excise – Clandestine removal and undervaluation – Evidentiary value of private records, computer printouts and statements – Appellant, a manufacturer of Non-Alloy Steel Ingots, was alleged to have cleared goods without payment of duty and to have undervalued goods, based on documents and computer printouts recovered during search from its office premises and from the premises of a dealer, statements recorded during investigation, excess electricity consumption and an FIR for theft of electricity. The Commissioner confirmed the demand of duty with interest and imposed penalty under Section 11AC – Whether the charge of clandestine manufacture and clearance and under-invoicing is established on the basis of such documents, printouts, statements and electricity consumption - HELD - The mere retrieval of a document from the premises or the computer system of an assessee, without more, cannot by itself be treated as conclusive proof of clandestine clearance or undervaluation. The records were maintained under a separate caption and were retrieved as printouts from a computer in the Appellant's office. The Revenue relied principally on the statement of one employee, who had severed his connection with the Appellant shortly after the statement was given. Suspicions, howsoever strong, cannot take the place of proof. The Revenue made no corroborative exercise to establish the identity, existence and transactions of the separately captioned entity. The other documents did not bear the name of the Appellant. The link with the Appellant was sought to be established only through the certification and statement of its authorised signatory. A document recovered from the premises of a dealer with whom the Appellant has no ownership or organisational nexus was treated as the Appellant's document without independent verification of authorship, source or identity of the parties named therein. A statement made for one set of documents cannot be extended to an unconnected set recovered from third-party premises. The conditions of Section 36B of the Central Excise Act, 1944, including the requisite certificate identifying the manner of production of the computer output, were not complied with. Electronic records, in the absence of the procedural safeguards mandated under Section 36B, cannot be accorded evidentiary value to found a demand of this nature. Power consumption can vary on account of fluctuations in voltage, load-shedding, machine efficiency, idle running and other operational variables. In the absence of a scientifically verified norm of consumption per MT of finished goods for the particular furnace, a comparison of units consumed with the quantity recorded does not constitute cogent evidence of unaccounted production. An FIR alleging theft of electricity, without anything linking it to a quantified figure of unaccounted manufacture and clearance, remains collateral to the proceedings. The demand founded on electricity consumption had also been dropped by the Department in de novo proceedings in the Appellant's own case. A charge of clandestine manufacture must be tested against the physical capability of the plant to produce the quantum of goods alleged. The Appellant had intimated the department in 2005 and 2006 that its second furnace had become operational. Even on the combined capacity of both furnaces, the Revenue did not demonstrate how the alleged production could have been achieved. No case was set up that the Appellant had any third or fourth furnace or any other undisclosed manufacturing facility. The statements relied upon were not tested in the manner mandated under Section 9D(1) of the Act, and the adjudicating authority did not apply its mind to this requirement. Such untested statements cannot be read in evidence. Clandestine removal cannot be presumed merely on the basis of note-book entries, private records or third-party computer printouts unless corroborated by independent and tangible evidence such as verification of excess production with reference to installed capacity and consumption of raw materials or power, movement of goods through transporters and identifiable flow-back of funds. None of these corroborative parameters was satisfied. The charge of under-invoicing was also not satisfactorily established. As the charge of clandestine removal and under-invoicing does not sustain, no penalty can be imposed - The demand of duty along with interest is set aside, the penalty under Section 11AC read with Rule 25 of the Central Excise Rules, 2002 is dropped and the appeal is allowed. [Read less]

Tripura Value Added Tax Act, 2004 - Levy of tax on retail sale of petrol and diesel kept outside VAT – Petitioner contended that the goods listed in Schedule II (d) of the of the Tripura VAT Act, 2004 were kept outside VAT and that tax collected on retail sales through notifications specifying rates for petrol and diesel was without authority - Respondents contended that the goods were kept outside VAT but not outside the Act, and that the Petitioner, whose supplier has no depot in the State, brought the products from outside the State, so that its retail sale of Petrol and Diesel was the first point of sale within the S... [Read more]

Tripura Value Added Tax Act, 2004 - Levy of tax on retail sale of petrol and diesel kept outside VAT – Petitioner contended that the goods listed in Schedule II (d) of the of the Tripura VAT Act, 2004 were kept outside VAT and that tax collected on retail sales through notifications specifying rates for petrol and diesel was without authority - Respondents contended that the goods were kept outside VAT but not outside the Act, and that the Petitioner, whose supplier has no depot in the State, brought the products from outside the State, so that its retail sale of Petrol and Diesel was the first point of sale within the State - Whether the Respondents can collect VAT under Section 3 of the Act on the retail sales of petrol and diesel made by the Petitioner - HELD - The State Government is empowered to keep certain goods outside VAT, and Schedule II (d) lists goods which are kept outside VAT and taxable at the first point of sale within the State at the rates specified. The State Government did not intend to follow the principle of multi stage taxation, which is how a VAT regime normally operates, for goods like petrol and diesel. It wanted to minimise the tax burden on dealers, which would be higher if the VAT regime were applied as in the case of other goods - The imposition of tax on these goods is therefore done through the Act, but by remaining outside the purview of VAT. The interpretation that the words kept outside VAT mean kept outside the purview of the Act cannot be accepted. In other States enactments the wording is different, where petrol and diesel are subjected to levy at the first point of sale at special rates. No error was found in the demand made by the Respondents - The Petitioner is not entitled to refund of the amount collected - The question is answered against the Petitioner and in favour of the Respondents - The Writ Petition is dismissed - Tripura Road Development Cess - Liability to pay cess on turnover of sales of petrol, diesel and natural gas - Section 3 of the Tripura Road Development Cess Act, 2015 levies cess on the turnover of sales of petrol, diesel and natural gas, with turnover of sales defined as sales price including the amount of tax levied under the Tripura VAT Act, 2004 - Petitioner contended that since petroleum products are kept outside the purview of the VAT Act by Schedule II (d), they generate zero turnover, and cess cannot be collected on the basis of VAT when VAT is excluded - Whether the Petitioner is liable to pay cess under Section 3 of the Cess Act on the turnover of sales of petrol, diesel and natural gas - HELD - The Cess Act levies cess on the turnover of sales after deducting turnover on which cess has been paid on earlier sales, and its proviso bars levy of cess at more than one stage. It had already been held that the Respondents can collect VAT under Section 3 of the VAT Act on the retail sales of petrol and diesel by the Petitioner. The same logic applies here, as the products are kept outside VAT but not outside the purview of the VAT Act. Consequently, the levy of cess under the Cess Act on the basis of VAT cannot be held illegal or impermissible. [Read less]

Meghalaya VAT Act, 2003 - Scrutiny of returns under Section 39 of the Meghalaya VAT Act - The Petitioner, challenged the Scrutiny Reports and Notices for curing defects in returns issued under Section 39 for the period from 2007 to 2017, contending that no notice under Section 35 was issued - The Respondents relied on a notice calling for production of books of account issued in 2017 and alleged suppression of that notice by the Petitioner - Whether scrutiny under Section 39 can be validly initiated without notice under Section 35, and whether such notice can be issued to a registered dealer in view of Section 35(3) - HELD... [Read more]

