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Service Tax - Intellectual Property Services, Service Tax on Foreign Technology Transfer - Appellant entered into an International Technology Transfer Agreement with a foreign entity holding proprietary rights in technical knowledge for rotor blade manufacture. Under the agreement, the foreign entity provided drawings, technical information, and technical assistance of skilled personnel for a fee, while retaining copyright on documents and designs and granting the recipient exclusive rights to produce, sell and provide after-sales service in India - Whether the transfer of technical know-how, designs, and specifications fr... [Read more]

Service Tax - Intellectual Property Services, Service Tax on Foreign Technology Transfer - Appellant entered into an International Technology Transfer Agreement with a foreign entity holding proprietary rights in technical knowledge for rotor blade manufacture. Under the agreement, the foreign entity provided drawings, technical information, and technical assistance of skilled personnel for a fee, while retaining copyright on documents and designs and granting the recipient exclusive rights to produce, sell and provide after-sales service in India - Whether the transfer of technical know-how, designs, and specifications from a foreign entity to an Indian entity constitutes "Intellectual Property Service" taxable under service tax on Reverse Charge basis when the technical know-how was not registered as an intellectual property right under Indian law – HELD - For a service to be taxable as intellectual property service under section 65(105)(zzr) read with section 65(55a) of the Finance Act, 1994, the intellectual property right must be "under any law for the time being in force", meaning it should be registered with trademark, patent or design authorities as recognized under Indian law. Since the technical know-how in the present case was admittedly not registered as an intellectual property right under any law in force in India, the Department failed to discharge its burden of proof that the activity was exigible to tax as intellectual property service – It is settled that registration with appropriate authorities is mandatory for taxation under the intellectual property service category, and absence of such registration means there exists no intellectual property right recognized under Indian law, thereby precluding service tax liability on reverse charge basis - The demand for service tax on intellectual property services is set aside - Scope of Consulting Engineering Services - Whether services rendered under a composite agreement involving collaborative development work, design, detailing, prototype-related activities and production start-up support constitute "Consulting Engineering Service" taxable under section 65(105)(g) of the Finance Act, 1994 – HELD – The Consulting Engineering service under section 65(105)(g) is limited to services rendered by a consulting engineer in relation to "advice, consultancy or technical assistance" in engineering disciplines, and does not extend to execution-oriented obligations or actual participation in the creation of deliverables. The definition employs the word "means", making it exhaustive and confining the levy only to services expressly enumerated therein – Applying the principle of noscitur a sociis, interpreting "technical assistance" by reference to the cognate terms "advice" and "consultancy", which require deliberation, conferring and rendering of opinion, but exclude actual performance of work - The contract could not be vivisected to isolate engineering skill embedded in performance and tax it as consulting engineering service. The erection, installation, commissioning and development work constitute execution of jobs and not consulting engineering service - The demand for service tax on consulting engineering services is set aside and the appeal is allowed in favour of the appellant. [Read less]

Customs - Classification of mono potassium phosphate as fertiliser — Appellant declared the classification under CTH 31056000, attracting duties of 5% BCD, 1% CVD and nil SAD. Revenue disputed this classification and re-classified the goods under CTH 28352400 by invoking CBEC Circular No. 44/2001 dated 06.08.2001 - Whether mono potassium phosphate should be classified under CTH 31056000 (fertilisers) as declared or under CTH 28352400 (chemical compounds) as reclassified by the Revenue – HELD – The CBEC Circular No. 44/2001 applies only to separate chemically defined single products like calcium nitrate and does not a... [Read more]

Customs - Classification of mono potassium phosphate as fertiliser — Appellant declared the classification under CTH 31056000, attracting duties of 5% BCD, 1% CVD and nil SAD. Revenue disputed this classification and re-classified the goods under CTH 28352400 by invoking CBEC Circular No. 44/2001 dated 06.08.2001 - Whether mono potassium phosphate should be classified under CTH 31056000 (fertilisers) as declared or under CTH 28352400 (chemical compounds) as reclassified by the Revenue – HELD – The CBEC Circular No. 44/2001 applies only to separate chemically defined single products like calcium nitrate and does not apply to mixtures, compounds or salts where calcium nitrate or similar compounds are constituents - The Chapter 31 of the Customs Tariff Act, 1975 deals entirely with fertilisers and mono potassium phosphate, being composed of two of the three basic fertilizing elements (nitrogen, phosphorus and potassium), qualifies as a fertiliser product – Further, the Fertilizer (Control) Order, 1985 clearly establishes that the imported goods are fertilisers for which licences have been issued by the Government. The mono potassium phosphate answers to the description of fertiliser under Chapter 31 and should be classified under CTH 31056000 - The reclassification by the revenue is set aside and the appeal is allowed [Read less]

GST – Anti-Profiteering - Principles of res judicata, Maintainability of fresh investigation in Anti-Profiteering Proceedings - DGAP had already conducted a detailed investigation against the same respondent for the identical project and period, quantifying the profiteered amount - The complainant later requested unconditional withdrawal of his complaint after receiving possession of his flat, and a settlement deed between the parties was executed settling all disputes - Whether a fresh investigation is maintainable and required to be initiated on a complaint regarding profiteering when the subject matter of profiteering... [Read more]

GST – Anti-Profiteering - Principles of res judicata, Maintainability of fresh investigation in Anti-Profiteering Proceedings - DGAP had already conducted a detailed investigation against the same respondent for the identical project and period, quantifying the profiteered amount - The complainant later requested unconditional withdrawal of his complaint after receiving possession of his flat, and a settlement deed between the parties was executed settling all disputes - Whether a fresh investigation is maintainable and required to be initiated on a complaint regarding profiteering when the subject matter of profiteering against the respondent for the same project and identical period has already been finally adjudicated upon by the competent authority – HELD - Once a matter has been fully and finally adjudicated upon by a competent authority and affirmed by a superior Court, the same matter cannot be reopened based on a fresh complaint raising the same cause of action against the same respondent for the same project and period. To permit such reopening would be contrary to the settled canons of jurisprudence and would lead to multiple parallel proceedings on the same subject matter, resulting in legal uncertainty and abuse of process - The proceedings are not maintainable and are hereby dropped. The DGAP shall take no further action on the said complaint - The matter is disposed of [Read less]

Service Tax - Refund of amounts deposited under protest during investigation proceedings when demand is subsequently dropped – Applicability of limitation period under Section 11B of the Central Excise Act, 1944 - Whether a refund claim filed after the dropping of tax demand is barred by the one-year limitation period under Section 11B of the Central Excise Act, 1944, where the amount was deposited during investigation without following the formal procedure of marking payments as "under protest" on challans – HELD - Any payment made under compulsion during investigation proceedings carries an inherent element of protes... [Read more]

Service Tax - Refund of amounts deposited under protest during investigation proceedings when demand is subsequently dropped – Applicability of limitation period under Section 11B of the Central Excise Act, 1944 - Whether a refund claim filed after the dropping of tax demand is barred by the one-year limitation period under Section 11B of the Central Excise Act, 1944, where the amount was deposited during investigation without following the formal procedure of marking payments as "under protest" on challans – HELD - Any payment made under compulsion during investigation proceedings carries an inherent element of protest, irrespective of whether it is formally marked "under protest" on challans or whether the prescribed procedure of written intimation to the Superintendent is strictly followed. The letters addressed during the investigation period clearly recorded that the deposits made by the Respondent-assessee were made under protest, establishing the character of the payment as being made under protest - The refund claim is filed within the statutory period of one year from the date of receipt of the order dropping the demand, which is the relevant date for computing the limitation period since no final determination of non-liability existed prior to adjudication. The principle of unjust enrichment does not apply as the assessee has not recovered the deposited amount from clients or charged service tax in invoices during the relevant period, as evidenced by the certificate from the CA and affidavit from the Managing Director - The retention of amounts collected without authority of law violates Article 265 of the Constitution. The Order-in-Appeal is upheld and the Revenue appeal is dismissed [Read less]

Service Tax - Valuation – Cum-duty benefit – Appellant engaged in renting of immovable properties within temple premises received rental consideration without separately levying service tax – Demand of service tax on the gross amount received. The assessee claimed that the consideration should be treated as inclusive of service tax (cum-duty valuation) under Section 67(2) of the Finance Act, 1994 - Whether cum-duty benefit could be extended when service tax was not separately collected or invoiced – HELD - Where service provider does not separately collect service tax from customers, the consideration received is d... [Read more]

Service Tax - Valuation – Cum-duty benefit – Appellant engaged in renting of immovable properties within temple premises received rental consideration without separately levying service tax – Demand of service tax on the gross amount received. The assessee claimed that the consideration should be treated as inclusive of service tax (cum-duty valuation) under Section 67(2) of the Finance Act, 1994 - Whether cum-duty benefit could be extended when service tax was not separately collected or invoiced – HELD - Where service provider does not separately collect service tax from customers, the consideration received is deemed inclusive of service tax - Service tax being an indirect tax, when consideration is received for services rendered without separately collecting tax, such consideration is deemed to be inclusive of service tax payable by the ultimate consumer. The provisions of Section 67(2) of the Finance Act, 1994 apply and provide that where the gross amount charged is inclusive of service tax, the value of taxable service shall be the amount which, after adding service tax, equals the gross amount charged. Since no evidence exists that the assessee separately collected tax but failed to pay it, the consideration must be treated as cum-duty – The impugned order denying cum-duty benefit is set aside - Levy of Penalty – Absence of mens rea – Penalty under Section 78 of Finance Act, 1994 for suppression of facts or wilful misstatement – HELD - For invoking penalty under Section 78, it must be established through clear and positive evidence that the duty was not paid due to fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade payment. The mental element introduced by the word "willful" requires examining the state of mind of the assessee. The mere detection of short payment during an inspection, without any corroborative evidence demonstrating conscious and deliberate intent to evade tax, cannot ipso facto justify penalty. The severity of penalty under Section 78 indicates that the conduct must be of a serious and blameworthy nature. The imposition of penalty under Section 78 is unsustainable and set it aside - Extended period of limitation – HELD - The law recognises that the ingredients for invoking extended period of limitation, namely suppression of facts, wilful misstatement, or intent to evade, are the same as those required for imposing penalty under Section 78. Mere failure to pay service tax without evidence of fraud, collusion, or wilful misstatement is insufficient to attract extended period. Since the conduct of the assessee did not constitute suppression of facts or wilful intent to evade, the demand arising from both show cause notices must be confined to the normal period of limitation only, and the demand beyond the normal period is set aside - Per AJAYAN T.V. [Member (J)]: The relief sought in the appeal is, in essence, confined to the grant of cum-tax benefit and to the setting aside of the penalty imposed. Nevertheless, the Ld. Advocate for the appellant had made his submissions at the bar on the issue of invocation of the extended period. The discussion contained in paragraphs 4 to 10 may not be strictly necessary for the determination of the issues arising from the appeal. At the same time, in agreement with the reasoning and findings recorded and also concur with the ultimate conclusion and the directions. [Read less]

