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Tripura VAT Act, 2004 - Challenge to show cause notices imposing penalty under repealed Act, Refund of security deposit made by transporter – Petitioner was registered as a taxable transport agent under the Tripura VAT Act, 2004 and had deposited security deposit under the Act - After the TVAT Act was repealed and replaced by the Tripura GST Act, 2017, the petitioner applied for refund of the security deposit - Dept issued show cause notices proposing to impose penalty under the repealed TVAT Act for the periods from September 2013 to March 2014 and 2014-15 to 2017-18 - Whether the tax authorities can impose penalty unde... [Read more]

Tripura VAT Act, 2004 - Challenge to show cause notices imposing penalty under repealed Act, Refund of security deposit made by transporter – Petitioner was registered as a taxable transport agent under the Tripura VAT Act, 2004 and had deposited security deposit under the Act - After the TVAT Act was repealed and replaced by the Tripura GST Act, 2017, the petitioner applied for refund of the security deposit - Dept issued show cause notices proposing to impose penalty under the repealed TVAT Act for the periods from September 2013 to March 2014 and 2014-15 to 2017-18 - Whether the tax authorities can impose penalty under the repealed TVAT Act long after the alleged violations – HELD - The action of the tax authorities in issuing show cause notices in 2023 for alleged violations between 2013-2018 and passing orders imposing tax and penalty is arbitrary, illegal, without jurisdiction, and mala fide. The penalty provision under Section 77 of the TVAT Act should be interpreted strictly, and penalty can only be imposed if the transporter had acted deliberately in defiance of law or was guilty of contumacious or dishonest conduct. The tax authorities had mechanically imposed the 150% penalty without any such determination. Further, since the TVAT Rules required a dealer to preserve records only for 5 years, a transporter cannot be put in a worse position and subjected to penalty notices long after this period. The actions of the tax authorities were contrary to the intention of the legislature - Since no security deposit is required for a transporter to be registered under the TSGST Act, 2017 the tax authorities are bound to refund the security deposit to the petitioner. The tax authorities are directed to refund the security deposit with 7% interest from the date of the petitioner's application – The writ petitions are allowed [Read less]

Service Tax - Manpower supply, Partial Reverse Charge Mechanism - Appellant was utilizing the services of various manpower suppliers who were providing labour for carrying out various activities in the appellant's company – Dept case that the manpower suppliers were not registered with the department and did not pay Service Tax - Department issued a Show Cause Notice proposing to demand Service Tax from the appellant under the partial Reverse Charge Mechanism (RCM) for the period from July 2012 to March 2015, along with interest and penalties - Whether the services provided by the independent contractors to the appellant... [Read more]

Service Tax - Manpower supply, Partial Reverse Charge Mechanism - Appellant was utilizing the services of various manpower suppliers who were providing labour for carrying out various activities in the appellant's company – Dept case that the manpower suppliers were not registered with the department and did not pay Service Tax - Department issued a Show Cause Notice proposing to demand Service Tax from the appellant under the partial Reverse Charge Mechanism (RCM) for the period from July 2012 to March 2015, along with interest and penalties - Whether the services provided by the independent contractors to the appellant constitute 'supply of manpower', thereby making the appellant liable to pay Service Tax under the partial RCM – HELD - The test for determining the relationship is a multi-factor test, which includes factors such as the level of control and supervision, the integration of the workers within the employer's business, the power to select, appoint and dismiss the workers, the provision of equipment, and the flexibility and autonomy enjoyed by the workers. The Department did not examine the true nature of the relationship between the parties and relied solely on assumptions and presumptions - The burden of proof to establish the taxability of the services is on the Revenue, and the Department has not discharged this burden - The Department failed to establish the taxability of the services under the partial RCM – The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Place of provision of service, Intermediary service – Appellant was engaged in the manufacture of valves and acted as an authorized distributor/agent for foreign entity to sell their goods in India and received commission for such services – Demand of service tax alleging that the commission received by the appellant was taxable as 'intermediary service' under the Place of Provision of Service Rules, 2012 (POPS Rules) - Whether the service provided by the appellant is 'intermediary service' and chargeable to service tax - HELD - The essence of the contracts between the appellant and foreign entities was t... [Read more]

Service Tax - Place of provision of service, Intermediary service – Appellant was engaged in the manufacture of valves and acted as an authorized distributor/agent for foreign entity to sell their goods in India and received commission for such services – Demand of service tax alleging that the commission received by the appellant was taxable as 'intermediary service' under the Place of Provision of Service Rules, 2012 (POPS Rules) - Whether the service provided by the appellant is 'intermediary service' and chargeable to service tax - HELD - The essence of the contracts between the appellant and foreign entities was that the appellant was facilitating the sale of goods by foreign entities to Indian buyers. During the relevant period, the definition of 'intermediary' under Rule 2(f) of the POPS Rules did not cover the facilitation of the supply of goods between two parties. The default position under Rule 3 of the POPS Rules, that the place of provision of service is the place of the service recipient, would apply in this case. Since the services were rendered to entities outside India, these services were not exigible to service tax under the Finance Act, 1994, which had no extraterritorial jurisdiction - The impugned order confirming the demand of service tax with interest and imposition of penalties is set aside and the appeal is allowed [Read less]

Central Excise - Cenvat credit on construction services pertaining to modernization, renovation or repair of the factory - Revenue case that the appellant had wrongly availed Cenvat credit on "Outward Freight Service" and "Construction Services" during the period from January 2010 to March 2014 - Whether the appellant was eligible for the Cenvat credit availed on "Construction Services" for the period from January 2010 to December 2011 – HELD - The construction activity carried out by the Appellant was explained in response to the SCN related to modernization, renovation or repair of the factory. As per the exclusion cla... [Read more]

Central Excise - Cenvat credit on construction services pertaining to modernization, renovation or repair of the factory - Revenue case that the appellant had wrongly availed Cenvat credit on "Outward Freight Service" and "Construction Services" during the period from January 2010 to March 2014 - Whether the appellant was eligible for the Cenvat credit availed on "Construction Services" for the period from January 2010 to December 2011 – HELD - The construction activity carried out by the Appellant was explained in response to the SCN related to modernization, renovation or repair of the factory. As per the exclusion clause in Rule 2(l) of the Cenvat Credit Rules, 2004, the credit on construction services is not eligible as long as the construction of a building or a civil structure or a part thereof is involved. The Tribunal did not find any merit in the appellant's arguments and dismissed this part of the appeal - The appeal insofar as the grounds relating to ‘construction service’ are accordingly dismissed. However, the impugned order to the extent of denial of credit for service tax on the payment of GTA outward transportation service is set aside – The appeal is partly allowed - Whether the appellant was eligible for the Cenvat credit availed on "Outward Transportation Services" during the period from June 2011 to March 2014 – HELD - The Chennai Bench had earlier ruled in favor of the appellant on this issue, following the judgment of the Larger Bench of the Tribunal in the case of The Ramco Cements Vs. CCE Pondicherry. Accordingly, the Tribunal set aside the impugned order to the extent of denial of credit for service tax on the payment of GTA outward transportation service and allowed this part of the appeal. [Read less]

Customs – Benefit of Exemption Notification Aircraft and spare-parts, Non-Scheduled Air Transport Service, Suppression of Facts, Extended Period of Limitation - Appellant imported an aircraft and its spare parts claiming the benefit of Exemption Notification No. 21/2002-Cus. and Notification No. 6/2006-CE. The DR) issued a show cause notice alleging that the appellant had misused the Exemption Notification by not using the aircraft for the intended purpose of non-scheduled operations and instead allowing it to be used by the promoters and their family members - The DRI also alleged that the spare parts imported were not ... [Read more]

Customs – Benefit of Exemption Notification Aircraft and spare-parts, Non-Scheduled Air Transport Service, Suppression of Facts, Extended Period of Limitation - Appellant imported an aircraft and its spare parts claiming the benefit of Exemption Notification No. 21/2002-Cus. and Notification No. 6/2006-CE. The DR) issued a show cause notice alleging that the appellant had misused the Exemption Notification by not using the aircraft for the intended purpose of non-scheduled operations and instead allowing it to be used by the promoters and their family members - The DRI also alleged that the spare parts imported were not used for repair or maintenance under the Exemption Notification, and the appellant was not a 'dedicated company' eligible to claim the benefit under the Exemption Notification - Whether the appellant had violated the conditions of the Exemption Notification by not using the aircraft for the intended purpose of non-scheduled operations – HELD - The Delhi High Court in Commissioner of Customs (Preventive), New Delhi vs. Global Vectra Helicorp Ltd. and the Larger Bench of the Tribunal in VRL Logistics vs. Commissioner of Customs held that a non-scheduled (passenger) operator can carry out charter services, and there is no requirement of publication of tariff. The appellant's Memorandum of Association and Articles of Association clearly show that one of the principal objectives of the company is the operation of air transport services, and the appellant could provide charter services to its group companies as such operations were carried out against remuneration. Therefore, the appellant had not violated the conditions of the Exemption Notification - The impugned order is set aside and the appeal is allowed - Whether the extended period of limitation under section 28(4) of the Customs Act could have been invoked in the present case – HELD - For invoking the extended period of limitation, there must be a deliberate attempt to evade payment of duty, and mere suppression of facts is not enough. In the present case, the Additional Director General did not make any finding that the appellant had suppressed information with the intention to evade payment of duty. Therefore, the extended period of limitation could not have been invoked. [Read less]

Service Tax - Bundle service, Service tax on advances - Appellant is engaged in providing maintenance and repair services. The department raised a demand for service tax on various grounds including non-payment of tax on bundle services, non-payment of tax on advances received, irregular availment of CENVAT credit, and non-payment of tax on legal services under reverse charge mechanism - Whether the appellant is liable to pay service tax on the amount received from clients towards electricity charges, gas charges, air conditioning charges etc. as part of bundle service - HELD - The appellant is not liable to pay service ta... [Read more]

Service Tax - Bundle service, Service tax on advances - Appellant is engaged in providing maintenance and repair services. The department raised a demand for service tax on various grounds including non-payment of tax on bundle services, non-payment of tax on advances received, irregular availment of CENVAT credit, and non-payment of tax on legal services under reverse charge mechanism - Whether the appellant is liable to pay service tax on the amount received from clients towards electricity charges, gas charges, air conditioning charges etc. as part of bundle service - HELD - The appellant is not liable to pay service tax on such amounts as it was acting as a pure agent in collecting these reimbursements from the clients. The appellant submitted invoices and a CA certificate to substantiate that the reimbursements were lower than the actual amounts paid. Further, the amounts received by the appellant were in the nature of refundable loans based on the loan agreements and bank statements submitted by the appellant. No service tax is payable on such refundable loans - The disallowance of CENVAT credit to the extent which the appellant had already discharged along with interest - The demand of service tax on bundle services and advances, and the penalties are set aside. The demand of service tax on legal services under reverse charge mechanism and the disallowance of CENVAT credit to the extent already discharged by the appellant is upheld – The appeal is partly allowed [Read less]

Central Excise - Electricity generation and sale – Appellant availed CENVAT credit on inputs and input services used in its captive power plant. This power was partly consumed in the appellant's factory, partly transferred to its sister concerns, and partly sold to the State Electricity Board. The department objected to the availment of CENVAT credit for the portion of electricity that was wheeled out to the sister concerns and sold to the State Electricity Board - Whether interest could be charged under Section 11AA of the Central Excise Act read with Rule 14 of the CENVAT Credit Rules, 2004 on the CENVAT credit availed... [Read more]