Meghalaya VAT Act, 2003 - Scrutiny of returns under Section 39 of the Meghalaya VAT Act - The Petitioner, challenged the Scrutiny Reports and Notices for curing defects in returns issued under Section 39 for the period from 2007 to 2017, contending that no notice under Section 35 was issued - The Respondents relied on a notice calling for production of books of account issued in 2017 and alleged suppression of that notice by the Petitioner - Whether scrutiny under Section 39 can be validly initiated without notice under Section 35, and whether such notice can be issued to a registered dealer in view of Section 35(3) - HELD - The language of Section 39(1) is clear and unambiguous, it mandates scrutiny of returns furnished by a registered dealer to whom notice has been issued by the Commissioner under Section 35. This is not a mere procedural formality but a condition precedent that goes to the root of authority and jurisdiction to undertake scrutiny - The words "to whom notice has been issued" qualify the class of registered dealers whose returns can be scrutinised, and reading Section 39 as allowing scrutiny of every return irrespective of notice is a misreading - Where a statute prescribes a particular manner for doing an act, it must be done in that manner alone, and an authority cannot assume jurisdiction in a manner not authorised - Section 35(3) provides for notice only to dealers other than a registered dealer. A registered dealer is bound to file returns under Section 35(2) without notice. The only harmonious construction is that Section 39 applies to registered dealers who were previously unregistered and were brought under the tax net by notice under Section 35(3). It does not apply to a dealer who was always registered and filed returns without notice - The specific provision cannot be ignored or read down – Further, the notice calling for books of account was for assessment purposes and not a notice to furnish returns. Even if treated as such, it would be invalid as Section 35(3) does not authorise notice to registered dealers - The mandatory precondition of notice under Section 35 is not satisfied, and the Scrutiny Reports and Notices under Section 39 are set aside and quashed - The writ petition is disposed of - Applicability of limitation under Section 57 to scrutiny of returns under Section 39 of the Meghalaya VAT Act - Notices for curing defects in returns for the period from 2007 to 2017 were issued in 2023. The Petitioner contended that no assessment can be made after five years from the end of the tax period under Section 57 and that the scrutiny was barred by limitation - Whether the five-year limitation under Section 57 applies to scrutiny proceedings under Section 39 - HELD - The scheme of the Act providing the five-year period of limitation under Section 57 is also to be applied in respect of Section 39. Authorities cannot be allowed to circumvent the limitation provisions for completing assessment by recourse to the powers of summary adjustment under the scrutiny provision. The Respondents' argument based on specific provisions prevailing over general provisions supports the Petitioner - The scrutiny proceedings and notices issued in 2023 for the period from 2007 to 2017 are beyond limitation and are set aside - Delegation of power to exercise scrutiny under Section 39 of the Meghalaya VAT Act - The Petitioner challenged the competence of the Superintendent of Taxes to initiate scrutiny proceedings under Section 39, contending that the power was not delegated by notification. The Respondents contended that the Superintendent was delegated the power under the Act read with the Rules and relied on internal orders and circulars - Whether the Superintendent of Taxes had jurisdiction and authority to initiate proceedings under Section 39 - HELD - Section 26 of the Act read with Rule 3 of the Rules mandates that the Commissioner "shall" delegate powers by a notification in the Official Gazette. The Respondents did not place on record any notification published in the Official Gazette delegating Section 39 powers to the Superintendent of Taxes. Reliance on internal orders and circulars does not satisfy the statutory requirement - The delegation is not established, and the proceedings under Section 39 are set aside. [Read less]

GST - Maintainability of appeal before the Tribunal where the penalty is below the monetary limit prescribed under Section 112(2) - Appellant challenged the Order-in-Appeal upholding the penalty under Section 129 imposed for not entering vehicle details in Part B of e-way bills. The penalty was below the monetary limit specified for appeals before the Tribunal - Whether the Tribunal can hear an appeal where the penalty is below the monetary limit specified in Section 112(2) - HELD - Section 112(2) gives the Tribunal discretion to refuse admission of an appeal below the specified monetary limit. It does not completely bar s... [Read more]

GST - Maintainability of appeal before the Tribunal where the penalty is below the monetary limit prescribed under Section 112(2) - Appellant challenged the Order-in-Appeal upholding the penalty under Section 129 imposed for not entering vehicle details in Part B of e-way bills. The penalty was below the monetary limit specified for appeals before the Tribunal - Whether the Tribunal can hear an appeal where the penalty is below the monetary limit specified in Section 112(2) - HELD - Section 112(2) gives the Tribunal discretion to refuse admission of an appeal below the specified monetary limit. It does not completely bar such an appeal. The appeal raises a question about an express exception in the Rules governing the movement of goods and the legality of the penalty. The Tribunal therefore exercises its discretion to hear and decide the appeal on merits - Penalty under Section 129 for not filling Part B of e-way bill during initial movement from consignor's place of business to transporter's premises within the State - Goods were sent from the Appellant's additional place of business to the transporter's receiving premises in the same State, a distance of less than 30 km, to be brought together before onward dispatch to the consignee - The vehicle number was not entered in Part B of the two e-way bills. The adjudicating authority imposed penalty under Section 129 - Whether leaving Part B unfilled during that journey is a breach attracting Section 129 - HELD – The third proviso to Rule 138(3) permits vehicle details to be left unfilled in Part B where goods are transported up to fifty kilometres within the State from the consignor's place of business to the transporter's place of business for further transportation. It does not exempt every journey of less than 50 km. The party claiming the benefit must prove that the conditions of the proviso are met. The recorded facts about the originating depot, the identified transporter's warehouse and the initial journey for consolidation bring the movement within the proviso - Explanation 2 to Rule 138(3) expressly preserves the exceptions in the third proviso, so the contention that every road movement without Part B is invalid overlooks them. The proviso to Rule 138(5) deals with a different situation, namely the final journey to the consignee's premises. An omission expressly permitted by the Rules cannot be treated as a breach of those Rules - The decisions on mens rea do not justify a penalty where the omission falls within an applicable statutory exception. This finding is confined to the initial journey, and any later movement remains subject to the requirements applicable to it. The objections on DIN, authentication and Rule 142 summaries are not decided - The Order-in-Appeal and the Order-in-Original are set aside. The penalty is cancelled - The appeal is allowed [Read less]

Service Tax – Classification of transportation of coal and allied services in mining area as Mining of Mineral, Oil or Gas Service or Goods Transport Agency service – Appellant rendered services under work orders of a corporate service recipient, covering transportation or shifting of coal, transportation of rejected coal within mining area, and incidental activities such as excavation, picking of coal material and roof treatment. The demand was confirmed under Mining of Mineral, Oil or Gas Service along with interest and penalty under Section 78 – Whether the services rendered under the work orders are classifiable ... [Read more]

Service Tax – Classification of transportation of coal and allied services in mining area as Mining of Mineral, Oil or Gas Service or Goods Transport Agency service – Appellant rendered services under work orders of a corporate service recipient, covering transportation or shifting of coal, transportation of rejected coal within mining area, and incidental activities such as excavation, picking of coal material and roof treatment. The demand was confirmed under Mining of Mineral, Oil or Gas Service along with interest and penalty under Section 78 – Whether the services rendered under the work orders are classifiable as Mining of Mineral, Oil or Gas Service or as Goods Transport Agency service, and whether the demand, interest and penalty are sustainable - HELD - Though different work orders were issued, the primary activity undertaken by the Appellant is transportation and all other elements of the contracts are incidental or ancillary to the transportation activity. The amount received for transportation formed the major part of the total receipts in each of the years. Hence, the principal service involved is Transportation Service. As per the Board Circular, a composite service may include intermediary and ancillary services which are not provided as independent activities but are the means for successful provision of the principal service. Such a composite service is to be classified on the basis of the main or principal service. The services rendered by the Appellant are appropriately classifiable under Goods Transport Agency service. The recipients of the transportation service are corporate entities falling within the categories mentioned in Notification No. 30/2012-ST. Therefore, the recipients are liable to pay service tax under Goods Transport Agency service on reverse charge basis under Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994. Transportation service without consignment notes falls in the negative list under Section 66D(p) and is not taxable. This position is supported by the decision of the Tribunal in Chartered Logistics, which was affirmed by the Apex Court. The issue of transportation service in the mining area being classifiable under Goods Transport Agency service and not Mining Service is no more res integra in view of the decision of the Apex Court in Singh Transporters. Transportation of coal from the pit-heads to the railway sidings within the mining areas does not involve any service in relation to mining of mineral, oil or gas. By applying the principles of essentiality under Section 66F, the services rendered under the work orders are essentially for transportation. As the demand is not sustained, the question of interest or penalty under Section 78 does not arise - The demand of service tax under Mining of Mineral, Oil or Gas Service is set aside along with interest and penalty under Section 78 and the appeal is allowed to this extent - Service Tax – Threshold exemption for Management, Maintenance and Repair Service and Supply of Tangible Goods Service – Appellant was also alleged to have rendered Management, Maintenance and Repair Service and Supply of Tangible Goods Service. The Appellant contended that its turnover from these two services, excluding transportation service, did not exceed the threshold exemption limit in any of the financial years from 2008-09 to 2012-13 – Whether service tax, interest and penalties under Sections 76, 77 and 78 of the Finance Act, 1994 are payable on these two services - HELD - On perusal of the year-wise turnover, the turnover of the Appellant in respect of the two taxable services, individually or jointly, did not exceed the threshold exemption limit of Rs. 10,00,000 except for the financial year 2010-11. The Appellant is liable to pay service tax for the financial year 2010-11 only on the value in excess of the threshold exemption limit. The Appellant is also liable to pay service tax on the entire value for the next financial year 2011-12 as the exemption stands lost. The turnover for the financial year 2012-13 falls within the threshold exemption limit and is not taxable. The Appellant is liable to pay interest on the service tax not paid. As suppression with intention to evade the tax has not been established, no penalty is imposable on this amount. No penalty is imposable under Section 76 of the Finance Act, 1994. The penalty under Section 77 is upheld as it has been imposed for the delay in filing of returns. The amount paid by the Appellant during investigation is to be appropriated against the service tax confirmed along with interest for the two financial years, and the rest may be appropriated from the pre-deposit already made - The demand is confirmed only for the financial years 2010-11 and 2011-12 along with interest, the penalties under Sections 76 and 78 are set aside, the penalty under Section 77 is upheld and the appeal is partly allowed - Service Tax – Demand confirmed without findings for the period April 2013 to March 2014 – Small scale exemption – Periodical show cause notice proposed demand on the basis of income figures for the period April 2013 to March 2014, alleging the same charge as the earlier notice. The impugned order confirmed the demand without recording any finding – Whether the demand for the period April 2013 to March 2014 is sustainable - HELD - The impugned order has not recorded any finding while confirming the said demand. Even if the demand is under the category of Mining of Mineral, Oil or Gas Service, the same cannot be sustained in view of the legal position that the services are classifiable as Goods Transport Agency service. Even otherwise, if the demand is not under that category, it is seen from the records that the Appellant would be entitled to the benefit of small scale exemption for the said financial year - The demand for the period April 2013 to March 2014 is set aside and the appeal is allowed to this extent. [Read less]