Central Excise - Admissibility of Cenvat Credit - Nexus with Manufacturing - Cenvat credit on various input services including freight and clearing on export, construction service, insurance/mediclaim for staff, works contract service, mandap keeper's service, interior decorator service, club or association services, photography services, asset portfolio and fund management, repairing motor vehicle, architect service, outdoor catering service, and repair and maintenance service of motor vehicle – HELD - In the assessee’s own case, the Tribunal has allowed the Cenvat Credit to the assessee on most of the impugned input ... [Read more]

Central Excise - Admissibility of Cenvat Credit - Nexus with Manufacturing - Cenvat credit on various input services including freight and clearing on export, construction service, insurance/mediclaim for staff, works contract service, mandap keeper's service, interior decorator service, club or association services, photography services, asset portfolio and fund management, repairing motor vehicle, architect service, outdoor catering service, and repair and maintenance service of motor vehicle – HELD - In the assessee’s own case, the Tribunal has allowed the Cenvat Credit to the assessee on most of the impugned input services involved in the instant case – Further, any input service that forms part of the value of the final product should be eligible for Cenvat credit benefit - The impugned order denying the Cenvat Credit on various input services is not sustainable. The order of the Commissioner denying Cenvat credit on the various input services is set aside and the assessee appeal is allowed - Cenvat Credit on Manpower Supply for Canteen Service – Whether Cenvat credit is admissible on manpower supply for canteen services when the provision of canteen is a mandatory statutory requirement under the Factories Act, 1948 and forms part of the cost of production – HELD - The expenses towards canteen provision form part of the cost of production as recognized in Cost Accounting Standards (CAS-4), and the provision of canteen is mandatory for factories employing more than 250 workers under Factories Act, 1948, with non-compliance attracting prosecution and penalty - The definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004 has been given a very wide interpretation, holding that any service in relation to manufacture falls within the definition of input service - The appeal filed by the revenue is dismissed, and the Commissioner's order allowing Cenvat credit on manpower supply for canteen service is upheld. [Read less]

Customs – Valuation, Includability of Franchise Fee in assessable value - Appellant entered into licensing agreements with foreign franchisors whereby it paid franchise fees comprising minimum and percentage-based fees, while procuring goods from unrelated third-party suppliers - Department demanded differential duty contending that franchise fees must be included in the assessable value as they constitute a condition of sale under Rule 10(1)(c) of the Customs Valuation Rules, 2007 - Whether franchise fees paid by the buyer to foreign franchisors under separate licensing agreements constitute a condition of sale of impor... [Read more]

Customs – Valuation, Includability of Franchise Fee in assessable value - Appellant entered into licensing agreements with foreign franchisors whereby it paid franchise fees comprising minimum and percentage-based fees, while procuring goods from unrelated third-party suppliers - Department demanded differential duty contending that franchise fees must be included in the assessable value as they constitute a condition of sale under Rule 10(1)(c) of the Customs Valuation Rules, 2007 - Whether franchise fees paid by the buyer to foreign franchisors under separate licensing agreements constitute a condition of sale of imported goods and are therefore includible in the assessable value of goods imported from unrelated suppliers – HELD – The Rule 10(1)(c) of the Valuation Rules requires that the royalty or licence fee must be a condition of the sale of the imported goods itself. The franchise fee in the present case is paid for obtaining the right to sell, distribute and promote goods in India, which is a post-import activity distinct from the procurement of goods from overseas suppliers. The absence of these rights would prevent the importer from selling goods in India but would not prevent importation. Moreover, the non-payment of the franchise fee does not give the foreign supplier any right to repudiate the supply contract, establishing that the franchise fee is not a condition imposed by the seller for the sale of imported goods but rather relates to distribution rights thereafter - The franchise fee is independent of imports as the buyer is liable to pay minimum franchise fees even without any imports. The pricing arrangement between the buyer and overseas supplier is entirely separate from the licensing agreement with franchisors, with no nexus between the import transaction and franchise payment - The demand for franchise fee inclusion is set aside. The impugned order is set aside and the appeal is allowed - Includability of Advertisement, Marketing and Promotional Expenses (AMP) and Corporate Marketing Fee (CMF) - The appellant incurred advertisement, marketing and promotional expenses in India and paid corporate marketing fees to the franchisors as per the licensing agreements, all relating to licensed eyewear brands - Whether advertisement, marketing and promotional expenses incurred by the importer on its own account in India and corporate marketing fees paid to foreign franchisors constitute payments made as a condition of sale of imported goods includible under Rule 10(1)(e) – HELD - The Rule 10(1)(e) requires that payments be made as a condition of sale either to the seller or to a third party to satisfy an obligation of the seller. These expenses were incurred by the importer on its own account for its own business purposes and are post-importation costs bearing no nexus with the import transaction. The expenses are undertaken to promote the importer's own sales and safeguard brand value in the domestic market rather than to satisfy any obligation of the foreign supplier. There exists no enforceable legal right in the foreign supplier to compel these expenditures, which distinguishes them from genuine conditions of sale - The activities undertaken by the buyer on its own account, even if beneficial to the seller, are not indirect payments to the seller. Even if the importer chose not to import branded goods and instead sourced locally, these marketing expenses would still be necessary for business operations, establishing their independence from the import transaction - The demand for inclusion of advertisement, marketing and promotional expenses is set aside - Extended Period of Limitation - Whether the extended period of limitation under the Customs Act is invokable when the goods were provisionally assessed and their importation was already within the knowledge of revenue authorities – HELD - Since the goods were provisionally assessed in 2011 with execution of provisional duty bonds and extra duty deposits, the importation of goods was within the knowledge of the revenue authorities at that time. The provisional assessment itself demonstrates that the department had notice of these importations. The subsequent finalization of assessments accepting the declared values and cancellation of bonds in 2018 further establishes that the issue had been considered by the authorities. The extended period of limitation cannot be invoked merely on the ground that certain details or agreements relating to the imported goods came to light during investigation if the basic fact of importation was already on record with the authorities – The extended period of limitation cannot be invoked, restricting the demand to the normal period of two years from the relevant date. [Read less]

Customs - Classification of Liquid Crystal Display panels as components of automotive instrument clusters – Appellant imported Liquid Crystal Display (LCD) panels for use in manufacturing Automotive Instrument Clusters (AIC) and classifies them under Customs Tariff Heading (CTH) 9013 as Liquid Crystal Devices attracting nil duty - Revenue contends that since the LCD panels are solely designed and meant for use in motor vehicles, they should be classified under CTH 87089900/87149010 as parts and accessories of motor vehicles, attracting Customs duty - Whether LCD panels merit classification under CTH 90138010 as declared ... [Read more]

Customs - Classification of Liquid Crystal Display panels as components of automotive instrument clusters – Appellant imported Liquid Crystal Display (LCD) panels for use in manufacturing Automotive Instrument Clusters (AIC) and classifies them under Customs Tariff Heading (CTH) 9013 as Liquid Crystal Devices attracting nil duty - Revenue contends that since the LCD panels are solely designed and meant for use in motor vehicles, they should be classified under CTH 87089900/87149010 as parts and accessories of motor vehicles, attracting Customs duty - Whether LCD panels merit classification under CTH 90138010 as declared by the importer or under CTH 87089900/87149010 as parts of motor vehicles as contended by the Revenue – HELD - The goods must be assessed to duty in the condition in which they are imported and not how they become after use. The point of taxation is at the time of import and not at a later stage of manufacturing. The CTH 9013 specifically provides for Liquid Crystal Devices not constituting articles provided more specifically in other headings, and the Explanatory Notes clarify that such more specific description must be by nomenclature or naming of the product or group of products. The terms "parts and accessories" cannot be construed as a more specific description by nomenclature - The Section Note 2 clause (g) of Section XVII specifically excludes articles of Chapter 90 from the scope of Chapter 87, and Section Note 3 merely conveys that classification of parts and accessories under Chapter 87 is conditional upon satisfying the sole or principal use condition and cannot override other statutory factors for classification - Following the ratio of the Supreme Court in Videocon Industries Limited and other cases, it is held that CTH 9013 being specific to LCDs, and parts and accessories of motor vehicles under CTH 8708/8714 being generic and not more specific in heading, the LCD imported merits classification under CTH 9013. The decisions cited by the revenue pertaining to classification of nuts, bolts and nameplates are distinguished as those decisions involved classification of items already falling within the ambit of Chapter 87 under the Central Excise Tariff Act and not import of an item like LCD becoming a component of AIC for ultimate use in motor vehicles - The appeal is allowed - Charge of misdeclaration and suppression and applicability of extended period of limitation - Revenue contends that the importer has deliberately mis-declared the goods by not indicating the intended purpose or end-use in the Bills of Entry and has thereby suppressed information, justifying invocation of extended period of limitation under Section 28(4) of the Customs Act, 1962 – HELD – The Section 46 of the Customs Act does not mandate indication of the usage of items at the time of import. The Adjudicating Authority has sustained the charge of suppression on the ground that other importers mentioned end-use in their Bills of Entry, which is legally flawed as what should be declared must be statutorily mandated and voluntary declarations by others do not cast an obligation on others to do the same without statutory prescription - When an SCN relies on certain documents to level a serious charge of suppression, copies of such documents are expected to be furnished to the noticee, which was not done in the present case despite repeated requests. The importer has clearly described the goods in the Bills of Entry as LCD/Liquid Crystal Device/Liquid Crystal Display matching with the descriptions in the respective invoices issued by foreign suppliers. The goods were in most cases physically inspected by Customs officials before clearance, if officers had any doubt regarding correctness of classification, they should have called for further information and ensured correct declaration through re-assessment under Section 17 - Since the description of goods has been correctly stated, nothing has been suppressed from the knowledge of the Department. The issue being interpretational in nature, the extended period of limitation under Section 28(4) is unwarranted - The appeal is allowed on limitation as well. [Read less]

Customs - Import of Sanitary Products without BIS Certification – Applicability of Quality Control Order – Dept rejected the clearance on the ground that the goods were imported without valid BIS Registration Certificate and Standard Mark in violation of the Medical Textiles (Quality Control) Order, 2024 and Section 17 of the BIS Act, 2016 - Confiscation of the goods under Section 111(d) of the Customs Act, 1962 along with redemption fine and penalty - Whether the imported goods covered by the Medical Textiles (Quality Control) Order, 2024 were properly confiscated as prohibited goods when the importer claimed the stat... [Read more]

