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Customs Act – Levy of penalty for possession and harbouring of smuggled goods –Whether the appellant is liable to penalty under Section 112(a) and 112(b) of the Customs Act, 1962 for being concerned with the keeping, harbouring and dealing of goods liable to confiscation – HELD - Although the gold was recovered from the godown premises and not from the physical person of the appellant, the records clearly reveal that the appellant was found in charge of the premises at the relevant time and had access to and control over the godown from where the contraband was recovered. The complete absence of licit documents, the ... [Read more]

Customs Act – Levy of penalty for possession and harbouring of smuggled goods –Whether the appellant is liable to penalty under Section 112(a) and 112(b) of the Customs Act, 1962 for being concerned with the keeping, harbouring and dealing of goods liable to confiscation – HELD - Although the gold was recovered from the godown premises and not from the physical person of the appellant, the records clearly reveal that the appellant was found in charge of the premises at the relevant time and had access to and control over the godown from where the contraband was recovered. The complete absence of licit documents, the nature and purity of the seized goods, and the appellant's inability to offer any plausible explanation regarding the source and lawful possession thereof establish his culpability. Gold is a notified commodity under Section 123 of the Act, and once recovery of notified goods is established from premises under the possession, custody or control of a person, the burden shifts upon such person to establish the licit nature of possession, which burden remained wholly undischarged. The recovery of a substantial quantity of gold from premises under his control, coupled with the complete absence of licit documents and the attendant circumstances brought out during investigation, justify the conclusion that the appellant was concerned with the keeping, harbouring and dealing with goods liable to confiscation under the Act. However, considering that the seized gold did not bear any foreign markings and the statements relied upon by the Department were not subjected to the evidentiary safeguards contemplated under Section 138B of the Customs Act, the penalty is reduced substantially to serve the ends of justice – The appeal is partly allowed [Read less]

Customs - Classification of E-Rickshaw Components - Applicability of Rule 2(a) of General Rules for Interpretation - Appellant imported chassis frames, body shells, structural assemblies, wiring harnesses and other ancillary parts of e-rickshaws in separate consignments, admittedly without electric motors and batteries, which were declared and classified as parts and components under customs tariff heading 8714. The Revenue reclassified these goods as complete electrical tricycles in completely knocked down condition under tariff headings 87039010 and 87038040, demanding differential customs duty - Whether goods lacking es... [Read more]

Customs - Classification of E-Rickshaw Components - Applicability of Rule 2(a) of General Rules for Interpretation - Appellant imported chassis frames, body shells, structural assemblies, wiring harnesses and other ancillary parts of e-rickshaws in separate consignments, admittedly without electric motors and batteries, which were declared and classified as parts and components under customs tariff heading 8714. The Revenue reclassified these goods as complete electrical tricycles in completely knocked down condition under tariff headings 87039010 and 87038040, demanding differential customs duty - Whether goods lacking essential propulsion components, namely electric motors and batteries, can be classified as complete e-rickshaws in CKD condition under Rule 2(a) of the General Rules for Interpretation of the Customs Tariff, thereby attracting higher rate of duty – HELD - Rule 2(a) of the General Rules for Interpretation provides that any reference in a heading to an article includes that article when incomplete or unfinished, provided that as presented, the incomplete or unfinished article has the essential character of the complete or finished article. The essential character of an e-rickshaw is its ability to function as a self-propelled motorised vehicle through its propulsion system consisting of electric motor and battery. Without these fundamental components, the assembled structure remains an inert frame incapable of performing the basic function of movement or operation as required for classification as a vehicle. The imported goods in the present case do not include electric motors or batteries, which were never imported under any bill of entry but sourced domestically after importation. Consequently, the imported goods cannot be deemed to possess the essential character of a complete e-rickshaw - Without all essential functional components, goods cannot be classified under Rule 2(a) as complete articles. Bundling contents of eight separate bills of entry to construct a notional composite CKD kit violates the principle that each bill of entry represents a distinct customs transaction and must be classified independently - The reclassification of goods as complete e-rickshaws in CKD condition is set aside, the demand for differential customs duty is rejected, and confiscation of goods and redemption fine are set aside - The appeals filed by the Revenue are dismissed and the appeals filed by the importer and its Directors are allowed - Confiscation under Section 111 of the Customs Act - Applicability in Pure Classification Disputes - Revenue sought confiscation of imported goods under Section 111(m) of the Customs Act on the ground of mis-declaration, alleging that goods described as parts and components were in fact complete e-rickshaws in CKD condition - Whether confiscation under Section 111(m) can be ordered where there exists no mis-description of goods but only a difference of opinion regarding tariff classification – HELD – The Section 111(m) empowers confiscation where any statement in the bill of entry is found to be false in a material particular. A mis-declaration requires a false or misleading statement regarding the nature, description, quantity or value of goods actually imported. In the present case, the goods were truthfully described in the bills of entry as parts and components of e-rickshaws, and the goods physically imported matched this description exactly. The dispute pertains solely to the legal question of which tariff heading applies to accurately described goods. This constitutes a classification matter arising from difference of interpretation in applying tariff entries, not a mis-declaration of facts. It is well-settled that where there is no mis-description of goods and the dispute is purely one of tariff classification, Section 111 cannot be invoked for confiscation. Confiscation requires a finding of wilful suppression or false description of goods, which is absent here - Confiscation of goods under Section 111(m) is set aside as being unsustainable in the absence of any mis-declaration - Penalty under Section 112(a) - Parasitic Nature and Dependence on Confiscation - Penalties were imposed under Section 112(a) of the Customs Act against the appellant-importer and its directors on the ground that the goods rendered themselves liable to confiscation under Section 111 - Whether penalty under Section 112(a) can survive when the underlying confiscation order under Section 111 is not sustained – HELD – The Section 112(a) provides for penalty against any person who, in relation to goods, does or omits to do any act which renders such goods liable to confiscation under Section 111. The penalty under Section 112(a) is by its nature and legal structure parasitic upon confiscation, meaning it depends entirely upon the goods being liable to confiscation under Section 111 for its own validity. When the predicate condition of liability to confiscation is absent or set aside, the entire foundation for penalty under Section 112(a) collapses. Since in the present case the goods are not liable to confiscation owing to absence of mis-declaration, and the dispute is purely classificatory in nature, the condition precedent for invoking Section 112(a) does not exist - Penalty imposed under Section 112(a) is set aside as it necessarily falls away with the setting aside of the confiscation order - Penalty under Section 114AA - Applicability to Classification Disputes and Documentary Fraud - Penalty under Section 114AA was imposed on the grounds that the appellant company knowingly or intentionally made false declarations by describing complete e-rickshaws in CKD condition as parts and components - Whether penalty under Section 114AA can be imposed where the dispute is one of tariff classification and no specific document has been identified as deliberately falsified or forged – HELD – The Section 114AA of the Customs Act provides for penalty where any person knowingly or intentionally makes, signs or uses any declaration, statement or document which is false or incorrect in any material particular in the transaction of any business for purposes of the Act. The provision targets deliberate fabrication, forgery or falsification of documents and was introduced as a stringent anti-fraud measure. In the present case, the bills of entry correctly describe the goods as parts and components of e-rickshaws, which is factually accurate. The adjudicating authority has not identified any specific document alleged to have been fabricated, forged or knowingly made incorrect. The underlying dispute is one of tariff classification only, where there is a bona fide difference of opinion on whether goods possessing certain characteristics should be classified under one heading or another. A contested classification entry is not a false document within the meaning of Section 114AA. The Section 114AA cannot be imported into a pure classification dispute where no act of documentary fraud has been established - Penalty under Section 114AA is set aside as being wholly inapplicable to a tariff classification dispute - Personal Liability of Directors - Requirement of Specific Findings of Personal Involvement - Whether the Director of a company can be held personally liable for penalties under the Customs Act merely because of their directorial designation, in the absence of specific evidence of personal knowledge, direction or participation in the alleged violation - HELD - The Customs Act does not provide for automatic vicarious liability of directors for the acts of a company. Unlike certain taxation statutes that specifically impose joint and several liability on directors, the Customs Act imposes penal liability only on persons who personally commit or abet specific acts. The imposition of personal penalty upon a director requires affirmative evidence that the director personally and knowingly made any false declaration or abetted the making thereof, or [Read less]

Central Excise - Penalty for abetting wrongful availment of CENVAT credit based on unsubstantiated allegations of bogus supplies, Absence of tangible evidence of non-manufacture, Denial of opportunity to cross-examine witnesses - Whether the appellant can be held liable for penalty for allegedly abetting wrongful availment of CENVAT credit by recipients when the allegation is based solely on investigations conducted at the recipient's end without any investigation at the appellant's premises – HELD - Similar issues involving identical facts have been consistently decided in favour of manufacturers in Jammu & Kashmir by t... [Read more]

Central Excise - Penalty for abetting wrongful availment of CENVAT credit based on unsubstantiated allegations of bogus supplies, Absence of tangible evidence of non-manufacture, Denial of opportunity to cross-examine witnesses - Whether the appellant can be held liable for penalty for allegedly abetting wrongful availment of CENVAT credit by recipients when the allegation is based solely on investigations conducted at the recipient's end without any investigation at the appellant's premises – HELD - Similar issues involving identical facts have been consistently decided in favour of manufacturers in Jammu & Kashmir by this Tribunal and the Allahabad Bench. The evidence demonstrates that toll barrier entries certify movement of raw materials and finished goods, District Industry Centre officers regularly verified purchase consignments, Range staff conducted periodic checks at the factory and reported no adverse findings, and Pollution Control Department, District Industries Department and Electrical Department found the factory functioning - The Revenue failed to produce any investigation conducted at the appellant's premises and no concrete evidence has been brought on record to establish that the appellant was not a manufacturer. The allegations are based on presumption and assumption rather than substantive proof. The charge of abetting wrongful CENVAT credit requires tangible evidence, not merely inferences or unwarranted assumptions. The absence of cross-examination of witnesses undermines their reliability. When the allegation of bogus procurement and manufacture by Jammu-based units cannot be established, the allegation of bogus procurement cannot be sustained - The Original Authority appears to have been predetermined in its adjudication and failed to discharge its duty as an independent adjudicator by discarding concrete evidence – The impugned orders are set aside and the appeals are allowed [Read less]

Customs - Classification of Nikrothal Wire under Customs Tariff - The Appellant imported various items including Nikrothal wire of different grades, which were initially self-assessed and classified under CTH 75052200 - Revenue disputed this classification on the ground that the items contained no cobalt content and reclassified them under CTH 72230091 – HELD - The coordinate bench of Tribunal in the Appellant's own case for an earlier period involving the considered identical goods and substantially similar facts, where the same goods were initially declared under CTH 75051220 and the Revenue had attempted reclassificat... [Read more]

Customs - Classification of Nikrothal Wire under Customs Tariff - The Appellant imported various items including Nikrothal wire of different grades, which were initially self-assessed and classified under CTH 75052200 - Revenue disputed this classification on the ground that the items contained no cobalt content and reclassified them under CTH 72230091 – HELD - The coordinate bench of Tribunal in the Appellant's own case for an earlier period involving the considered identical goods and substantially similar facts, where the same goods were initially declared under CTH 75051220 and the Revenue had attempted reclassification under CTH 72189910. The coordinate bench had considered the mill test certificate, the disputed classifications in light of chapter notes and sub-heading notes, and concluded that the Revenue's reclassification could not be sustained. Since no factual differences or change in law are pointed out in the present case, the scope of the present appeal is squarely covered by the earlier proceedings and principles. The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Refund of Unutilized Input Service Credit on Export of Services - Whether refund of Cenvat credit availed after the date of last export invoice issued in a particular quarter is permissible under Notification No. 5/2006-CX (NT), dated 14th March 2006, Condition No. 4, which provides that refund is allowed only where a provider of output service is not in a position to utilize input service credit against goods exported during the quarter or month to which the claim relates – HELD - A narrow and restrictive interpretation of Condition No. 4 would defeat the very object of the notification and deprive the ass... [Read more]

