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Central Excise - Refund of excess excise duty on incorrect valuation – Appellant paid Oil Industry Development Cess at ad valorem rate on ex-duty price instead of cum-duty price during a specified period, resulting in excess payment, and subsequently claimed refund under Section 11B of the Central Excise Act, 1944 - Whether excess cess paid due to adoption of incorrect assessable value is refundable in principle in terms of valuation under Section 4 of the Central Excise Act, 1944 read with Section 15 of the Oil Industry (Development) Act, 1974 and the Notification dated 28.03.2016 - HELD - Where an ad valorem levy of ce... [Read more]

Central Excise - Refund of excess excise duty on incorrect valuation – Appellant paid Oil Industry Development Cess at ad valorem rate on ex-duty price instead of cum-duty price during a specified period, resulting in excess payment, and subsequently claimed refund under Section 11B of the Central Excise Act, 1944 - Whether excess cess paid due to adoption of incorrect assessable value is refundable in principle in terms of valuation under Section 4 of the Central Excise Act, 1944 read with Section 15 of the Oil Industry (Development) Act, 1974 and the Notification dated 28.03.2016 - HELD - Where an ad valorem levy of cess is charged, the principles of valuation under Section 4 of the CEA, 1944 necessarily apply, requiring that transaction value be determined exclusive of duties and taxes. Where the sale price is charged inclusive of duty and governed by a pricing mechanism that does not separately recover duty, such price must be treated as cum-duty price, from which the duty element must be backed out to arrive at the correct assessable value - The excess payment arising from applying the duty rate on an inflated value that already includes the duty component constitutes payment of duty on duty, which is a direct mathematical consequence of incorrect valuation methodology. The Department cannot retain amounts collected without lawful authority as mandated by Article 265 of the Constitution. Since the Department has not disputed the computation or the corrected methodology adopted subsequently, rejection on merits is not sustainable. Excess duty paid due to incorrect valuation is refundable in principle, subject only to the doctrine of unjust enrichment - The appellant has successfully established that excess cess was paid due to incorrect valuation methodology. The appellant is entitled to refund of excess OID Cess paid, as the same has been paid on an incorrect assessable value and the incidence of such cess has not been passed on to the buyer - The impugned order is set aside and the appeal is allowedrnrn^Refund claim – Bar of unjust enrichment - Duty burden not passed on to buyer - Whether the refund claim is barred by the doctrine of unjust enrichment under Section 11B read with Section 12B of the Central Excise Act, 1944 – HELD - While Section 12B creates a statutory presumption that duty has been passed on, such presumption is rebuttable and the assessee can discharge the burden through cogent evidence. The crude oil sale agreement forms the primary evidence and establishes an exhaustive pricing mechanism wherein Oil Industry Development Cess is conspicuously absent despite specific mention of other levies like Sales Tax and VAT. The deliberate exclusion of cess from the pricing formula, when read in the context of detailed contractual provisions for other levies, demonstrates conscious allocation that cess is to be borne by the seller, not the buyer. The invoices, which constitute primary evidence of price charged in commercial transactions, do not reflect any cess component, indicating non-recovery from the buyer. The Chartered Accountant's certificate, based on examination of books of account and contractual terms, establishes that the duty burden was borne by the assessee - The Department has produced no contrary evidence to discredit these documents or establish actual recovery from the buyer. The principle that where contract price does not permit separate recovery of duty, unjust enrichment does not apply, is consistent across judicial precedents. Cum-duty valuation is a principle of assessment and cannot be extended to infer unjust enrichment beyond its statutory purpose - The appellant has successfully rebutted the presumption under Section 12B and the refund is not hit by unjust enrichment. [Read less]

Service Tax on Ash Evacuation Service - Removal of ash from ash pond – Demand under the category of ‘site formation and clearance, excavation and earth moving and demolition service’ - The appellant undertook work of evacuation of settled ash from ash pond as a sub-contractor - Whether the activity of removal of ash from ash pond is subject to service tax levy – HELD - The activity of removal of ash from ash pond is not leviable to service tax as it constitutes an essential part of the production process and does not qualify as a service activity - The activities forming part of the production process cannot be sub... [Read more]

Service Tax on Ash Evacuation Service - Removal of ash from ash pond – Demand under the category of ‘site formation and clearance, excavation and earth moving and demolition service’ - The appellant undertook work of evacuation of settled ash from ash pond as a sub-contractor - Whether the activity of removal of ash from ash pond is subject to service tax levy – HELD - The activity of removal of ash from ash pond is not leviable to service tax as it constitutes an essential part of the production process and does not qualify as a service activity - The activities forming part of the production process cannot be subjected to service tax levy - The demand of service tax under the category of site formation and clearance, excavation and earth moving and demolition service is set aside.rnrnWorks Contract Service - Adjustment of Payments - The assessee had deposited service tax amounting to a specific sum during the relevant financial years under the works contract service category - Whether the service tax payments already made by the assessee can be adjusted against the tax demand confirmed by the revenue authority – HELD – From challan-wise details of service tax payments furnished by the assessee it is found that substantial payments were made during the relevant financial years for which no material discrepancy was brought on record by the revenue. When payments are substantiated by documentary evidence in the form of authenticated challans and the revenue authority fails to dispute either the factum of payment or the authenticity thereof, such amounts merit consideration for adjustment against actual liabilities - Differential amounts between confirmed demand and proven payments can be adjusted, and when deposits made during investigation are available, they can be appropriated against such differential amounts - The payments made by the assessee are appropriated against the confirmed demands and no further demand of service tax can be sustained under the works contract service category.rnrnManpower Supply Service - Partial Reverse Charge Eligibility - Whether the assessee is entitled to avail the benefit of partial reverse charge mechanism restricting its service tax liability to 25 percent of the service value – HELD - In terms of Notification No. 30/2012-ST dated 20.06.2012 issued under Section 68(2) of the Finance Act, 1994, the partial reverse charge mechanism in respect of manpower supply service was applicable only where such service was provided by an individual, Hindu Undivided Family, proprietary concern, partnership firm or association of persons, located in the taxable territory, to a business entity registered as a body corporate located in the taxable territory. No material was placed on record to establish the fulfillment of these essential statutory conditions. In the absence of evidence demonstrating eligibility for partial reverse charge, the assessee cannot restrict its service tax liability to 25 percent and must pay full service tax on the entire value. When the assessee had actually deposited service tax at the full rate, such payments can be adjusted against confirmed demands - The claim for partial reverse charge is rejected and the service tax payments made by the assessee at the full rate are appropriated against the confirmed demands.rnrnRevenue neutrality and extended period of limitation - Since the service tax liability would be available as CENVAT credit to the appellant upon payment, a revenue neutral situation arises, and in such circumstances, no demand of service tax can be sustained in view of settled judicial pronouncements. Furthermore, the Revenue failed to adduce evidence of suppression of facts or wilful mis-statement by the appellant to justify invocation of extended period of limitation. The demand raised under extended period of limitation is set aside on the grounds of revenue neutrality and absence of justification for extended period invocation. [Read less]

Customs - Rejection of Declared Transaction Value under Rule 12 of Customs Valuation Rules - Appellants imported lighting fixtures from China and declared transaction values which were rejected by the Department based on alleged electronic data from pen drives and statements recorded during investigation - Whether the rejection of declared transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is legally sustainable – HELD - The statutory framework under Section 14 of the Customs Act, 1962 establishes a presumption in favour of the correctness of the declared trans... [Read more]