Customs - Import of Sanitary Products without BIS Certification – Applicability of Quality Control Order – Dept rejected the clearance on the ground that the goods were imported without valid BIS Registration Certificate and Standard Mark in violation of the Medical Textiles (Quality Control) Order, 2024 and Section 17 of the BIS Act, 2016 - Confiscation of the goods under Section 111(d) of the Customs Act, 1962 along with redemption fine and penalty - Whether the imported goods covered by the Medical Textiles (Quality Control) Order, 2024 were properly confiscated as prohibited goods when the importer claimed the status of a MSME entitled to extended timeline up to 01.04.2025 for compliance – HELD - While the Quality Control Order imposes a mandatory requirement for BIS certification and Standard Mark on imported sanitary products, the impugned order suffered from serious procedural defects. The Commissioner failed to analyse the guidance documents issued by the BIS and the concerned line ministry with requisite technical expertise, proceeded mechanically without following the QCO guidelines in letter and spirit, and neglected to verify the importer's claim of being a MSME despite the same being contended throughout the proceedings - The order was not a speaking order, particularly because it did not properly address the applicability of the extended timeline provisions to small enterprises, did not consider the date of import based on Bill of Lading and Shipping Bill as prescribed under Foreign Trade Policy, and failed to afford reasonable opportunity to the importer to place supporting evidence - While the goods must conform to Indian Standard IS 5405:2019 and bear BIS Standard Mark, the order required remand as it lacked proper analysis - The matter is remanded to the Commissioner to pass a fresh de-novo adjudication order, with strict adherence to principles of natural justice, proper consideration of the importer's MSME status and entitlement to extended timeline - the appeal is allowed by way of remand [Read less]

GST – West Bengal AAR - Classification of Laundry Soap in the form of bar, weighing less than 500 grams – Applicability of concessional tax rate - Whether the revised GST rate of 5 percent applicable to toilet soap under Schedule I of Notification No. 09/2025 – Central Tax (Rate) dated 17.09.2025 also applies to laundry soap, or whether laundry soap attracts the 18 percent rate under Schedule II – HELD - The toilet soap is primarily intended for cleansing the human body and is formulated with gentle and moisturizing ingredients, while laundry soap is specifically designed for cleaning clothes and fabrics - Dictiona... [Read more]

GST – West Bengal AAR - Classification of Laundry Soap in the form of bar, weighing less than 500 grams – Applicability of concessional tax rate - Whether the revised GST rate of 5 percent applicable to toilet soap under Schedule I of Notification No. 09/2025 – Central Tax (Rate) dated 17.09.2025 also applies to laundry soap, or whether laundry soap attracts the 18 percent rate under Schedule II – HELD - The toilet soap is primarily intended for cleansing the human body and is formulated with gentle and moisturizing ingredients, while laundry soap is specifically designed for cleaning clothes and fabrics - Dictionary definitions and BIS standards establish that toilet soap is formulated for gentle cleansing of the human body with specific ingredients providing moisturizing effects, while laundry soap is specifically designed for removing tough stains and dirt from fabrics with surfactants, enzymes, and builders - Despite a single common ingredient falling within a matching numeric range, the two products possess significant differences in chemical composition, with distinct requirements for ingredients such as unsaponified fatty matter, glycerol, and lather that distinguishes one from the other – The consumers, regardless of locality or economic position, distinguish toilet soap from laundry soap and use each for its specific purpose and the personal choice to use the same product for both purposes does not render the two products identical. The Customs Tariff Act specifically classifies toilet soap under sub-heading 340111 for toilet use and laundry soap under separate tariff items 34011919 and 34011942, thereby establishing them as distinct products under tariff classification - The laundry soap does not qualify as toilet soap and therefore does not attract the concessional 5 percent GST rate. The laundry soap weighing less than 500 grams falls under tariff item 34011942 and attracts 18% GST under Schedule II of the rate notification – Ordered accordingly [Read less]

GST – West Bengal AAR - Classification of Plastic Packing Boxes – Supply of lids, caps and closures supplied either separately or along with the boxes - Whether the polypropylene packing boxes and their accessories fall under HSN code 392390 – HELD - The subject goods qualify under Chapter 39 of the Customs Tariff as they are made of plastics (polymers of propylene) and are subjected to moulding and extrusion processes as envisaged in the chapter notes – The Tariff heading 3923 specifically covers articles for the conveyance or packing of goods made of plastics, and the manufactured product, being of the nature of ... [Read more]

GST – West Bengal AAR - Classification of Plastic Packing Boxes – Supply of lids, caps and closures supplied either separately or along with the boxes - Whether the polypropylene packing boxes and their accessories fall under HSN code 392390 – HELD - The subject goods qualify under Chapter 39 of the Customs Tariff as they are made of plastics (polymers of propylene) and are subjected to moulding and extrusion processes as envisaged in the chapter notes – The Tariff heading 3923 specifically covers articles for the conveyance or packing of goods made of plastics, and the manufactured product, being of the nature of boxes, cases and crates, does not qualify under the specifically enumerated tariff items 39231010, 39231020, 39231030 and 39231040, but instead qualifies as "other" articles under the subheading. Accordingly, the packing boxes are covered under tariff item 39231090 and the lids, caps and closures are covered under tariff item 39235090, both falling within Schedule II, serial number 124 of the Notification No. 09/2025 – Central Tax (Rate) dated 19.09.2025 attracting a tax rate of 18% SGST – Ordered accordingly [Read less]

Service Tax - Extended period of limitation under Section 73 of Finance Act, 1994 - Invocation solely on basis of third-party TDS/ITR data - Whether a demand under Section 73 of the Finance Act, 1994 can be validly raised by invoking the extended period of limitation solely on the basis of third-party TDS/ITR data – HELD – The invocation of the extended period of limitation under the proviso to Section 73(1) is not a matter of course but a penal exception to the normal period that must be founded upon clear evidence of fraud, collusion, wilful mis-statement, or suppression of facts with intent to evade payment of tax. ... [Read more]

Service Tax - Extended period of limitation under Section 73 of Finance Act, 1994 - Invocation solely on basis of third-party TDS/ITR data - Whether a demand under Section 73 of the Finance Act, 1994 can be validly raised by invoking the extended period of limitation solely on the basis of third-party TDS/ITR data – HELD – The invocation of the extended period of limitation under the proviso to Section 73(1) is not a matter of course but a penal exception to the normal period that must be founded upon clear evidence of fraud, collusion, wilful mis-statement, or suppression of facts with intent to evade payment of tax. The onus of establishing such ingredients rests squarely on the Revenue and must be discharged through cogent evidence brought out in the Show Cause Notice itself. TDS certificates or Form 26AS are at best starting points for inquiry and are not conclusive proof of taxable service rendered or service tax liability - Service tax and income tax operate under separate and independent statutory regimes, and income reflected in income tax returns does not, without more, constitute evidence of provision of taxable services under the Finance Act, 1994. The requirement for invoking the extended period is that there must be a positive act attributable to the assessee demonstrating an intent to evade tax liability, and mere non-payment standing alone does not suffice. Where amounts are openly disclosed in financial records and income tax returns with corresponding income tax liability discharged, no allegation of wilful suppression is tenable – Further, the CBIC has itself instructed that SCNs should not be issued indiscriminately based on ITR-TDS data differences and that proper verification of facts must precede issuance of such notices - The impugned Order-in-Appeal is set aside and the appeal is allowed [Read less]

Service Tax - Statutory Levies, Consideration for Taxable Service - Appellant engaged in construction of transmission lines through forest areas deposited mandatory Net Present Value charges into Compensatory Afforestation Fund Management and Planning Authority as a statutory precondition for obtaining forest clearance from the Ministry of Environment – Demand of service tax on these deposits, contending that the Government's grant of forest clearance in exchange for these deposits constituted a taxable service - Whether mandatory statutory payments deposited into the Compensatory Afforestation Fund constitute considerat... [Read more]

Service Tax - Statutory Levies, Consideration for Taxable Service - Appellant engaged in construction of transmission lines through forest areas deposited mandatory Net Present Value charges into Compensatory Afforestation Fund Management and Planning Authority as a statutory precondition for obtaining forest clearance from the Ministry of Environment – Demand of service tax on these deposits, contending that the Government's grant of forest clearance in exchange for these deposits constituted a taxable service - Whether mandatory statutory payments deposited into the Compensatory Afforestation Fund constitute consideration for a taxable service within the meaning of Section 65B(44) of the Finance Act, 1994 – HELD – The mandatory statutory payments cannot constitute consideration for any service. The concept of consideration in contract law and tax jurisprudence requires something given as a quid pro quo for a promise or act in a bilateral arrangement. However, the Net Present Value charges are levied and collected by operation of law under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act, 2016, without any element of choice or voluntary agreement. The funds are not retained by the Government Ministry for its own benefit but are disbursed for public purposes of compensatory afforestation, forest regeneration, and wildlife protection. The transaction lacks bilateral agreement, commercial character, and any element of quid pro quo – Further, the CBEC Circular No. 89/7/2006-ST clarifies that statutory levies collected by government authorities in discharge of regulatory duties do not constitute taxable services - The demand for service tax set aside and appeal is allowed - Sovereign Regulatory Act as Declared Service - Whether the grant of forest clearance by the Ministry of Environment constitutes an agreement to tolerate an act or situation within the meaning of Section 66E(e) of the Finance Act, 1994, thereby constituting a declared service exigible to service tax under reverse charge mechanism – HELD - The grant of forest clearance does not constitute a declared service under Section 66E(e). For a transaction to qualify as a declared service under this provision, four indispensable elements must be present: a consensual bilateral arrangement between two parties, voluntary agreement for consideration to refrain from an act or tolerate a situation, definite consideration flowing between parties, and a commercial or quasi-commercial character as opposed to purely statutory obligation - In the present case, the Ministry of Environment acts as a sovereign regulator discharging a statutory duty, not as a party to a consensual arrangement. The forest clearance is granted or refused on the basis of statutory criteria and policy considerations. The word agreeing in Section 66E(e) denotes a consensual act, not regulatory compulsion. Importing the concept of tolerance into a purely statutory and regulatory context where the Government performs its constitutional duty of regulating natural resources would distort the plain meaning of the statute - Appeal allowed and the demand for service tax set aside - Invocation of Extended Period and Levy of Penalty - Whether the extended period of limitation can be validly invoked and penalties imposed when the company had made statutory deposits in full compliance with law and disclosed all information in its books of account – HELD - The Net Present Value payments were made by the company in full compliance with the legal mandate under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act. These statutory deposits are on record and in conformity with law. The company disclosed all information in its books of account and has not suppressed any information or made any misrepresentation to the department. The revenue has produced no evidence of mala fide intent, wilful concealment, or fraud. The levy of penalty under Section 78 requires a finding of suppression, misstatement, or fraud, which is absent in this case - The penalties under Sections 77 and 78 are set aside along with interest under Section 75, and the appeal is allowed [Read less]