GST - Detention of goods and levy of penalty under Section 129 at the consignee's premises for non-updation of Part-B of e-way bill - Part-B containing the vehicle number was left unpopulated due to an inadvertent oversight - The Respondent inspected the stationary vehicle, recorded the driver's statement at the Appellant's unit and detained the goods under Section 129(1) for want of Part-B update. The Appellant updated Part-B promptly on being notified and deposited the disputed tax and penalty under protest to secure release of the goods - Whether the detention of goods and levy of penalty under Section 129 at the doorst... [Read more]

GST - Detention of goods and levy of penalty under Section 129 at the consignee's premises for non-updation of Part-B of e-way bill - Part-B containing the vehicle number was left unpopulated due to an inadvertent oversight - The Respondent inspected the stationary vehicle, recorded the driver's statement at the Appellant's unit and detained the goods under Section 129(1) for want of Part-B update. The Appellant updated Part-B promptly on being notified and deposited the disputed tax and penalty under protest to secure release of the goods - Whether the detention of goods and levy of penalty under Section 129 at the doorstep of the consignee's premises solely due to an un-updated Part-B, subsequently cured, is legally sustainable - HELD - Section 129 contemplates detention of goods in transit. The vehicle had already completed its inter-state journey and was stationary at the Appellant's registered gate, as corroborated by the driver's statement - Intercepting a vehicle that has finished its transit at the delivery address to invoke transit-detention provisions is a misapplication of the statute. Section 126 provides that no penalty shall be imposed for minor breaches that are easily rectifiable and involve no revenue loss – Further, the omission of Part-B was a clerical slip committed in the early weeks of the e-way bill mechanism. Tax on the underlying supply stood paid through valid tax invoices, and Part-A was generated - Section 129 is not a strict liability provision. Penalty cannot be sustained in the absence of intention to evade tax, and the Revenue cannot substitute a missing Part-B field with a presumption of tax evasion - Circular No. 64/38/2018-GST directs that minor discrepancies where primary documents exist should not attract proceedings under Section 129. Transforming a rectifiable paperwork delay into a penalty at the consignee's doorstep violates the doctrine of proportionality and reasonableness - The Order-in-Appeal is set aside and the appeal is allowed [Read less]

GST - Penalty under Section 129(3) for address discrepancies in documents accompanying goods in transit - Goods were intercepted and detained on the ground that the address in the invoice and transport documents differed from the registered principal place of business of the Appellant. Penalty was imposed under Section 129(3) - Whether the penalty under Section 129(3) is sustainable on the basis of discrepancies relating to the address and particulars of the Appellant, without sufficient evidence establishing contravention and intent to evade tax - HELD - The Department was required to establish the alleged contravention t... [Read more]

GST - Penalty under Section 129(3) for address discrepancies in documents accompanying goods in transit - Goods were intercepted and detained on the ground that the address in the invoice and transport documents differed from the registered principal place of business of the Appellant. Penalty was imposed under Section 129(3) - Whether the penalty under Section 129(3) is sustainable on the basis of discrepancies relating to the address and particulars of the Appellant, without sufficient evidence establishing contravention and intent to evade tax - HELD - The Department was required to establish the alleged contravention through relevant and reliable evidence. The mere existence of a discrepancy in the address or other particulars, without adequate supporting evidence, cannot automatically be treated as conclusive proof of an intention to evade tax - The Respondent did not bring on record sufficient independent evidence to establish that the goods were deliberately transported in contravention of the Act with an intention to evade tax. No discrepancy was found in the quantity and quality of the goods. The First Appellate Authority did not establish how the discrepancies constituted a legally and factually sustainable ground for the penalty - Proceedings under Section 129 cannot be sustained merely on the basis of assumptions or unsubstantiated technical allegations. The alleged discrepancy was purely technical or procedural in nature, with no mens rea or intent to evade tax - The Order-in-Appeal is set aside and the appeal is allowed [Read less]

GST - Validity of Order-in-Appeal dismissing appeal without hearing and without a speaking order - First Appellate Authority dismissed the appeal by a one-page order without considering the adjournment request - Whether the Order-in-Appeal, passed without affording an opportunity of hearing and without a speaking order - HELD - Section 107(8) of the CGST Act requires the Appellate Authority to give the Appellant an opportunity of being heard. Section 107(12) requires the order to be in writing and to state the points for determination, the decision thereon and the reasons for such decision. Section 107(11) requires the App... [Read more]

GST - Validity of Order-in-Appeal dismissing appeal without hearing and without a speaking order - First Appellate Authority dismissed the appeal by a one-page order without considering the adjournment request - Whether the Order-in-Appeal, passed without affording an opportunity of hearing and without a speaking order - HELD - Section 107(8) of the CGST Act requires the Appellate Authority to give the Appellant an opportunity of being heard. Section 107(12) requires the order to be in writing and to state the points for determination, the decision thereon and the reasons for such decision. Section 107(11) requires the Appellate Authority to make the necessary inquiry and then confirm, modify or annul the order - The order merely stated that the grounds were perused and that the order of the proper officer required no interference. This does not meet the requirement of Section 107(12). The Appellate Authority cannot dismiss an appeal on account of non-appearance of the Appellant or the authorised representative. At most it can proceed ex parte, but it is still obligated to decide the appeal on merits - An order without reasoning is a non-speaking order and is violative of the principles of natural justice. The impugned order, being cryptic and non-speaking and passed in defiance of Section 107, is hit by audi alteram partem - The Order-in-Appeal is set aside. The matter is remanded to the First Appellate Authority to decide the appeal afresh on merits by a speaking order, after giving the Appellant a hearing - The appeal stands disposed of [Read less]

GST - Anti-profiteering - Validity of re-investigation by the DGAP pursuant to remand by the Competition Commission of India after the Delhi High Court held the methodology in real estate cases to be flawed - Application alleged that the Respondent, a real estate developer, had not passed on the benefit of additional input tax credit to a homebuyer. The DGAP submitted an investigation report. The Competition Commission of India remanded the matter under Rule 133(4) as the methodology was held to be flawed by the Delhi High Court. The Respondent contended that the observation in the High Court judgment was not a direction f... [Read more]