Customs - Rejection of Declared Transaction Value under Rule 12 of Customs Valuation Rules - Appellants imported lighting fixtures from China and declared transaction values which were rejected by the Department based on alleged electronic data from pen drives and statements recorded during investigation - Whether the rejection of declared transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is legally sustainable – HELD - The statutory framework under Section 14 of the Customs Act, 1962 establishes a presumption in favour of the correctness of the declared transaction value, and any departure therefrom must be strictly justified with objective material giving rise to reasonable doubt. The expression "reason to doubt" under Rule 12 requires the existence of objective material and cannot be equated with mere suspicion or conjecture. The burden of establishing such doubt lies squarely on the Department - The Hon'ble Supreme Court in Eicher Tractors Ltd. v. Commissioner of Customs and South India Television Pvt. Ltd. v. Commissioner of Customs has authoritatively held that the price actually paid or payable must be accepted unless conditions specified in the rules are not satisfied, and the burden of proving undervaluation lies entirely on the Department through cogent and reliable evidence - In the present case, the Revenue relied upon unverified electronic data and uncorroborated statements without establishing any objective basis for doubting the declared value, no evidence of additional consideration, no corroborated documentary evidence, and no reliable comparison with contemporaneous imports. The entire case rested on suspicion rather than evidence and did not satisfy the statutory requirements of Rule 12 - Accordingly, the rejection of transaction value is set aside.rnrnRe-determination of Value in Accordance with Sequential Application of Valuation Rules - Whether the re-determination of value undertaken by the adjudicating authority was in accordance with the Customs Valuation Rules, 2007 – HELD - The Rule 3(2) of the Valuation Rules unequivocally provides that where value cannot be determined under Rule 3(1), it shall be determined by proceeding sequentially through Rules 4 to 9, with the word "shall" imposing a mandatory obligation leaving no scope for selective or discretionary application - The adjudicating authority bypassed the entire statutory framework and adopted a hybrid and impermissible method based on selective data and assumptions without establishing comparability or providing cogent reasoning. The adoption of standardized rates of rupees 110 per kilogram and rupees 225 per kilogram applied uniformly across multiple consignments was not derived from contemporaneous import data or any recognized valuation source but was extrapolated from unverified electronic records. The conversion of assumed values from RMB into USD and thereafter into INR did not follow any notified exchange rate or consistent methodology. The inclusion of buying agent commission was unsustainable as there was no evidence that such agents acted on behalf of suppliers or that the commission formed part of price actually paid or payable. The re-determination failed to follow the mandatory sequential application of Rules 4 to 9, adopted arbitrary standardized rates without evidentiary basis, relied on unverified electronic records and uncorroborated statements, and ignored commercial realities. Accordingly, the re-determination of value is set aside.rnrnAdmissibility of Electronic Evidence and Statements under Section 138C of Customs Act - Whether the reliance placed on electronic records allegedly retrieved from pen drives and hard disks and statements recorded under Section 108 of the Customs Act was legally admissible and sufficient to sustain the allegations – HELD - The electronic evidence and statements are neither legally admissible nor sufficient to sustain the allegation of undervaluation. Section 138C of the Customs Act, 1962, which governs admissibility of electronic records, is analogous to Section 65B of the Indian Evidence Act, 1872, and incorporates stringent safeguards to ensure authenticity, reliability and integrity of electronic evidence by mandating certification regarding the manner of production, particulars of the device and authenticity of contents - The evidentiary foundation of the electronic records was deeply flawed as they were neither authenticated nor certified, lacked statutory compliance, and had not been correlated with specific consignments. Further, statements recorded under Section 108, while admissible, must be voluntary, tested and corroborated by independent evidence, with denial of cross-examination of witnesses whose statements are relied upon constituting a serious violation of principles of natural justice. Despite specific requests, cross-examination was not granted and no valid reason for such denial was recorded - The absence of any evidence of extra remittance or flow of funds from appellants to suppliers was fatal, as proof of additional consideration is a sine qua non in cases of alleged undervaluation. Defective evidence cannot corroborate another defective piece of evidence. Accordingly, the electronic evidence and statements are held to be inadmissible and unreliable.rnrnInvocation of Extended Period of Limitation under Section 28 of Customs Act - HELD - The entire basis for invoking the extended period was the allegation of undervaluation founded upon electronic records and statements recorded during investigation, but as such evidence was found to be legally inadmissible and lacking statutory compliance under Section 138C and devoid of corroboration, when the very foundation of the allegation fails, the consequential invocation of extended limitation cannot survive. Extended period cannot be invoked on the basis of assumptions, suspicion or inferential reasoning and requires clear evidence of deliberate intent to evade duty. All imports were effected through proper Bills of Entry with goods examined and assessed by Customs authorities at the time of clearance, with values being enhanced wherever considered necessary. This factual position demonstrates that the Department was fully aware of the transactions and had applied its mind to the issue of valuation contemporaneously - The extended period is an exception to the normal rule and must be invoked strictly in accordance with statutory conditions. Once the Department is in possession of all relevant facts, the limitation clock begins to run. Accordingly, the invocation of extended period is set aside and the demand is barred by limitation.rnrnConfiscation and Penalties without Proof of Deliberate Misdeclaration - Whether the confiscation of goods under Section 111(m) of the Customs Act, 1962, the imposition of redemption fine, and the penalties imposed under Sections 112, 114A and 114AA were sustainable in law – HELD - Held that the confiscation, redemption fine and penalties are unsustainable. Confiscation under Section 111(m) can be invoked only where there is misdeclaration of value, quantity or other material particulars, and such misdeclaration must be deliberate, conscious and supported by cogent evidence - A mere difference in valuation or subsequent re-determination of value does not automatically amount to misdeclaration. Once the foundation for confiscation fails, the confiscation itself cannot be sustained as confiscation is not an automatic consequence of every valuation dispute. Redemption fine is purely consequential to confiscation, and it is a settled principle that where confiscation is set aside, redemption fine cannot survive independently. The imposition of penalty under Section 114A is not sustainable as the said provision is attracted only where duty has not been levied or has been short-levied by reason of collusion, wilful misstatement or suppression of [Read less]

Customs - Confiscation of Goods and Imposition of Redemption Fine - Importer's Bona Fides – Import of crude degummed soya bean oil. Upon discharge, an excess quantity of oil is found in the storage tank which was cleared on payment of duty - Adjudicating authority confiscates the excess goods under Section 111(j), 111(i), and 111(m) of the Customs Act, 1962, with an option to redeem on payment of fine under Section 125, and imposes penalty under Section 114A - Whether goods that remain in the possession of the custodian and are subsequently cleared on payment of duty are liable for confiscation – HELD - The appellant-i... [Read more]

Customs - Confiscation of Goods and Imposition of Redemption Fine - Importer's Bona Fides – Import of crude degummed soya bean oil. Upon discharge, an excess quantity of oil is found in the storage tank which was cleared on payment of duty - Adjudicating authority confiscates the excess goods under Section 111(j), 111(i), and 111(m) of the Customs Act, 1962, with an option to redeem on payment of fine under Section 125, and imposes penalty under Section 114A - Whether goods that remain in the possession of the custodian and are subsequently cleared on payment of duty are liable for confiscation – HELD - The appellant-importer made no attempt to clear the excess goods without payment of duty. The email communication on record establishes that the importer categorically instructed the custodian not to release the tankers until Customs duty was paid for the excess quantity. This demonstrates the bona fides of the importer. The fact that the goods were finally cleared on payment of duty further supports the position that there was no intention to remove goods without payment of duty - The adjudicating authority's finding that the importer and custodian were acting together to remove the goods without payment is factually incorrect and unsustainable in law. The order of confiscation and the consequent imposition of redemption fine are set aside - The appeals are allowedrnrnImposition of Penalty under Section 114A - Absence of Mens Rea - Penalty is imposed on both the importer and custodian under Section 114A of the Customs Act, 1962, on the premise that they had prior knowledge of the excess quantity and acted together to remove it without payment of customs duty - Whether penalty under Section 114A of the Customs Act, 1962, can be imposed where there is no evidence of mens rea or intent to remove goods without payment of duty and the goods are subsequently cleared on payment of duty – HELD - Section 114A is not applicable to the facts and circumstances of the case. The observation of the adjudicating authority regarding collusion between the importer and custodian is factually incorrect. No corroborative evidence exists on record to prove collusion, wilful misstatement, or suppression of facts. The custodian notified the importer of the excess quantity, and the importer immediately instructed the custodian not to release the tankers pending payment of duty. The evidence on record indicates that there is no mens rea on the part of either appellant to clear goods without payment of duty. The adjudicating authority has not made out any case to justify the imposition of penalty under Section 114A. Accordingly, the penalty imposed on the importer under Section 114A is set aside. [Read less]

Service Tax - Liability of proprietary concern for dues of erstwhile partnership firm - Whether a proprietary concern can be held liable for service tax demands pertaining to the period when an erstwhile partnership firm was in operation, where both entities have separate service tax registrations, different PAN numbers, and the partnership firm's registration was surrendered prior to issuance of show cause notice – HELD - The show cause notice is ab initio void and the demand is liable to be set aside on the ground that the Department failed to establish transferee liability of the proprietary concern for the tax arrear... [Read more]