Central Excise - Admissibility of Third Party documents in Excise Proceedings - Clandestine Removal of Goods - Whether a demand for duty on alleged clandestine removal of goods can be sustained solely on the basis of third party documents and statements recorded without the maker of the statement being examined as a witness and without being afforded an opportunity for cross-examination – HELD - The third party documents and statements cannot form the sole basis for raising a demand of duty in clandestine removal cases. Even authentic entries in third party records cannot fix liability upon a person without independent c... [Read more]

Central Excise - Admissibility of Third Party documents in Excise Proceedings - Clandestine Removal of Goods - Whether a demand for duty on alleged clandestine removal of goods can be sustained solely on the basis of third party documents and statements recorded without the maker of the statement being examined as a witness and without being afforded an opportunity for cross-examination – HELD - The third party documents and statements cannot form the sole basis for raising a demand of duty in clandestine removal cases. Even authentic entries in third party records cannot fix liability upon a person without independent corroborating evidence of their trustworthiness. Before relying upon statements recorded before an officer, the strict procedure prescribed under section 9D of the Central Excise Act, 1944 must be followed, which requires the person making the statement to be examined as a witness before the adjudicating authority with an opportunity for cross-examination. Where this statutory procedure is not followed, the statements become irrelevant and cannot be relied upon for proving the truth of their contents – Further, the charge of clandestine removal requires multiple layers of corroborative evidence including verification of procurement of excess raw materials from independent sources, evidence of electricity consumption, proof of actual buyers and transporters, physical stock verification, and production capacity assessment. The mere entries in a third party's rough notebooks containing vehicle numbers and quantities, without any supporting documentary evidence, without identification of buyers or transporters, and without any statement recorded from the actual transporter who engaged the contractor, cannot sustain a demand – The Revenue had the burden to prove the manufacture of goods and clandestine removal through clinching evidence rather than relying on surmises, conjectures or mere suspicions - The impugned order confirming the demand of duty and imposition of penalties is set aside and the appeals are allowed [Read less]

Customs - Tariff Classification of n-Hexane - Petroleum Product or Organic Chemical Compound – Respondent-assessee imported n-Hexane classifying is under Customs Tariff Heading 2901.10 and Central Excise Tariff Heading 2901.90 as a saturated acyclic hydrocarbon existing as a separate chemical compound - Revenue issued notice contending that the product should be classified under Customs Tariff Heading 2710.00 and Central Excise Tariff Heading 2710.12 as petroleum oil/motor spirit - Whether n-Hexane should be classified as a petroleum oil under Chapter 27 or as a pure hydrocarbon under Chapter 29 of the Customs and Centra... [Read more]

Customs - Tariff Classification of n-Hexane - Petroleum Product or Organic Chemical Compound – Respondent-assessee imported n-Hexane classifying is under Customs Tariff Heading 2901.10 and Central Excise Tariff Heading 2901.90 as a saturated acyclic hydrocarbon existing as a separate chemical compound - Revenue issued notice contending that the product should be classified under Customs Tariff Heading 2710.00 and Central Excise Tariff Heading 2710.12 as petroleum oil/motor spirit - Whether n-Hexane should be classified as a petroleum oil under Chapter 27 or as a pure hydrocarbon under Chapter 29 of the Customs and Central Excise Tariff Acts – HELD - The n-Hexane is correctly classifiable under Chapter 29 (Customs Tariff Heading 2901.10 and Central Excise Tariff Heading 2901.90) as a separate chemically defined organic compound. The burden of proof rests upon the Appellate-Revenue to demonstrate classification under Chapter 27, and the revenue has failed to discharge this burden. Revenue has not provided cogent evidence that the imported product is used as motor spirit suitable for spark ignition engines, which requires satisfaction of three conditions: the product must be a hydrocarbon oil, possess a flash point below 25°C, and be suitable for use as fuel in spark ignition engines - The n-Hexane, being a saturated acyclic hydrocarbon and possessing a definitive linear structural diagram distinct from its isomers, satisfies the definition of a separately chemically defined compound under Chapter 29 of the HSN Notes. The presence of impurities such as other hexane isomers and sulfur compounds does not alter this classification as these constitute unconverted starting materials arising from the fractional distillation manufacturing process and are not deliberately added or left behind to make the product suitable for specific use – Further, the DGFT Policy Circular dated 14.07.2004 authoritatively clarified that imports of hexane fall under Chapter 29 of the Indian Trade Classification. Applying Rule 3(a) of the General Rules of Interpretation, the Chapter 29 provides a more specific description for n-Hexane as a separately defined chemical compound compared to the general classification under Chapter 27, thereby requiring the application of the specific heading – The impugned CESTAT order upholding classification under Chapter 29 is affirmed and the Revenue appeal is dismissed [Read less]

Service Tax - Difference between ST-3 Returns and Financial Statement Turnover – Appellant filed service tax returns on a realization/receipt basis during the relevant period when service tax liability arose only upon actual receipt of consideration and not on an accrual basis - Department raised a demand based on the difference between amounts shown in ST-3 returns and book turnover shown in financial statements, treating the entire book turnover as taxable value without excluding unrealized income – HELD – The Financial Statements are prepared on an accrual basis whereas service tax returns for the said period were... [Read more]

Service Tax - Difference between ST-3 Returns and Financial Statement Turnover – Appellant filed service tax returns on a realization/receipt basis during the relevant period when service tax liability arose only upon actual receipt of consideration and not on an accrual basis - Department raised a demand based on the difference between amounts shown in ST-3 returns and book turnover shown in financial statements, treating the entire book turnover as taxable value without excluding unrealized income – HELD – The Financial Statements are prepared on an accrual basis whereas service tax returns for the said period were filed on a realization basis, making it settled legal position that service tax is not payable on amounts charged in bills/invoices but only on amounts actually received. The adjudicating authority violated principles of natural justice by non-consideration of relevant material evidence - The demand is set aside as unsustainable - Service Tax Liability on Goods Transport Agency Services under Reverse Charge Mechanism – Appellant provided transportation services to persons falling under specified categories and issued consignment notes qualifying as a Goods Transport Agency. Department raised a demand for service tax liability against the service provider, ignoring the statutory provision under Rule 2(1)(d)(v) of the Service Tax Rules, 1994 – HELD – The appellant had primarily provided transportation services to body corporates falling under specified categories who paid freight, the liability to discharge service tax rests upon the service recipient and not the service provider. Further, an abatement of 75 percent of the gross value of taxable service is available for GTA services under Notification No. 13/2008-ST dated 01.03.2008, and the benefit of such abatement was not extended by the adjudicating authority, resulting in inflated and unsustainable demand. The demand on this ground is set aside - Service Tax Liability on Export Cargo Handling Activities – Appellant engaged in handling export cargo belonging to a pharmaceutical company performing various activities - Department, relying merely on the title of the agreement described as contract for clearing and forwarding agency, concluded that the services fell under clearing and forwarding agent service category and raised a demand based on amounts representing reimbursement of actual expenses – HELD - The classification of taxable services must be determined based on actual nature and substance of activities performed and not merely on nomenclature or title of agreement. Since the activities were essentially connected with export cargo handling and the goods were export consignments meant for shipment outside India, the services rendered fall outside the ambit of taxable service. The amounts do not represent consideration towards any taxable service but constitute pure reimbursement of actual expenses incurred on behalf of the client such as port charges, freight and statutory levies, recovered at actuals without any element of profit, commission or value addition. Accordingly, such reimbursements cannot form part of taxable value for levy of service tax. The demand is set aside - Service Tax Liability on Advances Received – Department raised a demand for service tax on two categories of advances received by the service provider: an amount received as unsecured loan from a trading company and an amount received as advance for providing GTA service – HELD - The unsecured loan amount creates no service tax liability as there is no provision of taxable service, supported by confirmation and ledger account produced by the appellant. Regarding the advances for Goods Transport Agency service, these advances pertain to services covered under the Reverse Charge Mechanism under Rule 2(1)(d)(v) of the Service Tax Rules, 1994, wherein the liability to discharge service tax rests upon the service recipient. Accordingly, no service tax liability can be fastened upon the service provider in respect of these advances - Service Tax Liability on Detention Charges – HELD - The detention charges collected by the service provider are not liable to service tax as the same are in the nature of penal charges and do not constitute consideration for any taxable service. The demand is set aside - Denial of Cenvat Credit on Invoices not in appellant's name – HELD - The denial of Cenvat credit merely on account of procedural or clerical discrepancies in the names appearing on invoices is contrary to settled legal position. The substantive benefit of Cenvat credit cannot be denied when receipt of input services, payment of service tax by service provider and utilization of such services for output taxable services are not in dispute. Since it is not disputed that the services were duly received and the expenditure was properly recorded in the books of account, and the divisions were subsequently brought under centralized registration, the substantive benefit of Cenvat credit stands established. The demand is set aside - Denial of Cenvat Credit on Photocopy of Invoices or Non-production of Invoices – HELD - The department has nowhere disputed the actual receipt and use of the services in the course of business. The substantive benefit of Cenvat credit cannot be denied when the availment of credit and its utilization stand established. The allegation that Cenvat credit has been irregularly availed solely on the basis of photocopies of invoices is unsustainable both in law and on facts. The CA certification and submission of sample invoices establish the availability of original invoices. The demand is set aside - Double Demand on same Taxable Period in Overlapping Show Cause Notices – HELD - Once material facts were already within the knowledge of the department from earlier proceedings, records, returns and disclosures made by the appellant, issuance of a subsequent notice on the very same set of facts without any fresh tangible evidence indicating fraud, collusion, wilful misstatement or suppression of facts with intent to evade tax is not permissible in law, as upheld by the Supreme Court in Nizam Sugar Factory. The department was fully aware of the relevant facts and no new evidence was presented to justify re-examination of the same issues. The demands raised in the second show cause notice are not sustainable on the ground of limitation itself. The demand is set aside - Sundry Debtors not constituting Taxable Value for Service Tax Purpose – Demand treating the entire amount reflected as sundry debtors as on a particular date as consideration allegedly received during a specific financial year – HELD - The mere reflection of an amount under the head sundry debtors in the books of accounts does not ipso facto establish actual receipt of consideration during the relevant period. Since service tax liability under the Finance Act, 1994 was governed by the receipt-based system prior to the introduction of the Point of Taxation Rules, service tax liability could be fastened only upon actual receipt of consideration. The assumption treating sundry debtors as taxable value is entirely without any cogent basis, documentary evidence or independent verification and is made merely on conjectures and surmises. The demand confirmed on this presumptive basis is not sustainable - Denial of Abatement Benefit due to availment of Cenvat Credit – HELD – The conditions of Notification No. 1/2006-ST dated 01.03.2006, as amended provide that credit on input services used for providing the service on which abatement is claimed is denied, but the notification does not preclude the right to avail credit on input services used for providing other taxable output services. Since the service provider had not availed credit on input services exclusively used for providing services on which abatement was claimed, the benefit of abatement availed is not in violation of notification terms and conditions. The allegation is baseless and the [Read less]