Service Tax - Refund of Unutilized Input Service Credit on Export of Services - Whether refund of Cenvat credit availed after the date of last export invoice issued in a particular quarter is permissible under Notification No. 5/2006-CX (NT), dated 14th March 2006, Condition No. 4, which provides that refund is allowed only where a provider of output service is not in a position to utilize input service credit against goods exported during the quarter or month to which the claim relates – HELD - A narrow and restrictive interpretation of Condition No. 4 would defeat the very object of the notification and deprive the assessee of their rightfully intended benefit in law. The refund under the notification is considered on a quarterly basis and not on the basis of each singular export event. What is material and germane to the scheme is the ascertainment of the total unutilized input tax credit available at the end of the quarter - A mere timing difference in availing admissible Cenvat credit within the same quarter does not become a reason for denial of refund as long as the admissibility of such Cenvat credit is not disputed - The rejection of proportionate refund by giving the Notification a very restrictive interpretation is futile as Cenvat credit rejected against a claim of a particular quarter would certainly be available for refund in subsequent quarters - The order of the appellate authority is set aside, allowing refund of unutilized input service credit availed within the relevant quarter regardless of the timing of availment relative to the last export invoice date – The appeal is allowed [Read less]

Service Tax - Services performed outside India - Liability to pay Service Tax under Reverse Charge Mechanism - Appellant, engaged in manufacture and export of motor vehicle parts, entered into agreements with foreign service providers for handling exported goods including inspection, sorting, and rework. The respondent demanded service tax on reverse charge basis under Business Auxiliary Services for amounts paid to overseas service providers – HELD - The services which are physically performed outside India and consumed outside the taxable territory cannot be subjected to service tax under RCM. The Board's Circular date... [Read more]

Service Tax - Services performed outside India - Liability to pay Service Tax under Reverse Charge Mechanism - Appellant, engaged in manufacture and export of motor vehicle parts, entered into agreements with foreign service providers for handling exported goods including inspection, sorting, and rework. The respondent demanded service tax on reverse charge basis under Business Auxiliary Services for amounts paid to overseas service providers – HELD - The services which are physically performed outside India and consumed outside the taxable territory cannot be subjected to service tax under RCM. The Board's Circular dated 19.04.2006 clarifies that services must be received in India to be taxable under Section 66A - Although the impugned order classifies the services under sub-clause (v) and (vii) of Business Auxiliary Services definition, the fundamental issue that the services were entirely performed outside India makes the entire demand unsustainable - The demand for service tax is set aside and the appeal is allowed - Service Tax - Best Judgement Assessment - Absence of evidence of payment - Validity of assumption - Respondent adopted best judgement method under Section 72 of the Act to assess service tax liability for the period 2008-2011 by assuming doubled figures from base year 2006-07 and 2007-08 without any evidence of actual payments made during subsequent years - Whether best judgement method can be applied to assume fictitious payment figures in absence of evidence of actual payments in the assessment period – HELD - The best judgement assessment presupposes adoption of available figures adjusted by reasonable methodology, but cannot mean adopting fictitious figures without any evidential basis. The appellant had claimed no payments were made to foreign service providers after 2008-09, but the respondent proceeded to calculate liability by doubling the 2006-07 and 2007-08 figures cumulatively over subsequent years. No service tax could have been confirmed without evidence of actual payment in the subsequent years, and such arbitrary assumption of doubled figures is not sustainable in law. Accordingly, the best judgement assessment is set aside on this count - Service Tax - Invocation of Extended Period - Whether extended period can be invoked when the issue is detected during routine audit conducted on the premises of the appellant – HELD - The Central Board of Excise and Customs' Manual for Scrutiny clarifies that assessment remains the primary responsibility of assessing officers even in self-assessment regime, and that the failure to detect an issue during regular audits does not justify invoking extended period. The appellant had been subjected to audits multiple times and had been filing returns, and the respondent failed to raise any questions upon scrutinizing the returns. The argument that extended period should be invoked due to appellant's non-cooperation in providing documents cannot rescue the respondent's case when the issue itself was detected during routine audit. Accordingly, no case has been made by the respondent for invoking extended period of limitation and the appeal succeeds on limitation ground as well. [Read less]

Service Tax - Refund claims for service tax paid on input services received for authorized operations by SEZ Unit – Appellant filed refund claim after the one-year limitation period prescribed under Notification No. 40/2012-ST dated 20.06.2012 and Notification No. 12/2013-ST dated 01.07.2013. The adjudicating authority rejected the refund claims on the ground that they were time-barred - Whether the time period prescribed under Notification No. 40/2012 dated 20.06.2012 and Notification No. 12/2013 dated 01.07.2013 are mandatory in nature – HELD - The Notifications issued under the Finance Act, 1994 cannot impose restri... [Read more]

Service Tax - Refund claims for service tax paid on input services received for authorized operations by SEZ Unit – Appellant filed refund claim after the one-year limitation period prescribed under Notification No. 40/2012-ST dated 20.06.2012 and Notification No. 12/2013-ST dated 01.07.2013. The adjudicating authority rejected the refund claims on the ground that they were time-barred - Whether the time period prescribed under Notification No. 40/2012 dated 20.06.2012 and Notification No. 12/2013 dated 01.07.2013 are mandatory in nature – HELD - The Notifications issued under the Finance Act, 1994 cannot impose restrictions or time limits on SEZ units which are not prescribed under the SEZ Rules, 2006. Section 51 of the SEZ Act gives overriding effect to its provisions over any other law. Section 26(1) of the SEZ Act specifically exempts services provided to developers and units in SEZs from payment of service tax, subject only to the manner, terms and conditions prescribed under Section 26(2) through the SEZ Rules - The GMR Aerospace Engineering Limited case, held that the exemptions granted under Section 26 of the SEZ Act are subject only to the terms and conditions prescribed in the SEZ Rules, 2006, and not to the conditions prescribed in exemption notifications issued under the Finance Act - There is no legal authority to levy service tax on services supplied to SEZ units. Therefore, exemption notifications and the conditions prescribed therein, including limitation periods, are redundant and cannot restrict or deny the refund of service tax to SEZ units. Rule 22 of the SEZ Rules, 2006 does not stipulate any limitation period for filing refund claims, and the one-year limitation prescribed in the notifications cannot be applied to SEZ units - The impugned order rejecting the refund claim on the ground of limitation is set aside. The appellant is entitled to refund of service tax paid on input services received for authorized operations. The appeal is allowed [Read less]

GST - Whether the Tribunal has jurisdiction to condone the delay beyond the time period provided under sub-Section 4 of the Section 107 of the CGST Act, 2017 – HELD - The Registry is directed to immediately call for the particulars of all such appeals from the respective State Benches and place the same before this Bench on 20.07.2026 – Ordered accordingly

GST - Transfer Pricing Adjustment, Valuation of Supply - Petitioner, an importer and distributor of UPVC profiles, challenges an assessment order contending that price adjustments made to align with Transfer Pricing regulations cannot constitute part of the supply value unless the distributor undertakes specific performance obligations such as advertising campaigns and customer services - Whether price adjustments made for transfer pricing compliance purposes can be included in the value of supply under GST when such adjustments are linked to the performance of distributor obligations – HELD - The assessing officer has e... [Read more]

GST - Transfer Pricing Adjustment, Valuation of Supply - Petitioner, an importer and distributor of UPVC profiles, challenges an assessment order contending that price adjustments made to align with Transfer Pricing regulations cannot constitute part of the supply value unless the distributor undertakes specific performance obligations such as advertising campaigns and customer services - Whether price adjustments made for transfer pricing compliance purposes can be included in the value of supply under GST when such adjustments are linked to the performance of distributor obligations – HELD - The assessing officer has examined the distribution agreement and the CBIC Circular No.251/08/2025-GST dated 12.09.2025 and drawn a conclusion that the price adjustment is not only for transfer pricing alignment but is also linked to performance of distributor obligations, thereby justifying inclusion in supply value - While the petitioner may have an arguable case that such conclusions are erroneous and arise from misinterpretation of statute and Circular, such grievance should be carried before the Appellate authority rather than being entertained in writ jurisdiction – Further, on the issue of whether interest can be treated as part of the value of supply, the appropriate forum to carry such grievance is the appellate authority - The writ petition is disposed of without interference with the impugned order [Read less]

GST - Validity and Jurisdiction to issue Consolidated Show-Cause Notice for Multiple Financial Years – Appellant challenges consolidated show-cause notice issued under Section 74 of the CGST Act, 2017, which clubbed multiple financial years (2018-19 to 2023-24) into a single notice - Whether a single show-cause notice can be issued for multiple financial years under Section 74 of the CGST Act, 2017 – HELD - A single show-cause notice for multiple financial years is impermissible under Section 74 of the Act. Upon plain reading of Section 74(10), the provision prescribes a limitation period of five years from the due dat... [Read more]

GST - Validity and Jurisdiction to issue Consolidated Show-Cause Notice for Multiple Financial Years – Appellant challenges consolidated show-cause notice issued under Section 74 of the CGST Act, 2017, which clubbed multiple financial years (2018-19 to 2023-24) into a single notice - Whether a single show-cause notice can be issued for multiple financial years under Section 74 of the CGST Act, 2017 – HELD - A single show-cause notice for multiple financial years is impermissible under Section 74 of the Act. Upon plain reading of Section 74(10), the provision prescribes a limitation period of five years from the due date for furnishing the annual return "for the financial year" to which the tax not paid or short paid relates. The legislature deliberately used the expression "for the financial year" (singular), thereby treating each financial year as a separate and independent unit with its own distinct limitation period - The language and expression employed in sub-section (10) regarding "the financial year" is of paramount significance and demonstrates that the legislature intended each assessment year to have a specific period of limitation commencing independently – A show-cause notice must be issued based on the relevant tax period determined by the filing of returns for a specific financial year, and cannot be clubbed with multiple financial years – The limitation periods cannot be carried forward or enlarged beyond statutory prescription. By issuing a consolidated notice for multiple years, the revenue authority seeks to indirectly achieve what it cannot do directly. This violates the golden rule that if a statute prescribes a particular manner and time for taking action, such action must be carried out in that manner and within the fixed time or not at all, all other modes are expressly forbidden – The consolidated show-cause notice and the consequential order are set aside and quashed as being illegal, without jurisdiction and in violation of Section 74 of the CGST Act, 2017. The authorities are permitted to proceed afresh strictly in accordance with law, by issuing separate show-cause notices for each financial year within the prescribed limitation period – The writ petition is allowed - Maintainability of Writ Petition – HELD - Although a statutory appellate remedy exists under the Act, the writ petition is maintainable because the jurisdictional error is apparent on the face of the record and no further fact-finding inquiry is required. Hence, the instant writ petition is maintainable. [Read less]

GST – Benefit of Notification No.06/2020-CT dated 03.02.2020 to Revenue, Jurisdiction to initiate proceedings beyond statutory limitation period, Prohibition on parallel proceedings on identical subject matter - Appellant received a Demand-cum-Show Cause Notice for financial year 2017-18 issued on 22.07.2024, which was beyond five years from 31.12.2018 (the due date for furnishing annual return for 2017-18) - Whether the Respondent had jurisdiction to initiate proceedings under Section 74(1) of the CGST Act, 2017 for the financial year 2017-18 when the notice was issued beyond the statutory limitation period of five year... [Read more]