Service Tax - Liability of proprietary concern for dues of erstwhile partnership firm - Whether a proprietary concern can be held liable for service tax demands pertaining to the period when an erstwhile partnership firm was in operation, where both entities have separate service tax registrations, different PAN numbers, and the partnership firm's registration was surrendered prior to issuance of show cause notice – HELD - The show cause notice is ab initio void and the demand is liable to be set aside on the ground that the Department failed to establish transferee liability of the proprietary concern for the tax arrears of the erstwhile partnership firm. While the liability of the erstwhile firm does not automatically vanish, the Department was obligated to bring on record whether the present proprietary firm had acquired the partnership's ongoing business in a manner that the proprietor could be held personally liable for the erstwhile firm's tax arrears and to duly reflect the proprietor as the successor and not the non-existent partnership firm. In the absence of any evidence of formal transfer or amalgamation of the business entity, when the proprietorship carries a fresh registration, transferee liability remains unestablished – Further, the show cause notice itself was not even addressed to the partner who is the proprietor but to the proprietary concern with fresh registration - The impugned order is set aside and the appeal is allowedrnrnService Tax levy on composite works contracts prior to Finance Act, 2007 - Whether service tax can be levied on indivisible composite works contracts involving transfer of property in goods prior to the introduction of the Finance Act, 2007 which expressly made such contracts liable to service tax – HELD - Service tax cannot be levied on composite works contracts prior to 1st June 2007 as the charging Section 65(105) of the Finance Act, 1994 refers only to service contracts simpliciter and not to composite works contracts - In the present case, the services rendered involve deemed sale of material used in execution of the works contract on which VAT has been duly discharged and therefore the very demand of service tax for the period before 1st June 2007 on services involving composite works contracts is non-existent. Once the very basis of demand has been demolished, the impugned order cannot be sustained and set aside. [Read less]

Service Tax - Exemption for renting of residential dwelling as Hostel – Appellant rents a multi-storey building to an educational foundation for use as a hostel for students and staff – Appellant initially pays service tax but later files a refund claim contending the rental income is exempt under Section 66D(m) of the Finance Act, 1994 - Whether the service of renting a residential building used as a hostel by an educational institution for student and staff accommodation qualifies as a service by way of renting of residential dwelling for use as residence and is thus exempt from service tax – HELD - The phrase 'res... [Read more]

Service Tax - Exemption for renting of residential dwelling as Hostel – Appellant rents a multi-storey building to an educational foundation for use as a hostel for students and staff – Appellant initially pays service tax but later files a refund claim contending the rental income is exempt under Section 66D(m) of the Finance Act, 1994 - Whether the service of renting a residential building used as a hostel by an educational institution for student and staff accommodation qualifies as a service by way of renting of residential dwelling for use as residence and is thus exempt from service tax – HELD - The phrase 'residential dwelling for use as residence' in the section is activity-specific and not person-specific and does not require that the lessee itself must use the property as residence. The legislative intent behind the exemption is that a rented property used as residence should not attract tax, irrespective of the intermediary or the specific person using it. The ultimate use of the property in the present case remained unchanged as it was used for residence by students and staff of the educational institution - Granting a narrow interpretation by restricting the exemption only when the property is used by the lessee themselves would defeat the legislative intent, particularly as the tax burden would ultimately be passed on to the students. The TRU clarification that 'residential dwelling' means any residential accommodation, excluding temporary stay establishments such as hotels, motels, inns and guest houses, supports this interpretation. A hostel provides long-term residential accommodation and thus falls within the definition of residential dwelling - The appellant is not liable to pay service tax on the rental income received by renting the premises to the educational institution which was in turn used as hostels for the students – The appeal is allowed [Read less]

Service Tax - Secondment of employee, Reimbursable Salary Expenses - Service tax liability on technical services provided under secondment agreement and segregation of reimbursable salary components - Appellant company entered into a secondment agreement with its foreign holding company for supply of qualified technical personnel. The holding company deployed personnel who continued as regular employees on the parent company's payroll - Whether the entire amount paid under a secondment agreement for technical services is liable to service tax, or whether the reimbursable salary component of employee costs can be excluded f... [Read more]

Service Tax - Secondment of employee, Reimbursable Salary Expenses - Service tax liability on technical services provided under secondment agreement and segregation of reimbursable salary components - Appellant company entered into a secondment agreement with its foreign holding company for supply of qualified technical personnel. The holding company deployed personnel who continued as regular employees on the parent company's payroll - Whether the entire amount paid under a secondment agreement for technical services is liable to service tax, or whether the reimbursable salary component of employee costs can be excluded from service tax liability – HELD - While service tax is payable on the technical assistance and services received from the foreign holding company as a commercial transaction governed by the RCM, the component comprising reimbursable salary expenses paid to employees is not liable to service tax - The secondment agreement does constitute a taxable service involving technical assistance and commercial exchange of benefits between the parties. However, the salary reimbursement portion, being a direct employee cost passed through without any service element, falls outside the taxable service. Since the entire payment was transparently documented through the agreement placed on record, there is no evidence of suppression of facts warranting an extended period of limitation; therefore, the demand is restricted to the normal assessment period - The demand is upheld only to the extent of service tax on the technical services component, excluding the reimbursable salary amount, for the normal period of limitation – The appeal is partly allowedrnrnService tax liability on management services received from their associate company – HELD - The services were clearly received from an associate company, not from an employee, and constitute taxable management services under the RCM. There is no dispute regarding the payment being made for services actually rendered by the associate company, which brings the transaction squarely within the scope of service tax. The demand for service tax on management services is confirmed and upheld.rnrnService Tax on Cost Sharing Arrangement - Allocation of Common Expenses - Whether amounts paid under a cost sharing arrangement for allocation of common expenses constitute taxable services liable to service tax – HELD - The amount in question is liable to service tax as the payments constitute services received rather than a mere cost sharing arrangement. The amount was admittedly paid for services rendered by the associate company and therefore cannot be exempted from service tax by merely characterizing it as a cost sharing arrangement. [Read less]

Customs - Duty exemption on re-imported goods under Notification No. 158/95-Customs and Notification No. 94/96-Customs - Compliance with conditions and availment of alternative notifications - Exporter of frozen buffalo meat claiming duty drawback. Subsequently, a small fraction of the exported goods were re-imported due to commercial exigencies. At the time of re-import, the importer claimed duty exemption under Notification No. 158/95-Customs and paid back the drawback benefit claimed at the time of initial export along with interest upon re-importation - Whether the conditions of Notification No. 158/95-Customs dated 14... [Read more]

Customs - Duty exemption on re-imported goods under Notification No. 158/95-Customs and Notification No. 94/96-Customs - Compliance with conditions and availment of alternative notifications - Exporter of frozen buffalo meat claiming duty drawback. Subsequently, a small fraction of the exported goods were re-imported due to commercial exigencies. At the time of re-import, the importer claimed duty exemption under Notification No. 158/95-Customs and paid back the drawback benefit claimed at the time of initial export along with interest upon re-importation - Whether the conditions of Notification No. 158/95-Customs dated 14.11.1995 for re-importation of goods have been duly complied with by the appellant, and whether the importer is entitled to claim duty exemption benefit under the said notification or alternatively under Notification No. 94/96-Customs, notwithstanding that the benefit was not initially claimed in the B/E – HELD - The documentary evidence clearly demonstrates that the appellant has adequately provided the linkage between the goods initially exported and those re-imported for carrying out the processes envisaged under the notification. The entire cycle of initial export, re-importation of goods and subsequent export was properly documented and the bonds executed by the appellant were cancelled by the Department - It is a settled position of law that once a bond is cancelled, no demand can be raised alleging violation of conditions of such bond execution. The repayment of duty drawback benefits along with interest upon re-importation has been permitted and duly certified by the authorities. The requirement of Notification No. 94/96-Customs dated 16.12.1996, as amended, has also been duly complied with by the appellant through payment of drawback benefits - The appellant is entitled to the benefit of duty exemption under either notification - The differential customs duty demand and the redemption fine along with penalties are set aside. The appeal is allowed [Read less]