Central Excise - Electricity generation and sale – Appellant availed CENVAT credit on inputs and input services used in its captive power plant. This power was partly consumed in the appellant's factory, partly transferred to its sister concerns, and partly sold to the State Electricity Board. The department objected to the availment of CENVAT credit for the portion of electricity that was wheeled out to the sister concerns and sold to the State Electricity Board - Whether interest could be charged under Section 11AA of the Central Excise Act read with Rule 14 of the CENVAT Credit Rules, 2004 on the CENVAT credit availed by the appellant towards the electricity sold to the State Electricity Board – HELD - The show cause notice did not give any reason as to why interest is recoverable under Section 11AA. It merely alleged that the credit was wrongly availed in contravention of the rules. However, the appellant had reversed the CENVAT credit attributable to the electricity sold to the State Electricity Board on a monthly basis prior to the issuance of the SCN. Thus, the credit was not wrongly availed but was voluntarily reversed, which amounts to non-availing of credit. The Department did not specifically allege any violation of Rule 6 of the CENVAT Credit Rules, 2004 in the show cause notice to justify the levy of interest. Therefore, the demand of interest is set aside – The appeal is allowed - Whether penalty could be imposed on the appellant under Rule 15(1) of the CENVAT Credit Rules, 2004 on the CENVAT credit availed towards the electricity sold to the State Electricity Board – HELD - Since the appellant had reversed the CENVAT credit attributable to the electricity sold to the State Electricity Board, it amounted to non-availing of credit. The Supreme Court and the Tribunal have held that reversal of credit means the party did not avail the input service credit. Therefore, Rule 15(1), which deals with wrongful availing or utilization of CENVAT credit, could not be invoked. Accordingly, the penalty imposed on the appellant is set aside. [Read less]

GST - SEZ unit - Refund of unutilized input tax credit – Rejection of refund applications were rejected by the respondent authorities on the ground that the supplier of goods or services can file a refund claim, and not the recipient-SEZ unit - Whether the SEZ unit is entitled to claim a refund of the unutilized ITC under the GST law – HELD - The Gujarat High Court, in the case of Britannia Industries Ltd. v. Union of India, had held that an SEZ unit is entitled to claim a refund of the unutilized ITC, as exports are made without payment of tax under the LUT. The Supreme Court had also disposed of a case challenging th... [Read more]

GST - SEZ unit - Refund of unutilized input tax credit – Rejection of refund applications were rejected by the respondent authorities on the ground that the supplier of goods or services can file a refund claim, and not the recipient-SEZ unit - Whether the SEZ unit is entitled to claim a refund of the unutilized ITC under the GST law – HELD - The Gujarat High Court, in the case of Britannia Industries Ltd. v. Union of India, had held that an SEZ unit is entitled to claim a refund of the unutilized ITC, as exports are made without payment of tax under the LUT. The Supreme Court had also disposed of a case challenging the Gujarat High Court's decision, keeping the question of law open - The law declared by the Gujarat High Court in the Britannia Industries case is binding on the authorities in the present case, until a contrary decision is given by any other High Court. Therefore, the respondent authorities were bound to consider the petitioner's refund applications in light of the Britannia Industries judgment - the impugned orders rejecting the petitioner's refund applications is quashed and the matter is remanded back to the respondent to pass fresh orders after examining whether the services in question were for authorized operations as endorsed by the specified officer of the SEZ - The petition is partly allowed [Read less]

Central Excise - Job Work, Marketability, Notification No. 214/86-CE – Appellant manufactured side pillars and door pillars under job work and cleared the same to M/s Bombardier (raw material supplier) without payment of Central Excise duty. M/s Bombardier had filed a declaration under Notification No. 214/86-CE, stating that the goods received from the appellant were used in their factory for the manufacture of final products - Dept held that M/s Bombardier had not disclosed the process involved in the job work to the Central Excise Department, with a view to evading duty of excise, as they were aware that the process c... [Read more]

Central Excise - Job Work, Marketability, Notification No. 214/86-CE – Appellant manufactured side pillars and door pillars under job work and cleared the same to M/s Bombardier (raw material supplier) without payment of Central Excise duty. M/s Bombardier had filed a declaration under Notification No. 214/86-CE, stating that the goods received from the appellant were used in their factory for the manufacture of final products - Dept held that M/s Bombardier had not disclosed the process involved in the job work to the Central Excise Department, with a view to evading duty of excise, as they were aware that the process carried out in job work amounted to manufacture and duty was payable on the goods - Whether the door pillars/side pillars manufactured by the appellant were excisable goods and the appellant was liable to pay the Central Excise duty – HELD - The door pillars/side pillars manufactured by the appellant were not finished goods capable of being marketed, as they were subjected to further manufacturing process by Bombardier for supply to the Delhi Metro. The raw material supplied by Bombardier on the job work challan did not belong to the appellant, and the processed material/goods also did not belong to the appellant. The appellant had received only job work charges from Bombardier - The job worker is not liable to pay the duty and the duty liability is of the raw material supplier who had furnished the undertaking under Notification No. 214/86-CE – Further, the "excisable goods" definition under Section 2(d) of the Central Excise Act, 1944 requires the goods to be "capable of being bought and sold for a consideration and such goods shall be deemed to be marketable." In the present case, the door pillars/side pillars manufactured by the appellant were not capable of being bought and sold and had no independent marketability - the demand of duty is not sustainable and the imposition of penalty would also not sustain – The impugned order is set aside and the appeal is allowed [Read less]

Customs - Classification of mixture of Liquefied Petroleum Gas (LPG) – Butane, Eligibility for the exemption benefits under Customs Notification No. 21/2002 and Central Excise Notification No. 4/2005 - The goods were provisionally assessed and classified under CTH 2711 1300 as "Butane" - Appellant filed a refund claim seeking classification under CTH 2711 1900 as "Others" to avail the benefit of exemptions under Customs Notification No. 21/2002 and Central Excise Notification No. 4/2005. The Adjudicating Authority as well as the Commissioner (Appeals) upheld the classification under CTH 2711 1300 and denied the exemption... [Read more]

Customs - Classification of mixture of Liquefied Petroleum Gas (LPG) – Butane, Eligibility for the exemption benefits under Customs Notification No. 21/2002 and Central Excise Notification No. 4/2005 - The goods were provisionally assessed and classified under CTH 2711 1300 as "Butane" - Appellant filed a refund claim seeking classification under CTH 2711 1900 as "Others" to avail the benefit of exemptions under Customs Notification No. 21/2002 and Central Excise Notification No. 4/2005. The Adjudicating Authority as well as the Commissioner (Appeals) upheld the classification under CTH 2711 1300 and denied the exemption benefits - Whether the imported goods should be classified under CTH 2711 1900 as "Others" or under CTH 2711 1300 as "Butane" – HELD - The imported goods were indeed a mixture of Propane and Butane, with Butane being the predominant component at up to 98%. The goods were described on the B/E and relevant documents as "LPG-Butane". The lower authorities were right in conclusion that at the correct classification was under CTH 2711 1300 as "Butane", and not under CTH 2711 1900 as "Others" - the exemption notifications were amended vide Notification No. 37/2005-Customs and Notification No. 18/2005-Central Excise, which included "Liquefied Petroleum and Butane mixture, Liquefied Propane, Liquefied Butane" in the exemption, but these amendments were effective from 02.05.2005. Since the goods in the present case were imported and cleared for home consumption prior to 02.05.2005, the appellant was not eligible for the exemption benefits - The classification of the imported goods under CTH 2711 1300 as "Butane" and the denial of exemption benefits for the period prior to 02.05.2005 is upheld – The appeal is dismissed [Read less]

Service tax on consultancy services for construction of railway siding for private company - Whether the services received by the appellant from the contractor for construction of the railway siding are exempt from service tax on the ground that the railway siding is being constructed for a public sector undertaking – HELD - The issue is no longer res integra and is covered by the previous decisions of the Tribunal in the cases of Nabha Power Ltd. and Konkan Railway Corporation Ltd. - The definition of "Railway" under the Finance Act, 1994 does not make any distinction between public and private railways. Even though the... [Read more]

Service tax on consultancy services for construction of railway siding for private company - Whether the services received by the appellant from the contractor for construction of the railway siding are exempt from service tax on the ground that the railway siding is being constructed for a public sector undertaking – HELD - The issue is no longer res integra and is covered by the previous decisions of the Tribunal in the cases of Nabha Power Ltd. and Konkan Railway Corporation Ltd. - The definition of "Railway" under the Finance Act, 1994 does not make any distinction between public and private railways. Even though the railway siding was constructed for use by a public sector undertaking, MPPGCL, it would still be covered under the exemption from service tax as the exclusion of "railways" from the ambit of service tax was not restricted to only public railways - The services received by them from the contractor for the construction of the railway siding are exempt from service tax – The appeal is allowed [Read less]

Service Tax on Mobilization Advances, Point of Taxation Rules - Whether the mobilization advances received by the appellant in the year 2009-2010 were taxable under Service Tax – HELD - The 'Point of Taxation Rules 2011' introduced vide Notification No. 18/2011-ST dated 01.03.2011 provided that the date of receipt of mobilization advances cannot be considered as the date for provision of any taxable Service, nor such amount would be considered as consideration towards any taxable service during the material time - The Tribunal in the decisions in Gammon India Ltd. Vs CST Mumbai and Thermax Instrumentation Ltd. Vs CCE, ha... [Read more]

Service Tax on Mobilization Advances, Point of Taxation Rules - Whether the mobilization advances received by the appellant in the year 2009-2010 were taxable under Service Tax – HELD - The 'Point of Taxation Rules 2011' introduced vide Notification No. 18/2011-ST dated 01.03.2011 provided that the date of receipt of mobilization advances cannot be considered as the date for provision of any taxable Service, nor such amount would be considered as consideration towards any taxable service during the material time - The Tribunal in the decisions in Gammon India Ltd. Vs CST Mumbai and Thermax Instrumentation Ltd. Vs CCE, has held that the mobilization advances were in the nature of a deposit or an earnest money, and not towards the value of services provided. The advances were proportionately transferred to the sale/consideration of service in the books as and when the invoices were raised on the customers. Therefore, the mobilization advances were not taxable during the relevant period - The order of the Commissioner is not sustainable and set aside - The appeal filed by the appellant is allowed [Read less]

Central Excise – Manufacture of pig iron – Allegation of clandestine clearance – Demand of duty – Appellant is a public limited company engaged in manufacture of pig iron – After audit, department issued show cause notice to Appellant by proposing demand of excise duty on account of alleged clandestine production and clearance of pig iron – Adjudicating authority confirmed demand as proposed in show cause notice – Whether department had established allegation of clandestine production and clearance of pig iron against Appellant with sufficient evidence – HELD – Solely on basis of input-output ratio declar... [Read more]

Central Excise – Manufacture of pig iron – Allegation of clandestine clearance – Demand of duty – Appellant is a public limited company engaged in manufacture of pig iron – After audit, department issued show cause notice to Appellant by proposing demand of excise duty on account of alleged clandestine production and clearance of pig iron – Adjudicating authority confirmed demand as proposed in show cause notice – Whether department had established allegation of clandestine production and clearance of pig iron against Appellant with sufficient evidence – HELD – Solely on basis of input-output ratio declared by Appellant in their ER-5 returns, authorities have alleged that Appellant had suppressed production and clearance of pig iron during disputed period. It is a settled legal principle that demand based on allegation of clandestine removal cannot be sustained solely on basis of input-output ratios, in absence of any corroborative or direct evidence. Department had failed to bring any corroborative evidence to substantiate allegation of clandestine clearance. Demand confirmed solely on basis of input-output ratio declared by Appellant in ER-5 returns is not sustainable and hence, it is set aside – Appeal allowed [Read less]

Central Excise – Demand of duty – Bar of limitation – Appellant is engaged in manufacture of Catalytic Converter – During relevant period, Appellant was availing benefit of retention of 50% of sales tax collected in lieu of capital subsidy under deferment scheme – Department issued show cause notice proposing demand of central excise duty on amount retained by Appellant, by invoking extended period of limitation – Adjudicating Authority confirmed demand of duty – Whether demand confirmed against Appellant is barred by limitation or not – HELD – Though on merits, the issue is against Appellant, but on limi... [Read more]