GST – Benefit of Notification No.06/2020-CT dated 03.02.2020 to Revenue, Jurisdiction to initiate proceedings beyond statutory limitation period, Prohibition on parallel proceedings on identical subject matter - Appellant received a Demand-cum-Show Cause Notice for financial year 2017-18 issued on 22.07.2024, which was beyond five years from 31.12.2018 (the due date for furnishing annual return for 2017-18) - Whether the Respondent had jurisdiction to initiate proceedings under Section 74(1) of the CGST Act, 2017 for the financial year 2017-18 when the notice was issued beyond the statutory limitation period of five years – HELD - The Notification No.06/2020 dated 03.02.2020 extending the time limit for furnishing annual return for 2017-18 was intended for the benefit of assesses who had not filed their annual return by the original due date and was not intended to extend the time limit for the Respondent to initiate proceedings under Section 74(10). No other notification under Section 168A of the CGST Act, 2017 extending the time limit for exercising powers under Section 74 was placed before the Court. The notice issued by CGST authorities regarding wrongful deposit of VAT did not constitute initiation of proceedings under Section 74 as it was merely a notice for scrutiny and did not contain allegations of fraud or willful misstatement required under Section 74(1). Therefore, the Respondent acted without jurisdiction in issuing the show cause notice and passing the Order-in-Original for financial year 2017-18 – The SCN and Order-in-Original for 2017-18 are set aside and the writ petition is allowed - Prohibition on parallel proceedings on identical subject matter - Appellant received show cause notices from State GST authorities regarding mismatches between Input Tax Credit availed in Electronic Credit Ledger and amounts declared in Annual returns for financial years 2018-19 and 2019-20, which proceedings were subsequently dropped. Thereafter Respondent-CGST Authorities issued a Demand-cum-Show Cause Notice covering excess availment of ITC for the same financial years - Whether Respondent could initiate proceedings for the same subject matter of excess availment of ITC for 2018-19 and 2019-20 when proceedings on identical subject matter had already been initiated by SGST authorities – HELD - The Section 6(2)(b) of the CGST Act, 2017 prohibits initiation of any proceedings on the same subject matter, and identity of subject matter is a mandatory pre-condition for invoking the statutory bar, as established by the Supreme Court in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate. The expression "initiation of proceedings" refers to formal commencement of adjudicatory proceedings by way of issuance of show cause notice and the term "subject matter" refers to any tax liability, deficiency or obligation arising from any particular contravention. Where two proceedings initiated by the Department seek to assess or recover an identical or partial overlap in tax liability, deficiency or obligation from the same contravention, the bar of Section 6(2)(b) is attracted. Since the SGST authorities had already issued SCNs covering the aspect of excess availment of ITC for 2018-19 and 2019-20, Respondent could not have initiated proceedings into the same aspect - Show cause notice and Order-in-Original are set aside to the extent they relate to excess availment of ITC for 2018-19 and 2019-20; however, proceedings relating to short payment of GST for these years, which was not subject matter of SGST proceedings, are permitted to continue. [Read less]

GST – Situs of cause of action, Jurisdictional of High Court – Petitioner is registered GST dealer operating in multiple States/Union territories, filed a writ petition before the Patna High Court challenging an assessment order passed by the Excise and Taxation Officer at Chandigarh regarding alleged non-payment of GST under RCM on lease fees paid to organizations - Whether the Patna High Court has jurisdiction to entertain and decide a writ petition challenging an assessment order passed by the GST authority at Chandigarh when the return was filed and the cause of action arose at Chandigarh – HELD - Writ petition c... [Read more]

GST – Situs of cause of action, Jurisdictional of High Court – Petitioner is registered GST dealer operating in multiple States/Union territories, filed a writ petition before the Patna High Court challenging an assessment order passed by the Excise and Taxation Officer at Chandigarh regarding alleged non-payment of GST under RCM on lease fees paid to organizations - Whether the Patna High Court has jurisdiction to entertain and decide a writ petition challenging an assessment order passed by the GST authority at Chandigarh when the return was filed and the cause of action arose at Chandigarh – HELD - Writ petition challenging an order passed by the assessing officer of one jurisdiction cannot be entertained by a High Court of another jurisdiction merely because the assessee happens to be registered or has undertaken transactions in the territorial jurisdiction of that Court. The jurisdiction of a High Court to entertain a writ petition is limited to matters where the cause of action has arisen within its territorial jurisdiction or where the respondent authority falls within its supervisory or appellate purview. Since the impugned order has been passed by the ETO-cum-Proper Officer at Chandigarh and the return was filed at Chandigarh, the entire cause of action has arisen in Chandigarh. The fact that the appellant has obtained leases from entities located in Patna, Chandigarh and Delhi does not confer jurisdiction upon the Patna High Court to entertain the petition. Any challenge to the order passed by the Chandigarh authority must be made before a competent court having appellate or supervisory jurisdiction over that authority - The writ petition is not maintainable for lack of jurisdiction and dismissed [Read less]

Central Excise - Mining of iron ore and manganese ore, Manufacture of Iron Ore Concentrate – Activity of Crushing and Screening - Appellant, a mine owner engaged in mining iron ore and manganese ore, carried out raising, crushing and screening of iron ore through a contractor - Respondent issued notices proposing recovery of duty on the ground that crushing and screening of iron ore amounts to manufacture of "iron ore concentrate" under Chapter Note 4 to Chapter 26 of the Central Excise Tariff Act, 1985 - Whether the process of crushing and screening of iron ore undertaken by or on behalf of the appellant amounts to "man... [Read more]

Central Excise - Mining of iron ore and manganese ore, Manufacture of Iron Ore Concentrate – Activity of Crushing and Screening - Appellant, a mine owner engaged in mining iron ore and manganese ore, carried out raising, crushing and screening of iron ore through a contractor - Respondent issued notices proposing recovery of duty on the ground that crushing and screening of iron ore amounts to manufacture of "iron ore concentrate" under Chapter Note 4 to Chapter 26 of the Central Excise Tariff Act, 1985 - Whether the process of crushing and screening of iron ore undertaken by or on behalf of the appellant amounts to "manufacture" of "iron ore concentrate" within the meaning of Chapter Note 4 to Chapter 26 of the Central Excise Tariff Act, 1985, when the said process effects only size reduction and segregation of the iron ore - HELD - The HSN Explanatory Notes to Chapter 26 provide that concentrates apply to ores which have had part or all of the foreign matter removed by special treatments. Chapter Note 4 operates only upon the conversion of an ore into a concentrate, and the deeming fiction is conditional upon a concentrate first coming into existence - The burden of proving that a concentrate came into existence by special treatment lies squarely upon the respondent. Crushing and screening are primarily processes of size reduction and separation, and without the employment of special treatment and removal of foreign matter there cannot be any concentration. The CBEC Circular No.332/1/2012-TRU dated 17.02.2012 clarifies that levy of excise duty is attracted only in cases where the product meets the definition of concentrate as per HSN Notes and that crushing and screening of run-of-mines into lumps and fines does not amount to the production of concentrate. The Ministry of Mines has itself clarified that no special treatment is involved in crushing and screening of ore, and the end product can be termed as concentrate only when the grade of ore is sufficiently improved through beneficiation processes - The activity undertaken by the appellant does not amount to manufacture and does not result in the end product being concentrates falling under Chapter 26 of the Central Excise Tariff Act. The iron ore remains iron ore in name, character and use, and continues to remain unconditionally exempt as "ores" under the applicable notifications - The impugned order confirming the demand of excise duty is set aside and the appeal is allowed [Read less]

Central Excise - Classification of GI Wire Welded Mesh - The adjudicating authority classified the goods under CETH 7314 20 90 as articles of iron and steel, whereas the appellant contended that the goods should be classified under CETH 8436 as parts of poultry keeping machinery - Whether GI welded wire mesh can be considered as poultry machinery or parts of poultry keeping machinery, or whether it should be classified as articles of iron and steel under heading 7314 – HELD - From analyzing the definition of machinery from various judicial precedents, a machinery must consist of fixed and moving parts that work together ... [Read more]

Central Excise - Classification of GI Wire Welded Mesh - The adjudicating authority classified the goods under CETH 7314 20 90 as articles of iron and steel, whereas the appellant contended that the goods should be classified under CETH 8436 as parts of poultry keeping machinery - Whether GI welded wire mesh can be considered as poultry machinery or parts of poultry keeping machinery, or whether it should be classified as articles of iron and steel under heading 7314 – HELD - From analyzing the definition of machinery from various judicial precedents, a machinery must consist of fixed and moving parts that work together to perform a function, and that a mere structure or equipment for poultry keeping, even if ultimately intended for use in poultry farms, does not qualify as machinery under heading 8436. In Azra Poultry Equipments versus Union of India case the Delhi High Court held that wire mesh manufactured, even if sold to poultry farmers for assembling cages or batteries, cannot qualify as machinery under heading 8436 and would be an article of iron and steel within heading 7314 - The form in which the wire mesh is cleared from the factory is that of a structure without moving parts, and therefore it cannot be considered as part of machinery meant for poultry keeping - The impugned goods are to be classified under heading 7314 and not under heading 8436. The demand of Central Excise duty is upheld within the normal period. Penalty under section 11AC as well as under Rule 25 read with section 11AC is set aside – The appeal is partly allowed - Extended Period of Limitation - Invokability of extended period in classification disputes involving interpretation of tariff headings - Whether the extended period of limitation can be invoked by the department in a case involving classification disputes and interpretation of tariff headings – HELD - The entire issue relates to interpretation of contrasting tariff headings, which is a complex matter of statutory interpretation, and there is no evidence of any deliberate attempt to not pay duty or willfully misclassify the product – Further, the issue of classification concerning poultry equipment was pending before the High Court since 1991 and was only finally decided in 2012, indicating the complexity and ambiguity that existed in the interpretation of the relevant headings - The appellant's belief that the goods were attracting a nil tariff rate was bonafide, and there was no deliberate intention to wrongly classify the product. Therefore, the conditions necessary to invoke the extended period are not satisfied. The extended period of limitation cannot be invoked, and consequently, penalty under section 11AC is also not invokable - Penalty under Rule 25 and Confiscation - Whether penalty under Rule 25 and confiscation of immovable and movable property can be sustained when the extended period of limitation is not invokable – HELD – Penalty under Rule 25 read with section 11AC and confiscation of plant, building, machinery, materials, and conveyance cannot be sustained. The appellant's submission that Rule 25 does not empower confiscation of immovable property and that separate order for confiscation is not tenable when extended period cannot be invoked is correct. Since extended period cannot be invoked and the appellant's action was bonafide, the imposition of penalty under Rule 25 based on the extended period is not sustainable - Personal Penalty on Partner Under Rule 26 - Whether personal penalty can be imposed on the partner under Rule 26 when the firm itself has not been found to have committed any deliberate contravention and the action is bonafide – HELD - Since the appellant's conduct was bonafide and based on a reasonable interpretation of the applicable tariff headings, the imposition of personal penalty on the partner is not justified - Service Tax on Erection, Commissioning and Installation Service - Levy of service tax on erection, commissioning and installation activities performed at the buyer's premises - Whether service tax is leviable on the activities of erection, commissioning and installation of wire mesh performed by the appellant at the poultry farm premises – HELD - Service tax is leviable on such erection, commissioning and installation activities. The appellant was clearly engaged in doing certain erection, installation and commissioning work at the poultry farms, and therefore, as held by the adjudicating authority, such activities squarely fall under the category of erection, commissioning and installation service. The levy of service tax on such activities is justified and sustainable. The demand of service tax and penalty under section 78 is upheld. [Read less]