Customs - Abatement of appeal on death of Appellant - When an appellant dies during the pendency of an appeal before the CESTAT, whether the appeal stands abated if no application for continuance of proceedings is filed by the legal representative within the prescribed period – HELD - On the death of the appellant, the appeal stands abated in terms of Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, which provides that where the appellant dies during proceedings, the appeal or application shall abate unless an application for continuance is made by the successor-in-interest, exec... [Read more]

Customs - Abatement of appeal on death of Appellant - When an appellant dies during the pendency of an appeal before the CESTAT, whether the appeal stands abated if no application for continuance of proceedings is filed by the legal representative within the prescribed period – HELD - On the death of the appellant, the appeal stands abated in terms of Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, which provides that where the appellant dies during proceedings, the appeal or application shall abate unless an application for continuance is made by the successor-in-interest, executor, administrator or other legal representative within sixty days of the death - No proceedings can be initiated or continued against a dead person as it amounts to violation of natural justice, inasmuch as the dead person who is proceeded against is not alive to defend himself. Since no application for continuance of proceedings was filed by any legal representative of the deceased appellant within the prescribed period, the appeal stands abated and is disposed of accordingly [Read less]

Customs - Entitlement to concessional Countervailing Duty on imported mobile phones under Notification No. 12/2012-CE - Respondents importing mobile phones initially discharged CVD at 12.5% on MRP basis at the time of import. Subsequently, claimed the benefit of concessional rate of CVD at 1% under Notification No. 12/2012-CE on the condition of non-availment of CENVAT credit - The original authority rejected the benefit contending that imported goods cannot fulfil the condition relating to non-availment of credit on inputs used in manufacture. On appeal, the Commissioner of Customs (Appeals) allowed the benefit relying on... [Read more]

Customs - Entitlement to concessional Countervailing Duty on imported mobile phones under Notification No. 12/2012-CE - Respondents importing mobile phones initially discharged CVD at 12.5% on MRP basis at the time of import. Subsequently, claimed the benefit of concessional rate of CVD at 1% under Notification No. 12/2012-CE on the condition of non-availment of CENVAT credit - The original authority rejected the benefit contending that imported goods cannot fulfil the condition relating to non-availment of credit on inputs used in manufacture. On appeal, the Commissioner of Customs (Appeals) allowed the benefit relying on the Supreme Court judgment in SRF Ltd., holding that importers are entitled to exemption as long as conditions are not violated - Whether the Respondent-importer is entitled to concessional Countervailing Duty under Notification No. 12/2012-CE – HELD - The Additional Customs Duty under Section 3 of the Customs Tariff Act is levied to counterbalance the excise duty leviable on like goods manufactured in India, thereby ensuring parity and maintaining a level playing field. The Hon'ble Supreme Court in the binding judgment of SRF Ltd. has categorically held that for the purpose of levy of Additional Customs Duty, imported goods are to be imagined as manufactured in India and the rate of duty, including exemption, has to be determined accordingly. The Court created a legal fiction under Section 3 whereby imported goods are treated as if manufactured in India for determining duty and exemption. Since like goods manufactured in India are eligible for concessional rate subject to non-availment of CENVAT credit, the same benefit cannot be denied to the importer merely on the ground that such condition cannot be demonstrated in a literal sense - The condition relating to non-availment of CENVAT credit, when applied to importers, must be interpreted consistently with the legal fiction under Section 3 and cannot be enforced so as to defeat the exemption. The Department's reliance on the principle that exemption notifications are to be strictly construed is distinguishable because in the present case, the condition is inherently linked to the manufacturing process, which is not applicable to an importer who is a trader and could not have availed any CENVAT credit. Further, the importer was prevented from availing the benefit at the time of import due to limitations of the EDI system and lack of permission for manual filing by the Department - The substantive benefit cannot be denied on account of procedural or technical limitations, particularly when the assessee is not at fault. The Department's contention that the SRF Ltd. judgment had not attained finality is found to be factually and legally untenable - The impugned order is upheld and the Revenue appeal is dismissed [Read less]

Service Tax - Voluntary Compliance Encouragement Scheme - Time Limit for Issuance of Show Cause Notice - Appellant filed declaration under the VCES 2013, declaring unpaid service tax dues for a specified period - Designated authority issues a notice proposing rejection of the declaration beyond the prescribed time limit of thirty days stipulated in the Board Circular dated 25-11-2013 - Whether the SCN issued beyond the prescribed time limit can be acted upon to reject the voluntary compliance declaration filed by the assessee – HELD - The show cause notice is barred by time and cannot be acted upon. It is a settled posit... [Read more]

Service Tax - Voluntary Compliance Encouragement Scheme - Time Limit for Issuance of Show Cause Notice - Appellant filed declaration under the VCES 2013, declaring unpaid service tax dues for a specified period - Designated authority issues a notice proposing rejection of the declaration beyond the prescribed time limit of thirty days stipulated in the Board Circular dated 25-11-2013 - Whether the SCN issued beyond the prescribed time limit can be acted upon to reject the voluntary compliance declaration filed by the assessee – HELD - The show cause notice is barred by time and cannot be acted upon. It is a settled position that the show cause notice is the foundation upon which the Department builds its case, and the tenability of any demand hinges on a valid SCN. The Circular dated 25-11-2013 expressly directs that the Commissioner shall ensure scrupulous compliance with the time limit of giving notice within thirty days. The term "give" implies actual service and receipt of the notice by the addressee, not merely its dispatch - Furthermore, the very nomenclature and underlying object of the scheme is to promote voluntary encouragement by the assessee and to reduce unnecessary litigation. The Circular also provides that the conditions enumerated in Section 106(2) of the Finance Act may be construed strictly and narrowly, and no declaration shall be rejected on frivolous grounds. The Revenue shall accept the declaration filed by the assessee - The impugned order is set aside and the appeal is allowed [Read less]

GST - ITC claim on Invoice Issued in the Name of Corporate Office, Claim of Input Tac Credit based on self-invoicing, Duty paying document- Petitioners’ foreign company issued invoice in the name of the its Corporate office in Delhi, however, the payment for the said invoice was discharged by the Kerala unit (Petitioner) – The petitioner issued a self-invoice in terms of Section 31(3)(f) of the CGST Act, 2017 discharged the liability under Reverse Charge mechanism, thereafter claiming input tax credit and distributing the same to its other registered units without obtaining Input Service Distributor registration - Dema... [Read more]

GST - ITC claim on Invoice Issued in the Name of Corporate Office, Claim of Input Tac Credit based on self-invoicing, Duty paying document- Petitioners’ foreign company issued invoice in the name of the its Corporate office in Delhi, however, the payment for the said invoice was discharged by the Kerala unit (Petitioner) – The petitioner issued a self-invoice in terms of Section 31(3)(f) of the CGST Act, 2017 discharged the liability under Reverse Charge mechanism, thereafter claiming input tax credit and distributing the same to its other registered units without obtaining Input Service Distributor registration - Demand under Section 74 of the CGST Act alleging wrongful availment of ITC on invoice raised in the name of the separately registered Delhi unit and distribution of ITC among other units without obtaining mandatory ISD registration - Whether the petitioner is entitled to claim input tax credit on services received from an unregistered foreign supplier when the invoice is issued in the name of another registered unit of the company, and whether distribution of such credit to other units without ISD registration is valid – HELD - The petitioner is entitled to claim ITC as the definition of "recipient" under section 2(93) of the CGST Act encompasses any person liable to pay the consideration for the supply and the petitioner having discharged the entire tax liability becomes the qualified recipient. The self-invoice issued pursuant to section 31(3)(f) read with section 9(3) of the Act constitutes a valid tax paying document under Rule 36 of the CGST Rules, 2017 on the basis of which ITC can be claimed - The petitioner being the recipient of services supplied by a foreign company (a non-registered supplier), in fulfilment of its obligations under section 9(3), raised an invoice as required under section 31 of the CGST Act r/w Rule 36 of the CGST Rules, paid the tax based on such invoice, and claimed the ITC for the tax paid, on the strength of Section 16(2)(a) of the CGST, Act. Thus, all such actions of the petitioner were based on the relevant statutory provisions and are perfectly in tune with the statutory requirements. Hence, the ITC availed by the petitioner is legally sustainable - Furthermore, the transaction is revenue neutral as the tax has been paid by the without any loss to the Government. imposition of liability on technical grounds when there is no tax evasion would be against the spirit of the Act - The impugned order is quashed to the extent it held the input tax credit ineligible and that distribution among other units was illegal, and consequently the demand and penalty imposed are declared not unsustainable – The writ petition is disposed of [Read less]