GST - Anti-profiteering - Validity of re-investigation by the DGAP pursuant to remand by the Competition Commission of India after the Delhi High Court held the methodology in real estate cases to be flawed - Application alleged that the Respondent, a real estate developer, had not passed on the benefit of additional input tax credit to a homebuyer. The DGAP submitted an investigation report. The Competition Commission of India remanded the matter under Rule 133(4) as the methodology was held to be flawed by the Delhi High Court. The Respondent contended that the observation in the High Court judgment was not a direction for universal re-investigation, that it was not a party to those proceedings, and that the Commission had no power to reopen a concluded investigation - Whether the re-investigation is void ab initio for want of jurisdiction - HELD - The infirmity identified by the High Court related to the methodology for computing profiteering and was not peculiar to the parties before it. The relief granted in that case was confined to the parties. The legal principle laid down on methodology is the ratio decidendi and is binding on the Tribunal - The CCI decision to remit pending real estate matters for reinvestigation must therefore be viewed as an attempt to secure uniformity, consistency and conformity with the binding judicial precedent, rather than as an impermissible exercise of suo motu review. The object of the remand was to cure the legal infirmity in the investigative methodology - The Respondent not being a party to the High Court proceedings does not confer a right to have the matter determined on a methodology judicially found to be unsustainable - The Respondent did not demonstrate any specific statutory prohibition or jurisdictional limitation violated - The re-investigation is not without jurisdiction and is not void ab initio - Whether the DGAP became functus officio after submitting the original report and whether a fresh reference under Rule 128 was necessary - The DGAP submitted its original report. The proceedings before the erstwhile Authority had not culminated in a final order when its tenure ended. The Respondent contended that the DGAP could not conduct a second investigation without a fresh reference from the Standing Committee under Rule 128 - Whether the DGAP became functus officio and whether a fresh reference was mandatory before re-investigation - HELD - The doctrine of functus officio applies to a quasi-judicial authority that has finally discharged its function. The original report was rendered infirm by the subsequent judicial pronouncement as it was based on a flawed methodology. The proceedings had not culminated in a final order. Rule 133(4) empowers the Authority to remit the matter to the DGAP for re-investigation. The DGAP acted pursuant to a lawful remand order and not suo motu. The original reference under Rule 128 remained alive. The remand did not necessitate a fresh reference. The DGAP was merely directed to correct the methodology and submit a fresh report in the same proceedings - The DGAP did not become functus officio. A fresh reference under Rule 128 was not required - Limitation for submission of the DGAP report under Rule 129(6) in re-investigation proceedings - The re-investigation was initiated after the remand. The report was submitted well beyond the six months provided under Rule 129(6) and the maximum extended period. The Respondent contended that the proceedings were barred by limitation and that the extension granted by the Tribunal was ultra vires - Whether the re-initiated proceedings are barred by limitation under Rule 129(6) and whether the extension is ultra vires - HELD - Rule 129(6) requires the DGAP to submit its report within six months or within such extended period as may be granted by the Authority - The Delhi High Court has held that the Rules do not provide any consequence on lapse of the time limits. The anti-profiteering provisions are beneficial legislation which must receive liberal construction in favour of the consumer. The time limit for furnishing the report is directory and not mandatory. The proceedings do not abate on lapse of the time limit. The Tribunal had earlier affirmed this position. Though the delay was substantial, it occurred due to the need to obtain complete documents from the Respondent. The Respondent cannot take advantage of its own delay in producing documents. The extension granted by the Tribunal was within the spirit of Rule 129(6) - The proceedings are not barred by limitation - Alleged violation of natural justice due to change in methodology during anti-profiteering proceedings - The Respondent contended that the methodology was changed mid-proceeding without hearing, defeating its legitimate expectation - Whether the Respondent was denied natural justice due to the alleged change in methodology - HELD - The change in methodology was not arbitrary. It was mandated by the judgment of the Delhi High Court. The Respondent was given notice of the re-investigation and an opportunity to submit documents - The fresh report was served on the Respondent and the Tribunal issued notice calling for objections. The Respondent filed written submissions and was heard extensively on its jurisdictional and legal objections. The Respondent chose not to address the merits of the profiteering computation and confined itself to preliminary objections. A party that deliberately elected not to contest the merits cannot allege a violation of natural justice - There was no violation of natural justice - Contravention of Section 171(1) by non-passing of benefit of additional input tax credit to homebuyers - The DGAP found that the input tax credit available to the Respondent as a percentage of purchase value was higher in the post-GST period than in the pre-GST period. The benefit per square foot was computed on the basis of the total savings for the project divided by the total saleable area - Whether the Respondent contravened Section 171 by failing to pass on the benefit of additional input tax credit to eligible homebuyers - HELD - Section 171(1) mandates that any benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. It is beneficial legislation designed to prevent unjust enrichment and must receive a purposive construction. The obligation is discharged only by actual transmission of the benefit. Once the DGAP determines on the basis of the Respondent's own records that a benefit has accrued and has not been passed on, the evidential burden shifts to the Respondent - The Respondent produced no revised price list, credit note, refund voucher, adjusted invoice or correspondence with any homebuyer. The findings of the DGAP remain unchallenged and uncontroverted. The Respondent cannot approbate and reprobate by refusing to engage with the merits and then asserting that the findings are unsupported - The entire period of contravention was completed before Section 171(3A) came into force, so no penalty is leviable under that provision - The Respondent has contravened Section 171(1). The DGAP report is accepted. The benefit shall be passed on to the eligible homebuyers in proportion to their sold areas within three months along with interest at 18 per cent per annum in terms of Rule 133(3)(b). No penalty is imposed. [Read less]

GST – Gujarat AAR - Classification and rate of outdoor playground equipment and its spare parts - Applicant supplies outdoor playground equipment such as slides, swings, see-saws, climbers and multi-activity play stations installed at parks, schools, gardens, municipalities and public spaces, along with spare parts required exclusively for such equipment, and claims classification under Heading 9506 - Whether outdoor playground equipment and its spare parts are classifiable under Heading 9506 and the applicable GST rate under Notification No.09/2025-Central Tax (Rate) dated 17.09.2025 - HELD - The products do not fall un... [Read more]

GST – Gujarat AAR - Classification and rate of outdoor playground equipment and its spare parts - Applicant supplies outdoor playground equipment such as slides, swings, see-saws, climbers and multi-activity play stations installed at parks, schools, gardens, municipalities and public spaces, along with spare parts required exclusively for such equipment, and claims classification under Heading 9506 - Whether outdoor playground equipment and its spare parts are classifiable under Heading 9506 and the applicable GST rate under Notification No.09/2025-Central Tax (Rate) dated 17.09.2025 - HELD - The products do not fall under the excluded list in Chapter Note 1 to Chapter 95 or in the HSN notes to Heading 9506. The HSN notes cover under Sr.No.12 of the requisites for other sports and outdoor games the equipment of a kind used in children's playgrounds, such as swings, slides, see-saws and giant strides - The decision of the Tribunal in the case of M/s. Arihant Industrial Corpn. Ltd.that climbers used in children's playgrounds and gardens are sports goods for children classifiable under Chapter 9506 is squarely applicable. Since there is no specific entry for such equipment in the tariff entries under Heading 9506, it is aptly covered under sub-heading 95069990. As per Chapter Note 3 to Chapter 95, parts and accessories suitable for use solely or principally with articles of the Chapter are classified with those articles, and the spare parts also fall under sub-heading 95069990 - Being sports goods for children, the equipment and its spare parts are covered under Entry No.499 of Schedule-I of the Notification and are liable to GST at 5% - Outdoor playground equipment and its spare parts are classifiable under 95069990 and are liable to GST at 5% - Ordered accordingly - GST - Classification and rate of outdoor gym equipment and its spare parts - Applicant supplies outdoor gym equipment such as twisters, pull-up bars, cross-trainers and leg press installed at public spaces, along with spare parts required exclusively for such equipment - Whether outdoor gym equipment and its spare parts are classifiable under Heading 9506 and the applicable GST rate under Notification No.09/2025-Central Tax (Rate) dated 17.09.2025 - HELD - Heading 9506 not only covers articles and equipment for general physical exercise, gymnastics and athletics but also covers a wide range of sports equipment for indoor and outdoor sports. As per the HSN notes, outdoor gym equipment is covered under the articles and equipment for general physical exercise, gymnastics or athletics. Sub-heading 950691 covers such articles and equipment, and the outdoor gym equipment is appropriately covered under sub-heading 95069190 (others). As per Chapter Note 3 to Chapter 95, the spare parts for the gym equipment are also covered under sub-heading 95069190 - The equipment is covered under Entry No.619 of Schedule-II of the Notification, which relates to articles and equipment for general physical exercise, gymnastics and athletics other than sports goods, and the equipment and its spare parts are liable to GST at 18% - Outdoor gym equipment and its spare parts are classifiable under 95069190 and are liable to GST at 18% - Classification of bearings supplied as spare parts of outdoor gym equipment - Applicant supplies bearings as spare parts for its outdoor gym equipment, and claims classification of all spare parts along with the equipment under Heading 9506 - Whether bearings supplied as spare parts of outdoor gym equipment are classifiable along with the equipment under sub-heading 95069190 - HELD - Bearings are not items that can be specifically used only in outdoor gym equipment but can be used as spare parts in other equipment also - Bearings would be classifiable under sub-heading 95069190 only on account of being spare parts of outdoor gym equipment in view of Chapter Note 3 to Chapter 95. However, there is a specific tariff entry for ball bearings and roller bearings under Heading 8482. Under Rule 3(a) of the General Rules for the Interpretation of the Schedule to the Customs Tariff Act, 1975, the heading which provides the most specific description is to be preferred to headings providing a more general description - Since Heading 8482 gives the more specific description, bearings are appropriately classifiable under Heading 8482 only. Since proper details of the bearings were not provided by the Applicant, the appropriate tariff item cannot be decided and the Applicant is advised to classify them under the appropriate tariff entry under Heading 8482 as per the specifications. Bearings are covered under Entry No.467 of Schedule-II of the Notification and are liable to GST at 18% - Bearings are classifiable under Heading 8482 and not under sub-heading 95069190, and are liable to GST at 18%. [Read less]