Service Tax - Validity of Service of Show Cause Notice through WhatsApp - Revenue issued a SCN dated 15.10.2018 demanding service tax, but this notice was communicated to the appellant through WhatsApp on 19.10.2019, without any prior attempt at service through statutory modes - Whether service of a Show Cause Notice through WhatsApp constitutes valid service in accordance with Section 37C of the Central Excise Act, 1944, as made applicable to the Finance Act, 1994 – HELD - The service of notice through WhatsApp does not constitute valid service under the statutory framework. The Section 37C of the Central Excise Act, 19... [Read more]

Service Tax - Validity of Service of Show Cause Notice through WhatsApp - Revenue issued a SCN dated 15.10.2018 demanding service tax, but this notice was communicated to the appellant through WhatsApp on 19.10.2019, without any prior attempt at service through statutory modes - Whether service of a Show Cause Notice through WhatsApp constitutes valid service in accordance with Section 37C of the Central Excise Act, 1944, as made applicable to the Finance Act, 1994 – HELD - The service of notice through WhatsApp does not constitute valid service under the statutory framework. The Section 37C of the Central Excise Act, 1944 prescribes exhaustive and illustrative modes of service, WhatsApp, being a private messaging application, finds no mention in the statutory framework and is neither contemplated by the legislature nor brought within the fold of permissible modes of service by any delegated legislation or executive instruction - The Department produced no evidence of attempting service through prescribed modes before resorting to WhatsApp. This procedural infirmity strikes at the root of the entire adjudication proceedings and renders the demand invalid - The Order-in-Appeal is set aside, with the entire service tax demand being quashed. The appeal is allowed [Read less]

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

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

Since there is obligation on part of petitioner to construct and maintain the road, vis-à-vis the promise of NHAI to permit the petitioner to collect toll for the road, the transaction squarely falls within the scope of ‘supply’ and ‘consideration’.

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

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

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

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

Central Excise - Actual production determination; Admissibility of statutory documents – Appellant, manufacturer of M.S. Ingots, opted to pay duty on actual production and clearance instead of Annual Capacity of Production – Denial of claim for determination of actual production on the ground that the manufacturer could not produce RT-12 Returns and RG-1 Register - Whether the demand of central excise duty can be confirmed on the ground that the manufacturer failed to produce RT-12 Returns and RG-1 Register when the Department itself has these statutory documents on record and the manufacturer had submitted detailed in... [Read more]

Central Excise - Actual production determination; Admissibility of statutory documents – Appellant, manufacturer of M.S. Ingots, opted to pay duty on actual production and clearance instead of Annual Capacity of Production – Denial of claim for determination of actual production on the ground that the manufacturer could not produce RT-12 Returns and RG-1 Register - Whether the demand of central excise duty can be confirmed on the ground that the manufacturer failed to produce RT-12 Returns and RG-1 Register when the Department itself has these statutory documents on record and the manufacturer had submitted detailed information regarding actual production and clearances - HELD – The adjudicating authority failed to provide any finding regarding the correctness of the actual production figures submitted by the manufacturer. There exists no contrary finding establishing that the information furnished regarding actual production was false or incorrect. The Tribunal observes that the details of actual production and clearances during the disputed period have been reflected in the statement placed on record and remain undisputed by the adjudicating authority. These figures could have been easily verified from the statutory records, RT-12 Returns and Challans, which are statutory documents available with the department itself. Therefore, there exists no justification for the adjudicating authority insisting on re-submission of these statutory documents by the manufacturer. The evidence on record clearly indicates that the manufacturer had already paid duty on the basis of actual production and clearances during the relevant period. Consequently, there exists no further duty liability to be borne by the manufacturer – The demand of central excise duty confirmed by the impugned order is set aside and the appeal is allowed [Read less]

Customs - Validity of Customs Duty demand when Export Obligation Discharge Certificate (EODC) issued and bonds vacated - Whether Customs authorities can demand duty on the ground of non-fulfillment of export obligation when Export Obligation Discharge Certificates have been issued by the licensing authority after due verification in respect of all licenses and have not been revoked – HELD - The issuance of EODCs by the licensing authority is conclusive proof of fulfillment of export obligations. Once an EODC is issued and the customs bonds are vacated by the competent authority, the foundation for any demand under Sectio... [Read more]

Customs - Validity of Customs Duty demand when Export Obligation Discharge Certificate (EODC) issued and bonds vacated - Whether Customs authorities can demand duty on the ground of non-fulfillment of export obligation when Export Obligation Discharge Certificates have been issued by the licensing authority after due verification in respect of all licenses and have not been revoked – HELD - The issuance of EODCs by the licensing authority is conclusive proof of fulfillment of export obligations. Once an EODC is issued and the customs bonds are vacated by the competent authority, the foundation for any demand under Section 28(4) of the Customs Act ceases to exist. The Department cannot approbate and reprobate by demanding the very duty whose security it has voluntarily released. The jurisdiction to determine fulfillment of export obligations vests exclusively in the licensing authority under the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy - The Customs authority's role is limited to verifying compliance with the conditions of the exemption notification. The EODC serves as conclusive proof that such conditions stand satisfied. If the Department was aggrieved with the issuance of EODC, the appropriate course was to approach the licensing authority for revocation, which was never done - The EODCs remain valid and subsisting, and the demand on the ground of violation of notification conditions is wholly unsustainable - The issue is answered in favor of the assessee; the duty demand is set aside - Contradiction between Department's own Contemporaneous Records on movement of goods - Whether the Customs demand can be sustained when the Department, in five contemporaneous Show Cause Notices to the Export Oriented Unit, has itself proceeded on the footing that goods were received by the EOU, thereby squarely contradicting the DRI hypothesis of no-movement of goods – HELD - The allegation that goods were diverted into the domestic market is not sustainable. The Show Cause Notices themselves explicitly acknowledge that the EOU received goods from the importer against various invoices and central excise receipts. These contemporaneous departmental records from a sister authority constitute direct contradiction to the theory that no goods ever moved from the importer to the EOU. The records establish that one wing of the same Department (Central Excise commissionerate) demanded duty from the EOU on the footing that goods were received, while another wing (DRI) sought to demand duty from the importer on the footing that the same goods were never received. Both positions cannot be simultaneously sustained. This violates the settled principle of administrative law that the state cannot approbate and reprobate or blow hot and cold simultaneously across its own divisions - The issue is answered in favor of the assessee; the diversion allegation is rejected - Denial of Cross-Examination of Witnesses whose statements form basis of Adverse Order – HELD - The denial of cross-examination is a gross violation of the principles of natural justice. To rely on statements of witnesses, the witnesses must be examined-in-chief and thereafter offered cross-examination to the accused. The revenue has failed to follow this procedure. The right to cross-examine flows from natural justice and is independent of statutory provisions. When statements made during investigation form the bedrock of an adverse adjudication, denial of cross-examination is a per se violation of natural justice and vitiates the proceedings - The issue is answered in favor of the assessee; the order is vitiated for violation of natural justice - Extrapolation of Duty Demand - Whether a duty demand on 100% of the consignments under 29 authorizations can be sustained by extrapolation from a vehicle enquiry that admittedly covered at best one-third of the consignments and was inconclusive in the bulk of that subset – HELD - The full duty demand cannot be sustained through extrapolation. A finding of alleged non-movement in a small and inconclusive subset of consignments cannot be extrapolated to cover the entire universe of consignments across all authorizations. The principle established in case law clearly holds that duty cannot be confirmed on extrapolation from a sample or partial enquiry. When the enquiry itself is admittedly inconclusive in the majority of the sample cases examined, the logical foundation for imposing duty on 100% of consignments does not exist. Such extrapolation violates the principle that findings of violation must be based on clear and cogent evidence rather than assumptions and inferences drawn from partial and inconclusive enquiries - The issue is answered in favor of the assessee; the extrapolation methodology is rejected - Invocation of Extended Period of Limitation – HELD - The extended period of limitation is not invokable. Section 28(4) can be invoked only on proof of collusion, wilful misstatement or suppression of facts with intent to evade duty. The assessee has not concealed anything as all relevant facts were openly and transparently placed before the department throughout the process. The issuance of authorizations by the licensing authority after scrutiny, filing of B/E through regular Customs channels, completion of assessments, registration and debiting of authorizations, and discharge of export obligations through deemed export supplies with proper documentation were all accomplished with full transparency. The issuance of EODC by the licensing authority after verification and the vacating of bonds by the Customs authority were themselves acts of the Government itself. There is no suppression of facts that were openly placed before the department. Mere non-payment of duty, even if any question of duty existed, is not equivalent to wilful default or fraudulent evasion. A bona fide difference on scheme interpretation cannot ground the invocation of extended period. The demand is barred by limitation - Confiscation and Redemption Fine when goods are validly exported – HELD - The goods cannot be confiscated and no redemption fine is imposable. The goods in question have been validly exported in fulfillment of the export obligations attached to the authorizations, as evidenced by the issuance of EODCs by the licensing authority and the discharge of customs bonds by the competent authority. Since the goods have been legally exported and the export obligations have been properly discharged, no violation of the provisions of the Customs Act or the notifications issued thereunder is established. Confiscation under Section 111(o) is applicable only when goods are in violation of customs law. Once goods are validly exported through the established legal mechanism and proper documentation, they cannot be subjected to confiscation proceedings. Consequently, there is no occasion for imposition of redemption fine, which is a substitute for confiscation. The proposal for confiscation itself has stood spent as the goods stand cleared and exported - The issue is answered in favor of the assessee. [Read less]