Customs - Prohibited Goods - Invalid Pre-Shipment Inspection Certificate (PSIC) - Whether non-compliance with PSIC requirement regarding authorized area of operation of inspecting agency, when goods are subsequently inspected by DGFT-approved Indian agency and found to contain no objectionable material, constitutes improper import warranting confiscation under Section 111(d) of the Customs Act, 1962 – HELD - The requirement of a valid PSIC from an agency authorized for a specific country is an important condition for import of metallic scrap, however, non-compliance thereof does not tantamount to improper import of goods... [Read more]

Customs - Prohibited Goods - Invalid Pre-Shipment Inspection Certificate (PSIC) - Whether non-compliance with PSIC requirement regarding authorized area of operation of inspecting agency, when goods are subsequently inspected by DGFT-approved Indian agency and found to contain no objectionable material, constitutes improper import warranting confiscation under Section 111(d) of the Customs Act, 1962 – HELD - The requirement of a valid PSIC from an agency authorized for a specific country is an important condition for import of metallic scrap, however, non-compliance thereof does not tantamount to improper import of goods as contemplated under Section 111(d) of the Customs Act, 1962 - The Section 111(d) permits confiscation only where goods are imported contrary to any prohibition imposed by or under the Act or contrary to any prohibition imposed by any other law for the time being in force, and mere non-compliance with import policy conditions that are subject to fulfillment by the exporter may entail 100 percent inspection of goods but would not constitute improper import – Further, in the present case, though the inspecting agency was DGFT-empanelled, the only lapse was that it was not authorized to operate in the specific area where inspection took place. When the subsequent post-shipment inspection by a local DGFT-approved agency did not reveal any objectionable material, war material, or excess radiation levels in the goods, it amounts to substantial compliance of the DGFT policy - The confiscation order, redemption fine, and penalties imposed by the lower authorities are set aside – The appeal is allowed [Read less]

Service Tax Liability on commission received from print media for Sale of Advertisement Space – Demand of service tax on the entire commission/trade discount received from Print Media, treating it as taxable under Business Auxiliary Services - Whether the services provided by the Appellant in purchasing and selling advertisement space in Print Media fall within the negative list under Section 66D(g) of the Finance Act, 1994 – HELD - The Appellant's core activity constitutes selling of space for advertisements in Print Media, which expressly falls within the negative list under Section 66D(g) of the Finance Act, 1994, a... [Read more]

Service Tax Liability on commission received from print media for Sale of Advertisement Space – Demand of service tax on the entire commission/trade discount received from Print Media, treating it as taxable under Business Auxiliary Services - Whether the services provided by the Appellant in purchasing and selling advertisement space in Print Media fall within the negative list under Section 66D(g) of the Finance Act, 1994 – HELD - The Appellant's core activity constitutes selling of space for advertisements in Print Media, which expressly falls within the negative list under Section 66D(g) of the Finance Act, 1994, and is therefore not subject to service tax. The fact that the Appellant was registered under the category of Advertising Agency Service and paid service tax on profit margins does not alter the nature of their actual business activities, which are exempted from taxation. The classification of services was dispensed with after the introduction of the negative list regime with effect from 01.07.2012 and the Appellant's fundamental activity of direct purchase and resale of advertisement space does not constitute a taxable service under the statutory framework - The impugned order is set aside and the appeal is allowed - Taxability of Trade Discount and Incentives Received from Print Media - Whether the trade discount and incentives/free advertisement space received by the Appellant from Print Media constitute consideration for services rendered and are thus subject to service tax – HELD - The trade discount of 15% allowed to the Appellant as an accredited member of Indian Newspaper Society does not constitute commission but rather a trading margin. The Revenue's characterization of these amounts as commission is incorrect as the Appellant did not receive any Form 26-AS under Section 194H of the Income Tax Act, and no Tax Deduction at Source was deducted by the Print Media, which would be mandatory if commission were actually paid. Further, the incentives and volume discounts are received based on bulk purchase targets achieved by the Appellant and are not related to any service rendered to clients or any contractual obligation to promote the Print Media's business - Trade discount and incentives are not recovered from clients and do not form part of the value of taxable services since the Print Media/Publishing House is not the client of the Appellant; rather, the advertisers are the clients. The learned Adjudicating Authority's finding that the Appellant acted as an intermediary is beyond the scope of the Show Cause Notices, which alleged only Business Auxiliary Services, not intermediary services - The demands on trade discount and incentives are set aside - Invocation of Extended Period of Limitation - Whether the extended period of limitation is properly invocable in the present case where the issue involves interpretation of statutory provisions regarding taxability of trade discount and incentives – HELD - The department has not been able to establish any of the required ingredients to invoke the extended period of limitation because the issue involved in the present case relates to interpretation of statutory provisions, specifically whether commission/trade discount/incentives given by Print Media are subject to service tax. It is settled law that the extended period of limitation cannot be invoked when the issue relates to interpretation of statutory provisions, as distinguished from cases involving willful mis-statement, suppression, or concealment of facts with an intent to evade tax. The Appellant's payment of service tax on profit margins and filing of ST-3 returns under the Advertising Agency Service category, while ultimately being engaged in a non-taxable activity under Section 66D(g), does not constitute suppression but rather reflects a difference of opinion on interpretation of law - The demand for the period 01.07.2012 to 31.03.2016 is time-barred, and the Show Cause Notice dated 26.04.2018 is not maintainable - Imposition of Interest and Penalties - The learned Adjudicating Authority imposed interest under Section 75 and penalties under Sections 76, 77, and 78 following the confirmation of service tax demand - Whether interest and penalties are imposable when the underlying demand for service tax is not sustainable - HELD - Since the primary demand for service tax is not sustainable in law, the ancillary question of imposition of interest and penalties does not arise. Interest and penalties are consequential to a valid and sustainable demand; when the principal demand itself fails, the foundation for imposing interest and penalties disappears — Interest and penalties are set aside. [Read less]

Service Tax liability on markup in purchase and resale of cargo space by freight forwarders - Whether the markup earned by a freight forwarder on the purchase and resale of cargo space on a principal-to-principal basis constitutes taxable consideration for Business Support Services or whether such markup represents mere business profit arising from trading in cargo space which is not taxable as a service – HELD - Firstly, profit is the basic motive in any buying and selling transaction and cannot, merely by virtue of a markup, be converted into a taxable service. The Respondent assumes without any evidence or substantiat... [Read more]

Service Tax liability on markup in purchase and resale of cargo space by freight forwarders - Whether the markup earned by a freight forwarder on the purchase and resale of cargo space on a principal-to-principal basis constitutes taxable consideration for Business Support Services or whether such markup represents mere business profit arising from trading in cargo space which is not taxable as a service – HELD - Firstly, profit is the basic motive in any buying and selling transaction and cannot, merely by virtue of a markup, be converted into a taxable service. The Respondent assumes without any evidence or substantiation that the markup arises from rendering of ancillary services such as local transportation, cargo handling and facilitation charges, which allegation is wholly baseless - Respondent takes contradictory stands, on one hand claiming the Appellant is not a pure agent because of the markup, and on the other hand claiming the markup itself represents the value of services rendered - Where services are bundled, the main service of ocean transportation is not taxable either before or after 01.07.2012 in view of the statutory provisions and CBIC circulars. The Appellant operates as a principal and not as an intermediary, as it purchases cargo space in bulk on its own account and bears the risk of non-utilization of unsold space, unlike an agent who would merely facilitate transactions - The buying and selling of cargo space on a principal-to-principal basis does not amount to rendering a service and any profit earned through such transactions is not leviable to Service Tax - The impugned Order-in-Original is set aside and the appeal is allowed [Read less]

Service Tax - Limitation period for claiming rebate on specified services used for export of goods – Appellant claims refund of service tax paid on job work service used for export of goods by filing refund claim within the financial year but beyond one year from the date of Let Export Order (LEO) – Whether the claim for rebate of service tax paid on specified services used for export of goods is required to be filed strictly within one year from the date of LEO as specified in condition 3(g) of Notification No. 41/2012-ST or whether the limitation period can be computed from the end of quarter or with reference to dat... [Read more]

Service Tax - Limitation period for claiming rebate on specified services used for export of goods – Appellant claims refund of service tax paid on job work service used for export of goods by filing refund claim within the financial year but beyond one year from the date of Let Export Order (LEO) – Whether the claim for rebate of service tax paid on specified services used for export of goods is required to be filed strictly within one year from the date of LEO as specified in condition 3(g) of Notification No. 41/2012-ST or whether the limitation period can be computed from the end of quarter or with reference to date of FIRCs as per the residuary clause in explanation (f) of section 11B – HELD - The claim for rebate of service tax must be filed strictly within one year from the date of LEO, where the date of export is reckoned from the date on which the proper officer of Customs makes an order permitting clearance and loading of goods for exportation under Section 51 of the Customs Act. The notification is self-contained and contains an express provision regulating the grant of rebate with specific conditions that must be strictly followed. The condition relating to limitation is not a procedural requirement but has bearing on substantive rights of limitation. As the Notification itself prescribes a different provision for computing the limitation aspect and does not incorporate section 11B, the provisions of section 11B and the residuary clause in explanation (f) thereof do not apply. Any notification, being an exception to the general rule, must be strictly construed and if it prescribes any time limit, it must be complied with – The claims filed beyond one year from the date of LEO are hit by the time bar and are not admissible - The impugned order is upheld and the appeal is dismissed [Read less]

Central Excise - Clandestine Removal of Excisable Goods - Evidentiary Requirements - Whether clandestine removal of excisable goods can be established solely on the basis of statement of an employee who is not the author of seized private records and without corroborative evidence from raw material suppliers, recipients of goods, transporters, or voluntary admission from the partners – HELD - In cases of clandestine manufacture and clearance, revenue must establish tangible evidence encompassing various activities in the chain of events including unaccounted raw material purchase in excess of statutory records, actual re... [Read more]

Central Excise - Clandestine Removal of Excisable Goods - Evidentiary Requirements - Whether clandestine removal of excisable goods can be established solely on the basis of statement of an employee who is not the author of seized private records and without corroborative evidence from raw material suppliers, recipients of goods, transporters, or voluntary admission from the partners – HELD - In cases of clandestine manufacture and clearance, revenue must establish tangible evidence encompassing various activities in the chain of events including unaccounted raw material purchase in excess of statutory records, actual removal of finished goods without duty payment, discovery of such goods outside factory, instances of sale to identified parties, receipt of sale proceeds, disproportionate electricity consumption, statements of buyers with details of illicit transactions, and proof of transportation. The tribunal observed that serious charges of clandestine removal cannot be alleged merely on assumptions, presumptions or wild inferences but require corroborative evidence. In the present case, revenue relied solely on the statement of person who was not the author of the seized private records, without recording statements of actual authors despite issuing summons. There was no investigation at the recipient end despite names of four buyers appearing in the challan books, no evidence regarding transportation of goods, no voluntary admission from the partner despite several summons, and no explanation of how the value of clandestinely cleared goods was arrived at - The Department failed to adduce any positive evidence for alleging unaccounted manufacture and clandestine clearance - The order confirming the excise duty demand along with interest and penalties is set aside – The appeals are allowed [Read less]

GST – Entitlement to Input Tax Credit on account of Retrospective Amendment to Section 16(5) of the CGST Act, 2017 – Applicability to assessment concluded prior to Amendment – Denial of input tax credit on the ground that returns were filed beyond the due date. Subsequently, the Finance Act, 2024 inserted section 16(5) of the CGST Act, 2017, which retrospectively regularizes input tax credit for financial years 2017-18 to 2020-21 if returns are filed up to 30th November, 2021 - Respondent issued a fresh order maintaining the denial of input tax credit despite the insertion of the new clause - Whether the petitioner i... [Read more]