GST - Anti-profiteering - Failure to pass on the benefit of reduction in GST rate on cinema admission tickets from 18% to 12% w.e.f. 01.01.2019 - Whether a registered person engaged in providing cinema admission services, who increases base prices following a GST rate reduction while maintaining the same cumulative tax-inclusive price, violates Section 171(1) of the CGST Act, 2017 and constitutes profiteering notwithstanding any permission granted by the High Court to collect proposed fares subject to regulatory compliance – HELD – The Respondent has violated Section 171(1) of the CGST Act, 2017, which mandates that a... [Read more]

GST - Anti-profiteering - Failure to pass on the benefit of reduction in GST rate on cinema admission tickets from 18% to 12% w.e.f. 01.01.2019 - Whether a registered person engaged in providing cinema admission services, who increases base prices following a GST rate reduction while maintaining the same cumulative tax-inclusive price, violates Section 171(1) of the CGST Act, 2017 and constitutes profiteering notwithstanding any permission granted by the High Court to collect proposed fares subject to regulatory compliance – HELD – The Respondent has violated Section 171(1) of the CGST Act, 2017, which mandates that any reduction in the rate of tax on supply of goods or services must be passed on to the recipient by way of commensurate reduction in prices. The statutory obligation under Section 171 is absolute and cannot be overridden by conditional permissions granted by the High Court, as such permissions were not unconditional and were subject to compliance with the regulatory framework governing ticket pricing - The intention of the Government is that the benefit of tax rate reduction should immediately be passed on to the end-user by way of reduction in prices commensurate with the reduction in tax rate. By increasing base prices while maintaining the same cum-tax selling price, the Respondent has defeated the statutory mandate and prevented consumers from benefiting from the government's decision to lower the tax rate - Since recipients are not identifiable, the Respondent shall deposit 50% in the Central Consumer Welfare Fund and 50% in the State Consumer Welfare Fund. The Respondent shall pay interest at 18% per annum on the total profiteered amount from 28.06.2019 – Ordered accordingly [Read less]

Customs - Mandatory return of seized cash on expiry of statutory period under Customs Act – Seizure of Cash during search proceedings – Non-issue of show cause notice within Six months from the date of seizure - The Customs authorities neither issued SCN within the prescribed period nor communicated any extension order before the expiry of the six-month period. Subsequently, Customs authorities transferred the seized cash to income tax authorities - Whether seized cash must be mandatorily returned to the person from whom it was seized when no show cause notice is issued within six months of seizure and no valid extensi... [Read more]

Customs - Mandatory return of seized cash on expiry of statutory period under Customs Act – Seizure of Cash during search proceedings – Non-issue of show cause notice within Six months from the date of seizure - The Customs authorities neither issued SCN within the prescribed period nor communicated any extension order before the expiry of the six-month period. Subsequently, Customs authorities transferred the seized cash to income tax authorities - Whether seized cash must be mandatorily returned to the person from whom it was seized when no show cause notice is issued within six months of seizure and no valid extension order communicating the extension to the person concerned is passed before expiry of the statutory period – HELD - The seized cash must be mandatorily returned on expiry of six months in accordance with Section 110(2) of the Customs Act, 1962. The order sheet dated 18.02.2026 purporting to grant extension does not satisfy the requirements of a valid approval order because it merely bears a signature without any recorded reasons or evidence of application of mind by the competent authority, rendering it a mere rubber stamp - Furthermore, the order was never communicated to the petitioners before the expiry of the six-month period, which is a mandatory requirement under the proviso to Section 110(2) - The approval orders for extension must reflect that the higher authority applied its mind and examine the fitness of the case. Consequently, both conditions prescribed under Section 110(2) were not fulfilled and the petitioners earned a legal right to return of the cash on 19.02.2026. The retention of cash beyond this date and subsequent transfer to income tax authorities without informing the Court during pendency of writ petition constitutes illegal action beyond the jurisdiction of the Customs authorities - Though the petitioners may now pursue return of money from income tax authorities in accordance with law, costs of Rs.1,00,000 is imposed on respondents for illegal actions, deliberate obstruction of justice, and overreaching the proceedings – The petition is disposed of [Read less]

GST - Validity of Consolidated Show Cause Notice for Multiple Financial Years - Whether the authorities have jurisdiction to issue a consolidated show cause notice covering multiple financial years or different tax periods for GST assessment – HELD - The Petitioner’s case is squarely covered by the ratio in M/s Milroc Good Earth Developers V/s Union of India case – There are no provisions under GST law permitting consolidation of various financial years or tax periods and clubbing of multiple assessment years in a single show cause notice - Since the showcause notice and the impugned order are without jurisdiction, ... [Read more]

GST - Validity of Consolidated Show Cause Notice for Multiple Financial Years - Whether the authorities have jurisdiction to issue a consolidated show cause notice covering multiple financial years or different tax periods for GST assessment – HELD - The Petitioner’s case is squarely covered by the ratio in M/s Milroc Good Earth Developers V/s Union of India case – There are no provisions under GST law permitting consolidation of various financial years or tax periods and clubbing of multiple assessment years in a single show cause notice - Since the showcause notice and the impugned order are without jurisdiction, the same are void ab initio and cannot be acted upon, irrespective of admission of liability on the part of petitioner - The consolidated show cause notice and consequent actions are quashed and set aside. The writ petition is allowed [Read less]

GST - Principle of res judicata, Maintainability of fresh investigation in Anti-profiteering proceedings - Whether a fresh investigation is required to be initiated based on a new complaint regarding alleged profiteering by the respondent for the same project and period when the subject matter of profiteering has already been finally adjudicated upon and affirmed by a superior court and the complaint has been withdrawn by the complainant – HELD - The principles of res judicata are well established and provide that once a matter has been fully and finally adjudicated upon by a competent authority and affirmed by a superio... [Read more]

GST - Principle of res judicata, Maintainability of fresh investigation in Anti-profiteering proceedings - Whether a fresh investigation is required to be initiated based on a new complaint regarding alleged profiteering by the respondent for the same project and period when the subject matter of profiteering has already been finally adjudicated upon and affirmed by a superior court and the complaint has been withdrawn by the complainant – HELD - The principles of res judicata are well established and provide that once a matter has been fully and finally adjudicated upon by a competent authority and affirmed by a superior court, the same cannot be reopened based on a fresh complaint raising the same cause of action against the same respondent for the same project and period. Permitting such a course would be contrary to 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 complainant has himself unconditionally withdrawn the complaint and has already obtained possession of the allotted unit with all financial transactions settled. The matter of profiteering has attained finality both in terms of facts and law through the previous investigation, the National Anti-Profiteering Authority's order, and the High Court's judgment - No fresh investigation is required to be taken up based on the complaint. The present proceedings are dropped as not maintainable [Read less]

GST - Anti-Profiteering - Jurisdiction of erstwhile NAA to direct further investigation beyond scope of original complaint in Anti-Profiteering Proceedings - Whether the erstwhile National Anti-Profiteering Authority possesses jurisdiction to direct investigation into goods and services beyond those covered in the original complaint or reference – HELD - The authority possesses wide jurisdiction to direct further investigation beyond the scope of the original complaint. Rule 133(4) of the CGST Rules, 2017 confers jurisdiction on the authority to direct further investigation without imposing any restrictions or limitation... [Read more]