GST – Gujarat AAR - Classification of geomembrane pond liner as textile product coated or laminated with plastic used for technical purposes under Heading 5911 - Applicant manufactures geomembrane pond liner for waterproof lining by weaving HDPE tapes or strips of width below 5 mm into woven fabrics, which are then coated and laminated with plastics on both sides by sandwich lamination and used in aquaculture ponds with Biofloc technology - Whether the geomembrane is classifiable under Heading 5911, sub-heading 59111000 or sub-heading 59119090 - HELD - Classification is determined from the ingredients used, the manufactu... [Read more]

GST – Gujarat AAR - Classification of geomembrane pond liner as textile product coated or laminated with plastic used for technical purposes under Heading 5911 - Applicant manufactures geomembrane pond liner for waterproof lining by weaving HDPE tapes or strips of width below 5 mm into woven fabrics, which are then coated and laminated with plastics on both sides by sandwich lamination and used in aquaculture ponds with Biofloc technology - Whether the geomembrane is classifiable under Heading 5911, sub-heading 59111000 or sub-heading 59119090 - HELD - Classification is determined from the ingredients used, the manufacturing process and the technical uses of the goods. Section Note 1(g) to Section XI excludes only strips of plastic with width exceeding 5 mm, and the strips below 5 mm are covered under Section XI. The HDPE tapes or strips less than 5 mm fall under sub-heading 54049020 and the woven fabrics obtained from them fall under sub-heading 540720 - Since the phrase "technical uses" is a criterion for Heading 5911, weightage is to be given to the functional use or end use concept. Geomembrane has purely technical use as it is used in aquaculture ponds with Biofloc technology, for which geomembrane-lined ponds are a must. Chapter Note 8(a) to Chapter 59 covers textile fabrics coated, covered or laminated with other material and used for technical purposes. The phrase "other material" is vast enough to include plastics, and the HSN notes to Heading 5911 specifically mention plastic as other material. The geomembrane is therefore a textile article - Geomembrane is classifiable under sub-heading 59111000 – Ordered accordingly - Rate of GST on geomembrane classified under Heading 5911 - Application was filed during the period when Notification No.01/2017-Central Tax (Rate) was in force, which was later superseded by Notification No.09/2025-Central Tax (Rate) dated 17.09.2025 effective from 22.09.2025 - Whether the geomembrane is covered under Entry No.168 of Schedule-II of Notification No.01/2017-Central Tax (Rate) and what is the applicable rate of GST - HELD - Entry No.168 of Schedule-II of Notification No.01/2017-Central Tax (Rate) covers Tariff Heading 5911, and the geomembrane is liable to GST at 12% for the period up to 21.09.2025. Under Notification No.09/2025-Central Tax (Rate), Entry No.386 of Schedule-I covers Tariff Heading 5911, and the geomembrane is liable to GST at 5% with effect from 22.09.2025. The entries refer to Note 7 to Chapter 59, which was renumbered as Note 8 by the Finance Act, 2021, and the benefit of classification under sub-heading 59111000 accrues on account of Note 8 - The geomembrane is covered under Entry No.168 of Schedule-II and is liable to GST at 12% up to 21.09.2025, and is covered under Entry No.386 of Schedule-I and is liable to GST at 5% with effect from 22.09.2025. [Read less]

GST - Introduction of grounds under Section 16(2)(b) and 16(2)(c) at the appellate stage to sustain a demand originally founded on Section 16(4) of the CGST Act, 2017 - Appellant availed input tax credit pertaining to an earlier financial year through GSTR-3B returns filed in the subsequent year, and the credit was reflected in GSTR-2A. The SCN under Section 73 and the Order-in-Original disallowed the credit solely as time barred under Section 16(4). The First Appellate Authority upheld the demand and additionally held that credit was availed without receipt of supplies and without payment of tax by suppliers - Whether gro... [Read more]

GST - Introduction of grounds under Section 16(2)(b) and 16(2)(c) at the appellate stage to sustain a demand originally founded on Section 16(4) of the CGST Act, 2017 - Appellant availed input tax credit pertaining to an earlier financial year through GSTR-3B returns filed in the subsequent year, and the credit was reflected in GSTR-2A. The SCN under Section 73 and the Order-in-Original disallowed the credit solely as time barred under Section 16(4). The First Appellate Authority upheld the demand and additionally held that credit was availed without receipt of supplies and without payment of tax by suppliers - Whether grounds under Section 16(2)(b) or 16(2)(c), not forming the original foundation of the demand, can subsequently be introduced to sustain it - HELD - The show cause notice did not allege non-receipt of goods or services, non-payment of tax by suppliers or breach of Section 16(2)(b) or 16(2)(c). The Order-in-Original contained no independent finding on these grounds. Section 75(7) provides that no demand shall be confirmed on grounds other than those specified in the notice - Once Section 16(5) removes the foundation under Section 16(4), the demand cannot be sustained by constructing a new case under Section 16(2)(b) or 16(2)(c). Input tax credit is a statutory entitlement subject to the conditions imposed by the legislature. The Revenue cannot rely on this principle to enforce a time limit that has been retrospectively displaced. Section 16(5) does not cure substantive ineligibility. Allegations of fake invoices, non-receipt of supplies, blocked credit or any other substantive defect may be raised, proved and adjudicated in accordance with law - Grounds under Section 16(2)(b) or 16(2)(c), not forming the original foundation of the demand, cannot be introduced subsequently to sustain it – The appeal is allowed - Whether GSTR-3B is a return under Section 39 for the purpose of Section 16(5) - Appellant took input tax credit through GSTR-3B returns for a period within the financial year following the year to which the invoices pertained. The Revenue contended that the credit was not taken in a return under Section 39 as it was claimed through GSTR-3B - Whether GSTR-3B constitutes a return under Section 39 for the purposes of Section 16(5) - HELD - The Supreme Court in Bharti Airtel has held that GSTR-3B, although introduced as a stopgap arrangement, is a return within the meaning of Section 39 read with Rule 61. Since the credit was taken by the Appellant in GSTR-3B returns, it satisfies the expression any return under Section 39 in Section 16(5). The contention of the Revenue is not legally sustainable - GSTR-3B is a return under Section 39 for the purposes of Section 16(5) - Distinction between availment and utilisation of input tax credit under Section 16(5) - Appellant took input tax credit through returns filed within the period permitted by Section 16(5). The dispute required the Tribunal to distinguish availment of credit from its utilisation and from its annual disclosure and reconciliation - Whether there is any legal distinction between availment of input tax credit and its utilisation - HELD - Section 16 is concerned with entitlement to take credit. Once eligible credit is claimed through the prescribed return, it is credited to the Electronic Credit Ledger under Section 49, which is availment. Utilisation occurs later when the ledger is debited towards payment of output tax. Reconciliation is the subsequent reporting of credit in the annual return and reconciliation statement. These are distinct events and are not interchangeable - Section 16(4) regulates the time for taking credit and Section 16(5) retrospectively extends that period for specified financial years. Neither provision requires credit validly taken within the permitted period to be utilised within that same period. Once the disputed credit was taken within the period permitted by Section 16(5), its subsequent utilisation cannot be treated as delayed availment - Section 16(5) imposes no separate expiry date for utilisation of credit validly availed - Effect of non-carry-forward or incorrect disclosure in GSTR-9 and GSTR-9C on input tax credit already taken through a return under Section 39 - The First Appellate Authority held that Section 16(5) did not alter the requirement to disclose the carry-forward of credit in the specified tables of GSTR-9 and GSTR-9C. The Revenue contended that Section 16(5) permits credit to be taken in GSTR-3B but does not validate an incorrect declaration in the annual return or reconciliation statement - Whether non-carry-forward or an incorrect disclosure in GSTR-9 or GSTR-9C can defeat credit already taken through a return under Section 39 - HELD - GSTR-9 is an annual return and GSTR-9C is a reconciliation statement. Neither is the return under Section 39 through which the disputed credit was taken. Section 16(5) does not make entitlement conditional upon correct disclosure in a particular column of GSTR-9 or GSTR-9C. The statutory condition is that the credit must have been taken through a return under Section 39 filed by the specified date - A subsequent error in annual reconciliation cannot convert credit already availed into credit not availed. An annual return or reconciliation statement may disclose a discrepancy and prompt verification. It does not create, extinguish or recharacterise credit already taken through GSTR-3B. A contrary interpretation would indirectly restore the restriction that Parliament removed through Section 16(5) - Incorrect disclosure in GSTR-9 or GSTR-9C cannot defeat credit already taken through a return under Section 39 - Effect of non-applicability of Notification No. 22/2024-Central Tax on the entitlement under Section 16(5) - The Revenue argued that the notification relied upon by the Appellant did not apply. The notification provides a special procedure for rectification of orders where credit was denied under Section 16(4) but later became available under Section 16(5) or Section 16(6), where no appeal has been filed - Whether the alleged non-applicability of Notification No. 22/2024-Central Tax defeats the substantive entitlement created by Section 16(5) - HELD - The submission proceeds on a misconception about the source of the entitlement. The notification does not create entitlement to credit. The entitlement flows directly from Section 16(5), which was introduced retrospectively. The notification provides an additional procedural remedy for a specified category of orders where no appeal has been filed. The Appellant may not be able to use that special rectification procedure as an appeal was already filed. That does not make Section 16(5) inapplicable. The Revenue conflates the procedural remedy with the substantive statutory entitlement. Circular No. 237/31/2024-GST directs authorities to give effect to Sections 16(5) and 16(6) in pending proceedings and appeals - The non-applicability of the special rectification procedure does not defeat the right accrued under Section 16(5) - Protection of input tax credit pertaining to FY 2018-19 taken through GSTR-3B during October 2019 to March 2020 under retrospective Section 16(5) - Appellant took input tax credit pertaining to FY 2018-19 through GSTR-3B returns for the period October 2019 to March 2020. The demand under Section 73 was based solely on the premise that the credit was wrongly availed as it was taken after the time limit in Section 16(4) - Whether the disputed credit is protected by retrospective Section 16(5) - HELD - The credit was taken through GSTR-3B returns filed well before 30.11.2021. The case falls within the language of Section 16(5) - Where the return claiming credit was filed before 30.11.2021, denial under Section 16(4) cannot survive after the insertion of Section 16(5). The demand under Section 73 was founded on the premise that the credit was taken after the time limit in Section 16(4). Section 16(5) permits credit pertai [Read less]