GST – Entitlement to Input Tax Credit on account of Retrospective Amendment to Section 16(5) of the CGST Act, 2017 – Applicability to assessment concluded prior to Amendment – Denial of input tax credit on the ground that returns were filed beyond the due date. Subsequently, the Finance Act, 2024 inserted section 16(5) of the CGST Act, 2017, which retrospectively regularizes input tax credit for financial years 2017-18 to 2020-21 if returns are filed up to 30th November, 2021 - Respondent issued a fresh order maintaining the denial of input tax credit despite the insertion of the new clause - Whether the petitioner is entitled to benefit of retrospective amendment – HELD - By virtue of the inserted clause in Section 16, the petitioner cannot be denied the benefit of such amendment. The amendment is curative and retrospective in nature from 01.07.2017. The ratio laid down in Hiranmoy Dutta is squarely applicable, whereby once returns are filed by 30th November, 2021, input tax credit for the relevant period stands regularized. The impugned order is quashed and set aside, and the matter is remitted to the Joint Commissioner for re-adjudication in light of section 16(5) – Ordered accordingly [Read less]

GST - Power to Withhold Refund under Section 54(11) of the CGST Act, 2017 – Refund claim of amount recovered during DGGI search operation – Appellate Authority allowed refund by holding that the collection was made during the course of inspection in contravention of CBIC Instruction No.01/2022-23 - Rejection of refund application on the ground that the appellate order had not attained finality as the State could file appeal before the Appellate Tribunal and therefore, consideration of refund application at that stage would be premature and may adversely affect the interest of revenue - Whether the Deputy Commissioner c... [Read more]

GST - Power to Withhold Refund under Section 54(11) of the CGST Act, 2017 – Refund claim of amount recovered during DGGI search operation – Appellate Authority allowed refund by holding that the collection was made during the course of inspection in contravention of CBIC Instruction No.01/2022-23 - Rejection of refund application on the ground that the appellate order had not attained finality as the State could file appeal before the Appellate Tribunal and therefore, consideration of refund application at that stage would be premature and may adversely affect the interest of revenue - Whether the Deputy Commissioner can refuse to consider a refund application by invoking the power under Section 54(11) of the CGST Act to withhold refund on the ground that an appeal by the State to the Appellate Tribunal is contemplated but not yet filed – HELD - The power to withhold refund under Section 54(11) of the CGST Act is strictly circumscribed and can be exercised only when an order giving rise to refund is the subject-matter of an appeal or further proceeding that is already pending, and the Commissioner has formed an opinion that grant of such refund is likely to adversely affect the revenue on account of malfeasance or fraud committed. The statute mandates recording of reasons for withholding refund in Form GST RFD-07 in consonance with Rule 92(2) of the CGST Rules - Mere quoting of Section 54(11) without establishing the existence of pending proceedings does not empower the authority to withhold refund. A contemplated or prospective action by the State to file an appeal cannot be the basis for refusing to consider a refund application that has flowed from an appellate order. The authority must respect the appellate order till it is reversed, varied or modified by a competent authority or Court. Prior to filing of appeal before the Appellate Tribunal, the authority does not have the jurisdiction to assume power to withhold refund - In the instant case, the Dy. Commissioner lacked jurisdiction to invoke Section 54(11). The reason assigned in the impugned order that consideration of refund application is premature before lapse of six months period is not a valid ground under the statute and constitutes arbitrary and irrational exercise of power – The impugned order is set aside and the matter is remitted to the Dy Commissioner for fresh consideration of the refund application – The writ petition is allowed [Read less]

Central Excise – Eligibility to CENVAT Input Credit on Fuel Used in Manufacturing Intermediate Non-Dutiable Products - Appellant, a manufacturer of refractory products, manufactures Dead Burnt Magnesite (DBM), a nil-rated intermediate product at its Salem unit using furnace oil as fuel. The DBM is then stock-transferred to Appellant's Belpahar unit where it is used to manufacture dutiable final products such as refractory mortars, ramming mass and refractory bricks - Department denied CENVAT input credit on furnace oil claiming that since DBM is a nil-rated final good cleared from Salem unit, no input credit can be claim... [Read more]

Central Excise – Eligibility to CENVAT Input Credit on Fuel Used in Manufacturing Intermediate Non-Dutiable Products - Appellant, a manufacturer of refractory products, manufactures Dead Burnt Magnesite (DBM), a nil-rated intermediate product at its Salem unit using furnace oil as fuel. The DBM is then stock-transferred to Appellant's Belpahar unit where it is used to manufacture dutiable final products such as refractory mortars, ramming mass and refractory bricks - Department denied CENVAT input credit on furnace oil claiming that since DBM is a nil-rated final good cleared from Salem unit, no input credit can be claimed under Rule 57AD(1) which prohibits input credit on exempted or nil-rated goods - Whether CENVAT credit taken on fuel is required to be reversed when the exempted intermediate product is used for manufacture of dutiable goods that are ultimately cleared only on payment of Central Excise Duty – HELD - The DBM is an intermediary product and not a final product for the purpose of denying input credit, as the actual final products are the dutiable goods manufactured at Belpahar unit. The principle established in Escorts Limited case applies that where an intermediate product chargeable at nil-rate of duty comes into existence, credit is allowed so long as duty is paid on the final product - The term "within the factory of production" should be interpreted liberally to include another unit of the same manufacturer where both units are commonly owned with unified balance sheets, as a strict literal interpretation would create artificial distinctions contrary to the object of MODVAT and CENVAT schemes which aim to prevent cascading effect of taxes - Since the final products are excisable in nature, the bar under Rule 57AD(1) applicable only to exempted or nil-rated final goods does not apply, and the Appellant is entitled to claim CENVAT input credit on furnace oil - The Tribunal's order is set aside with the Commissioner of Central Excise (Appeals) order being restored in favour of the Appellant – The appeal is allowed - Stock Transfer or Sale - Whether the clearance of D.B.M. as such from Salem unit to Belpahar unit is a stock-transfer or sale – HELD – There was no consideration of any sort involved in the clearance of D.B.M. from Salem unit. Goods were merely shifted from one unit of the manufacturer to another unit of the very same manufacturer. Admittedly, the owners of the units are one and the same and the balance sheet is common for both. There is no sign of any trade whatsoever. Even in the clearance bills, it has been specified as stock-transfers. Anything contrary, the same has to be brought up by the Department. Hence, it is merely a stock-transfer, and not sale as alleged by the Department - Scope of expression "within the factory of production" - Whether input credit can be claimed when input utilised in one location and the final dutiable product is manufacture elsewhere – HELD - If the expression "within the factory of production" is interpreted strictly and narrowly to mean that every stage of manufacture must take place within the same factory premises, anomalous consequences would follow - When both the concerned units are owned by the same manufacturer and have a common balance sheet, if CENVAT input credit is to be denied on the mere ground that physical location of utilisation of the input and the physical location of manufacture of the final goods are different, then it would be detrimental to the very object of MODVAT and CENVAT Scheme which is to remove all the cascading effect of taxes by allowing manufacturers and service providers to claim credit for duties paid on inputs against their final output excise duty liability. Such a result would make the entitlement of credit depend not on the use of the input or its nexus with the final product, but merely on the physical distance between the very same manufacturer's facilities and also introduce an artificial distinction having no nexus with the object of the MODVAT/CENVAT scheme. Moreover, no prejudice or loss of due revenue would be caused to the Dept by following the wider interpretation. Therefore, the phrase "within the factory of production" is to be given a wider interpretation to include TRL's Belpahar unit as well and consequently, CENVAT input credit cannot be denied for the fuel - furnace oil on the ground that it was utilised in TRL's Salem unit while the final product was produced in its Belpahar unit. [Read less]

Service Tax - Limitation Period for Service of Show-cause Notice - Department issued Show-cause notice demanding service tax based on differential amounts noted in VAT Return and ST-3 Return. The Show-cause notice, though signed on 31.12.2020, was actually served on 15.01.2021, which is beyond five years from the date of filing of Return on 24.10.2015 - Whether a Show-cause notice served beyond the period of limitation, covering a demand for service tax pertaining to April 2015 to September 2015, is sustainable in law – HELD - The Show-cause notice covering the first period, that contains the disputed demand, was served ... [Read more]

Service Tax - Limitation Period for Service of Show-cause Notice - Department issued Show-cause notice demanding service tax based on differential amounts noted in VAT Return and ST-3 Return. The Show-cause notice, though signed on 31.12.2020, was actually served on 15.01.2021, which is beyond five years from the date of filing of Return on 24.10.2015 - Whether a Show-cause notice served beyond the period of limitation, covering a demand for service tax pertaining to April 2015 to September 2015, is sustainable in law – HELD - The Show-cause notice covering the first period, that contains the disputed demand, was served much after five years of filing of Return on 24.10.2015 including the period covered upto 31.12.2021 in the Ordinance issued to address Covid Pandemic situation, is to be treated as issued beyond the period of limitation and the demand in question is not sustainable for the fact that it is barred by time - The service of notice beyond the statutory period of limitation renders the show-cause notice void, and consequently, all proceedings flowing from such invalid notice must fall - The order passed by the Commissioner (Appeals) is set aside and the appeal is allowed [Read less]

GST - Proceedings against non-existent entity after merger, Applicability of Section 87 of the CGST Act, 2017 — Petitioner, a company that had merged with another entity pursuant to a court-approved scheme of amalgamation, challenges an order-in-original confirming GST demand issued in the name of the transferor company which had ceased to exist following the merger - Respondent-Authorities initiated proceedings by issuing show cause notice against the non-existent transferor entity despite being informed of the merger - Whether a show cause notice and consequent order issued against a non-existent amalgamating company, ... [Read more]

GST - Proceedings against non-existent entity after merger, Applicability of Section 87 of the CGST Act, 2017 — Petitioner, a company that had merged with another entity pursuant to a court-approved scheme of amalgamation, challenges an order-in-original confirming GST demand issued in the name of the transferor company which had ceased to exist following the merger - Respondent-Authorities initiated proceedings by issuing show cause notice against the non-existent transferor entity despite being informed of the merger - Whether a show cause notice and consequent order issued against a non-existent amalgamating company, which had ceased to exist upon merger pursuant to a court-approved scheme of amalgamation, is sustainable in law – HELD - Any show cause notice issued to an amalgamating company after it has ceased to exist pursuant to its merger based on the scheme of amalgamation would be without jurisdiction. If proceedings are initiated against a non-existing company despite the assessing authority having knowledge of the amalgamation, such proceedings are void ab initio - The Section 87 of the CGST Act applies only to the intervening period from the date on which the merger order takes effect till the date of the order, and in no way authorizes the Department to issue show cause notice on a non-existent entity post-merger or amalgamation. Post-merger, the merged entity has no legal status and therefore no proceedings can be initiated against it – The show cause notice issued to an amalgamating company after the same had ceased to exist pursuant to its merger is without jurisdiction. Therefore, any proceeding initiated thereunder, is null and void. However, this order would not come in the way of the Authorities from initiating any proceeding, in accordance with law, for recovery of any unpaid GST dues, along with interest and penalty from the Writ Petitioner, if the same is otherwise permissible under the law - The impugned Order-in-Original is set aside and the writ petition is allowed [Read less]