GST - Criminal Liability on Advocate, Bonafide Professional act, Payment of pre-deposit by from Electronic Credit Ledger, Lodging of FIR - Petitioner-Advocate, engaged by a client to file a statutory appeal takes a professional decision regarding the mode and manner of making pre-deposit of disputed tax - The Deputy Commissioner lodged a FIR nominating the petitioner as a conspirator with the assessee for allegedly committing tax evasion through an illegal course of action in making the pre-deposit from the Electronic Credit Ledger - Whether an advocate acting in his professional capacity in filing an appeal and advising c... [Read more]

GST - Criminal Liability on Advocate, Bonafide Professional act, Payment of pre-deposit by from Electronic Credit Ledger, Lodging of FIR - Petitioner-Advocate, engaged by a client to file a statutory appeal takes a professional decision regarding the mode and manner of making pre-deposit of disputed tax - The Deputy Commissioner lodged a FIR nominating the petitioner as a conspirator with the assessee for allegedly committing tax evasion through an illegal course of action in making the pre-deposit from the Electronic Credit Ledger - Whether an advocate acting in his professional capacity in filing an appeal and advising clients on the mode of pre-deposit can be held criminally liable as a conspirator with the client for adopting a particular legal interpretation – HELD - An advocate by profession is authorized to represent his client in any matter suited to be argued in a Court. An advocate is duty-bound to discharge his professional responsibilities fearlessly. If an advocate is to be held in conspiracy with his client merely for performing a professional act like preferring an appeal, it would bring about the end of the very existence of the bar and would deprive citizens of their fundamental right to legal assistance under Articles 14 and 21 of the Constitution - The professional decision to make pre-deposit in a particular manner does not make the advocate a conspirator as it is purely a professional act based on a particular view of law - An advocate is authorized by profession to represent clients and advance legal arguments, irrespective whether those arguments are ultimately accepted or rejected. Such professional judgment cannot transform into criminal conspiracy merely because the legal position taken differs from the view held by administrative authorities - The first information report, charge-sheet, and cognizance order against the advocate are quashed in their entirety, with directions to make appropriate entries in the official records of the police station indicating the quashing of proceedings – The writ petition is allowed [Read less]

Central Excise - Establishment of Shortage of Raw Materials and Finished Goods - Stock Verification Based on Eye Estimation - During investigation, physical stock taking is not undertaken by authorities and stocks are recorded on the basis of mere eye estimations without any physical weighment - Whether shortage of raw materials or finished goods can be established on the basis of eye estimation alone in the absence of proper physical weighment and weighment slips – HELD - It is a settled principle of law that shortage of raw materials or finished goods cannot be established on the basis of eye estimation alone. The dema... [Read more]

Central Excise - Establishment of Shortage of Raw Materials and Finished Goods - Stock Verification Based on Eye Estimation - During investigation, physical stock taking is not undertaken by authorities and stocks are recorded on the basis of mere eye estimations without any physical weighment - Whether shortage of raw materials or finished goods can be established on the basis of eye estimation alone in the absence of proper physical weighment and weighment slips – HELD - It is a settled principle of law that shortage of raw materials or finished goods cannot be established on the basis of eye estimation alone. The demand raised on account of shortage of raw materials and finished goods found during the investigations is not sustainable in law as the stock verification does not meet the requirement of proper physical verification. The mere signature of the employees on the stock verification report is not sufficient proof of shortage when no actual weighment has been conducted and no weighment slips are available on record - The demands raised on account of shortage of raw materials and finished goods are set aside and the appeal is allowed - Denial of SSI Exemption - Manufacture of Branded Goods - Appellants are denied the benefit of SSI Exemption on the ground that they were manufacturing branded goods with the brand name Essel embossed on the products. The brand name Essel is owned by a different company for different products - Whether the benefit of SSI Exemption available under Notification No. 09/2001-CE dated 01.03.2001 and Notification No. 09/2003-CE dated 01.03.2003 can be denied to manufacturers solely on the ground that they have used brand name markings on their products when no evidence shows that the appellants actually used the brand name – HELD - No corroborative evidence has been brought on record by the Revenue in support of their allegations that the appellants have used the brand name of others. The brand name Essel is owned by a different entity for different goods and not for the goods manufactured by the appellants - Mere markings or embossing of brand names do not constitute use of another's brand in a manner that would disentitle the appellants from the benefit of Small Scale Exemption. The condition in the notification regarding use of brand name does not apply to the facts of the case - The demands raised on account of manufacture of branded goods and denial of Small Scale Exemption are set aside - Allegation of Clandestine Removal of Goods - Absence of Corroborative Evidence - Whether a charge of clandestine removal of goods can be sustained when no buyer of finished goods or supplier of raw materials is brought out by investigation and it is not established how much raw materials were used for manufacture of the allegedly clandestinely removed goods – HELD - The allegation of clandestine removal of goods is not supported by the investigation. No buyer of finished goods or supplier of raw materials has been identified during investigation, nor have transporters been investigated. Critically, the revenue has failed to establish how much raw materials were actually used by the appellants for manufacture of the goods allegedly removed clandestinely. The difference in rough records and statutory records alone, without corroborative evidence, cannot sustain the charge of clandestine removal - The demand raised on the ground of clandestine removal of goods is set aside - Maintenance of Parallel Invoices - Absence of Verification - The appellants are alleged to have maintained parallel invoices with the same serial numbers but showing different values to effect duty evasion - Whether a demand based on the allegation of parallel invoices can be sustained when these invoices have not been verified to establish against whom they were actually issued or whether the recipients received them – HELD - The parallel invoices have not been verified to establish against whom they were actually issued or whether those persons have received the invoices. In the absence of any evidence on record verifying the actual issuance and receipt of parallel invoices, the demand raised based on this allegation cannot be sustained. The mere existence of invoices with similar serial numbers showing different values is insufficient to establish duty evasion without verification of actual issuance and receipt -The demand raised on account of parallel invoices is set aside - Disallowance of CENVAT Credit - Demand is raised for disallowance of CENVAT Credit on the allegation that inputs were availed without actual receipt of goods - Whether CENVAT Credit can be disallowed when the appellant has availed credit on the basis of computerised statements upon receiving the goods and the revenue has not established that the goods were not actually received by the appellant for manufacture – HELD - The appellant has availed CENVAT Credit on the basis of computerised statements on receiving the goods. The Revenue has not made out a case that the said goods were not received by the appellant for manufacture of their final goods. The discrepancy between computerised records at head office and seized private records alone cannot establish that goods were not received. Since the revenue has failed to prove non-receipt of inputs, the denial of CENVAT Credit is without any basis and is not sustainable in law - The CENVAT Credit cannot be denied and the demand for disallowance is set aside - Disallowance of CENVAT Credit on Shortage of Raw Materials - Whether CENVAT Credit can be disallowed on account of shortage of raw materials when the shortage itself has not been clearly established by the revenue – HELD - Since the shortage of raw materials has not been clearly established by the revenue through proper physical verification and weighment, the denial of CENVAT Credit based on such unestablished shortage is not sustainable. The foundation for denying CENVAT Credit fails when the underlying fact of shortage is itself not proven through acceptable methods - The demands for disallowance of CENVAT Credit on account of shortage of raw materials are set aside - Imposition of Penalty Under Central Excise Rules - Condition Precedent Not Satisfied - Whether penalty can be imposed on individual proprietors and Directors under Rule 26 of Central Excise Rules 2002 when the underlying allegations against the companies on which the penalty is based are not sustainable - HELD - When the allegations against the companies are not maintainable and the underlying charges of duty evasion are set aside, the condition precedent for imposing penalty under Rule 26 on the individuals cannot be satisfied. The findings in respect of imposition of penalty on the individuals are based on vague allegations and baseless findings in respect of allegations against the companies. When the primary charges fail, the derivative liability for penalty cannot stand - No penalty is imposable on the individual proprietors and Directors as the condition precedent for penalty imposition is not satisfied. [Read less]

Central Excise - Cenvat Credit on Outward Freight Charges for the period April 2005 to December 2009 - Whether the appellant is entitled to claim Cenvat Credit for Service Tax paid on outward freight charges when goods are cleared and delivered to the customer's premises with the manufacturer bearing freight and insurance costs – HELD - For the period till March 31, 2008, the manufacturer is eligible for full Cenvat Credit for Service Tax paid on outward freight charges without any restriction, as the statutory provisions of Rule 2(l) of CCR, 2004 permitted credit for clearance of final products "from the place of remova... [Read more]

Central Excise - Cenvat Credit on Outward Freight Charges for the period April 2005 to December 2009 - Whether the appellant is entitled to claim Cenvat Credit for Service Tax paid on outward freight charges when goods are cleared and delivered to the customer's premises with the manufacturer bearing freight and insurance costs – HELD - For the period till March 31, 2008, the manufacturer is eligible for full Cenvat Credit for Service Tax paid on outward freight charges without any restriction, as the statutory provisions of Rule 2(l) of CCR, 2004 permitted credit for clearance of final products "from the place of removal" without specifying limitations. For the period from April 1, 2008 onwards, although the rule was amended to state "upto the place of removal," the manufacturer remains entitled to Cenvat Credit because the documentary evidence including purchase orders clearly establishes that the goods are sold on a "for destination" basis with the manufacturer bearing freight and insurance costs, thereby making the customer's premises the actual place of removal where ownership passes to the buyer - Additionally, the demand for the extended period is set aside on the ground of time-bar because the appellant was duly registered, had filed regular returns showing Cenvat credits, and no suppression has been made out as the demand was quantified using the manufacturer's own financial statements, indicating full departmental knowledge of the transactions - The impugned order is set aside and the appeal is allowed [Read less]

Customs - Admissibility of statements under Section 108 of the Customs Act - Show cause notice imposing a penalty under section 112 of the Customs Act based solely on a statement made by the assessee under Section 108 of the Customs Act, recorded during the course of inquiry - Whether a statement made under section 108 of the Customs Act can be considered as relevant if the procedure contemplated under section 138B of the Customs Act has not been followed – HELD - The provisions of Section 108 of the Customs Act enable officers to summon any person whose attendance they consider necessary to give evidence in any inquiry,... [Read more]

Customs - Admissibility of statements under Section 108 of the Customs Act - Show cause notice imposing a penalty under section 112 of the Customs Act based solely on a statement made by the assessee under Section 108 of the Customs Act, recorded during the course of inquiry - Whether a statement made under section 108 of the Customs Act can be considered as relevant if the procedure contemplated under section 138B of the Customs Act has not been followed – HELD - The provisions of Section 108 of the Customs Act enable officers to summon any person whose attendance they consider necessary to give evidence in any inquiry, and the statements of persons so summoned are recorded under this provision. Section 138B of the Customs Act makes such statements relevant for proving the truth of facts contained therein only when the person who made the statement is examined as a witness before the adjudicating authority and the adjudicating authority forms an opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice - The use of the word "shall" in section 138B makes the procedure mandatory. The procedure is not merely directory but mandatory, and failure to comply with it means that no reliance can be placed on the statements recorded under section 108 of the Customs Act. The rigour of this provision cannot be done away with by the adjudicating authority, as without such examination and opinion, the statement does not constitute relevant and admissible evidence and has to be ignored. Therefore, since the procedure contemplated under Section 138B was not followed and the statement made by the assessee under Section 108 is the sole basis for imposition of penalty, the order imposing penalty is set aside - The impugned order is set aside and the appeal is allowed [Read less]