Central Excise - CENVAT credit of service tax distributed by Input Service Distributors for services used at offshore fields - Respondent manufactured excisable products at its processing plant from raw sour gas and condensate received from offshore gas fields through subsea pipelines. The plant manufactured both dutiable and exempted goods. The ISD distributed credit of service tax paid on services used at the offshore fields, where natural gas was produced as an exempted product - Revenue sought to deny the credit on the ground that the services were used exclusively at the offshore fields producing exempted goods - Trib... [Read more]

Central Excise - CENVAT credit of service tax distributed by Input Service Distributors for services used at offshore fields - Respondent manufactured excisable products at its processing plant from raw sour gas and condensate received from offshore gas fields through subsea pipelines. The plant manufactured both dutiable and exempted goods. The ISD distributed credit of service tax paid on services used at the offshore fields, where natural gas was produced as an exempted product - Revenue sought to deny the credit on the ground that the services were used exclusively at the offshore fields producing exempted goods - Tribunal allowed the Respondent's appeal by following the decision of the Bombay High Court in the Respondent's own case relating to another plant - Whether the Respondent was eligible to take credit of service tax distributed by the Input Service Distributors on services used exclusively at the offshore fields - HELD - The decision of this Court under the sales tax law concerned the situs of sale under a Production Sharing Contract and had nothing to do with the issue of distribution of input service credit by the Input Service Distributor under the Rules. The word ‘sale’ does not appear anywhere in Rule 7 of the CENVAT Credit Rules, 2004. The Rule is premised on the use of services in or in relation to the manufacture of final products where invoices are received at a place different from the manufacturing facility - Under Rule 7, credit attributable to service used in a unit exclusively engaged in manufacture of exempted goods shall not be distributed. Here the credit was distributed to the plant which manufactures dutiable goods. In the Bombay High Court decision, it was held that the definition of input service is cast in broad terms and covers services used directly or indirectly in or in relation to the manufacture of final products. The dutiable final products are fundamentally premised upon the process which commences at the offshore location - The manufacturer of both dutiable and exempted goods would be required to comply with Rule 6 and is entitled to credit only on that quantity of input service which is used in the manufacture of dutiable goods. The ratio of that decision squarely applies since the only difference is that sour gas, instead of crude oil, was supplied from the offshore field to the plant. Except for that fact, all other aspects are identical. The Tribunal committed no error in applying that decision - The appeals are dismissed [Read less]

Central Excise - Refund of CENVAT credit reversed on inputs contained in expired medicines destroyed as unfit for human consumption - Non-compliance with procedure for remission of duty - Appellant reversed the CENVAT credit on the inputs contained in medicines destroyed as unfit for human consumption. It then filed a refund claim on the ground that the reversal was erroneous, since the goods destroyed were waste pharmaceuticals and no remission was required – Rejection of refund claim on the ground that the Appellant did not follow the procedure in Chapter 18 of the Central Excise Manual - Whether the refund claim of th... [Read more]

Central Excise - Refund of CENVAT credit reversed on inputs contained in expired medicines destroyed as unfit for human consumption - Non-compliance with procedure for remission of duty - Appellant reversed the CENVAT credit on the inputs contained in medicines destroyed as unfit for human consumption. It then filed a refund claim on the ground that the reversal was erroneous, since the goods destroyed were waste pharmaceuticals and no remission was required – Rejection of refund claim on the ground that the Appellant did not follow the procedure in Chapter 18 of the Central Excise Manual - Whether the refund claim of the reversed CENVAT credit is maintainable when the expired medicines were destroyed without following the procedure under Rule 21 read with Chapter 18 - HELD - The issue is covered in favour of the Revenue by the decision of this Court in Sun Pharmaceutical Industries Ltd. The procedure under Chapter 18 is not a procedural condition of a technical nature. It is a substantive condition for claiming remission of duty and destruction of goods. Its non-observance is not condonable and is likely to facilitate the commission of fraud and administrative inconvenience - It is an admitted position that the Appellant destroyed expired medicines unfit for consumption by human beings. The Appellant was required to apply for remission permission from the jurisdictional Central Excise authorities and thereafter remit the duty payable. Rule 21 was therefore contravened. The Notification relied upon by the Appellant, which relates to waste pharmaceuticals, does not apply since the goods destroyed were expired medicines. Under Rule 3(5C) of the CENVAT Credit Rules, 2004, where payment of duty is ordered to be remitted under Rule 21, the CENVAT credit taken on the inputs shall be reversed - As the Appellant did not follow the procedure under Chapter 18, the CENVAT credit was rightly reversed and the refund claim was rightly rejected - The appeals are dismissed [Read less]

Service Tax - Exemption under Clause 12A of Mega Exemption Notification No.25/2012-ST to services provided to a governmental authority - Works contract services of construction of storage godowns were received by the Respondent, a public company established by the State Government with more than 99% equity participation, which procures paddy from farmers and distributes essential commodities through the Public Distribution System at subsidised rates - Appellant contended that the Respondent was not a governmental authority as it did not carry out any function entrusted to a municipality under Article 243W of the Constituti... [Read more]