GST - Anti-Profiteering - Jurisdiction of erstwhile NAA to direct further investigation beyond scope of original complaint in Anti-Profiteering Proceedings - Whether the erstwhile National Anti-Profiteering Authority possesses jurisdiction to direct investigation into goods and services beyond those covered in the original complaint or reference – HELD - The authority possesses wide jurisdiction to direct further investigation beyond the scope of the original complaint. Rule 133(4) of the CGST Rules, 2017 confers jurisdiction on the authority to direct further investigation without imposing any restrictions or limitations. The provision is non-obstante in nature and the authority need not confine itself only to goods or services covered in the original report. The authority itself had recognized this position by directing further investigation based on the respondent's own submission acknowledging that benefits may not have been passed to certain customers. Sub-rule (5) of Rule 133 is merely clarificatory in nature and does not confer additional jurisdiction but reiterates existing powers - Further, the scope of investigation by the investigating authority under Rule 129(2) is very wide and is not limited to goods or services in relation to which a complaint is received. Since the respondent itself invited the direction for further investigation through its own submissions, it cannot later challenge the jurisdiction of the authority to conduct such investigation. Therefore, the first contention of the respondent stands rejected and the authority's order directing further investigation is upheld - The jurisdiction of the erstwhile Anti-Profiteering Authority to direct further investigation into other products is confirmed.rnrn^Validity of Proceedings following omission of Rules constituting Anti-Profiteering Authority without Savings Clause - Rules 122, 124, 125, 134 and 137 of the CGST Rules, 2017 which provided for the constitution, appointment and functioning of the National Anti-Profiteering Authority were omitted vide Notification dated 23.11.2022 without any savings clause. The respondent challenged the validity of proceedings initiated under the earlier authority structure - Whether proceedings initiated by the National Anti-Profiteering Authority become void and non-existent following the omission of the rules constituting the authority without any savings clause – HELD - The omission of the Rules does not render the proceedings non-existent or cause them to disappear from record. While it is true that repeal or deletion of statutory provisions normally obliterates them from the statute book and the operation largely depends on savings clauses, the facts of this case present a different scenario. The Government decision to address illegal profiteering continued even after the Rules were omitted. The Competition Commission of India was subsequently vested with anti-profiteering powers, and later the Principal Bench of the GST Appellate Tribunal was given jurisdiction to examine anti-profiteering matters. This reflects a change in the designated authority rather than abandonment of the anti-profiteering objective. Furthermore, the amended Rule 127 substituted the term "duties" with "functions" and added an explanation defining "authority" as the authority notified under sub-section 2 of Section 171 of the Act. The principles of succession apply to such situations, ensuring that orders passed by the erstwhile authority before omission of rules do not vanish from record. The omission of Rules creating the NAA does not result in nullification of its orders or proceedings - The proceedings initiated and orders passed by the erstwhile NAA are valid and do not become void due to subsequent omission of the rules constituting the authority.rnrn^Applicability of Limitation Period to Anti-Profiteering Proceedings - Respondent contended that proceedings were barred by limitation as the investigating authority did not furnish its report within the time period specified in Rule 133(1) of the CGST Rules, 2017, which mandates that the authority shall decide matters within six months of receipt of the report from the investigating authority - Whether anti-profiteering proceedings are barred by limitation due to non-compliance with the time limit specified in Rule 133(1) for deciding matters – HELD - The Rule 133(1) prescribes a time limit for the authority to decide matters but does not provide any consequences for non-compliance with such time limit. The Delhi High Court in Reckitt Benckiser case has held that since the Rules do not specify consequences for lapse of time limits, the time limits are directory in nature and not mandatory in character. The anti-profiteering provisions in the Act and Rules constitute beneficial legislation designed to promote consumer welfare which must receive liberal construction that favors the consumer and promotes the intent and objective of the Act. If strict adherence to procedural time limits could vitiate the entire proceedings, it would defeat the protective purpose of the legislation - The anti-profiteering proceedings are not barred by limitation, and the time limits specified in the Rules are directory rather than mandatory in nature.rnrn^Applicability of Interest and Penalty - The profiteering period was from 15.11.2017 to 31.01.2018. The provision for imposition of penalty under Section 171(3A) was introduced with effect from 01.01.2020, and the provision for interest under Rule 133(3)(c) was inserted on 28.06.2019 - Whether interest and penalty can be imposed on profiteered amounts when the profiteering occurred in a period prior to the introduction of these provisions – HELD - The respondent is not liable to pay any interest or penalty on the profiteered amount. The provisions for interest and penalty were introduced after the period of alleged profiteering and these provisions apply only prospectively from their date of introduction. Since the profiteering occurred prior to the introduction of both the penalty provision (01.01.2020) and the interest provision (28.06.2019), these provisions cannot be applied retrospectively to the respondent's conduct during the pre-amendment period - The respondent is not liable to pay any interest or penalty on the profiteered amount as the profiteering period predates the introduction of these provisions.rnrn^Whether the anti-profiteering authority must consider commercial, costing and market-related factors while determining whether the benefit of GST rate reduction has been passed on to consumers, or whether it is limited to examining whether the benefit has been commensurate reduction in prices – HELD - The anti-profiteering authority is not concerned with the price determined by the supplier for supply of particular goods or services, exclusive of the GST or input-tax credit component. The supplier is at liberty to set base prices and vary them according to commercial and economic factors. However, the fundamental duty under Section 171 of the CGST Act, 2017 requires that every supplier must pass on the benefit of reduced tax rate and input-tax credit by way of commensurate reduction in prices - The authority is mandated only to ensure that benefits of reduced rates and input-tax credit are passed on; it cannot force suppliers to sell at reduced prices. However, if a supplier fails to pass the benefit to any customer, it cannot claim compliance by passing greater benefits to other customers. Each customer is entitled to receive the benefit of rate reduction - The methodology of comparing average prices of the pre-GST period with actual prices of the post-GST period is permissible and does not constitute an error. The authority correctly adopted this approach to determine the profiteered amount, and the respondent's challenge to the methodology is rejected. The respondent's admission through its own submissions that benefits were not passed on [Read less]

GST - Mandatory nature of Form DRC-01A notice, Right to settle tax demand at reduced penalty before issue of SCN – Petitioner-assessee is issued a show cause notice on Form DRC-01 for alleged wrongful availment of input tax credit but no prior notice on Form DRC-01A was communicated to the assessee as required under Rule 142(1A) of the CGST Rules 2017 - Petitioner sought adjudication of dispute against reduced penalty of 15% as against full penalty demand - Whether the issuance of Form DRC-01A notice prior to serving the show cause notice under section 73 or section 74 of the CGST Act, 2017 is mandatory, and whether an a... [Read more]

GST - Mandatory nature of Form DRC-01A notice, Right to settle tax demand at reduced penalty before issue of SCN – Petitioner-assessee is issued a show cause notice on Form DRC-01 for alleged wrongful availment of input tax credit but no prior notice on Form DRC-01A was communicated to the assessee as required under Rule 142(1A) of the CGST Rules 2017 - Petitioner sought adjudication of dispute against reduced penalty of 15% as against full penalty demand - Whether the issuance of Form DRC-01A notice prior to serving the show cause notice under section 73 or section 74 of the CGST Act, 2017 is mandatory, and whether an assessee can claim the benefit of section 74(5) of the Act to settle the disputed demand at a reduced penalty of fifteen percent even when such prior notice is not issued – HELD - The provisions of section 74(5) of the CGST Act read with Rule 142(1A) of the CGST Rules are mandatory in nature to the extent that no demand of penalty higher than 15% percent may be raised in the first place - Although Rule 142(1A) uses the word "may," this must be interpreted consistently with the principal Act which prescribes clear consequences flowing from Section 74(5) providing an option to an assessee to pay the short-paid tax along with interest and only 15% penalty before service of SCN, as against the higher penalty of 25% payable upon issuance of formal SCN. The word "may" in the Rule cannot be read to mean the provision is merely discretionary. To read Rule 142(1A) as directory would create an impermissible conflict between the principal Act and subordinate Rules - Further, an assessee remains entitled to claim the benefits of Section 74(5) up to the stage of filing a reply to the SCN on Form DRC-01 and this right stands eclipsed only where the noticee chooses to dispute liability without claiming such right. The statutory intent to give mandatory effect to these provisions is evidenced by the differentiated penalty structure. Procedural Rules exist to give effect to the statutory scheme created by the principal legislature and can never be read to carve out a different scheme - The assessee is directed to pay the disputed demand along with interest and 15% penalty and the adjudication order shall stand satisfied on such payment, with the amount being treated as computed on the date of issuance of DRC-01A notice – The writ petition is allowed [Read less]

Service Tax – Classification of Service of Transportation of Ready Mix Concrete using Transit Mixers – Transportation of Ready Mix Concrete using specially designed Transit Mixers mounted on truck chassis – Respondent issued consignment notes to a cement company for such transportation services – Revenue contended that the activity constituted supply of tangible goods services rather than GTA - Whether the activity of transportation of Ready Mix Concrete using Transit Mixers constitutes GTA service or supply of tangible goods services under Section 66E(f) of the Finance Act, 1994 – HELD - The activity constitute... [Read more]