GST - Parallel adjudicatory proceedings - Scope of Section 6(2)(b) of CGST Act, 2017 – Petitioner received show cause notices and intimation of liability notices from both the State Tax Authority and the Central GST Authority relating to denial of Input Tax Credit claims on purchases made from a supplier whose registration was subsequently cancelled - Whether parallel adjudicatory proceedings can be initiated by both Central and State GST authorities on the same subject matter concerning denial of ITC – HELD – The principles laid down by the Supreme Court in Armour Security case establishes that Section 6(2)(b) of th... [Read more]

GST - Parallel adjudicatory proceedings - Scope of Section 6(2)(b) of CGST Act, 2017 – Petitioner received show cause notices and intimation of liability notices from both the State Tax Authority and the Central GST Authority relating to denial of Input Tax Credit claims on purchases made from a supplier whose registration was subsequently cancelled - Whether parallel adjudicatory proceedings can be initiated by both Central and State GST authorities on the same subject matter concerning denial of ITC – HELD – The principles laid down by the Supreme Court in Armour Security case establishes that Section 6(2)(b) of the CGST Act bars the initiation of any proceedings on the same subject matter by different tax authorities. Once one authority initiates formal adjudicatory proceedings through a show cause notice, the other authority is prohibited from commencing parallel adjudicatory proceedings on identical tax liability or obligation. However, bona fide investigative steps such as summons remain permissible unless they result in parallel adjudication - The expression "initiation of proceedings" refers specifically to the formal commencement of adjudicatory proceedings through issuance of a show cause notice and does not encompass preliminary investigative actions - The petition is disposed of with directions that the petitioner file fresh responses before both the Central and State with all relevant documents supporting the ITC claim. The State Authority shall thereafter communicate with the Central Authority to verify the assessee's claim. Both authorities shall coordinate to determine which of them shall continue the adjudicatory proceedings on the same subject matter and ensure no parallel adjudication continues – The petition is disposed of [Read less]

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

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

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

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

Customs - Validity of Demand Notice – Investigation alleging misclassification of imported goods (screw washer/gasket). During investigation, the petitioner expressed willingness to pay differential duty and requested that a letter be issued to that extent. Subsequently, a communication indicating differential customs duty was issued by an Assistant Commissioner. The petitioner paid the demanded amount under protest - Whether a communication issued by an Assistant Commissioner without following the statutory procedure mandated under Section 28 of the Customs Act, 1962, and without issuing a formal show cause notice, can ... [Read more]

Customs - Validity of Demand Notice – Investigation alleging misclassification of imported goods (screw washer/gasket). During investigation, the petitioner expressed willingness to pay differential duty and requested that a letter be issued to that extent. Subsequently, a communication indicating differential customs duty was issued by an Assistant Commissioner. The petitioner paid the demanded amount under protest - Whether a communication issued by an Assistant Commissioner without following the statutory procedure mandated under Section 28 of the Customs Act, 1962, and without issuing a formal show cause notice, can be treated as a valid demand notice and whether amounts paid under protest during investigation can be appropriated towards eventual demand raised in adjudicatory order – HELD - The impugned communication is not a formal demand notice but rather a letter issued as a follow-up to the petitioner’s own statement expressing willingness to pay differential duty. Although the petitioner admitted to an error in calculation of differential duty and voluntarily recomputed and paid the amount, this admission does not bar the petitioner from its entitlement to the statutory process of adjudication of its liability - The amounts paid during investigation, whether under protest or otherwise, may be appropriated towards the final liability of the assessee at the time of passing of an adjudicatory order. The impugned communication, though issued without following formal Section 28 procedure, does not preclude the respondents from issuing a proper show cause notice to adjudicate the petitioner's actual liability - The impugned communication is quashed and set aside. The respondents are directed to issue SCN regarding the petitioner's liability, if any. The amount already paid by the petitioner shall be appropriated towards any demand eventually raised in the adjudicatory order. No further demands or recovery shall be made against the petitioner in the interim - The petition is partly allowed [Read less]

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

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

U.P. Trade Tax Act - Classification of amusement rides - The assessing authority levied tax at 10% treating the goods as unclassified items instead of 2% as claimed by the revisionist-assessse - Whether goods manufactured for amusement parks, specifically amusement rides, swings and jhoolas, fall within entry 32 of the Notification dated 29.01.2001 and are taxable at 2% as classified items or at 10% as unclassified items – HELD - The amusement rides do not fall within the category of goods for indoor or outdoor games or sports. The popular commercial sense, indoor and outdoor games and sports are activities which develop... [Read more]

U.P. Trade Tax Act - Classification of amusement rides - The assessing authority levied tax at 10% treating the goods as unclassified items instead of 2% as claimed by the revisionist-assessse - Whether goods manufactured for amusement parks, specifically amusement rides, swings and jhoolas, fall within entry 32 of the Notification dated 29.01.2001 and are taxable at 2% as classified items or at 10% as unclassified items – HELD - The amusement rides do not fall within the category of goods for indoor or outdoor games or sports. The popular commercial sense, indoor and outdoor games and sports are activities which develop mental or physical skill of a human being and are qualified by elements of competition, fixed rules to be followed, and skill required to win against an opponent - The goods manufactured for amusement parks provide mere amusement and entertainment only but do not require any skill. They lack the element of competitiveness among players and do not contribute to mental and physical development – It is the settled principle that classification of goods must be according to their popular meaning as understood in commercial sense and not scientific or technical meaning - The goods for amusement purposes cannot be equated with indoor and outdoor games. The revision is dismissed and the order of the Tribunal upholding the tax at 10% rate is upheld [Read less]

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

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

Customs - Smuggled goods - Jurisdiction of CESTAT - Whether appeal against Commissioner (Appeals) order relating to goods imported as baggage is maintainable before CESTAT when goods are characterized as smuggled – HELD - The statutory bar under the proviso to Section 129A(1) of the Customs Act excluding appeals relating to goods imported or exported as baggage applies irrespective of whether such goods are characterized as smuggled or contraband on merits. The distinction drawn by the appellant between smuggled goods and baggage goods is a merits argument and not a jurisdictional one. Goods found in the hand baggage of ... [Read more]

Customs - Smuggled goods - Jurisdiction of CESTAT - Whether appeal against Commissioner (Appeals) order relating to goods imported as baggage is maintainable before CESTAT when goods are characterized as smuggled – HELD - The statutory bar under the proviso to Section 129A(1) of the Customs Act excluding appeals relating to goods imported or exported as baggage applies irrespective of whether such goods are characterized as smuggled or contraband on merits. The distinction drawn by the appellant between smuggled goods and baggage goods is a merits argument and not a jurisdictional one. Goods found in the hand baggage of a passenger upon arrival at the airport remain goods imported as baggage for jurisdictional purposes, and the characterization of such goods as smuggled does not bring them outside the definition of baggage goods - However, when the Department itself has invoked Sections 110, 123, and 124 of the Act and alleged smuggling, and the Show Cause Notice proposes confiscatory provisions for smuggled goods rather than applying Baggage Rules. A strict interpretation of the exclusion clause should distinguish between imported goods under baggage regime and smuggled goods prosecuted under smuggling provisions. Since the Department consistently treated the goods as smuggled goods throughout the proceedings and did not rely upon baggage declarations or baggage allowance provisions, the goods cannot be characterized as goods imported as baggage. Therefore, the appeal is maintainable before CESTAT, and the appellant cannot be relegated to revision under Section 129DD – The appeal is maintainable - Valuation of goods - Reliance on manufacturer's invoice confirmed by email versus uncorroborated statements - Whether adjudicating authority should adopt valuation based on photocopy of invoice with blanks in critical columns submitted by witness or value confirmed by manufacturer's Chief Legal Officer through email – HELD - Where the Commissioner (Appeals) himself finds that the photocopy of invoice submitted by the witness contains blanks in columns for discount percentage, price, subtotal, and grand total, and such photocopy was never substantiated by the original document, the reliability and credibility of such photocopy stands questioned. In contrast, the manufacturer's Chief Legal Officer provided by email a complete invoice bearing all particulars including the discounted price, and this invoice was acknowledged in the Show Cause Notice itself. The credibility of the email from the manufacturer cannot be rejected merely on the ground that it is unsolicited when the same source had earlier provided information during investigation which was relied upon by the Department - The valuation based on the manufacturer's invoice confirmed through email should have been accepted – The Valuation is revised to the lower amount confirmed by manufacturer's email, and penalties are reduced accordingly - Redemption of confiscated goods - Imposition of condition of re-export as mandatory condition for redemption - Whether condition of re-export can be imposed while offering redemption of goods – HELD - No condition can be imposed while giving an offer for redemption of goods. The redemption provision provides an option to the appellant, and the confiscated goods may be redeemed either for home consumption on payment of duty, interest, fine, and penalties, or for re-export on payment of fine and penalties. The imposition of mandatory re-export condition restricts the statutory right of redemption and is therefore impermissible - The condition of mandatory re-export is struck down, and the appellant has the option to redeem goods either for home consumption or re-export - Quantum of penalty - Whether penalties under Sections 112(a), 112(b), and 114AA should be maintained at the level imposed by adjudicating authority – HELD - Considering the circumstances where the appellant consistently claimed ownership and imported status in judicial proceedings, deposited substantial amounts seeking release of goods for re-export, the Department failed to establish genuineness of photocopy invoice through proper evidence, and the valuation was based on uncorroborated statements that were subsequently disowned, the case merits reduction of penalties. The composite penalty under Sections 112(a) and 112(b) is excessive and should be reduced to reflect the actual contravention. The penalty under Section 114AA, which is imposable for non-declaration or misdeclaration of goods, should also be reduced proportionately in view of the factual findings regarding valuation – The Composite penalty under Sections 112(a) and 112(b) is reduced from Rs. 50 lakhs to Rs. 10 lakhs, and penalty under Section 114AA is reduced from Rs. 2 crores to Rs. 50 lakhs. Redemption fine of Rs. 50 lakhs is maintained. [Read less]