Central Excise – Demand of duty – Bar of limitation – Appellant is engaged in manufacture of Catalytic Converter – During relevant period, Appellant was availing benefit of retention of 50% of sales tax collected in lieu of capital subsidy under deferment scheme – Department issued show cause notice proposing demand of central excise duty on amount retained by Appellant, by invoking extended period of limitation – Adjudicating Authority confirmed demand of duty – Whether demand confirmed against Appellant is barred by limitation or not – HELD – Though on merits, the issue is against Appellant, but on limitation, Appellant is entitled to benefits, because entire demand is barred by limitation. Department had failed to bring on record any evidence to show that Appellant had suppressed material facts from department with intent to evade payment of duty. Show cause notice was issued on basis of audit. It is a settled principle of law that extended period of limitation cannot be invoked, when demand proposed is arising out of audit proceedings. Invoking of extended period is not justified in present case. Entire demand being barred by limitation is set aside – Appeals allowed [Read less]

Central Excise - Reimbursement of incentive/grant of VAT/CST by state government, Inclusion of reimbursement amount in assessable value uitation period for issue of show cause notice - Appellant received an amount from the State Government under the Industrial Investment and Promotion Policy. The revenue authorities contended that this amount should be included in the assessable value under Section 4 of the Central Excise Act, 1944, as the appellant had not included it in their ER-I returns, thereby suppressing the facts to evade duty - Whether the reimbursement of incentive/grant of VAT/CST by the State Government to the ... [Read more]

Central Excise - Reimbursement of incentive/grant of VAT/CST by state government, Inclusion of reimbursement amount in assessable value uitation period for issue of show cause notice - Appellant received an amount from the State Government under the Industrial Investment and Promotion Policy. The revenue authorities contended that this amount should be included in the assessable value under Section 4 of the Central Excise Act, 1944, as the appellant had not included it in their ER-I returns, thereby suppressing the facts to evade duty - Whether the reimbursement of incentive/grant of VAT/CST by the State Government to the appellant is liable to be included in the assessable value under Section 4 of the CEA, 1944 - HELD - The amount of subsidy/incentive under the promotion policy is not an additional consideration and does not affect the selling price of the goods. The VAT/CST was actually paid by the appellant, and the reimbursement by the State government was in the nature of a capital subsidy or incentive, which cannot be included in the assessable value - the reimbursement of incentive / grant of VAT / CST by the State Government to the appellant is not liable to be included in the assessable value. Since, the amount of incentive / grant is not liable to be included in the assessable value, there is no suppression of fact – The appeal is allowed on merit as well as on the ground of limitation [Read less]

Customs – Section 28 of Customs Act, 1962 – Import of goods – Demand of differential duty – Appellant imported consignments of Rubber Processing Oil vide 15 Bills of entry by classifying same under CTH 2710 1990 – Commissioner classified imported goods under CTH 2707 9900 and confirmed demand of differential duty – Commissioner (Appeals) upheld original order – Whether Revenue could proceed to conform differential duty without issuing a show cause notice under Section 28 of the Act after five years of assessing imported goods provisionally – HELD – As per CBEC manual deals with provisional assessment unde... [Read more]

Customs – Section 28 of Customs Act, 1962 – Import of goods – Demand of differential duty – Appellant imported consignments of Rubber Processing Oil vide 15 Bills of entry by classifying same under CTH 2710 1990 – Commissioner classified imported goods under CTH 2707 9900 and confirmed demand of differential duty – Commissioner (Appeals) upheld original order – Whether Revenue could proceed to conform differential duty without issuing a show cause notice under Section 28 of the Act after five years of assessing imported goods provisionally – HELD – As per CBEC manual deals with provisional assessment under Chapter 7, provisional assessments must be finalised expeditiously well within 6 months. Provisional assessments cannot be finalised without valid reasons. Having not passed an order finalising provisional assessment, Revenue had not made out a case for confirmation of demand under Section 28 of the Act, there too without a show cause notice. Proceedings in impugned case and impugned order do not have force of law and therefore, not maintainable. Order under challenge is set aside – Appeal allowed [Read less]

Customs – Export of iron ore – Redetermination of transaction value – Demand of duty – In all these appeals, different Appellants/exporters, who were engaged in export of iron ore, have come in appeal either in respect of rejection of their refund claims in full or part on finalization of provisional assessment or in view of demand made for payment of additional duty as a consequence to finalization – Whether rejection of transaction value declared by Appellants at time of export is sustainable – HELD – Based on documents furnished by Appellants/exporters, department finalized shipping bills and as a conseque... [Read more]

Customs – Export of iron ore – Redetermination of transaction value – Demand of duty – In all these appeals, different Appellants/exporters, who were engaged in export of iron ore, have come in appeal either in respect of rejection of their refund claims in full or part on finalization of provisional assessment or in view of demand made for payment of additional duty as a consequence to finalization – Whether rejection of transaction value declared by Appellants at time of export is sustainable – HELD – Based on documents furnished by Appellants/exporters, department finalized shipping bills and as a consequence, granted them refunds either in view of excess payment made at time of export in respect of provisionally assessed shipping bills or demanded/adjusted duty short paid. Appellants are aggrieved that said calculation of refunds or demand is based on wrong redetermination of value of export. There is no dispute that Appellants/exporters have realized any amount over and above what had been declared in final invoice. When there is no major deviation in terms of parameters and they being within tolerance limit or accepted norms as agreed upon by both sides in terms of contracts, department could not have rejected transaction value declared by Appellants at time of final assessment and adopted contemporaneous price and worked out the refund based on said re-determined value. Demand raised on account of redetermination of transaction value applying any contemporaneous value would not sustain and to that extent, demand will be set aside. However, insofar as re-computation of refund amount is concerned, matter is remanded back to Original Authority to re-compute total amount of refund admissible – Appeals partly allowed [Read less]

Service Tax – Providing of services – Demand of tax – Appellant is a Public Sector Undertaking engaged in carrying out certain construction works and other related activities in steel plant, power plant, railways, etc. – Department issued show cause notice to Appellant by proposing demand of Service Tax under various categories – Adjudicating Authority confirmed demands as proposed in show cause notice – Whether demand confirmed against Appellant under category of Cargo Handling Service (CHS) is sustainable – HELD – What is essential for this service is that service provided should be relating to or in rela... [Read more]

Service Tax – Providing of services – Demand of tax – Appellant is a Public Sector Undertaking engaged in carrying out certain construction works and other related activities in steel plant, power plant, railways, etc. – Department issued show cause notice to Appellant by proposing demand of Service Tax under various categories – Adjudicating Authority confirmed demands as proposed in show cause notice – Whether demand confirmed against Appellant under category of Cargo Handling Service (CHS) is sustainable – HELD – What is essential for this service is that service provided should be relating to or in relation to cargo handling by a cargo handling agency and said service should be integrally or inseparably connected with handling of cargo without being mere activity of transportation of such cargo. Perusal of agreement does not support view of department that Appellant was a cargo handling agency and on contrary, they were essentially engaged in handling certain materials including transportation thereof within premises of plant itself using their own heavy equipments. Activity carried out by Appellant inside plant was not considered as falling under category of CHS. Demand will not sustain under category of CHS – Appeal partly allowed - Repair service – Tax liability – Whether Adjudicating authority is justified in confirming demand raised under category of Management, Maintenance or Repair service – HELD – From perusal of scope of contract itself, it was very much in nature of maintenance and repair contract. Nature of activities performed by Appellant was akin to maintenance or repair. It was not necessary that Appellant had to undertake both activities of maintenance as well as repairs and if they had either maintained or repaired or both, they will still be covered within scope of service. There is no infirmity in order of adjudicating authority to this extent - Manpower recruitment service – Demand of tax – Whether demand confirmed under category of Manpower Recruitment or Supply Agency service (MRSAS) is sustainable – HELD – Adjudicating authority had examined three contracts while confirming demand raised under this head. MRSAS was brought under tax net w.e.f. 16-6-2005. In view of contracts, services were provided prior to introduction of this levy. Merely because bills were raised later on for this service and payments were received later on, demand cannot be made in respect of three contracts under category of MRSAS. Therefore, to that extent, order of adjudicating authority is liable to be set aside. [Read less]

Service Tax – Section 65(68) and 65(105)(zzp) of Finance Act, 1994 – Demand of tax – Sustainability – Appellant is engaged in trading of chocolates and manufacturing as well as sale of pet foods and related accessories – In pursuance of audit, department issued show cause notice to Appellant by proposing demand of Service Tax under various categories of services – Commissioner confirmed demands as proposed in show cause notice – Whether demand confirmed in impugned order under category of Goods Transport Agency Service is sustainable – HELD – Section 65(105)(zzp) of the Act defines taxable service as any ... [Read more]

Service Tax – Section 65(68) and 65(105)(zzp) of Finance Act, 1994 – Demand of tax – Sustainability – Appellant is engaged in trading of chocolates and manufacturing as well as sale of pet foods and related accessories – In pursuance of audit, department issued show cause notice to Appellant by proposing demand of Service Tax under various categories of services – Commissioner confirmed demands as proposed in show cause notice – Whether demand confirmed in impugned order under category of Goods Transport Agency Service is sustainable – HELD – Section 65(105)(zzp) of the Act defines taxable service as any service provided or to be provided to any person by a Goods Transport Agency in relation to transport of goods by road in goods carriage. Appellant do not avail services from Goods Transport Agency. Since no service had been availed through Goods Transport Agency, no Service Tax is payable. Demand confirmed under this head is not sustainable and hence, it is set aside – Appeal allowed - Manpower recruitment – Whether Appellant is liable to pay Service Tax under category of Management or Business Consultant Service – HELD – Appellant had employed certain employees from its overseas companies on secondment basis. Service may be covered under Section 65(68) of the Act under category of Man Power Recruitment or Supply Agency and not under Management or Business Consultant service as proposed in show cause notice. Since show cause notice had not been issued under category of Man Power Recruitment or Supply Agency, Service Tax cannot confirmed under this category. Demand confirmed under category of Management or Business Consultant service is not sustainable - Whether demand confirmed under category of Scientific and Technical Consultancy Services is sustainable – HELD – As per Section 65(105)(za) of the Act, taxable service means any service provided or to be provided to any person by a scientist or any science and technology institution or organization in relation to scientific or technical consultancy. Appellant is engaged in manufacturing of pet care products and they are not scientific or technocrat or related institution. In these circumstances, order of Commissioner is not sustainable. [Read less]

Service Tax – Section 65(105)(zzzza) of Finance Act, 1994 – Rendering of services to Railways – Entitlement of exemption – Appellant is engaged in providing various taxable services – Investigation conducted revealed that Appellant had not discharged their Service Tax liability – After following due process of law, Commissioner confirmed demand of service tax along with interest – Whether Appellant is entitled to benefit of exemption on Commercial or Industrial construction services provided to Indian Railways – HELD – Appellant had undertaken the work of Flash Butt Welding of Rail Joints in connection wi... [Read more]