Tamil Nadu General Sales Tax Act, 1959 - Classification of Gold Coins - Bullion vs Articles of Gold – Department’s appeal challenging the order of the Sales Tax Appellate Tribunal which classified gold coins embossed with the picture of Goddess Lakshmi as bullion liable to tax at 1% instead of 4% as articles of gold - Whether gold coins embossed with the picture of Goddess Lakshmi and mixed with copper should be classified as bullion in uncoined form or as articles of gold – HELD – The term bullion, according to its ordinary and popular meaning, refers to gold or silver in the mass, either in raw form or as ingots ... [Read more]

Tamil Nadu General Sales Tax Act, 1959 - Classification of Gold Coins - Bullion vs Articles of Gold – Department’s appeal challenging the order of the Sales Tax Appellate Tribunal which classified gold coins embossed with the picture of Goddess Lakshmi as bullion liable to tax at 1% instead of 4% as articles of gold - Whether gold coins embossed with the picture of Goddess Lakshmi and mixed with copper should be classified as bullion in uncoined form or as articles of gold – HELD – The term bullion, according to its ordinary and popular meaning, refers to gold or silver in the mass, either in raw form or as ingots or bars, representing unwrought material. Whereas, Gold coins that have undergone a manufacturing process with specific markings and engraved pictures constitute value addition and lose the character of bullion, becoming finished metal items. The embossing or engraving of pictures carries inherent value addition that transforms the raw material into a different commercial product - In common trade practice, gold coins with engraved pictures are not sold at prices equivalent to bullion rates, but at prices reflecting value addition including making charges and wastage. The fact that the respondent-assessee itself realized that part of the turnover was taxable as gold jewellery and collected higher tax rates supports the position that such coins are articles of gold, not bullion – The words in tax legislation must be interpreted according to common parlance and popular sense, not in any technical or scientific sense. The assessment order passed by the Appellate Authority is restored, classifying the gold coins as articles of gold taxable at 4% - The order of the Sales Tax Appellate Tribunal is set aside and the Tax Case Appeal is allowed [Read less]

Service Tax - Liability of Sub-contractor for Maintenance, Management and Repair Services – Appellant engaged as a sub-contractor by a system integrator to carry out maintenance, management and repair services of leased lines and related equipment claims no service tax liability as the services were rendered at the behest of the system integrator who has already discharged the service tax liability – Demand invoking the extended period of limitation for demanding service tax is therefore not sustainable - Whether the extended period of limitation can be invoked to demand service tax from a sub-contractor when the main ... [Read more]

Service Tax - Liability of Sub-contractor for Maintenance, Management and Repair Services – Appellant engaged as a sub-contractor by a system integrator to carry out maintenance, management and repair services of leased lines and related equipment claims no service tax liability as the services were rendered at the behest of the system integrator who has already discharged the service tax liability – Demand invoking the extended period of limitation for demanding service tax is therefore not sustainable - Whether the extended period of limitation can be invoked to demand service tax from a sub-contractor when the main contractor has already paid service tax – HELD - On reading of Section 65(64) with Section 65(105) (zzg) of the Finance Act, as it stood from July 2004 to March 2008, it is clear that the Appellant is engaged in taxable services falling within the definition of "Management, Maintenance and Repair Services" and cannot be considered merely as a sub-contractor. The Tribunal has rightly held that non-payment of service tax for the maintenance, management and repair services came to light only during the course of internal audit by the Department, thereby establishing suppression. The extended period of limitation for demanding service tax is therefore sustainable, and the waiver of penalty by the appellate authority in exercise of its discretionary power on the ground of reasonable cause does not exonerate the service provider from the substantive tax liability - The plea of revenue neutrality is factually incorrect as a part of receipt is for services rendered on Maintenance, Management and leased lines – Further, the payment of service tax by the main contractor does not absolve the sub-contractor of independent tax liability – The Tribunal order is confirmed and the appeal is dismissed [Read less]

Central Excise - Cenvat Credit Eligibility and Extended Period of Limitation - Cenvat credit on service tax paid towards annual maintenance charges for software services procured from a foreign vendor - Recovery of Cenvat credit taken, alleging that the service tax was not leviable for services rendered prior to the prescribed date, and that the appellant had suppressed contractual obligations with the vendor - Whether the extended period of limitation under section 11A of the Central Excise Act can be invoked when there is no intention to evade duty – HELD - Where a taxpayer takes credit of erroneously paid service tax ... [Read more]

Central Excise - Cenvat Credit Eligibility and Extended Period of Limitation - Cenvat credit on service tax paid towards annual maintenance charges for software services procured from a foreign vendor - Recovery of Cenvat credit taken, alleging that the service tax was not leviable for services rendered prior to the prescribed date, and that the appellant had suppressed contractual obligations with the vendor - Whether the extended period of limitation under section 11A of the Central Excise Act can be invoked when there is no intention to evade duty – HELD - Where a taxpayer takes credit of erroneously paid service tax by suo motu availing credit instead of following the prescribed procedure of filing a refund claim, and furthermore suppresses material facts like contractual obligations from the Department, such conduct amounts to suppression of facts. The suppression of contractual obligation entered into between the vendor and the appellant (formerly known as Alstom) was not disclosed to the Department, and the service tax was paid belatedly followed by suo motu credit availed instead of claiming refund - Taking the entire transaction as a whole, suppression and fraudulent conduct get established, thereby attracting the extended period of limitation of five years under section 11A. The remedy available to a taxpayer for erroneously paid duty is to file a refund claim under section 11B, and not to suo motu take credit. Since the inspection and verification commenced prior to the notice, and the extended period was available due to suppression of facts, the notice issued during the extended period is valid and the penalty is also justified – The Tribunal Order is upheld and the appeal is dismissed [Read less]

GST - Provisional Attachment of Bank Account under Section 83 of the CGST Act, 2017 – Whether the attachment order passed in mechanical manner without formation of requisite opinion by the competent authority is valid and sustainable in law – HELD – The Section 83 being draconian in nature requires strict compliance with statutory conditions which include formation of an opinion by the competent authority that it is necessary to protect the interest of government revenue, issuance of written order for attachment, and observance of rules regarding manner of attachment. The court relies on the principle established in ... [Read more]

GST - Provisional Attachment of Bank Account under Section 83 of the CGST Act, 2017 – Whether the attachment order passed in mechanical manner without formation of requisite opinion by the competent authority is valid and sustainable in law – HELD – The Section 83 being draconian in nature requires strict compliance with statutory conditions which include formation of an opinion by the competent authority that it is necessary to protect the interest of government revenue, issuance of written order for attachment, and observance of rules regarding manner of attachment. The court relies on the principle established in Radha Krishan Industries case that when exercise of power is challenged, validity depends on strict and punctilious observance of statutory preconditions. The impugned attachment order merely states that attachment is directed to protect revenue interest without demonstrating formation of any opinion, thereby falling short of mandatory procedure. Accordingly, the attachment order is set aside and the bank is directed to de-freeze the petitioner's bank account – Writ petition is allowed [Read less]

Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 – Delayed Payment – Lapse of Benefit – The appellant fails to deposit the amount within the stipulated time and despite extension granted due to COVID Pandemic, makes the payment much later than the prescribed deadline - Whether the benefit of the scheme can be extended to the appellant despite non-compliance with the stipulated payment deadline due to COVID Pandemic conditions – HELD - The Section 127(5) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 is clear and unambiguous in providing that if the declarant does not pay the amount within t... [Read more]

Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 – Delayed Payment – Lapse of Benefit – The appellant fails to deposit the amount within the stipulated time and despite extension granted due to COVID Pandemic, makes the payment much later than the prescribed deadline - Whether the benefit of the scheme can be extended to the appellant despite non-compliance with the stipulated payment deadline due to COVID Pandemic conditions – HELD - The Section 127(5) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 is clear and unambiguous in providing that if the declarant does not pay the amount within the stipulated time, the declaration stands lapsed due to any reason, without exception. When statutory words are clear, plain and unambiguous conveying only one meaning, courts are bound to give effect to that meaning irrespective of consequences or hardship. Since the scheme is a beneficial legislation meant for defaulting taxpayers, ambiguity if any must be construed against the assessee - The payment deadline of thirty days from issuance of SVLDRS-3 form was mandatory and non-compliance within the extended period of thirty June, 2020 results in automatic lapse of scheme benefits. However, regarding penalty imposition, there exists no mala fide intent on the appellant's part to default or deliberately delay payment when the appellant had voluntarily applied under the amnesty scheme. The demand for service tax and interest is upheld but the imposition of penalty is set aside - The order confirming penalty is set aside while confirming the demand for tax and interest is confirmed – The appeal is partly allowed [Read less]

Tamil Nadu VAT Act, 2006 – Classification of Capital Goods – Applicability of Tax Rate – The Appellant challenged an assessment order imposing tax at 14.5% on inter-state sales of moulds and dies effected without C-Forms, contending that these goods qualified as capital goods attracting a 5% tax rate under the TNVAT Act - Whether moulds and dies can be classified as capital goods for the purpose of determining the applicable tax rate under Section 8(2) of the Central Sales Tax Act, 1956, read with the TNVAT Act – HELD - For goods to be treated as capital goods under Section 2(11) of the TNVAT Act, two conditions mu... [Read more]

Tamil Nadu VAT Act, 2006 – Classification of Capital Goods – Applicability of Tax Rate – The Appellant challenged an assessment order imposing tax at 14.5% on inter-state sales of moulds and dies effected without C-Forms, contending that these goods qualified as capital goods attracting a 5% tax rate under the TNVAT Act - Whether moulds and dies can be classified as capital goods for the purpose of determining the applicable tax rate under Section 8(2) of the Central Sales Tax Act, 1956, read with the TNVAT Act – HELD - For goods to be treated as capital goods under Section 2(11) of the TNVAT Act, two conditions must be cumulatively satisfied: first, the goods should fall within clauses (a) to (g) of the definition of capital goods, and second, the goods should be used in the State for the purpose of manufacture, processing, packing or storing of goods in the course of business. Although moulds and dies are specifically mentioned in clause (d) of Section 2(11), the admitted position that these goods were not used within the State for the purpose of manufacture renders the second condition unfulfilled. Both conditions are mandatory and cannot be treated as alternative requirements. Since the goods did not satisfy the essential condition of being used in the State, they could not be classified as capital goods – The Department was justified in applying the residuary entry (entry 69) of part-C of the First Schedule - The writ petition is dismissed [Read less]

Central Excise - Rebate of Central Excise Duty on Exported Goods - Loss of Moisture Content – Quantity of Metallurgical Coke actually exported, as reflected in the shipping bills, was less than the quantity cleared due to loss of moisture content during transit from the factory to the port. The appellant claimed rebate under Rule 18 of the Central Excise Rules, 2002 on the entire quantity cleared but respondent authorities sanctioned rebate only on the actual quantity exported as per shipping bills, disallowing rebate on the quantity lost due to moisture evaporation -Whether rebate of duty under Rule 18 of the Central Ex... [Read more]