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

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

GST – Refund of penalty paid in concluded proceedings, Penalty for transportation of goods with an expired e-way bill - The person-in-charge makes payment of the proposed tax and penalty on the same date the notice is served, following which a release order is issued and proceedings are concluded – Petitioner seeking quashing of the penalty notice and refund of the penalty amount, claiming violation of principles of natural justice and absence of opportunity of hearing, and contending that the e-way bill had merely expired due to technical reasons without any intention to evade tax – HELD – The writ application is ... [Read more]

GST – Refund of penalty paid in concluded proceedings, Penalty for transportation of goods with an expired e-way bill - The person-in-charge makes payment of the proposed tax and penalty on the same date the notice is served, following which a release order is issued and proceedings are concluded – Petitioner seeking quashing of the penalty notice and refund of the penalty amount, claiming violation of principles of natural justice and absence of opportunity of hearing, and contending that the e-way bill had merely expired due to technical reasons without any intention to evade tax – HELD – The writ application is filed directly without availing the statutory remedy of appeal. The order imposing penalty is an appealable order and the petitioner could have preferred an appeal within three months but failed to do so. Further, the petitioner is unable to demonstrate from the records that any protest was made at the relevant point of time. There is no violation of principles of natural justice as the person-in-charge was given the opportunity to make payment and chose to do so. There is no merit in the writ application and the same is dismissed [Read less]

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

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

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

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

GST – Tamil Nadu AAR – Meaning of term "namely - Classification of Rose Water for religious use - Applicant contends that the product qualifies as "puja samagri" and exempt from GST – HELD – The statutory language of Notification 2/2017-Central Tax (Rate) dated 28.06.2017 uses the word "namely" to list specific puja items. The word "namely" in legal lexicon means "particularly, especially, to wit" and "by name or particular mention," thereby confining the exemption to the ten items expressly enumerated. Other items predominantly used for religious purposes, such as agarbattis and dhupkathi, which were discussed dur... [Read more]

GST – Tamil Nadu AAR – Meaning of term "namely - Classification of Rose Water for religious use - Applicant contends that the product qualifies as "puja samagri" and exempt from GST – HELD – The statutory language of Notification 2/2017-Central Tax (Rate) dated 28.06.2017 uses the word "namely" to list specific puja items. The word "namely" in legal lexicon means "particularly, especially, to wit" and "by name or particular mention," thereby confining the exemption to the ten items expressly enumerated. Other items predominantly used for religious purposes, such as agarbattis and dhupkathi, which were discussed during the GST Council meeting, were deliberately excluded from the puja samagri list and taxed according to their respective tariff headings. Further, the rose water has multiple uses beyond religious purposes - Based on laboratory analysis the product is obtained by mixing synthetic rose perfume in water and cannot be classified as an aqueous distillate but rather as an aqueous solution of essential oils under tariff heading 3301 9079, which attracts 18% percent GST - The rose water supplied by the applicant is not covered under the exempt puja samagri category as the exemption list is exhaustive, not illustrative, and the product is classifiable under tariff heading 3301 9079 attracting 18% GST – Ordered accordingly [Read less]

GST – Tamil Nadu AAR - GST Liability on License Fees for collection of Human Hair from temple premises - Whether the auction amount collected by the temple authorities for collection of human hair falls within the ambit of Supply under Section 7 of the CGST Act, 2017 – HELD - The activity of issuing a license to collect human hair from the temple premises constitutes a supply of service under section 7 of the CGST Act, 2017, as it involves transfer of rights for a consideration in the course or furtherance of business, regardless of the fact that it is a place of worship, since commercial activities undertaken by any ... [Read more]

GST – Tamil Nadu AAR - GST Liability on License Fees for collection of Human Hair from temple premises - Whether the auction amount collected by the temple authorities for collection of human hair falls within the ambit of Supply under Section 7 of the CGST Act, 2017 – HELD - The activity of issuing a license to collect human hair from the temple premises constitutes a supply of service under section 7 of the CGST Act, 2017, as it involves transfer of rights for a consideration in the course or furtherance of business, regardless of the fact that it is a place of worship, since commercial activities undertaken by any place of worship are liable to be taxed – There is distinction between the religious activity of tonsuring, which is exempt from GST, and the commercial activity of issuing a license to collect the hair, which is a separate activity altogether and falls under service activity classification code 9997. Accordingly, the auction amount collected by the temple is a supply of service falling within the ambit of section 7 of the CGST Act, 2017, and is liable to tax at 18% GST – Ordered accordingly [Read less]

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

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

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

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

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

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

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

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

Karnataka Value Added Tax Act, 2003 - Joint Development Agreement and Works Contract – In terms of JDA, the owner has agreed to convey or transfer to the developer or its nominees 65% of the undivided right, title and interest of the schedule property and the Developer as consideration has agreed to construct and deliver to the owners 35% of the salable super built-up area, together with 35% of the car parking spaces for the absolute use, benefit and ownership of the landowner - Whether a joint development agreement between a landowner and developer constitutes a Works Contract liable to tax under the Karnataka VAT Act, ... [Read more]

Karnataka Value Added Tax Act, 2003 - Joint Development Agreement and Works Contract – In terms of JDA, the owner has agreed to convey or transfer to the developer or its nominees 65% of the undivided right, title and interest of the schedule property and the Developer as consideration has agreed to construct and deliver to the owners 35% of the salable super built-up area, together with 35% of the car parking spaces for the absolute use, benefit and ownership of the landowner - Whether a joint development agreement between a landowner and developer constitutes a Works Contract liable to tax under the Karnataka VAT Act, 2003 – HELD - A JDA between a landowner and a developer is held to be a composite arrangement involving both elements of transfer of immovable property and works contract. However, the construction activity undertaken by the developer constitutes a Works Contract only from the stage at which the developer enters into agreements with flat purchasers and not from the stage of the JDA itself. The construction undertaken by the developer in respect of the landowner's share under the Joint Development Agreement does not amount to a Works Contract as there is no monetary consideration involved and the transaction is in the nature of barter or exchange - The Supreme Court's decision in Larsen and Toubro Limited versus State of Karnataka makes it clear that the activity of construction undertaken by the developer would constitute a works contract only from the stage at which the developer enters into a contract with the flat purchaser, and only the value addition to the goods transferred after such stage can be subjected to tax by the State - Therefore, the JDA between the landowner and the developer is not taxable as a Works Contract under the Act, and only the subsequent transactions between the developer and flat purchasers can be taxed. Accordingly, question of law is answered in favour of the assessee and against the Revenue - Barter and Exchange versus Sale - Whether a transaction involving transfer of undivided share in land in exchange for constructed built-up area amounts to a sale within the meaning of Section 2(29) of the KVAT Act, 2003 – HELD - In a JDA where the landowner transfers an undivided share in land to the developer in exchange for a corresponding proportion of constructed built-up area, the transaction does not amount to a sale within the meaning of Section 2(29) of the Act. The essential ingredients of a sale under the definition is the presence of price in the form of money or monetary value as consideration. The Supreme Court in Dhampur Sugar Mills Limited versus Commissioner of Trade Tax, Uttar Pradesh has clarified that barter or exchange is distinct and different from a sale, and the consideration for a sale must be in the form of money or monetary payment. In the absence of monetary consideration and where the transaction involves exchange of one form of property for another form of property without monetary payment, the transaction partakes the character of barter or exchange. Therefore, the contention of the Revenue that the cost of construction of the landowner's share constitutes consideration for transfer of undivided share in land cannot be accepted, and such transaction falls outside the definition of sale under the Act. Accordingly, question of law is answered in favour of the assessee and against the Revenue - State Legislative Competence and Transfer of Immovable Property - Whether the State Legislature has the competence to levy tax on transfer of immovable property in the context of a joint development agreement under Entry 54 of List II of the Seventh Schedule to the Constitution of India – HELD - The State Legislature lacks the legislative competence under Entry 54 of List II of the Seventh Schedule to levy tax on the transfer of immovable property. However, the State is competent to levy sales tax on the sale of goods component in an agreement for sale of flats, which includes a deemed sale of goods in the execution of a works contract, provided the levy is confined to the value of the goods and does not extend to the transfer of immovable property. Since the subject matter of a JDA is primarily the transfer of immovable property, any levy of tax thereon would fall outside the legislative competence of the State - The Supreme Court's decision in Larsen and Toubro Limited clarifies that while Article 366(29A)(b) of the Constitution permits taxation of the sale of goods element in a works contract even after incorporation of goods, such taxation is permissible only to the extent of the value of goods involved in the execution of the works contract, and the levy cannot extend to the transfer of immovable property itself. Accordingly, question of law is answered in favour of the assessee and against the Revenue - Statutory Mechanism for Levy and Computation - Whether a Circular can prescribe the method for valuation and computation of taxable turnover in the absence of statutory machinery provisions in the Act or Rules – HELD - The Circular No.121/2009-10 dated 07.12.2009, insofar as it seeks to introduce a mechanism for valuation of undivided share in land and to include the value of land in the taxable turnover, lacks statutory backing and cannot override or supplement the provisions of the Act. The Supreme Court in Commissioner of Central Excise and Customs, Kerala versus Larsen and Toubro Limited and the Punjab and Haryana High Court in Dhingra Jardine Infrastructure Private Limited versus State of Haryana have established that once a charging provision is provided under a statute, the machinery for its computation must also be provided under the statute itself. In the absence of any enabling provision under the Act or Rules prescribing the computation mechanism, a circular cannot introduce or prescribe such mechanism. Therefore, the Circular without statutory authority cannot be enforced and is not binding on assessees. In the absence of a statutory mechanism to determine the value of goods involved in the execution of works contract in the context of a JDA, the levy, to that extent, is unenforceable. Accordingly, question of law is answered in favour of the assessee and against the Revenue - Composition Scheme and Deduction of Land Value - Whether under the composition scheme any deductions beyond those expressly permitted under the statute can be allowed, particularly the deduction of land value from taxable turnover – HELD - Under the Composition Scheme, tax cannot be levied on elements attributable to transfer of immovable property. The Supreme Court's decision in Larsen and Toubro Limited clarifies that a works contract arises only from the stage at which the developer enters into a contract with the flat purchaser, and the levy is confined to the value addition to the goods transferred thereafter. Once it is held that the value of land is not liable to be included in the taxable turnover, the question of granting or denying deductions from the total turnover in the context of the composition scheme does not arise. Therefore, even under the composition scheme, tax cannot be levied on the value of land attributable to transfer of immovable property, and the statutory restrictions on permissible deductions apply only to the extent that land value has been wrongfully included in the taxable turnover. Since land value should be excluded from the turnover itself, the issue of deduction does not become relevant. This question of law is answered accordingly [Read less]

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

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

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

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

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

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