Service Tax – Section 65(105)(zzzza) of Finance Act, 1994 – Rendering of services to Railways – Entitlement of exemption – Appellant is engaged in providing various taxable services – Investigation conducted revealed that Appellant had not discharged their Service Tax liability – After following due process of law, Commissioner confirmed demand of service tax along with interest – Whether Appellant is entitled to benefit of exemption on Commercial or Industrial construction services provided to Indian Railways – HELD – Appellant had undertaken the work of Flash Butt Welding of Rail Joints in connection with construction of roadbed. Work of Flash Butt Welding provided to Railways falls within purview of “original works”, which is exempted from levy of Service Tax under Negative as well as Positive/Pre-Negative list regime of service. Demand of service tax confirmed in impugned order on this issue is not sustainable and hence, it is set aside – Appeal disposed of - Providing of works contract services – Tax liability – Whether Appellant is liable to pay Service Tax on Works Contract Services provided in connection with Railways – HELD – Work has been undertaken for construction of railway bridges, which is specifically exempted from purview of works contract services as defined under Section 65(105)(zzzza) of the Act. No service tax is payable by Appellant on Works Contract Services rendered by Appellant to Railways. Demand confirmed in impugned order on this count is set aside - Export of service – Demand of tax – Whether demand confirmed in impugned order under category of Business Auxiliary Services is sustainable – HELD – Appellant was providing market information and customer lead, customer evaluation, shortlisting and advice in relation to product sales and such services were provided to Pandrol UK, an entity based outside India on principal-to-principal basis. Perusal of documentary evidences submitted by Appellant categorically indicate that services rendered by them to Pandrol, UK would qualify as ‘export of service’, which is not liable to of Service Tax. Demand of Service Tax confirmed in impugned order on this count is set aside - Recovery of equipment hire charges – Whether Appellant is liable to pay Service Tax on staff deputation and equipment hire charges recovered from Joint Venture – HELD – Appellant have entered into a Joint Venture Agreement with GPT Infra projects Limited for executing railways infrastructure work from time to time. In terms of arrangement between parties, profit and loss arising out of contract was to be shared equally in ratio of 50% each. Relation between Appellant and Joint Venture was not that of a service provider and service recipient. Activities undertaken by a partner/co-venturer for mutual benefit of partnership/joint venture cannot be regarded as a service rendered by one person to another for consideration and therefore cannot be taxed. Demand confirmed under this head is set aside - Appropriation of amount – Whether Adjudicating authority is justified in appropriation of amount paid by Appellant during investigation – HELD – Amount paid by Appellant during course of investigation had been collected by Appellant from their clients and hence, said amount is liable to be paid to Government account. Appropriation of this amount as done in impugned order is uphold - Deposit of amount – Entitlement of refund – Whether Appellant is entitled to refund of amount deposited against their service tax liability – HELD – Appellant had paid an amount against their service tax liability. Since no service tax is liable to be paid by Appellant, Appellant is eligible for refund of this amount along with applicable interest. [Read less]

Central Excise – Manufacture of sponge iron – Allegation of clandestine clearance – Demand of duty – Appellant is engaged in manufacture of Sponge Iron – Based on third party records, department alleged that Appellant had cleared Sponge Iron clandestinely without payment of Excise Duty – Adjudicating Authority confirmed demand of duty along with interest and penalty – Whether department had established allegation of clandestine clearance of sponge iron against Appellant with sufficient evidence – HELD – Entire proceedings have been initiated solely on basis of search operations conducted at third party’... [Read more]

Central Excise – Manufacture of sponge iron – Allegation of clandestine clearance – Demand of duty – Appellant is engaged in manufacture of Sponge Iron – Based on third party records, department alleged that Appellant had cleared Sponge Iron clandestinely without payment of Excise Duty – Adjudicating Authority confirmed demand of duty along with interest and penalty – Whether department had established allegation of clandestine clearance of sponge iron against Appellant with sufficient evidence – HELD – Entire proceedings have been initiated solely on basis of search operations conducted at third party’s premises. There is nothing to indicate that any search operations were subsequently conducted at premises of Appellant and any incriminating documents were seized from them. There is no record of any shortage/excess being found at Appellant’s premises after conducting any stock verification. Revenue had not come out with any corroborative evidence with regard to movement of vehicles carrying alleged quantity of sponge iron. Allegation about removal of goods clandestinely cannot be construed based on assumptions and presumptions only. Confirmed demand is legally not sustainable. Order under challenge is set aside – Appeals allowed [Read less]

Central Excise - Excise duty on ready-mix concrete (RMC) - Appellant was manufacturing concrete mix at a site for the construction of a workshop-cum-depot for Bangalore Metro Rail Corporation Ltd. (BMRCL) - Dept alleged that the appellant was manufacturing excisable RMC without registration and payment of excise duty - Whether the product manufactured by the appellant was falling under the category of 'Ready Mix Concrete (RMC)', an excisable product under the Central Excise Tariff Act, 1985 – HELD - There is no evidence to show that the goods manufactured by the appellant at the batching plant at the site were capable of... [Read more]

Central Excise - Excise duty on ready-mix concrete (RMC) - Appellant was manufacturing concrete mix at a site for the construction of a workshop-cum-depot for Bangalore Metro Rail Corporation Ltd. (BMRCL) - Dept alleged that the appellant was manufacturing excisable RMC without registration and payment of excise duty - Whether the product manufactured by the appellant was falling under the category of 'Ready Mix Concrete (RMC)', an excisable product under the Central Excise Tariff Act, 1985 – HELD - There is no evidence to show that the goods manufactured by the appellant at the batching plant at the site were capable of producing RMC as specified in the Indian Standard IS 4926. The Circular No. 368/1/98-CX dated 06.01.1998, clarifies that concrete mix conforming to IS 456-1978, produced and used at the site of construction, is exempt from excise duty - As per the notifications in force, the duty on concrete mix manufactured at the site of construction for use in the construction site was exempted. Therefore, the impugned orders confirming the demand of excise duty, interest, and penalty are unsustainable - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Duty Exemption to Mega Power Project - Appellant supplied various steel pipe fittings to several Mega Power Projects claiming exemption from excise duty by availing the benefit of Notification No. 6/2006-CE dated 01.03.2006, which exempts goods supplied against International Competitive Bidding (ICB) for Mega Power Projects, provided that such goods are exempt from customs duty when imported – Denial of exemption, holding that the appellant's goods did not fall under Chapter 9801 of the Customs Tariff, which is a prerequisite for the customs duty exemption under Notification No. 21/2002-Cus dated 01.03.2... [Read more]

Central Excise - Duty Exemption to Mega Power Project - Appellant supplied various steel pipe fittings to several Mega Power Projects claiming exemption from excise duty by availing the benefit of Notification No. 6/2006-CE dated 01.03.2006, which exempts goods supplied against International Competitive Bidding (ICB) for Mega Power Projects, provided that such goods are exempt from customs duty when imported – Denial of exemption, holding that the appellant's goods did not fall under Chapter 9801 of the Customs Tariff, which is a prerequisite for the customs duty exemption under Notification No. 21/2002-Cus dated 01.03.2002 (Sl. No. 400) - Whether the appellant is entitled to the central excise duty exemption under Notification No. 6/2006-CE dated 01.03.2006 (Sl. No. 91) for the supplies made to Mega Power Projects – HELD - The authorities below had adopted an unduly narrow interpretation of Chapter 9801 of the Customs Tariff, which covers not only "machinery" but also instruments, apparatus, appliances, control gear, transmission equipment, auxiliary equipment, and all components or raw materials required for the initial setting up of a power project. The pipe fittings supplied by the appellant, such as tube bends, tees, reducers, and elbows, are essential components for the installation of Mega Power Projects and fall squarely within the ambit of Heading 9801, notwithstanding their classification under Chapter 73 – Further, the fulfilment of the conditions under Notification No. 21/2002-Cus (Sl. No. 400) is not a prerequisite for availing the exemption under Notification No. 6/2006-CE (Sl. No. 91), as long as the goods are cleared under ICB for use in Mega Power Projects and are exempt from customs duty when imported - The impugned order is set aside and the appeal is allowed [Read less]

GST – Rectification of error in Adjudication Order, Payment of fraudulently availed inadmissible Input Tax Credit - The adjudicating authority had found that the petitioner had fraudulently availed inadmissible ITC and issued fake invoices without any underlying supply of goods or services. The petitioner had submitted that it had realized the mistake and rectified its conduct by paying up the disputed ITC amount, but the adjudicating authority failed to consider this stand - Whether the adjudicating authority's failure to consider the petitioner's explanation regarding payment of the disputed ITC amount and rectificatio... [Read more]

GST – Rectification of error in Adjudication Order, Payment of fraudulently availed inadmissible Input Tax Credit - The adjudicating authority had found that the petitioner had fraudulently availed inadmissible ITC and issued fake invoices without any underlying supply of goods or services. The petitioner had submitted that it had realized the mistake and rectified its conduct by paying up the disputed ITC amount, but the adjudicating authority failed to consider this stand - Whether the adjudicating authority's failure to consider the petitioner's explanation regarding payment of the disputed ITC amount and rectification of its conduct amounts to an error apparent on the face of the record, which can be rectified under Section 161 of the CGST Act, 2017 – HELD - The adjudicating authority's failure to consider the petitioner's reply and the stand pressed by the petitioner during the oral hearing was a blatant error, which amounted to an error apparent on the face of the record. Once a particular stand is taken by the noticee/assessee, which is material to the proposed confirmation of demand and raises material issues, the minimum requirement of law is that the adjudicating authority would necessarily deal with it fairly and squarely by offering objective consideration and assigning specific reasons, especially since such authority proposes to reject the explanation and thus visit the noticee with adverse civil consequences - The order rejecting the petitioner's rectification application was also not valid, as the adjudicating authority had failed to consider the petitioner's case and the stand pressed before it. Such non-consideration of the case raised and pressed before the adjudicating authority necessarily involves an element of mistake apparent from the record, which can be rectified under Section 161 of the CGST Act - The order rejecting the petitioner's rectification application and the adjudication order are set aside. The matter was remitted to the adjudicating authority to pass a fresh order after giving a fresh opportunity of hearing to the petitioner – The petition is disposed of [Read less]

Customs – Sanction of refund – Entitlement of interest – Appellant filed a refund claim of amount paid during course of investigation in a matter of duty evasion – Adjudicating authority sanctioned refund – Appellant filed an application claiming interest on refund, which was rejected by Adjudicating authority – Commissioner (Appeals) rejected appeal filed by Appellant – Whether Appellant is entitled to claim interest on refund of deposit made during course of investigation – HELD – Issue of claim of interest on deposits made during investigation is no more res integra, as interest had been granted in a n... [Read more]

Customs – Sanction of refund – Entitlement of interest – Appellant filed a refund claim of amount paid during course of investigation in a matter of duty evasion – Adjudicating authority sanctioned refund – Appellant filed an application claiming interest on refund, which was rejected by Adjudicating authority – Commissioner (Appeals) rejected appeal filed by Appellant – Whether Appellant is entitled to claim interest on refund of deposit made during course of investigation – HELD – Issue of claim of interest on deposits made during investigation is no more res integra, as interest had been granted in a number of cases by High Courts and they have been followed even by this Tribunal. In plethora of cases, Tribunal had directed to disburse interest on refund of deposit @12% p.a. from date of deposit till date of refund/sanction. There is no bar under the law to not file a separate application to claim interest on refund. By following decisions rendered by this Tribunal as well as various High Courts, it is directed that interest shall be paid on deposit made which had been refunded by department. Such interest shall be calculated @12% from date of making deposit till date of repayment – Appeal allowed [Read less]

Service Tax - Incentives/Discounts, Dealer-Manufacturer Relationship - Appellant is an authorized dealer of M/s. Maruti Suzuki India Ltd. (MSIL) and provides maintenance and repair services for light motor vehicles/passenger cars. MSIL provided incentives and trade discounts to the appellant on achievement of certain sales targets, such as wholesale target, accessories sales, and spare parts sales - Whether service tax is leviable on the incentives/discounts and reimbursements extended by MSIL to the appellant – HELD - The issue is no longer res integra and squarely covered by the law laid down by the Tribunal. The deale... [Read more]