Service Tax – Classification of Service of Transportation of Ready Mix Concrete using Transit Mixers – Transportation of Ready Mix Concrete using specially designed Transit Mixers mounted on truck chassis – Respondent issued consignment notes to a cement company for such transportation services – Revenue contended that the activity constituted supply of tangible goods services rather than GTA - Whether the activity of transportation of Ready Mix Concrete using Transit Mixers constitutes GTA service or supply of tangible goods services under Section 66E(f) of the Finance Act, 1994 – HELD - The activity constitutes goods transport agency service and not supply of tangible goods services, therefore no service tax liability arises on the service provider as the obligation lies on the service recipient to discharge the same under Reverse charge – The contract between the parties was specifically for transportation of RMC from the manufacturing site to the customer's site, where the service provider was required to load the RMC in its own vehicles, transport the same to the required destination and unload it as per the directions of the service recipient. The charging structure based on quantity transported and distance travelled further corroborates that the transaction was one of transportation of goods by road and not hiring of vehicles. The mere fact that specialized vehicles were deployed does not convert the nature of activity into supply of tangible goods services - The order of the Commissioner (Appeals) setting aside the demand is upheld and the Revenue appeal is dismissed [Read less]

GST - Bail application in case involving GST evasion through fictitious firms - Applicant was arrested on allegation of orchestrating and operating multiple fictitious firms that availed and passed on fraudulent ITC through at least eleven bogus entities, causing massive loss to the public exchequer - Applicant claimed to have been working merely in an accounting or consulting capacity without proprietary or beneficial interest in any of the firms, and contended that his arrest was illegal as grounds of arrest were not provided in writing as required under the relevant statutory provision – HELD - While the allegations a... [Read more]

GST - Bail application in case involving GST evasion through fictitious firms - Applicant was arrested on allegation of orchestrating and operating multiple fictitious firms that availed and passed on fraudulent ITC through at least eleven bogus entities, causing massive loss to the public exchequer - Applicant claimed to have been working merely in an accounting or consulting capacity without proprietary or beneficial interest in any of the firms, and contended that his arrest was illegal as grounds of arrest were not provided in writing as required under the relevant statutory provision – HELD - While the allegations and counter-allegations constitute matters to be determined at trial, the veracity of charges can be assessed only after conclusion of the trial and appreciation of evidence by the trial Court. The trial of the case would take sufficiently long time, and the applicant has undergone incarceration of six months as on the relevant date. The judgments relied upon by the prosecution, though acknowledged as correct statements of law, are distinguishable on the facts of the present case - The applicant is ordered to be released on bail on furnishing bail or surety bonds to the satisfaction of the concerned trial Court or Duty Magistrate, with a direction to the trial Court to conclude the trial expeditiously - The petition is allowed [Read less]

Customs - Confiscation of imported scrap goods based on alleged mis-declaration of country of origin – Import of LMS Bundle Scrap from UAE - Department seized the goods on the basis of reasonable belief that the goods were liable for confiscation under Section 111 of the Customs Act, 1962 as they were alleged to have mis-declared the country of origin - Commissioner (Appeals) ordered confiscation with an option to redeem on payment of redemption fine under Section 125 of the Customs Act, 1962 and imposed penalty under Section 112(a)(i) of the Customs Act, 1962 – Whether the appellant has imported the impugned goods in ... [Read more]

Customs - Confiscation of imported scrap goods based on alleged mis-declaration of country of origin – Import of LMS Bundle Scrap from UAE - Department seized the goods on the basis of reasonable belief that the goods were liable for confiscation under Section 111 of the Customs Act, 1962 as they were alleged to have mis-declared the country of origin - Commissioner (Appeals) ordered confiscation with an option to redeem on payment of redemption fine under Section 125 of the Customs Act, 1962 and imposed penalty under Section 112(a)(i) of the Customs Act, 1962 – Whether the appellant has imported the impugned goods in violation of the regulation for the provision of Foreign Trade Policy - HELD - There is no mis-declaration on the part of the appellant. Under Indian law, the import of Ferrous Waste and Scrap from Dubai/UAE is freely allowed and there exists no statutory bar on such imports. The appellant filed all requisite documents including Commercial Invoice, Packing List, Certificate of Origin, Bill of Lading, PSIC and Container Tracking, demonstrating complete compliance with import conditions - At the time of inspection on 12.04.2023, there was no effective ban on export from Dubai as the Dubai Customs Notice 05/2023 was issued only on 19.04.2023. Although the retrospective ban by UAE on export of scrap becomes effective from 20.03.2023, such retrospective ban does not affect imports made after full compliance with Foreign Trade Policy conditions - Further, an office memorandum issued by DGFT cannot retrospectively invalidate valid and legal certificates issued by PSIA. An OM issued by DGFT is neither a formal statutory document nor does it suggest any specific policy violation by PSIA - The order of confiscation, redemption fine under Section 125 of the Customs Act, 1962 and penalty under Section 112(a)(i) of the Customs Act, 1962 are set aside – The appeal is allowed [Read less]

Service Tax - Demand of cenvat credit of the service tax paid on the services of the 'air travel agent' provided to a SEZ Unit – Appellant rendered air travel booking services to units located in SEZ - Whether services provided to SEZ units for authorized operations are exempt from service tax under Section 26(1) of the Special Economic Zones Act, 2005, notwithstanding the provisions of the Finance Act, 1994, and whether the demand for service tax along with interest and penalties can be sustained – HELD - The services provided to SEZ units for authorized operations are exempt from service tax by virtue of the overrid... [Read more]

Service Tax - Demand of cenvat credit of the service tax paid on the services of the 'air travel agent' provided to a SEZ Unit – Appellant rendered air travel booking services to units located in SEZ - Whether services provided to SEZ units for authorized operations are exempt from service tax under Section 26(1) of the Special Economic Zones Act, 2005, notwithstanding the provisions of the Finance Act, 1994, and whether the demand for service tax along with interest and penalties can be sustained – HELD - The services provided to SEZ units for authorized operations are exempt from service tax by virtue of the overriding effect of Section 26(1) read with Section 51(1) of the Special Economic Zones Act, 2005. The Section 26(1) of the SEZ Act confers specific exemption from service tax on taxable services provided to a developer or unit to carry on authorized operations in a Special Economic Zone. Section 51(1) explicitly provides that the provisions of the SEZ Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The SEZ Act being a special enactment dealing with special economic zones prevails over the general provisions of the Finance Act, 1994 - The principle of law established through catena of decisions is that Section 26 is a special power of exemption under a special enactment, whereas notifications under Section 93 of the Finance Act, 1994 are general powers of exemption available to any person - In the absence of any evidence that the services do not pertain to authorized operations or were utilized for personal purposes of employees, the services must be considered as provided for authorized operations of the SEZ - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Export cargo handling service - Demand recovery of the cenvat credit availed on the services of export of cargo - Whether export cargo handling service constitutes an exempted service for purposes of Cenvat credit – HELD - The export cargo handling service is not an exempted service but is excluded from the definition of cargo handling service, and the service of cargo handling which is excluded from the definition of cargo handling service cannot be classified as an exempted service. The exempted services under clause 2(e) of the Cenvat Credit Rules, 2004 would cover only services which are notified under ... [Read more]

Service Tax - Export cargo handling service - Demand recovery of the cenvat credit availed on the services of export of cargo - Whether export cargo handling service constitutes an exempted service for purposes of Cenvat credit – HELD - The export cargo handling service is not an exempted service but is excluded from the definition of cargo handling service, and the service of cargo handling which is excluded from the definition of cargo handling service cannot be classified as an exempted service. The exempted services under clause 2(e) of the Cenvat Credit Rules, 2004 would cover only services which are notified under the Finance Act, 1994, and services outside the purview of service tax cannot be treated as exempted services. Therefore, the computation of 8% amount considering the export service as exempted service is incorrect and unsustainable - The impugned order is set aside and the appeal is allowedrnrn^As regards service tax credit availed on the 'supply of tangible goods for use' service it is not tenable, since 'supply of tangible goods' service was introduced on 16.05.2008 and the dispute in this appeal is for the period prior to the introduction of this service, hence the demand is unsustainable. As regards the demand of service tax credit availed on 'Repair of cars' and the 'telephone', the Revenue has not adduced any evidence to the effect that these services were used for the personal use of the appellant's employees. Further, landline telephone services were considered as eligible for cenvat credit in catena of cases. [Read less]