Service Tax - Exemption under Clause 12A of Mega Exemption Notification No.25/2012-ST to services provided to a governmental authority - Works contract services of construction of storage godowns were received by the Respondent, a public company established by the State Government with more than 99% equity participation, which procures paddy from farmers and distributes essential commodities through the Public Distribution System at subsidised rates - Appellant contended that the Respondent was not a governmental authority as it did not carry out any function entrusted to a municipality under Article 243W of the Constitution - Whether the Respondent qualifies as a governmental authority under Clause 2(s) of the Notification and is eligible for exemption under Clause 12A - HELD - To qualify as a governmental authority, the body should have been set up by an Act of Parliament or a State Legislature or established by the Government, there should be 90% or more participation by way of equity or control, and it should carry out any function entrusted to a municipality under Article 243W. The first two conditions are fully satisfied since the Respondent is established by the State Government with more than 99% participation by way of equity. The Respondent is formed not for profit making but to aid the State in its endeavour to alleviate urban poverty, safeguard the interest of the weaker section of society and provide for social and economic development planning. Its activity of procuring paddy, storing it and distributing it to the general public through Fair Price Shops at very low subsidised rates is certainly towards achieving the object of poverty alleviation and social and economic development planning. It therefore discharges some of the functions vested with a body under Article 243W - The Respondent qualifies as a governmental authority and is eligible for exemption under Clause 12A - The Writ Appeal is dismissed - Exemption under Clause 14(d) of Mega Exemption Notification No.25/2012-ST for post-harvest storage infrastructure for agricultural produce - Godowns were constructed in the major paddy growing districts primarily for storing the paddy procured from farmers, and the Appellant contended that the exemption was not available as the godowns could also be used for storing other commodities including cement - Whether construction of godowns which could later be used for storing other commodities is eligible for exemption under Clause 14(d) - HELD - The possibility of later usage of these godowns for storage of other commodities cannot be the determining factor. The primary test for eligibility is the objective, design and actual immediate use of the infrastructure at the time of its execution. If the godowns are built specifically to house essential commodities or agricultural produce such as paddy or rice for the public distribution system, they fulfil the criteria. The Department cannot deny an exemption based on hypothetical, future alternate uses - As long as the infrastructure fits the definition of post-harvest storage at the time of the service provision, subsequent or auxiliary changes in utilisation do not retroactively dissolve a valid statutory exemption. The Respondent had categorically stated that storage of other commodities happens only in Taluk godowns and that these godowns are used for post-harvest storage of agricultural produce. The Respondent operates under the control of the State Government primarily to execute public welfare functions such as food security and PDS distribution, which supports the non-commercial, public utility nature of the construction and protects it from being classified as a generic commercial warehouse - The Respondent is eligible to claim exemption under Clause 14(d), the order in original is set aside - The Writ Appeal is dismissed. [Read less]

Customs - Limitation for recovery of drawback under Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - Petitioner exported textile garments under seven shipping bills in 2011 and availed drawback - Show cause notice for recovery of drawback with interest was allegedly issued in 2018 on the ground of non-production of proof of realisation of export proceeds and the impugned order was passed in 2023 - Petitioner contended that the notice was never served, that no hearing was given and that the recovery proceedings were barred by limitation - Whether recovery proceedings initiated after a lap... [Read more]

Customs - Limitation for recovery of drawback under Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - Petitioner exported textile garments under seven shipping bills in 2011 and availed drawback - Show cause notice for recovery of drawback with interest was allegedly issued in 2018 on the ground of non-production of proof of realisation of export proceeds and the impugned order was passed in 2023 - Petitioner contended that the notice was never served, that no hearing was given and that the recovery proceedings were barred by limitation - Whether recovery proceedings initiated after a lapse of more than seven years from the payment of drawback were within a reasonable period - HELD - Rule 16 empowers the Customs authorities to recover drawback erroneously or excessively paid but does not prescribe any period of limitation. In the absence of an express period of limitation, such power has to be exercised within a reasonable period, which depends on the facts and circumstances of each case. The decision of the Delhi High Court in Rajbir Singh, which declined to apply a general limitation period of three years where there were strong allegations of fraudulent availment, has no application since there is no allegation that the Petitioner fraudulently availed the drawback or suppressed any material fact. The only allegation is failure to produce proof of realisation of export proceeds. No satisfactory explanation was offered for the delay in initiating the recovery proceedings - The Petitioner had also categorically stated that he had closed his export business in 2011 and was no longer in possession of the documents relating to the exports. Recovery proceedings initiated after an unexplained delay of more than seven years cannot be said to have been commenced within a reasonable period - The recovery proceedings are unsustainable, the impugned order is set aside and the Writ Petition is allowed with a direction to refund the amount within four weeks, failing which the amount shall carry interest at the rate of 8% per annum – The petition is allowed [Read less]

Customs – Limitation for second appeal before CESTAT – Date of service of first appellate order – Section 37C of Customs Act, 1962 – No order was received after the hearing of the first appeals. On enquiry, a copy of the order rejecting the appeals was furnished to the Appellant on 31.03.2025. The Appellant filed second appeals before the CESTAT on 03.06.2025, reckoning the date of service as 31.03.2025. The CESTAT dismissed the appeals as barred by limitation. The Revenue contended that the DIN on the order showed that it was uploaded on the portal – Whether the date of service of the first appellate order is to... [Read more]

Customs – Limitation for second appeal before CESTAT – Date of service of first appellate order – Section 37C of Customs Act, 1962 – No order was received after the hearing of the first appeals. On enquiry, a copy of the order rejecting the appeals was furnished to the Appellant on 31.03.2025. The Appellant filed second appeals before the CESTAT on 03.06.2025, reckoning the date of service as 31.03.2025. The CESTAT dismissed the appeals as barred by limitation. The Revenue contended that the DIN on the order showed that it was uploaded on the portal – Whether the date of service of the first appellate order is to be reckoned from the date of the order or from 31.03.2025, and whether the second appeals were barred by limitation – HELD – The Revenue produced no evidence that the order was served electronically or uploaded on the portal. The DIN is only an authentication of the order, and nothing can be inferred from it about service. Section 37C requires service of an order by registered post or speed post with acknowledgement due. The reply under the Right to Information Act showed that the order was dispatched by speed post, with no mention of any acknowledgement being sought, which is contrary to Section 37C. The date of service is therefore 31.03.2025, and the appeals filed on 03.06.2025 are within time – The dismissal by the CESTAT is incorrect, its orders are quashed, and the appeals are allowed - Customs – Limitation for first appeal – Last day falling on a Sunday – Section 4 of the Limitation Act – The Appellant filed first appeals against the orders-in-original, taking the benefit of the extension of time granted by the Supreme Court. The last day fell on a Sunday, and the appeals were filed on the next working day. The first appellate authority rejected the appeals on the ground that no relaxation in time could be given beyond the period fixed under the statute or by the Supreme Court – Whether the first appeals filed on the first working day after the last day, which fell on a Sunday, are maintainable – HELD – Since the last day fell on a Sunday, Section 4 of the Limitation Act applies. Relying on the decision of the Uttarakhand High Court, the appeals instituted on the first working day thereafter are maintainable. As the Appellant had not been heard on merits at either stage, the matter requires adjudication on merits – The orders of the CESTAT are quashed, the matters are remanded to the first appellate authority for adjudication in accordance with law, and the appeals are allowed. [Read less]

GST - Eligibility of works contract services supplied to a statutory water authority for concessional rate of tax meant for local authority - Appellant provided works contract services to the Kerala Water Authority and paid tax at the concessional rate - Short payment of tax on invoices for which the rate of tax had changed with effect from 01.01.2022 through an amendment to Notification No. 11/2017-CT(Rate) as amended w.e.f. 1.1.2022 - Whether the Kerala Water Authority is a local authority under Section 2(69) of the CGST Act, 2017 and whether the Appellant is eligible for the concessional rate or liable at the higher rat... [Read more]

GST - Eligibility of works contract services supplied to a statutory water authority for concessional rate of tax meant for local authority - Appellant provided works contract services to the Kerala Water Authority and paid tax at the concessional rate - Short payment of tax on invoices for which the rate of tax had changed with effect from 01.01.2022 through an amendment to Notification No. 11/2017-CT(Rate) as amended w.e.f. 1.1.2022 - Whether the Kerala Water Authority is a local authority under Section 2(69) of the CGST Act, 2017 and whether the Appellant is eligible for the concessional rate or liable at the higher rate on the invoices in question - HELD - The definition of local authority in Section 2(69) is specific and means only those bodies mentioned in the clauses of that definition. It does not include other bodies merely described as local bodies by virtue of a local law. Developmental authorities formed under town planning laws do not qualify as local authorities for GST. A statutory body, corporation or authority created by Parliament or a State Legislature is neither Government nor local authority, as it is a juridical entity separate from the State - The Kerala Water Authority was established under the State water supply and sewerage law as a body corporate, and the Kerala Water Supply and Sewerage Act, 1986 deems it a local authority for all purposes. That deeming provision does not make Kerala Water Authority a local authority under the CGST Act. The authority does not fall under any of the sub-clauses (a) to (g) of Section 2(69). The registration of the authority by the Department in the category of local authority does not alter this position. The CBIC Circular No. 245/02/2025-GST clarifies that statutory authorities such as development authorities are not local authorities under Section 2(69) - The works contract services supplied to the authority are not eligible for the concessional rate and are liable to tax at the 18% with effect from 01.01.2022 – Ordered accordingly - Liability to pay interest under Section 50(1) on differential tax paid partly through Electronic Credit Ledger - Appellant had paid the differential tax through the electronic credit ledger as to a part and through the electronic cash ledger as to the balance. The demand included interest on the entire differential tax - Whether interest is payable on the differential tax paid through the electronic credit ledger - HELD - Where differential tax is payable, interest for delayed payment follows automatically under Section 50(1), from the time of supply till the date of payment. The proviso to Section 50(1) restricts interest to that portion of tax which is paid by debiting the electronic cash ledger. Interest is therefore not payable to the extent of tax paid through the electronic credit ledger. Interest is payable only to the extent of tax paid through the electronic cash ledger - The interest is payable only on that portion of tax paid through the electronic cash ledger. The demand of interest accrued on the tax amount paid through the electronic credit ledger is set aside. [Read less]