Service Tax - Incentives/Discounts, Dealer-Manufacturer Relationship - Appellant is an authorized dealer of M/s. Maruti Suzuki India Ltd. (MSIL) and provides maintenance and repair services for light motor vehicles/passenger cars. MSIL provided incentives and trade discounts to the appellant on achievement of certain sales targets, such as wholesale target, accessories sales, and spare parts sales - Whether service tax is leviable on the incentives/discounts and reimbursements extended by MSIL to the appellant – HELD - The issue is no longer res integra and squarely covered by the law laid down by the Tribunal. The dealership agreement between the manufacturer (MSIL) and the dealer (the appellant) establishes a principal-to-principal relationship, where the dealer purchases the vehicles from the manufacturer and sells them to the end customers. The incentives and discounts are in the nature of trade discounts and form part of the sale price of the vehicles, having no correlation with the services to be rendered by the appellant. The activity of promoting the sale is with respect to the vehicles owned by the appellant, which is incidentally in the interest of both parties - The onward sale of vehicles involves merely a transfer of property in goods, which is excluded from the definition of "service". Therefore, the incentives and discounts cannot be treated as consideration for any service, and consequently, no service tax is leviable thereon - the impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Construction of residential complex for Government body, Work contract service – Appellant was engaged in construction of civil works for various Government Departments and entities - Whether the construction of residential complex for GSPHCL and Gujarat Rajya Pathya Pustak Mandal is liable to service tax – HELD - The construction of residential complexes for government bodies like GSPHCL, which are intended for personal use of government employees, is excluded from the definition of "residential complex" and thus not liable to service tax. The GSPHCL is a 100% government-owned entity, and the residential... [Read more]

Service Tax - Construction of residential complex for Government body, Work contract service – Appellant was engaged in construction of civil works for various Government Departments and entities - Whether the construction of residential complex for GSPHCL and Gujarat Rajya Pathya Pustak Mandal is liable to service tax – HELD - The construction of residential complexes for government bodies like GSPHCL, which are intended for personal use of government employees, is excluded from the definition of "residential complex" and thus not liable to service tax. The GSPHCL is a 100% government-owned entity, and the residential complexes constructed were for the personal use of government employees - the services provided by the appellant to M/s GSPHCL and Gujarat Rajya Pathya Pustak Mandal fall under the category of services provided to the government for personal use and hence, no tax liability arises on the appellant in respect of such services. As far as the period prior to 01.06.2007 is concerned, since the services have been provided to the government, therefore, no service tax liability arises on the appellant even for the period prior to 01.06.2007 - The service tax demand on construction of residential complex is set aside but the demand and penalties on GTA service is upheld – The appeal is partly allowed - Whether the service tax demand on GTA service is valid – HELD - In the instant case, there is no dispute on non-payment of service tax on GTA service under reverse charge mechanism, delayed registration under service tax as well as non-filing of ST-3 returns for the relevant period. Therefore, penalty imposed on the appellant under Section 76 and 77 of the Finance Act, 1994 in respect of GTA Service is upheld. If appellant had paid service tax under RCM at the relevant time, they would have been entitled to cenvat credit of the same. The appellant certainly deserves sympathy on this count as far as imposition of penalty under section 78 is concerned. Therefore, the penalty imposed under section 78 of the Finance Act, 1994 is set aside [Read less]

Central Excise – Invoking of extended period of limitation – Demand of credit – Appellant is engaged in processing of Man Made Fabrics and were availing Cenvat Credit on basis of invoices issued by manufacturers of grey fabrics – Enquiry conducted by department revealed that Appellant had availed Cenvat Credit on strength of invoices issued by fake/non-existing units – Department issued show cause notice, proposing demand of credit, to Appellant by invoking extended period of limitation – Adjudicating authority confirmed demand along with interest and penalty – Commissioner (Appeals) upheld order passed by Ad... [Read more]

Central Excise – Invoking of extended period of limitation – Demand of credit – Appellant is engaged in processing of Man Made Fabrics and were availing Cenvat Credit on basis of invoices issued by manufacturers of grey fabrics – Enquiry conducted by department revealed that Appellant had availed Cenvat Credit on strength of invoices issued by fake/non-existing units – Department issued show cause notice, proposing demand of credit, to Appellant by invoking extended period of limitation – Adjudicating authority confirmed demand along with interest and penalty – Commissioner (Appeals) upheld order passed by Adjudicating Authority – Whether invoking of extended period of limitation is justified in facts and circumstances of case – HELD – During investigation, it was proved that suppliers of inputs were found non-existent and fraud was perpetrated by certain persons involving fake/fictitious identities. Appellant claimed to have purchased duty paid inputs from those entities which were later found to be non-existent. In absence of any allegation that Appellants were parties to fraud, larger period of limitation cannot be applied. Commissioner (Appeals) and Adjudicating Authority have erred in invoking extended period of limitation in confirming demand of Cenvat credit and imposing penalty on Appellant. Impugned order passed by Commissioner (Appeals) is liable to be set aside – Appeals allowed [Read less]

Customs – Regulation 10 of Customs Brokers’ Licensing Regulations, 2018 – Revocation of licence – Forfeiture of security deposit – Directorate General of Analytics and Risk Management (DGARM) of Central Board of Indirect taxes and Customs analysed the data and identified risky exporters involved in execution of fraudulent exports – DGARM also found that exports by these exporters were handled by certain Customs Brokers including Appellant – After following due process of law, Commissioner revoked Customs Broker licence of Appellant and forfeited its security deposit – Whether Appellant has violated provisio... [Read more]

Customs – Regulation 10 of Customs Brokers’ Licensing Regulations, 2018 – Revocation of licence – Forfeiture of security deposit – Directorate General of Analytics and Risk Management (DGARM) of Central Board of Indirect taxes and Customs analysed the data and identified risky exporters involved in execution of fraudulent exports – DGARM also found that exports by these exporters were handled by certain Customs Brokers including Appellant – After following due process of law, Commissioner revoked Customs Broker licence of Appellant and forfeited its security deposit – Whether Appellant has violated provisions of Regulations 10(d), 10 (e) and 10(n) of the Regulations – HELD – Regulation 10(d) of the Regulations mandates Customs Broker to advise his client to follow the Rules and if client fails to do so, to report to Assistant Commissioner. There is nothing in records to prove that Appellant had not advised its clients to follow the Rules. Regulation 10(e) of the Regulations mandates Customs Broker to exercise due diligence in ensuring correctness of information which he provides to client. There is nothing in facts of this case to show that Appellant had imparted any incorrect information to its clients. Regulation 10(n) of the Regulations requires Customs Broker to verify correctness of Importer Exporter Code (IEC) number and Goods and Services Tax Identification Number (GSTIN). Verification of certificates part of obligation under Regulation 10(n) of the Regulations on Customs Broker is fully satisfied as long as it satisfies itself that IEC and GSTIN were issued by concerned officers. Onus on Customs Broker cannot extend to verifying that the officers correctly issued IEC or GSTIN Registration. There is nothing on record to show that either of these documents were fake or forged. There is no evidence that Appellant had violated Regulations 10(d), 10(e) and 10(n) of the Regulations. Impugned order cannot be sustained and needs to be set aside – Appeal allowed [Read less]

GST - Work Contracts executed in VAT Regime, Mismatch between GSTR-3B and Form 26AS, Jurisdiction of GST authorities – Proceedings under Section 73 of the CGST Act alleging mismatch in GSTR-3B and Form 26AS. An ex-parte order was passed levying tax, penalty, and interest on the petitioner - Whether the GST authorities have jurisdiction to initiate proceedings and levy tax, interest, and penalty on the payments received by the petitioner for the work contracts executed prior to the implementation of the GST regime - HELD - The GST authorities have exceeded their jurisdiction in initiating the present proceedings under Sec... [Read more]

GST - Work Contracts executed in VAT Regime, Mismatch between GSTR-3B and Form 26AS, Jurisdiction of GST authorities – Proceedings under Section 73 of the CGST Act alleging mismatch in GSTR-3B and Form 26AS. An ex-parte order was passed levying tax, penalty, and interest on the petitioner - Whether the GST authorities have jurisdiction to initiate proceedings and levy tax, interest, and penalty on the payments received by the petitioner for the work contracts executed prior to the implementation of the GST regime - HELD - The GST authorities have exceeded their jurisdiction in initiating the present proceedings under Section 73 of the GST Act as the work contracts were awarded to the petitioner for the assessment years 2015-16 and 2016-17, which were prior to the implementation of the GST regime. The payments were received at a later stage, after the GST regime was in place. The petitioner had already paid VAT on these payments. Merely because the payments were received after the implementation of the GST regime, the GST authorities cannot assume jurisdiction to levy tax, interest, and penalty on these payments, as they were related to the work contracts executed under the VAT regime. The proper course of action for the GST authorities would have been to inform the assessing authority under the VAT Act, who should have then looked into the matter – There is no provision under the GST Act or Rules which empowers for assuming jurisdiction for levying tax, interest and penalty on the amount received subsequently for no services rendered under the GST regime but for the work executed under the VAT regime - The impugned orders passed by the GST authorities are set aside and the authorities are directed to refund any amount deposited by the petitioner, along with interest – The writ petition is allowed [Read less]

GST - Stock Transfer, Technical mistake in e-way bill, Levy of penalty - While preparing the e-way bill for the transfer of machinery from one unit to another, there was a technical mistake in mentioning the truck number. The goods were intercepted and detained, and penalty proceedings were initiated under Section 129(3) of the CGST Act - Whether the penalty proceedings under Section 129(3) of the CGST Act are sustainable in the present case – HELD - The goods in question were a stock transfer from one unit of the petitioner to another, and there was no element of sale involved. Further, the petitioner is a Government of... [Read more]

GST - Stock Transfer, Technical mistake in e-way bill, Levy of penalty - While preparing the e-way bill for the transfer of machinery from one unit to another, there was a technical mistake in mentioning the truck number. The goods were intercepted and detained, and penalty proceedings were initiated under Section 129(3) of the CGST Act - Whether the penalty proceedings under Section 129(3) of the CGST Act are sustainable in the present case – HELD - The goods in question were a stock transfer from one unit of the petitioner to another, and there was no element of sale involved. Further, the petitioner is a Government of India undertaking owned and controlled by the Ministry of Petroleum and the goods in question were old machinery of the petitioner's unit which were being sent to its another unit as stock transfer accompanying with delivery challan and gate pass, therefore, at the best the same can be said to be technical error exists in the e-way bill without discrepancy in the goods or intent to evade the payment of tax - In cases of technical errors in the e-way bill without any discrepancy in the goods or intent to evade tax, the penalty under Section 129(3) of the CGST Act is not sustainable - The penalty proceedings are set aside and the writ petition is allowed [Read less]

Central Excise – Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – Clearance of goods – Demand of short-paid duty – Dropping of demand – Respondent is engaged in manufacture of rolled products of Aluminium – Revenue alleged that Respondent had undervalued assessable value of their excisable finished product cleared to their sister units – On basis of said allegation, department issued show cause notice proposing to demand short paid excise duty from Respondent – Additional Commissioner confirmed demand as proposed in show cause notice – Commissioner (Appeals) dro... [Read more]

Central Excise – Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – Clearance of goods – Demand of short-paid duty – Dropping of demand – Respondent is engaged in manufacture of rolled products of Aluminium – Revenue alleged that Respondent had undervalued assessable value of their excisable finished product cleared to their sister units – On basis of said allegation, department issued show cause notice proposing to demand short paid excise duty from Respondent – Additional Commissioner confirmed demand as proposed in show cause notice – Commissioner (Appeals) dropped demand confirmed in Order-in-Original – Whether cost of production as per CAS-4 adopted by Respondent has to be arrived at on basis of actual cost of inputs, fabrication, etc. or on basis of notional transfer price adopted by Respondent for its internal profitability assessment of units – HELD – Respondent’s Cas-4 value is based on actual landed cost of materials/inputs as well as actual fabrication cost and other manufacturing costs which have been incurred by Respondent and it does not include any notional values. CAS-4 value arrived at is increased by 10% as per mandate of Rule 8 of the Rules to arrive at assessable value. Revenue seeks to treat notional transfer price as costs to arrive at CAS-4 value. Transfer price recorded in books of accounts of units should not be adopted as cost of raw material for purpose of CAS-4 certificate, in as much as, such price is only a notional value for internal accounting purposes and such notional value is neither recorded nor its impact is captured in financial statements of Respondent. Impugned order passed by lower appellate authority is affirmed – Appeal dismissed [Read less]