Central Excise - Rebate of Central Excise Duty on Exported Goods - Loss of Moisture Content – Quantity of Metallurgical Coke actually exported, as reflected in the shipping bills, was less than the quantity cleared due to loss of moisture content during transit from the factory to the port. The appellant claimed rebate under Rule 18 of the Central Excise Rules, 2002 on the entire quantity cleared but respondent authorities sanctioned rebate only on the actual quantity exported as per shipping bills, disallowing rebate on the quantity lost due to moisture evaporation -Whether rebate of duty under Rule 18 of the Central Excise Rules, 2002 can be granted on the quantity of goods cleared from the factory or only on the actual quantity of goods exported out of India – HELD – The petitioner, as required by the provision of Rule-4 of the Rules, 2002, paid the duty on the goods which it manufactured, however, the goods exported were less in weight than the one which were loaded in the trucks at the factory premises - The rebate of duty is intrinsically connected with the export of goods. The plain reading of Rule 18 and its explanation clarifies that export means taking goods out of India to a place outside India - The Notification dated 06.09.2004 issued under Rule 18 mandatorily specifies that excisable goods shall be exported after payment of duty and rebate has to be processed and calculated on the quantity of goods actually exported. The petitioner failed to declare the loss of moisture content in the goods at the time of paying duty and clearing from the factory, and in the absence of such declaration at the relevant point, the Customs authorities cannot be expected to presume that substantial shortage in quantity was caused merely by moisture loss - Since the petitioner failed to calculate and declare the moisture content while loading goods from warehouse till they reached the dock for export, rebate cannot be processed on the quantity reduced on account of moisture. The respondent authorities correctly determined rebate on the actual quantity of goods exported as per shipping bills - The orders of the respondent authorities are upheld and the petitions are dismissed [Read less]

Tamil Nadu VAT Act, 2006 - Revision of Assessment Order - Non-consideration of Reply to Show Cause Notice - Whether an assessment order passed without considering and applying the assessee's reply to the show cause notice can be sustained in law – HELD - The impugned assessment order cannot be sustained as the assessing officer failed to consider the reply dated 15.03.2021 filed by the assessee to the show cause notice. The record itself indicates that the dealer did not raise any objection, and the assessee had expressly dealt with the issues relating to interstate purchases and UPS sales in the reply. The principle of ... [Read more]

Tamil Nadu VAT Act, 2006 - Revision of Assessment Order - Non-consideration of Reply to Show Cause Notice - Whether an assessment order passed without considering and applying the assessee's reply to the show cause notice can be sustained in law – HELD - The impugned assessment order cannot be sustained as the assessing officer failed to consider the reply dated 15.03.2021 filed by the assessee to the show cause notice. The record itself indicates that the dealer did not raise any objection, and the assessee had expressly dealt with the issues relating to interstate purchases and UPS sales in the reply. The principle of natural justice requires that the assessing officer must consider the submissions and evidence placed on record by the assessee before arriving at a conclusion. The failure to consider the assessee's reply is a substantial procedural defect that vitiates the assessment order, rendering it arbitrary and illegal - The impugned order is set aside and the matter is remanded for reconsideration. The assessing officer shall provide a reasonable opportunity to the petitioner – The writ petition is disposed of [Read less]

Central Excise - MODVAT/CENVAT Credit on Low Sulphur Heavy Stock (LSHS) used for Generation of Electricity – Eligibility when electricity is transferred to sister units of the same manufacturer for manufacturing final products - Appellant claimed MODVAT/CENVAT input credit on the LSHS used for electricity generation. Department reversed the credit contending that electricity generated in one factory cannot be transferred to sister units located outside the factory of production - Whether MODVAT/CENVAT input credit can be denied on LSHS used for generation of electricity for the manufacture of dutiable final products when... [Read more]

Central Excise - MODVAT/CENVAT Credit on Low Sulphur Heavy Stock (LSHS) used for Generation of Electricity – Eligibility when electricity is transferred to sister units of the same manufacturer for manufacturing final products - Appellant claimed MODVAT/CENVAT input credit on the LSHS used for electricity generation. Department reversed the credit contending that electricity generated in one factory cannot be transferred to sister units located outside the factory of production - Whether MODVAT/CENVAT input credit can be denied on LSHS used for generation of electricity for the manufacture of dutiable final products when such electricity is transferred to sister manufacturing units of the same company located at different geographical locations – HELD - The expansive definition of 'factory' under Section 2(e) of the Central Excise Act, 1944, includes multiple units of the same manufacturer at different locations. The expression 'within the factory of production' refers to the factory owned by the assessee and encompasses multiple units if they are engaged in manufacturing excisable goods. When one company has different units at different geographical locations and all units are manufacturing units, electricity generated in one unit and consumed in other units of the same company qualifies as captive generation and captive consumption - The phrase 'captive' is a qualification of the location where electricity is generated and not the location where it is consumed. Therefore, if electricity generated in a captive arrangement is used for manufacturing final products in any unit of the same company, the input credit cannot be denied merely because the units are located at different geographical locations - The definition of 'input' introduced by the Fourth Amendment to the Central Excise Rules, 1944, effective from 16.03.1995, specifically included inputs used for generation of electricity used within the factory of production for manufacture of final products or for any other purpose - Insofar as the surplus electricity used for lighting the housing colony, since it is not used for manufacturing of any final product dutiable, to that extent electricity transferred for lighting the housing colony, the denial of input credit is sustained - The Input credit on LSHS for electricity transferred to sister units for manufacturing final products is allowed. However, input credit is denied to the extent that electricity is used for lighting the staff housing colony, as such use is not for manufacturing any final product - The appeals are partly allowed - Extended Period of Limitation – Applicability when assessee suppresses information regarding diversion of electricity during inspection - The appellant challenged the applicability of the extended period of limitation, arguing that there was no intentional suppression aimed at evading duty - Whether the extended period of limitation under Section 11-A of the Central Excise Act, 1944, is invokable when the assessee discloses the diversion of electricity only after inspection of factory premises and not voluntarily – HELD - Since the assessee disclosed the transfer of electricity to sister units and housing colony only after the inspection of the factory premises by the Divisional Preventive Officers, an element of intentional suppression of the diversion is apparent. The expression 'suppression of facts' when used in the company of terms such as fraud, collusion and wilful misstatement must refer to a deliberate act of non-disclosure aimed at evading duty, requiring an element of intentional action. The timing of disclosure after inspection constituted a deliberate withholding of information that should have been disclosed when the credit was originally claimed. The non-voluntary nature of the disclosure and the timing thereof established the requisite element of intentional suppression necessary to invoke the extended five-year period of limitation under the proviso to Section 11-A(1) instead of the ordinary one-year period - The extended period of limitation is held to be applicable. The show cause notices issued beyond one year but within five years from the relevant date are legally sustainable. [Read less]

Customs Law – Delayed adjudication of show case notice - Classification of titanium graphite blocks, Eligibility to IGST Exemption – HELD - In view of the direction issued by the Hon'ble Supreme Court in the matter of Delayed adjudication of SCNs, directing High Courts and Tribunals not to proceed with matters involving classification of goods pending disposal of the SLP, and considering that similar issues arise before this Court, the respondents are directed to keep all proceedings pursuant to the impugned order-in-original in abeyance till the disposal of the said SLP by the Supreme Court. The respondents are furthe... [Read more]

Customs Law – Delayed adjudication of show case notice - Classification of titanium graphite blocks, Eligibility to IGST Exemption – HELD - In view of the direction issued by the Hon'ble Supreme Court in the matter of Delayed adjudication of SCNs, directing High Courts and Tribunals not to proceed with matters involving classification of goods pending disposal of the SLP, and considering that similar issues arise before this Court, the respondents are directed to keep all proceedings pursuant to the impugned order-in-original in abeyance till the disposal of the said SLP by the Supreme Court. The respondents are further restrained from taking any coercive steps for recovery of duty, interest, penalty or confiscation of goods pursuant to the impugned order till the disposal of the SLP – The Writ Petition disposed of with directions keeping the proceedings in abeyance [Read less]

GST – Cancellation of Registration based on Defective Show Cause Notice - Requirement of Record Reasons and Valid Personal Visit Report - Respondent issued Show Cause Notices based on personal visits to the registered business premises, followed by suspension and thereafter cancellation orders without affording the petitioners an opportunity of hearing on the Show Cause Notices – HELD - Rule 22(1) of the CGST Rules, 2017, mandatorily requires that before issuing a notice in Form GST REG-17, the proper officer must have recorded reasons to believe that the registration is liable to be cancelled under Section 29 of the C... [Read more]

GST – Cancellation of Registration based on Defective Show Cause Notice - Requirement of Record Reasons and Valid Personal Visit Report - Respondent issued Show Cause Notices based on personal visits to the registered business premises, followed by suspension and thereafter cancellation orders without affording the petitioners an opportunity of hearing on the Show Cause Notices – HELD - Rule 22(1) of the CGST Rules, 2017, mandatorily requires that before issuing a notice in Form GST REG-17, the proper officer must have recorded reasons to believe that the registration is liable to be cancelled under Section 29 of the CGST Act, 2017. The Show Cause Notices fail to satisfy this requirement as they are based on personal visit reports which are either defective, showing unrelated properties, or completely blank without any recorded particulars. Such defective reports cannot form the basis for recording valid reasons to believe - The petitioners are entitled to file documents demonstrating that they are conducting business at the registered premises and that they must be afforded a fair opportunity to respond to the SCNs. Since the cancellation orders are founded on Show Cause Notices issued without proper recorded reasons supported by valid documentary evidence, the cancellation orders cannot be sustained and quashed. Consequently, the suspension orders which preceded the cancellation also stand to be quashed - The proceedings are restored to the stage of Show Cause Notice – The petition is partly allowed [Read less]

GST – Odisha AAR - Forest land diversion – Payment of Net Present Value and Compensatory Afforestation charges – Activity in relation to electricity transmission and construction of transmission lines – Applicant was required to obtain forest clearance certificate for diverting forest land to undertake construction of electrical transmission infrastructure. As a mandatory condition for obtaining such forest clearance under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act, 2016 - Whether statutory deposits of Net Present Value (NPV), Compensatory Afforestation, Dwarf Plantation, Site S... [Read more]

GST – Odisha AAR - Forest land diversion – Payment of Net Present Value and Compensatory Afforestation charges – Activity in relation to electricity transmission and construction of transmission lines – Applicant was required to obtain forest clearance certificate for diverting forest land to undertake construction of electrical transmission infrastructure. As a mandatory condition for obtaining such forest clearance under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act, 2016 - Whether statutory deposits of Net Present Value (NPV), Compensatory Afforestation, Dwarf Plantation, Site Specific Wildlife Conservation Plan and other CAMPA-related charges required for obtaining forest clearance certificate constitute a consideration against supply of services under Section 7 of the CGST Act, 2017 – HELD – The diversion of forest land for non-forest purposes is prohibited except with prior approval under the Forest (Conservation) Act, 1980. The State holds natural resources in public trust. When a business entity requests diversion of forest land for commercial activities, the State evaluates the application and grants specific permission enabling the otherwise prohibited activity. The grant of approval by Government is not a passive sovereign act but a specific activity undertaken in favour of an identified applicant in furtherance of business - The deposits of NPV and other compensatory afforestation charges are not voluntary but mandatory conditions imposed for obtaining forest clearance. Without such deposits, approval would not be granted and forest land could not be delivered. Therefore, granting clearance or permission to use forest land is an activity performed in the furtherance of business and falls within the definition of service under Section 2(102) of CGST Act. The payment is intrinsically linked with the grant of approval. Under the definition of consideration in Section 2(31) of CGST Act, such payments constitute consideration as they are made in respect of, in response to, or for inducement of the supply of goods or services. The grant of permission therefore constitutes a supply of service by Government within the meaning of Sections 7 and 2(31) of the Act - The deposits towards Net Present Value (NPV), Compensatory Afforestation, Dwarf Plantation, Site Specific Wildlife Conservation Plan, Plantation of Dwarf Species and other CAMPA-related charges constitute consideration for supply of service under Section 7 of CGST Act, 2017. The same are not exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and GST is payable under RCM in terms of Entry No. 5 of Notification No. 13/2017-CT (Rate) dated 28.06.2017, with the value on which GST is payable being the amount of NPV and other CAMPA-related charges deposited as consideration for obtaining permission for diversion of forest land – Ordered accordingly - Whether NPV and other CAMPA-related charges are exempt from GST under Entry Nos. 4 and 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 – HELD - The exemption notifications are in the nature of exceptions to charging provisions and must be construed strictly, with the burden lying upon the person claiming exemption to establish that the transaction squarely falls within the language of the exemption entry. Entry Nos. 4 and 5 of Notification No. 12/2017-CT (Rate) exempt specified services provided by Governmental authorities in relation to functions entrusted to Municipalities under Article 243W and Panchayats under Article 243G of the Constitution. The present transaction concerns diversion of forest land for a commercial transmission project, which is a statutory regulatory function exercised under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act, 2016, and not a municipal or panchayat function. Therefore, the services do not fall within the ambit of the exemption entries - Liability under Reverse Charge Mechanism – HELD - The Entry No. 5 of Notification No. 13/2017-Central Tax (Rate) provides that in respect of services supplied by the Central Government, State Government, Union Territory or local authority to a business entity located in the taxable territory, the liability to pay GST shall be discharged by the recipient under reverse charge mechanism, except in respect of certain specifically excluded services. All essential ingredients of Entry No. 5 are satisfied. The mere fact that consideration is deposited into the CAMPA Fund rather than directly retained by a particular Government department does not alter the nature of the transaction, as taxability under GST law is determined by examining the existence of a supply and the consideration paid in relation thereto, and the subsequent destination, accounting treatment or utilization of the amount received is not determinative of taxability. [Read less]