Service Tax - Taxability of CSR contributions as sponsorship service - Appellant made payments to various organizations for activities such as construction of toilets, school buildings and temple towers, claiming them to be donations for charitable purposes - Department treated them as sponsorships and confirmed the demand of service tax under Section 65(99a) of the Finance Act, 1994, which the Tribunal upheld - Whether the payments made by the Appellant are sponsorship services within the meaning of Section 65(99a) and chargeable to service tax - HELD - The Appellant is not seeking exemption from the levy. It is the Reven... [Read more]

Service Tax - Taxability of CSR contributions as sponsorship service - Appellant made payments to various organizations for activities such as construction of toilets, school buildings and temple towers, claiming them to be donations for charitable purposes - Department treated them as sponsorships and confirmed the demand of service tax under Section 65(99a) of the Finance Act, 1994, which the Tribunal upheld - Whether the payments made by the Appellant are sponsorship services within the meaning of Section 65(99a) and chargeable to service tax - HELD - The Appellant is not seeking exemption from the levy. It is the Revenue which seeks to bring the transactions within the service tax net, and therefore the onus is on the Revenue to establish the true character of the transaction - If the appellant takes the stand that there was no agreement with the donee, the Revenue cannot assume that there was one and that it was not being produced. The Revenue is at liberty to address the donee and ask for particulars - Under Section 65(99a), service tax is leviable where the event is named after the sponsor, the sponsor's logo or trading name is displayed, exclusive or priority booking rights are given, or prizes or trophies are sponsored in the sponsor's name. Financial support in the form of donations or gifts does not constitute sponsorship if the donee is under no obligation to provide anything in return. The key word is "obliged", and a transaction is sponsorship only when the payment is subject to a condition that the recipient has to do something in return - Merely because the records of the contributor or the recipient refer to the transaction as sponsorship, or the donee on its own acknowledges the contribution, the transaction does not become taxable. The requirement to display the logo was found in only two transactions, as stipulated in the Board resolution itself, and these alone were sponsorship. The other transactions were brought under the tax net on stereotyped reasons, namely non-production of original documents, absence of documentary proof and display of the logo at the event. These reasons are unsustainable since it was not the case of the Revenue that the Appellant was withholding any material or that the donee was obliged to display the logo. The Revenue has not discharged its onus - The question of law is answered in favour of the Appellant, the order of the Tribunal is set aside and the appeal is allowed - Invocation of extended period of limitation on sponsorship transactions - Proceedings were initiated against the Appellant after the expiry of the normal limitation period, and the Revenue justified the invocation of the extended period by relying on the proviso to Section 73(1) of the Finance Act, 1994 - Whether the extended period of limitation was invokable in respect of the two transactions held to be sponsorship - HELD - The proviso to Section 73(1) could have been invoked only if circumstances such as fraud, collusion, willful misstatement or suppression of facts had been present. The Department had not placed any credible material to show that the Appellant was guilty of such misconduct. Hence, even in respect of the two transactions found to be sponsorship, the proceedings could not have been initiated since they were time-barred - The extended period of limitation was wrongly invoked, the order of the Tribunal is set aside and the appeal is allowed. [Read less]

GST - Power to seize cash under Section 67(2) of the CGST Act, 2017 - Cash was seized from the residential premises during search and the adjudicating authority held it to be sale proceeds of unaccounted goods sold without tax invoices, liable to confiscation under Section 130(1) - Petitioners contended that money is excluded from goods under Section 2(52) and cannot be seized as ‘things’ - Whether Section 67(2) authorises seizure of cash merely because it is suspected or later held to represent the proceeds of unaccounted taxable supplies - HELD – The writ petition challenging seizure of cash is maintainable despite... [Read more]

GST - Power to seize cash under Section 67(2) of the CGST Act, 2017 - Cash was seized from the residential premises during search and the adjudicating authority held it to be sale proceeds of unaccounted goods sold without tax invoices, liable to confiscation under Section 130(1) - Petitioners contended that money is excluded from goods under Section 2(52) and cannot be seized as ‘things’ - Whether Section 67(2) authorises seizure of cash merely because it is suspected or later held to represent the proceeds of unaccounted taxable supplies - HELD – The writ petition challenging seizure of cash is maintainable despite pending statutory appeal and remedy under Section 112 - The power of seizure under Section 67(2) operates in respect of two distinct categories, namely goods liable to confiscation and documents or books or things useful or relevant to proceedings. Section 2(52) expressly excludes money from the definition of goods, and therefore cash cannot be goods liable to confiscation - The word ‘things’ must be read ejusdem generis with the associated words documents and books, which are evidentiary in character, and the second proviso permitting retention only for examination and inquiry confirms the evidentiary purpose - The Income-tax Act and the Customs Act expressly provide for seizure of money or currency, which shows that Parliament knows how to confer such power, and the omission in Section 67 cannot be judicially supplied. Powers of search and seizure are drastic powers and are not to be construed liberally - Even a prima facie case of tax evasion cannot enlarge the power of seizure beyond the limits enacted by Parliament. The reasons to believe must be based on objective material having a rational nexus with the statutory conditions and is not synonymous with mere suspicion - Cash that merely represents unaccounted wealth cannot be seized under Section 67, and retention towards a possible future recovery is not permitted - The seizure and retention of cash cannot be sustained, the Respondents are directed to release the amount to the persons from whose possession it was seized subject to any lawful order under an independently applicable statute, and the Petitioners are entitled to applicable interest – The writ petition is allowed [Read less]

Central Excise – Refund of pre-deposit with interest – Ex-parte order of Commissioner (Appeals) – Service of personal hearing notice – Section 35A(3) of Central Excise Act, 1944 – The Tribunal allowed the Appellant's appeal, and refund of the pre-deposit was sanctioned along with interest, which was later reduced by a corrigendum. The Revenue appealed, and the Commissioner (Appeals) decided the matter ex-parte, recording that none appeared despite personal hearing granted on three dates, and remanded it for re-quantification of interest. The CESTAT dismissed the Appellant's appeal on merits, and also dismissed it... [Read more]

Central Excise – Refund of pre-deposit with interest – Ex-parte order of Commissioner (Appeals) – Service of personal hearing notice – Section 35A(3) of Central Excise Act, 1944 – The Tribunal allowed the Appellant's appeal, and refund of the pre-deposit was sanctioned along with interest, which was later reduced by a corrigendum. The Revenue appealed, and the Commissioner (Appeals) decided the matter ex-parte, recording that none appeared despite personal hearing granted on three dates, and remanded it for re-quantification of interest. The CESTAT dismissed the Appellant's appeal on merits, and also dismissed its rectification application. The Appellant contended that it never received the hearing notices, and that its counsel had appeared on one of the same dates before the same authority in another appeal between the same parties – Whether the Commissioner (Appeals) and the CESTAT were justified in holding that notices of personal hearing were served, when no acknowledgement of service was on record, and whether the Appellant was denied an opportunity of hearing – HELD – Personal hearing notices are a statutory requirement under Section 35A(3). The Respondent placed no document on record demonstrating service of the notices, and it was therefore held that the notices were not served. The orders in the two appeals involving the same parties on the same date showed that counsel for the Appellant appeared in one matter, so it cannot be said that counsel chose not to appear in the other. This further establishes that the notices were not received. The CESTAT did not deal with the specific ground on denial of opportunity of hearing and decided the matter on merits, which also results in denial of opportunity – The Commissioner (Appeals) is directed to consider the Appellant's claim afresh, and the appeal is partly allowed [Read less]