Customs - Duty evasion, CESTAT appeal, Pre-deposit requirement - Petitioners were alleged to be involved in the evasion of customs duty by undervaluing the imports of sanitary and bathroom fittings through their companies. Pursuant to the show cause notice, the OIO was passed imposing various penalties on the petitioners. The petitioners filed appeals before the CESTAT, but the same were dismissed for non-compliance of the pre-deposit requirement - Whether the amounts already deposited by the petitioners, including the amounts paid under protest during the investigation, can be considered for the purpose of pre-deposit und... [Read more]

Customs - Duty evasion, CESTAT appeal, Pre-deposit requirement - Petitioners were alleged to be involved in the evasion of customs duty by undervaluing the imports of sanitary and bathroom fittings through their companies. Pursuant to the show cause notice, the OIO was passed imposing various penalties on the petitioners. The petitioners filed appeals before the CESTAT, but the same were dismissed for non-compliance of the pre-deposit requirement - Whether the amounts already deposited by the petitioners, including the amounts paid under protest during the investigation, can be considered for the purpose of pre-deposit under Section 129E of the Customs Act, 1962 – HELD - The amounts deposited by the petitioners, including the amounts paid under protest during the investigation, cannot be completely ignored and a fresh deposit cannot be called for, only to deprive the petitioners of their legal appellate remedy. The amounts paid under protest should be taken into consideration for the purpose of pre-deposit, in the absence of any statutory language to the contrary. The provisions of a taxing statute must be construed strictly and literally, and there is no room for intendment. Since Section 129E of the Customs Act, 1962 does not expressly exclude the amounts deposited prior to the assessment, the same should be considered for the purpose of pre-deposit - the impugned order of the CESTAT is set aside and the Tribunal is directed that the petitioners' appeals be heard on merits, considering the substantial amounts already deposited with the Department – The petition is allowed [Read less]

Customs – Import of goods – Classification – Appellant imported multifunctional audio & video equipment by classifying same under Customs Tariff Item (CTI) 8518 4000 of First Schedule to the Act – Department had objected to classification adopted by Appellant and proposed for re-classification under CTI 8527 9100 by issue of show cause notice – Commissioner re-classified imported goods under CTI 8527 9100 and confirmed demand of differential duty – Whether goods imported by Appellant merits classification under CTI 8518 4000 as claimed by Appellant or under CTI 8527 9100 as determined by Commissioner for decidi... [Read more]

Customs – Import of goods – Classification – Appellant imported multifunctional audio & video equipment by classifying same under Customs Tariff Item (CTI) 8518 4000 of First Schedule to the Act – Department had objected to classification adopted by Appellant and proposed for re-classification under CTI 8527 9100 by issue of show cause notice – Commissioner re-classified imported goods under CTI 8527 9100 and confirmed demand of differential duty – Whether goods imported by Appellant merits classification under CTI 8518 4000 as claimed by Appellant or under CTI 8527 9100 as determined by Commissioner for deciding appropriate levy of customs duty – HELD – Chapter heading 8518 deals with sound amplifiers and loud speakers, which receive input and by changing frequency of sound to be amplified, produce much higher level of output with other features such as equalization, tone-control, mixing effects etc. Chapter heading 8527 deals with products of reception apparatus for radio broadcasting, which have separate mechanism for reception and broadcasting facility. In terms of CBEC clarification, imported products are classifiable with respect to its principal function of amplification of input sounds, i.e. under category of audio frequency amplifiers and electric sound amplifiers under CTI 8518 4000. Impugned goods are classifiable under CTI 8518 4000 of First Schedule to the Act as claimed by Appellant. Impugned order classifying imported goods under heading 8527 9100 does not stand scrutiny of law and therefore is not legally sustainable. Impugned order passed by Commissioner is set aside – Appeal allowed [Read less]

Service Tax – Renting of property – Receipt of lease rent – Demand of tax – Appellant is registered with Service Tax Department for provision of various services – Department issued show cause notice to Appellant by proposing demand of Service Tax in respect of lease rent – Adjudicating Authority confirmed demand as proposed in show cause notice – Commissioner (Appeals) affirmed order passed by Adjudicating Authority – Whether Appellant is liable to pay Service Tax on lease rent amount – HELD – Main contention of Appellant is that commercial lump sum lease rent received against vacant plot was not charg... [Read more]

Service Tax – Renting of property – Receipt of lease rent – Demand of tax – Appellant is registered with Service Tax Department for provision of various services – Department issued show cause notice to Appellant by proposing demand of Service Tax in respect of lease rent – Adjudicating Authority confirmed demand as proposed in show cause notice – Commissioner (Appeals) affirmed order passed by Adjudicating Authority – Whether Appellant is liable to pay Service Tax on lease rent amount – HELD – Main contention of Appellant is that commercial lump sum lease rent received against vacant plot was not chargeable to service tax, as same was nothing but a premium amount received against land. Premium amount received by Appellant was for obtaining lease of immovable property and same was normally termed as capital receipt, whereas, lease rent was made for use and occupation of property leased and same was said to be revenue receipt. Nature of amount received as premium and that received as lease rent is different. Premium amount received by Appellant against allotment of vacant land was not chargeable to service tax, however, lease rent received by Appellant was for service of Renting of Immovable Property and chargeable to service tax. Impugned order is upheld – Appeal dismissed [Read less]

GST – Deposit of amount more than tax demand, Waiver of pre-deposit condition for filing of appeal - Appellate Authority had dismissed the petitioner's appeals solely on the ground of non-compliance with the pre-deposit requirement under Section 107(6)(b) of the CGST Act, 2017, despite the fact that the petitioner had already deposited an amount exceeding the total tax demand - Whether the condition of pre-deposit can be waived considering the fact that the petitioner had already deposited an amount more than the total tax demand – HELD – The amount paid by the petitioner is in excess of the total tax demand assessed... [Read more]

GST – Deposit of amount more than tax demand, Waiver of pre-deposit condition for filing of appeal - Appellate Authority had dismissed the petitioner's appeals solely on the ground of non-compliance with the pre-deposit requirement under Section 107(6)(b) of the CGST Act, 2017, despite the fact that the petitioner had already deposited an amount exceeding the total tax demand - Whether the condition of pre-deposit can be waived considering the fact that the petitioner had already deposited an amount more than the total tax demand – HELD – The amount paid by the petitioner is in excess of the total tax demand assessed by the respondents. Since the revenue is already secured, there is no revenue loss to the Government, and the condition of 10% pre-deposit is exempted in the given factual matrix, as it is a revenue-neutral condition - Since the petitioner had already deposited an amount more than the total tax demand, there is no need to insist on the pre-deposit requirement – The writ petition is disposed of [Read less]

UPVAT Act, 2008 - Reassessment proceedings, Reversal of Input Tax Credit – Petitioner claimed ITC on sales made against Form-I during regular assessment proceedings. The assessment orders accepted the petitioners' claims. Subsequently, the revenue authorities sought to initiate reassessment proceedings to reverse the allowed ITC - Whether the reassessment proceedings initiated by the revenue authorities to reverse the ITC claimed by the petitioners is within jurisdiction under Section 29 of the UP Act, 2008 – HELD - The scope of reassessment proceedings under Section 29 is limited to cases where the "turnover of purcha... [Read more]

UPVAT Act, 2008 - Reassessment proceedings, Reversal of Input Tax Credit – Petitioner claimed ITC on sales made against Form-I during regular assessment proceedings. The assessment orders accepted the petitioners' claims. Subsequently, the revenue authorities sought to initiate reassessment proceedings to reverse the allowed ITC - Whether the reassessment proceedings initiated by the revenue authorities to reverse the ITC claimed by the petitioners is within jurisdiction under Section 29 of the UP Act, 2008 – HELD - The scope of reassessment proceedings under Section 29 is limited to cases where the "turnover of purchase" or "turnover of sale" of the dealer has escaped assessment or has been under-assessed, or where a wrong/lower rate of tax has been applied. The computation of ITC, being an allowance distinct from the assessment of turnover and tax liability, does not fall within the purview of Section 29 - The Assessing Authority's jurisdiction to examine the correctness of ITC is confined to the regular assessment proceedings under Sections 25, 26, and 28 of the UPVAT Act, and not through the reassessment mechanism under Section 29 - The revenue authorities had acted without jurisdiction in initiating the reassessment proceedings solely to reverse the ITC claimed by the petitioners - The impugned reassessment orders is quashed and the petitions are allowed [Read less]

GST – Refund of Unutilized Input Tax Credit, Non-submission of FIRC, Rejection of Refund Claim, Consideration of Chartered Accountant's Certificate - Petitioner had obtained permission from the RBI to operate on a gearing account basis with its other offices worldwide, allowing it to receive foreign currency on exports after making payments in foreign currency - Refund applications under Section 54 of the CGST seeking refund of unutilized input tax credit - Whether the petitioner is entitled to the refund of unutilized input tax credit based on the Chartered Accountant's Certificate submitted by the petitioner – HELD -... [Read more]

GST – Refund of Unutilized Input Tax Credit, Non-submission of FIRC, Rejection of Refund Claim, Consideration of Chartered Accountant's Certificate - Petitioner had obtained permission from the RBI to operate on a gearing account basis with its other offices worldwide, allowing it to receive foreign currency on exports after making payments in foreign currency - Refund applications under Section 54 of the CGST seeking refund of unutilized input tax credit - Whether the petitioner is entitled to the refund of unutilized input tax credit based on the Chartered Accountant's Certificate submitted by the petitioner – HELD - The Chartered Accountant's Certificate submitted by the petitioner should be considered by the authorities as an authentic document, and the authorities cannot reject the refund claim solely on the ground that the petitioner did not submit the FIRC - In the present case, the Chartered Accountant's Certificate clearly shows that the petitioner has received the convertible foreign exchange for the export of services. Therefore, the authorities were not justified in rejecting the refund claim solely on the ground that the petitioner did not submit the FIRC, as required by the Circular No.125/44/2019 - The impugned orders rejecting the petitioner's refund claims are set aside and the respondent authorities are directed to process the refund claims of the petitioner in accordance with the law, without insisting on the submission of FIRC and accepting the Chartered Accountant's Certificate – The petition is allowed [Read less]

GST - Refund of unutilized input tax credit, Production of eBRCs/FIRCs, Intermediary services – Petitioner sought refund of unutilized input tax credit on account of export of services without payment of tax. The respondents initially sanctioned the refund, but later set aside the refund orders and rejected the refund claims, alleging non-production of eBRCs/FIRCs and holding that the services provided by the petitioner were in the nature of 'intermediary services' - Whether the respondents were justified in setting aside the refund orders on the ground of non-production of eBRCs/FIRCs by the petitioner – HELD - The re... [Read more]

GST - Refund of unutilized input tax credit, Production of eBRCs/FIRCs, Intermediary services – Petitioner sought refund of unutilized input tax credit on account of export of services without payment of tax. The respondents initially sanctioned the refund, but later set aside the refund orders and rejected the refund claims, alleging non-production of eBRCs/FIRCs and holding that the services provided by the petitioner were in the nature of 'intermediary services' - Whether the respondents were justified in setting aside the refund orders on the ground of non-production of eBRCs/FIRCs by the petitioner – HELD - The respondents erred in setting aside the refund orders on the ground of non-production of eBRCs/FIRCs, as the material on record clearly showed that the petitioner had produced the eBRCs/FIRCs along with its replies - This Court in its earlier judgment in M/s. Nokia Solutions and Networks India Pvt. Ltd., held that mere non-submission of eBRCs/FIRCs along with the refund application would not be a ground to reject the refund claim, if the details were available on record. The respondents had failed to appreciate the petitioner's submissions and the documentary evidence provided - the impugned Orders and notices are quashed and set aside – The writ petition is allowed [Read less]