GST - Failure to declare value of outward supply in GSTR-3B despite correctly declaring the same in GSTR-1 - Penalty under Section 74 of the CGST Act, 2017 - Invocation of Section 73 for Identical Default in Succeeding Period - Whether penalty under Section 74 can be invoked for the earlier period when the respondent has invoked the machinery under Section 73 for the identical default in the succeeding period – HELD - The deliberations preceding the incorporation of Section 128A into the Act by the GST Council indicate that there were several glitches resulting in non-filing of returns on time - The Amnesty scheme under ... [Read more]

GST - Failure to declare value of outward supply in GSTR-3B despite correctly declaring the same in GSTR-1 - Penalty under Section 74 of the CGST Act, 2017 - Invocation of Section 73 for Identical Default in Succeeding Period - Whether penalty under Section 74 can be invoked for the earlier period when the respondent has invoked the machinery under Section 73 for the identical default in the succeeding period – HELD - The deliberations preceding the incorporation of Section 128A into the Act by the GST Council indicate that there were several glitches resulting in non-filing of returns on time - The Amnesty scheme under Section 128A, inserted by Finance Act No. 2 of 2024, is available only for cases where Section 73 machinery was invoked and not for Section 74. The case of the appellant qualifies for examination under Section 73 rather than Section 74 since the appellant had correctly declared the value of outward supplies in GSTR-1 and the liability arose from short payment of tax compared to the declared liability. The principle that once tax payable towards outward supplies is declared in GSTR-1, mere failure to make corresponding declaration in GSTR-3B would not by itself amount to suppression of facts to evade tax within the meaning of Section 74 is recognize. The fact that the respondent has treated the identical default in the succeeding period under Section 73 indicates differential treatment for the same nature of default - The impugned order imposing penalty under Section 74 is quashed, and the case is remitted back to the respondent to redo the exercise afresh - The writ petition is partly allowed [Read less]

GST – Availment of Input Tax Credit based on overruled Judicial Decision - Invocation of Section 74 of CGST Act, 2017 for wrongly availed ITC based on a judicial decision that was subsequently reversed by the Supreme Court – Petitioner, engaged in renting and leasing of immovable properties, availed input tax credit on works contract services and construction materials on the basis of the Orissa High Court's decision in Safari Retreats Pvt. Ltd. The Petitioner initially sought approval from the respondent for claiming input tax credit of a certain amount but proceeded to avail a significantly higher amount without obta... [Read more]

GST – Availment of Input Tax Credit based on overruled Judicial Decision - Invocation of Section 74 of CGST Act, 2017 for wrongly availed ITC based on a judicial decision that was subsequently reversed by the Supreme Court – Petitioner, engaged in renting and leasing of immovable properties, availed input tax credit on works contract services and construction materials on the basis of the Orissa High Court's decision in Safari Retreats Pvt. Ltd. The Petitioner initially sought approval from the respondent for claiming input tax credit of a certain amount but proceeded to avail a significantly higher amount without obtaining formal concurrence from the respondent. Subsequently, the Orissa High Court's decision was reversed by the Supreme Court, following which the respondent issued SCN under Section 74 of the CGST Act for wrongly availed input tax credit - Whether the respondent was justified in invoking Section 74 of the CGST Act for determining wrongly availed input tax credit when the appellant had acted in reliance upon a judicial decision that was later reversed by the Supreme Court – Petitioner’s contention that having intimated the department regarding the availment of the said input tax credit, the respondent was not justified in invoking Section 74 - HELD – The Section 17(5)(c) and (d) of the CGST Act contains a prohibition and prohibits a person for availing of Input Tax Credit on works contract services supplied for the construction of an immovable property. The restrictions contained in Sections 17(5)(c) and (d) of the CGST Act are clear statutory prohibitions blocking input tax credit on works contract services and construction materials for immovable property. While the petitioner relied upon the Orissa High Court's decision, the very foundation and basis for availing the input tax credit was removed when the Supreme Court reversed that decision – Mere communication to the respondent without formal approval or concurrence from the authority cannot entitle the appellant to bonafide believe that it was entitled to avail the blocked credit. The communication was not responded to by the respondent, which does not grant any legal sanctity to the availment. Additionally, the petitioner initially sought approval for a limited amount but without obtaining concurrence proceeded to avail a significantly larger amount of input tax credit, which establishes that no case has been made out against invoking the extended period of limitation. Even otherwise, the credit that was wrongly availed by the petitioner was beyond the period of limitation. Therefore, the invocation of the extended period of limitation is justified – The writ petition is dismissed - The invocation of Section 74 for multiple tax periods – HELD - As far as the challenge to the impugned proceedings for multiple tax periods is concerned, the issue now stands covered against the petitioner in terms of the decision of the Karnataka High Court in M/s Chimney Hills Education Society vs. Additional Commissioner of Central Tax and Another. Therefore, no further views are expressed. [Read less]

GST - Adjustment of IGST paid on inter-state supply subsequently held to be intra-State supply, Adjustment of wrongfully paid IGST against CGST/SGST liability – Petitioner paid IGST on transactions with vendors initially considered to be inter-State supplies but subsequently realized that the invoices should have been raised on the vendors' unit located in the same State, thereby making these intra-state supplies liable to CGST/SGST instead. The authorities issued an adjudication demanding payment of tax along with interest and penalty, dismissed the appeal on grounds of limitation, and issued a demand notice without con... [Read more]

GST - Adjustment of IGST paid on inter-state supply subsequently held to be intra-State supply, Adjustment of wrongfully paid IGST against CGST/SGST liability – Petitioner paid IGST on transactions with vendors initially considered to be inter-State supplies but subsequently realized that the invoices should have been raised on the vendors' unit located in the same State, thereby making these intra-state supplies liable to CGST/SGST instead. The authorities issued an adjudication demanding payment of tax along with interest and penalty, dismissed the appeal on grounds of limitation, and issued a demand notice without considering adjustment of the wrongfully paid IGST against the CGST/SGST liability - Whether a registered person is entitled to adjustment of IGST against the CGST/SGST liability – HELD – The Section 77(2) of the CGST Act, 2017 when read in conjunction with Rule 92 of the CGST Rules, 2017 stipulates that a registered person who has paid IGST on a transaction considered to be inter-State supply but subsequently held to be intra-state supply shall not be required to pay any interest or tax. The Rule 92 contemplates adjustment of an amount to which an assessee is entitled by issuing an order in Part A of Form GST DRC-07 giving details of the adjustment as against a refund. The respondent authorities have failed to apply this legal principle and have incorrectly raised a demand with interest and penalty - The original authority must reconsider the matter in light of these provisions and issue an order in the prescribed form considering the adjustment mechanism instead of closing the proceedings. The petition is allowed in part by quashing the adjudication order, the order-in-original and the demand in form GST DRC-13 and the matter is restored to the first respondent to reconsider and pass fresh orders in light of the aforesaid legal proposition – The petition is partly allowed [Read less]

GST - Reasonable Opportunity to reply to Show Cause Notice, Correction in original notice, Service of notice on GST Portal - The petitioner was informed via email that a fresh notice would be issued due to errors in the initial DRC-01A notice, but the corrected notice (DRC-01) was issued without correcting the errors or informing the petitioner about the same - The physical copy of the notice sent by registered post with acknowledgment due was returned unserved – HELD - The petitioner was informed on 25.01.2024 that "a fresh notice" will be issued but not issued fresh DRC-01A. Further, it cannot be disputed that the phy... [Read more]

GST - Reasonable Opportunity to reply to Show Cause Notice, Correction in original notice, Service of notice on GST Portal - The petitioner was informed via email that a fresh notice would be issued due to errors in the initial DRC-01A notice, but the corrected notice (DRC-01) was issued without correcting the errors or informing the petitioner about the same - The physical copy of the notice sent by registered post with acknowledgment due was returned unserved – HELD - The petitioner was informed on 25.01.2024 that "a fresh notice" will be issued but not issued fresh DRC-01A. Further, it cannot be disputed that the physical copy of the notice is returned un-served. In the circumstances, the petitioner's case that it expected a fresh DRC-01A and therefore its consultant did not pay attention to the portal or the E-mail merits acceptance. There is a lack of opportunity, and for complete adjudication, the petitioner must have an opportunity to file a response within a reasonable time - The adjudication order is quashed the proceedings are restored for reconsideration – The petition is disposed of [Read less]

Customs AAR - Classification of Unassembled Elevator Components – Import of traction machine, control panel, car frame, door mechanism, safety gear, etc. - The applicant contended that the imported components constitute the essential character of a complete elevator and therefore merit classification under tariff item 84281011 (lifts of a kind used in buildings) by application of Rule 2(a) of the General Rules for Interpretation of the Import Tariff – HELD - When goods presented in unassembled or disassembled form do not possess the essential character of a complete finished article, they cannot be classified as comple... [Read more]

Customs AAR - Classification of Unassembled Elevator Components – Import of traction machine, control panel, car frame, door mechanism, safety gear, etc. - The applicant contended that the imported components constitute the essential character of a complete elevator and therefore merit classification under tariff item 84281011 (lifts of a kind used in buildings) by application of Rule 2(a) of the General Rules for Interpretation of the Import Tariff – HELD - When goods presented in unassembled or disassembled form do not possess the essential character of a complete finished article, they cannot be classified as complete goods under Rule 2(a) of General Rule of Interpretation. Rule 2(a) applies only when incomplete or unfinished goods presented in unassembled or disassembled form possess the essential character of the complete or finished article. The Rule contemplates assembly operations only such as fixing devices (screws, nuts, bolts), riveting or welding without subjecting components to further working operations - The guiderails, brackets, fishplates, entrance jamb frame and car enclosure are not merely auxiliary but fundamental to elevator operation. The imported goods alone, valued at 49 percent of the total, cannot perform vertical transportation independently without these essential installation and structural components which constitute 51 percent of the total value. If essential components are not imported but manufactured or procured locally, it would be difficult to maintain that essential characteristics of the complete article have been achieved. The imported goods do not constitute a complete elevator in CKD form nor possess the essential character of a complete elevator, and therefore cannot be classified under tariff item 84281011. The individual components must be classified separately according to their respective nature and function under appropriate headings including 4016, 7326, 8423, 8431, 8483, 8531, 8537 and 8544 of the Customs Tariff Act – Ordered accordingly [Read less]