Customs - Retrospective application of Notification, Requirement of Publication in Official Gazette – Petitioner imported platinum jewellery studded with freshwater pearls from Thailand under the ASEAN-India Free Trade Area agreement. The goods arrived at the port of importation on 02.04.2026 at 00:15 hours. On the same day, the company requested clearance without import license, claiming entitlement to transitional arrangements. However, the Customs authorities refused clearance relying on Notification No. 02/2026-27 issued on 01.04.2026 and published in the official gazette on 02.04.2026 at 22:46:52 hours, which restri... [Read more]

Customs - Retrospective application of Notification, Requirement of Publication in Official Gazette – Petitioner imported platinum jewellery studded with freshwater pearls from Thailand under the ASEAN-India Free Trade Area agreement. The goods arrived at the port of importation on 02.04.2026 at 00:15 hours. On the same day, the company requested clearance without import license, claiming entitlement to transitional arrangements. However, the Customs authorities refused clearance relying on Notification No. 02/2026-27 issued on 01.04.2026 and published in the official gazette on 02.04.2026 at 22:46:52 hours, which restricted the import of the specified goods and denied transitional benefits - Whether a Notification restricting imports and denying transitional arrangements, published in the official Gazette more than 22 hours after the arrival of goods at the port, can operate retrospectively and apply to goods already in transit prior to its publication – HELD - The notification cannot operate retrospectively against the imported goods. The Court relies on the principle established in Viraj Impex that delegated legislation acquires the force of law only upon publication in the official gazette in the manner prescribed by the parent statute, and such publication is a condition precedent for enforceability - The Court further adopts the principle from G.S. Chatha Rice Mills that in the era of electronic publication of gazette notifications, the precise time of uploading the notification to the e-gazette is significant for determining when it becomes effective and enforceable - Since the notification was digitally signed and published at 22:46:52 hours on 02.04.2026, nearly 22 hours after the goods arrived, the notification could not have any retrospective effect on goods that had already landed before its publication - Once the legislature prescribes a specific mode of promulgation, the executive cannot introduce an alternative mode and attribute legal consequences to it. Therefore, the respondent authorities erred in applying the notification to the petitioner's consignment that had already arrived before the notification was published in the official Gazette - The authorities are directed to immediately assess, clear, and grant out-of-charge to the petitioner's consignment without insisting upon any import authorization or license under the impugned notification - The writ petition partly allowed [Read less]

GST - Anti-profiteering - Interest liability on refundable amount – Respondent-Developer derived an additional input tax credit compared to the pre-GST period, which resulted in a profiteered amount that was not reduced in the base or cum-tax prices charged to the buyers - The Developer subsequently agreed to comply with the anti-profiteering report but contested the imposition of interest, contending that interest should either not be levied or should apply only from the date of Completion certificate - Whether a developer is liable to refund the profiteered amount along with interest and from which date the interest be... [Read more]

GST - Anti-profiteering - Interest liability on refundable amount – Respondent-Developer derived an additional input tax credit compared to the pre-GST period, which resulted in a profiteered amount that was not reduced in the base or cum-tax prices charged to the buyers - The Developer subsequently agreed to comply with the anti-profiteering report but contested the imposition of interest, contending that interest should either not be levied or should apply only from the date of Completion certificate - Whether a developer is liable to refund the profiteered amount along with interest and from which date the interest becomes payable – HELD - The Respondent is liable to refund the profiteered amount along with interest at 18% per annum from the respective dates of collection of the excess amount. Section 171 of the CGST Act, 2017 creates a statutory obligation to pass on the benefit of tax reduction or additional input tax credit at the time of supply itself. Rule 133(3)(b) of the CGST Rules, 2017 expressly empowers the authority to order return of the amount not passed on by way of commensurate reduction in prices, along with interest from the date of collection of the higher amount till the date of its return. The provision is mandatory in nature - The developer's contention that interest should apply only from the date of Completion certificate is rejected because Section 171 mandates passing on of benefits at the time of supply itself, and retention of such benefit constitutes collection of excess amounts attracting interest from the date of such collection - Where a supplier retains the benefit instead of passing it on to the recipient, the amount retained assumes the character of excess consideration collected from the buyers, and interest in such cases is compensatory in nature ensuring restitution of the time value of money that rightfully belongs to the recipients. The reliance on Rule 133(3)(c), which applies only where recipients are not identifiable or do not claim the amount, is misplaced as all homebuyers are identifiable in the present case – Ordered accordingly [Read less]

GST - Anti-profiteering provision – Passing of input tax credit benefit to consumers – The matter of passing on the benefit of input tax credit to home-buyers in a real estate project the case was referred to the DGAP for investigation - DGAP computed the profiteered amount after adjusting for ITC benefits that were verified as passed on to 55 home-buyers - Whether the respondent-construction service provider has complied with Section 171 of the CGST Act, 2017, by passing on the benefit of input tax credit to home-buyers – HELD - The respondent passed on the ITC benefit to eligible home-buyers to the tune of Rs. 2,02... [Read more]

GST - Anti-profiteering provision – Passing of input tax credit benefit to consumers – The matter of passing on the benefit of input tax credit to home-buyers in a real estate project the case was referred to the DGAP for investigation - DGAP computed the profiteered amount after adjusting for ITC benefits that were verified as passed on to 55 home-buyers - Whether the respondent-construction service provider has complied with Section 171 of the CGST Act, 2017, by passing on the benefit of input tax credit to home-buyers – HELD - The respondent passed on the ITC benefit to eligible home-buyers to the tune of Rs. 2,02,53,991/-, which exceeds the computed profiteered amount of Rs. 1,70,87,844/-. The Tribunal accepted the report of the DGAP after verifying the documents submitted by the respondent showing that the benefit was indeed passed on to home-buyers, including acknowledgment from the complainant. Since the respondent has already paid the profiteered amount to eligible home-buyers, the respondent is not liable to pay any penalty under Section 171 of the CGST Act, 2017. However, the respondent is directed to calculate and pay interest within two months as applicable under Rule 133(3)(b) of the CGST Rules, 2017 - The appeal is disposed of [Read less]

Customs - Confiscation and Redemption Fine for Re-exported Prohibited Goods - Appellant imported miscellaneous goods including prohibited cosmetic items in violation of the Drugs and Cosmetics Act, 1940, along with goods having quantity mis-declarations - Adjudicating authority confiscated the goods under section 119 of the Customs Act, 1962, imposed redemption fine, and granted permission for re-export - Whether confiscation of goods and imposition of redemption fine can be imposed when permission is granted for re-exporting the confiscated goods – HELD - Confiscation under section 111(d) of the Customs Act, 1962, is ma... [Read more]

Customs - Confiscation and Redemption Fine for Re-exported Prohibited Goods - Appellant imported miscellaneous goods including prohibited cosmetic items in violation of the Drugs and Cosmetics Act, 1940, along with goods having quantity mis-declarations - Adjudicating authority confiscated the goods under section 119 of the Customs Act, 1962, imposed redemption fine, and granted permission for re-export - Whether confiscation of goods and imposition of redemption fine can be imposed when permission is granted for re-exporting the confiscated goods – HELD - Confiscation under section 111(d) of the Customs Act, 1962, is mandatory when goods are imported in breach of statutory provisions and become offending goods liable for confiscation - The Supreme Court's interpretation of the word "liable" establishes that both confiscation of goods and imposition of penalty on the concerned person are not discretionary but mandatory. Re-export permission is a sequentially separate administrative process that comes into operation only after the importer redeems the confiscated goods by paying redemption fine. Confiscation is a necessary precedent action before administrative permission for export is granted. The bundling of the re-export permission with the quasi-judicial order does not alter this sequence of events - It is open to the adjudicating authority to impose both redemption fine and penalty when permission is granted for re-exporting the goods. Therefore, imposition of redemption fine on re-export of prohibited goods cannot be faulted - The matter be remanded to the original authority to examine afresh and state the basis of arriving at the revised value before determining the duty, interest, fine, and penalty, following principles of natural justice - The appeal is disposed of [Read less]