GST - Rectification of bonafide errors in GSTR-1 Return - Petitioner filed GSTR-1 returns for the tax period June 2022 to September 2022 and due to an inadvertent error, the petitioner uploaded the GSTIN of supplier in Kerala instead of the Tamil Nadu branch, which resulted in supplier being unable to avail the ITC. After becoming aware of the error, the petitioner requested the respondent authorities to allow rectification of the GSTR-1 returns, but the request was not granted - Whether the petitioner should be permitted to rectify the GSTR-1 returns despite the time limit prescribed under the law having expired - HELD - ... [Read more]

GST - Rectification of bonafide errors in GSTR-1 Return - Petitioner filed GSTR-1 returns for the tax period June 2022 to September 2022 and due to an inadvertent error, the petitioner uploaded the GSTIN of supplier in Kerala instead of the Tamil Nadu branch, which resulted in supplier being unable to avail the ITC. After becoming aware of the error, the petitioner requested the respondent authorities to allow rectification of the GSTR-1 returns, but the request was not granted - Whether the petitioner should be permitted to rectify the GSTR-1 returns despite the time limit prescribed under the law having expired - HELD - In cases where there is a bonafide and inadvertent error in filing GSTR-1 returns and where there is no loss of revenue to the government, the technicalities should not come in the way of the assessee rectifying the error. The GST regime is largely based on the electronic domain and there can be inadvertent human errors, which should be recognized and permitted to be corrected by the department, as long as there is no loss of revenue. The incorrect particulars in GSTR-1 returns can have a cascading effect, not only on the assessee but also on third parties, and therefore, the law should be interpreted in a manner that allows for rectification of such errors - The respondents are directed to permit the petitioner to carry out necessary amendments to the GSTR-1 returns – The petitions are partly allowed [Read less]

GST - Belated claim of input tax credit, Recovery proceedings - Intimation of reversal of input tax credit belatedly beyond the limitation prescribed under Section 16(4) of the CGST Act. As the petitioner failed to reverse the same, the impugned order was passed - Whether the impugned order and the consequent recovery notice in DRC-13 for recovery of interest on the belated availing of the ITC on IGST are valid – HELD - The belated availing of the ITC on IGST has been regularized by the statutory intervention through the insertion of Section 16(5) to the CGST Act. The impugned order and the consequent recovery notice in ... [Read more]

GST - Belated claim of input tax credit, Recovery proceedings - Intimation of reversal of input tax credit belatedly beyond the limitation prescribed under Section 16(4) of the CGST Act. As the petitioner failed to reverse the same, the impugned order was passed - Whether the impugned order and the consequent recovery notice in DRC-13 for recovery of interest on the belated availing of the ITC on IGST are valid – HELD - The belated availing of the ITC on IGST has been regularized by the statutory intervention through the insertion of Section 16(5) to the CGST Act. The impugned order and the consequent recovery notice in DRC-13 are arbitrary and not in accordance with the law and set aside - The Writ Petition is disposed of [Read less]

GST - Refund application, Limitation, COVID-19 pandemic – Petitioner filed several refund applications from May 2023 to January 2025 for the period from January 2019 to March 2022 – Rejection of refund claim on the ground of time-barred - Whether the refund claims filed by the petitioner were barred by limitation - HELD - The petitioner had initially filed a refund application on 9 May 2023, which was well within the period of limitation. The petitioner had filed another refund application on 28 February 2024, which was also within the prescribed period of limitation. However, the respondent had failed to consider thes... [Read more]

GST - Refund application, Limitation, COVID-19 pandemic – Petitioner filed several refund applications from May 2023 to January 2025 for the period from January 2019 to March 2022 – Rejection of refund claim on the ground of time-barred - Whether the refund claims filed by the petitioner were barred by limitation - HELD - The petitioner had initially filed a refund application on 9 May 2023, which was well within the period of limitation. The petitioner had filed another refund application on 28 February 2024, which was also within the prescribed period of limitation. However, the respondent had failed to consider these applications and had erroneously rejected the claims as time-barred - Further, the exclusion of time period from March 2020 to February 2022 due to the COVID-19 pandemic, as per the Notification No. 13/2022, should have been considered by the respondent, which would have made the petitioner's refund claims within the limitation period - The impugned order rejecting the petitioner's refund claims as time-barred is set aside. The respondents are directed to consider the petitioner's refund claims and pass appropriate orders along with applicable interest, without reference to the limitation period – The writ petition is allowed [Read less]

Service Tax – Sections 66 and 73 of Finance Act, 1994 – Distribution of electricity – Demand of tax – Sustainability – Appellant is engaged in distribution of electricity in licensed area of State – Revenue issued show cause notice to Appellant by invoking extended period of limitation as provided under Section 73 of the Act on ground of fraud, willful mis-statement and suppression of facts to escape payment of tax – Adjudicating Authority confirmed demand as proposed in show cause notice along with interest and penalty – Whether demand confirmed in impugned order against Appellant is sustainable – HELD �... [Read more]

Service Tax – Sections 66 and 73 of Finance Act, 1994 – Distribution of electricity – Demand of tax – Sustainability – Appellant is engaged in distribution of electricity in licensed area of State – Revenue issued show cause notice to Appellant by invoking extended period of limitation as provided under Section 73 of the Act on ground of fraud, willful mis-statement and suppression of facts to escape payment of tax – Adjudicating Authority confirmed demand as proposed in show cause notice along with interest and penalty – Whether demand confirmed in impugned order against Appellant is sustainable – HELD – While issuing show cause notice, Revenue had simply gone by income shown in Profit & Loss accounts and Balance Sheet of Appellant and had treated entire income during financial years as income of Appellant. Very fact that transmission and distribution of electricity had been enjoying full exemption right from 2010 had not been considered at all by Revenue while framing allegation and quantifying the demand. Amended Section 66 of the Act clearly point out the legislative intent to grant full waiver of tax for providers of service towards transmission and distribution of electricity. Appellant have taken up the work of bifurcation of demand under 18 different heads, which had been properly certified by Chartered Accountant. Some of incomes like insurance claim received, interest from bank and interest on refund of income tax are outright not liable for any Service Tax payment. Other likely taxable income, but exempted, had been listed by Appellant within 18 categories, which tallies with certificate issued by Chartered Accountant. Revenue had failed to quantify demand properly, which had been done on a lumpsum basis, wherein several non-taxable incomes were also included. Demand confirmed against Appellant is set aside – Appeals allowed [Read less]

No proceedings can be initiated against the recipient without issuing notice to the supplier. Only when the supplier fails to rectify the discrepancy and pay the output tax liability, the recovery proceedings can be initiated against the recipient.

Service Tax – Sections 73(1) and 78 of Finance Act, 1994 – Imposition of penalty – Sustainability – During course of audit, department noticed that Appellant did not discharge service tax liability towards Rent-a-Cab service and Legal Consultancy service under reverse charge mechanism – Pursuant to audit objections, Appellant paid applicable service tax along with interest – Deputy Commissioner imposed penalty under Section 78 of the Act by invoking extended period of limitation under proviso to Section 73(1) of the Act – Commissioner (Appeals) upheld penalty imposed under Section 78 of the Act – Whether pe... [Read more]

Service Tax – Sections 73(1) and 78 of Finance Act, 1994 – Imposition of penalty – Sustainability – During course of audit, department noticed that Appellant did not discharge service tax liability towards Rent-a-Cab service and Legal Consultancy service under reverse charge mechanism – Pursuant to audit objections, Appellant paid applicable service tax along with interest – Deputy Commissioner imposed penalty under Section 78 of the Act by invoking extended period of limitation under proviso to Section 73(1) of the Act – Commissioner (Appeals) upheld penalty imposed under Section 78 of the Act – Whether penalty under Section 78 of the Act can be imposed in respect to service tax discharged by Appellant along with interest prior to issuance of show cause notice – HELD – Alleged short payment of tax had been pointed out during course of audit of records of Appellant. Appellant bonafidely believed that they were not liable to discharge service tax liability on impugned services. Appellant had maintained regular books of accounts and all transactions are recorded in usual manner in ordinary course of business. Appellant had provided all necessary information called for during course of audit and promptly paid service tax along with interest before issuance of show cause notice. Invocation of extended period is not justified in absence of any strong allegation or positive act, pointing towards fraud, collusion, or any willful statement or suppression of facts with intent to evade payment of tax. Since case is being covered by provisions of Section 73(3) of the Act, no penalty can be imposed under Section 78 of the Act. Penalty imposed on Appellant under Section 78 of the Act is unsustainable. Impugned order deserves to be set aside – Appeal allowed [Read less]

Customs – Section 111(o) of Customs Act, 1962 – Import of goods – Order of confiscation – Sustainability – Appellant imported goods against advance authorization scheme – As a consequence of non-compliance of pre-import condition, Commissioner confirmed demand of differential duty and ordered for confiscation of imported goods under Section 111(o) of the Act – Whether order of confiscation of imported goods under Section 111(o) of the Act is sustainable – HELD – As per Section 111(o) of the Act, goods shall be liable for confiscation in event the condition subject to which the goods are exempted from duty... [Read more]

Customs – Section 111(o) of Customs Act, 1962 – Import of goods – Order of confiscation – Sustainability – Appellant imported goods against advance authorization scheme – As a consequence of non-compliance of pre-import condition, Commissioner confirmed demand of differential duty and ordered for confiscation of imported goods under Section 111(o) of the Act – Whether order of confiscation of imported goods under Section 111(o) of the Act is sustainable – HELD – As per Section 111(o) of the Act, goods shall be liable for confiscation in event the condition subject to which the goods are exempted from duty is not observed. Impugned condition inserted vide Notification of October 2017 was omitted vide Notification of January 2019, owing to which, integrated tax was liable to discharged thereon. Joint Director General of Foreign Trade by Trade Notice No.7 of 2023-24 clarified that all imports made under Advance Authorization Scheme which could not meet pre-import condition may be regularized by making payments as prescribed in Customs Circular No.16/2023. Appellant had discharged integrated tax along with interest thereon. Once Appellant pays integrated tax, issue would be regularized. In such circumstances, recourse in impugned order to confiscation under Section 111(o) of the Act as a consequence of imports in breach of condition of ‘pre-import’ does not sustain. Order under challenge is set aside – Appeal allowed [Read less]

GST – Kerala AAR - Manpower Recruitment Services, COVID-19 lockdown payments, GST Applicability – Applicant is a charitable society that provides manpower services to Government Departments and undertakings. During the COVID-19 lockdown, one of service recipient made interim payments to the outsourced workers supplied by the applicant even though the workers did not perform any duties during that period - Whether GST is applicable on the interim payments received by KSESL from VSSC during the COVID-19 lockdown period, when no services were actually rendered by the outsourced workers – HELD - The services provided by ... [Read more]

GST – Kerala AAR - Manpower Recruitment Services, COVID-19 lockdown payments, GST Applicability – Applicant is a charitable society that provides manpower services to Government Departments and undertakings. During the COVID-19 lockdown, one of service recipient made interim payments to the outsourced workers supplied by the applicant even though the workers did not perform any duties during that period - Whether GST is applicable on the interim payments received by KSESL from VSSC during the COVID-19 lockdown period, when no services were actually rendered by the outsourced workers – HELD - The services provided by the applicant fall under the category of Manpower Recruitment Services, which is a taxable supply under the CGST Act. The fact that the entire amount was paid to the employees does not affect the taxability of the supply, as GST is applicable on the total consideration received for manpower services - The Government's directives, which treated the lockdown period as "on duty" and mandated the payment of wages, did not convert the nature of the payments from contractual consideration to ex gratia or compensation. The payments were still linked to the existing employment relationship and the supply of manpower services, and therefore subject to GST - In the absence of any specific GST exemption, the full amount of the interim payments received by the applicant from the service recipient during the lockdown period is subject to GST at the applicable rate – Ordered accordingly [Read less]

GST – Kerala AAR - Applicant conducts two courses- Junior Diploma in Co-operation (JDC) and Higher Diploma in Co-operation and Business Management (HDC & BM) - which are recognized qualifications under the Kerala Co-operative Law for various posts in co-operative societies - Whether the services provided by the applicant in relation to the JDC and HDC & BM courses are eligible for GST exemption under Serial No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 – HELD - The applicant falls under the definition of "educational institution" as per clause (ii) of paragraph 2(y) of the said Notification, as... [Read more]

GST – Kerala AAR - Applicant conducts two courses- Junior Diploma in Co-operation (JDC) and Higher Diploma in Co-operation and Business Management (HDC & BM) - which are recognized qualifications under the Kerala Co-operative Law for various posts in co-operative societies - Whether the services provided by the applicant in relation to the JDC and HDC & BM courses are eligible for GST exemption under Serial No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 – HELD - The applicant falls under the definition of "educational institution" as per clause (ii) of paragraph 2(y) of the said Notification, as the JDC and HDC & BM courses conducted by the applicant are part of a curriculum for obtaining qualifications recognized by the Kerala Co-operative Societies Act and Rules. In the similar situations where institutes impart education leading to qualifications recognized by law have been consistently held eligible for GST exemption under this entry - The services rendered by the applicant to the students enrolled in the HDC & BM and JDC courses are services provided by an educational institution to its students in the course of imparting education, and hence are eligible for full exemption from GST under Serial No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 – Ordered accordingly [Read less]

GST – Kerala AAR - Registration, Applicability of GST on application/examination fees – Applicant is a statutory autonomous institution established to conduct examinations for selection of candidates to various posts in Devaswom Boards across Kerala. The Board collects application/examination fees from candidates and utilizes the funds to meet various expenses related to the recruitment process - Whether the applicant-Kerala Devaswom Recruitment Board is required to obtain GST registration – HELD - The Board is a taxable service provider and is liable to be registered under the CGST Act if the aggregate value of its ... [Read more]

GST – Kerala AAR - Registration, Applicability of GST on application/examination fees – Applicant is a statutory autonomous institution established to conduct examinations for selection of candidates to various posts in Devaswom Boards across Kerala. The Board collects application/examination fees from candidates and utilizes the funds to meet various expenses related to the recruitment process - Whether the applicant-Kerala Devaswom Recruitment Board is required to obtain GST registration – HELD - The Board is a taxable service provider and is liable to be registered under the CGST Act if the aggregate value of its taxable supply of services exceeds the threshold limit prescribed under Section 22 of the CGST Act, or if the Board falls under any of the categories specified under Section 24 of the Act. The services provided by the Board in conducting examinations for recruitment to various posts in the Devaswom Boards constitute a taxable supply under the CGST Act – Ordered accordingly - Whether GST is applicable on the application/examination fees collected from candidates – HELD - The fees collected from candidates represent consideration for the services supplied by the Board in conducting recruitment examinations and related processes. Accordingly, the application/examination fees are chargeable to GST under Section 9 of the CGST Act. The relationship between the payment of fees by candidates and the services rendered by the Board is one of reciprocal obligation- quid pro quo, which brings the transaction within the scope of a supply of service for consideration as contemplated under the CGST Act - Whether the activity of conducting examinations is a taxable supply under GST – HELD - The services provided by the Board to candidates in connection with the recruitment of eligible persons to various posts in the Devaswom Boards constitute a taxable supply under Section 2(108) of the CGST Act, 2017. The Board's activities, though categorized as a "Governmental authority," do not fall under any of the functions entrusted to a Panchayat or a Municipality under the Constitution, and instead the Board is engaged as an independent recruitment service provider. Therefore, the services provided by the Board in conducting examinations are not exempt from GST under the relevant Notification. [Read less]

GST – Kerala AAR - Joint Development Agreement (JDA), GST applicability on landowner, Transfer of development rights (TDR) - Applicant entered into a Joint Development Agreement (JDA) with a landowner for the construction of a residential apartment complex. As per the terms of the JDA, the applicant will construct 39 residential apartments, out of which 11 apartments will constitute the landowner's share - Whether GST is applicable to the landowner's share of constructed residential flats – HELD - The transfer of development rights (TDR) by the landowner to the developer/promoter constitutes a taxable supply under the ... [Read more]

GST – Kerala AAR - Joint Development Agreement (JDA), GST applicability on landowner, Transfer of development rights (TDR) - Applicant entered into a Joint Development Agreement (JDA) with a landowner for the construction of a residential apartment complex. As per the terms of the JDA, the applicant will construct 39 residential apartments, out of which 11 apartments will constitute the landowner's share - Whether GST is applicable to the landowner's share of constructed residential flats – HELD - The transfer of development rights (TDR) by the landowner to the developer/promoter constitutes a taxable supply under the GST law. The construction of the residential apartments, including the landowner's share, by the developer/promoter is also a taxable supply of service. Therefore, GST is applicable to the landowner's share of constructed residential flats - For the construction services provided by the developer/promoter to the landowner, the applicable GST rate is 5% without Input Tax Credit, as per Notification No. 03/2019 dated 29.03.2019. The value of the construction service shall be deemed to be the value of similar apartments sold to independent buyers near the date of transfer of development rights, as per Para 2A of Notification No. 03/2019 - Additionally, the developer/promoter is liable to pay GST at 18% under reverse charge mechanism on the portion of the development rights attributable to the residential apartments that remain un-booked as on the date of issuance of the completion certificate or first occupation, whichever is earlier, as per Notification Nos. 05/2019 and 06/2019 dated 29.03.2019 – Ordered accordingly - GST on Development Rights under RCM – HELD - As per Section 9 of the CGST Act, 2017, read with Notification Nos. 11/2017 & 13/2017 as amended and 04/2019, GST at 18% applies to the transfer of development rights (TDR) by a landowner to a promoter, payable by the promoter under reverse charge. However, TDR used for construction of residential apartments is exempt, except for the portion relating to un-booked units as on the date of completion certificate or first occupation. [Read less]

Goa Value Added Tax Act, 2005 - Validity of Rule 3 of the Green Cess Rules - Green Cess Act, Reassessment, Reasons to believe - Notices under the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 proposing to reassess the petitioners for past assessment years and demanding payment of Green Cess - Petitioners challenged the show cause notices on the grounds that they are merely service providers at the port and do not import or bring the goods causing pollution into the state, and hence cannot be subjected to the Green Cess; and that the power of reassessment is being exercised without any "reason... [Read more]

Goa Value Added Tax Act, 2005 - Validity of Rule 3 of the Green Cess Rules - Green Cess Act, Reassessment, Reasons to believe - Notices under the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 proposing to reassess the petitioners for past assessment years and demanding payment of Green Cess - Petitioners challenged the show cause notices on the grounds that they are merely service providers at the port and do not import or bring the goods causing pollution into the state, and hence cannot be subjected to the Green Cess; and that the power of reassessment is being exercised without any "reasons to believe" and is time-barred - Whether the petitioners, being mere service providers at the port and not the importers/owners of the goods causing pollution, can be subjected to the levy of Green Cess – HELD - The charging Section 4 of the Green Cess Act imposes the cess on "every person carrying out" the activities of handling, utilization, consumption, combustion, transportation or movement of the specified products/substances causing pollution. However, Rule 3(1) of the Rules clearly casts the liability to pay Green Cess on "every person who brings or causes to be brought within the State any product and/or substance at the entry point". The petitioners, being merely service providers at the port and not the importers or owners of the goods causing pollution, do not fall within the ambit of Rule 3(1) and hence cannot be subjected to the Green Cess – Further, the impugned show cause notices for reassessment are invalid as they do not fulfil the jurisdictional pre-condition of communicating the "reasons to believe" that the petitioners' turnover has escaped assessment. The power of reassessment under Section 31 of the GVAT Act, 2005, made applicable to the Green Cess proceedings, can only be exercised if the assessing authority has "reasons to believe" about the escapement of assessment. Mere change of opinion by the authority is not a valid ground to reopen the concluded assessments, and the show cause notices do not disclose any tangible material or grounds for the "reasons to believe". Therefore, the reassessment proceedings initiated through the impugned show cause notices are arbitrary and without jurisdiction - the impugned show cause notices are quashed and set aside, as they are not the persons liable to pay the Green Cess under the Act and Rules. However, the challenge to the validity of Rule 3 of the Green Cess Rules was dismissed – The writ petitions are partly allowed - Whether the delegation of power to the executive under Section 4(2) of the Green Cess Act to frame rules for assessment, levy and collection of cess is excessive and ultra vires the Act – HELD - The delegation of power under Section 4(2) of the Green Cess Act to the executive to frame rules for assessment, levy and collection of cess is not excessive or ultra vires the Act. The Act has provided the basic legislative policy and framework by prescribing the nature of activities on which the cess is to be levied, the maximum rate of cess, and has left the procedural aspects to be dealt with by the Rules. The Rules framed under Section 4(2) have provided the detailed mechanism for assessment, payment, filing of returns etc. by the persons liable to pay the cess. As long as the Rules do not contradict or go beyond the statutory provisions, the delegation of procedural aspects to the executive is permissible and does not suffer from the vice of excessive delegation. [Read less]

GST - Kerala AAR – Applicant is designated as the State Skill Development Mission (SSDM) and conducts various skill development initiatives, including Centers of Excellence (CoEs), accreditation of skill training courses, and skill development programs for other Departments - Whether the share of fees received by KASE from its skill training partners and the fees collected from its own skill training institutes are exempt from GST – HELD - The share of fees received by applicant-KASE from its skill training partners is not eligible for exemption under Notification No. 12/2017-Central Tax (Rate), as the applicant has no... [Read more]

GST - Kerala AAR – Applicant is designated as the State Skill Development Mission (SSDM) and conducts various skill development initiatives, including Centers of Excellence (CoEs), accreditation of skill training courses, and skill development programs for other Departments - Whether the share of fees received by KASE from its skill training partners and the fees collected from its own skill training institutes are exempt from GST – HELD - The share of fees received by applicant-KASE from its skill training partners is not eligible for exemption under Notification No. 12/2017-Central Tax (Rate), as the applicant has not demonstrated that the outsourced training partners are themselves NSDC-approved and that the services are directly linked to NSDC schemes or NSQF-aligned qualifications approved by NCVET. Therefore, the share of fees received from such partners is liable to GST - Regarding the fees collected by applicant from its own training institutes, while the applicant has an MoU with NSDC, it has not provided evidence to establish that the courses offered are in relation to any NSDC scheme or NSQF-aligned qualifications approved by NCVET. Additionally, the courses do not qualify for exemption under Entry 66 of the Notification, as applicant did not demonstrate that the courses are part of a curriculum leading to qualifications recognized by law. Consequently, the fees collected by applicant from its own training institutes are also liable to GST – Ordered accordingly - Whether KASE is eligible to claim input tax credit on expenses incurred using Government grants – HELD - In the absence of specific details regarding the inputs and their use, the Authority is unable to provide a conclusive ruling. However, it is clarified that the source of funds, such as government grants, does not, by itself, restrict ITC eligibility, provided the inputs are used for making taxable supplies and the conditions under Section 16 of the CGST Act are satisfied. [Read less]