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2024 (11) TMI 993
Service tax on handling charges collected by the appellant from their customers of motor vehicle - appellant being a car dealer of Maruti Suzuki Ltd. involved in the selling car on principle to principle basis - appellant submits that the handling charges was collected by the appellant which was subsequently considered as part of the sale price of the car and the appellant have discharged the VAT on such handling charges treating the same as part and parcel of sale price of the car, any amount which is part of the sale of the goods will not attract any service tax.
HELD THAT:- We find that this issue is no longer res-integra in as much as in various judgments, it was held that if the handling charges is included in the sale value of the car and VAT was paid then such handling charges being a part and parcel of the sale value will not be exigible to service tax. See Ganga Automobiles [2023 (10) TMI 355 - CESTAT AHMEDABAD]
It is not in dispute that once the handling charges is part and parcel of the sale price of car and sales tax/VAT thereon has been paid, the same became a part and parcel of the sale value hence will not attract any service tax.
Thus the service tax demand on the handling charges collected during the sale of the car as sale price of the car cannot be levied with service tax.
Whether the handling charges is a part and parcel of the sale value of the goods and VAT was paid? - From the VAT assessment order, it is clear that the handling charges and warranty amount which was not earlier included in the sale value was included for the purpose of VAT assessment and VAT has been paid and thereafter, no VAT amount tax remains to be paid. With the above it is clear that the appellant have paid the VAT amount on the handling charges.
Therefore, the above judgments which are on the facts that the handling charges is a part and parcel of the sale value and the same was suffered the VAT tax, directly applies in the facts of the present case as discussed above.
AR raised point that this VAT assessment order were not presented before the lower authority. Therefore, the same cannot be considered at this stage. In this regard, we are of the view that as per the settled legal position this Tribunal is a final fact finding authority, therefore, considering the VAT assessment order, the demand of service tax is not incorrect. Therefore, the objection of Ld. AR cannot be sustained.
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2024 (11) TMI 992
Classification of Services Provided - services as a steamer agent and a cargo handling agency - whether the services qualify as export of service? - since the service provided by the appellant is partly outside India, the same is covered by the definition of export of service - appellant is engaged in providing service of steamer agent in respect of vessels arriving at Kandla and other ports for discharging imported cargo and loading export cargo - appellant has got themselves registered under the category of steamer agent service covered u/s 65 (105) (i) of Finance Act, 1994, as also taken registration under the category of “Cargo Handling Agency” Service covered u/s 65(105) (zr) of Finance Act, 1994
HELD THAT:- We find that the appellant have carried out the job of segregation and internal shifting of timber logs on behalf of foreign based principals as part of their obligation but also the appellant have sent progress reports of segregation and internal shifting to the service recipient i.e. foreign based principals. Therefore, the progress report is also indeed a part of over all part of important service activity without which the service provided by the appellant would not complete.
From the above sub rule (ii) of Rule 3 of export of service rules, 2005 it is clear that the service falling under sub – clause (zn) and (zr) which are subject matter of the present case, if partly performed outside India it shall be considered as performed outside India. In the present case as discussed above, the progress report was sent to the foreign principals which is the part of the overall service. Hence, the service is partly performed outside India, therefore, it qualifies as export of service in terms of Rule 3 (ii) of Export of Service Rules, 2005.
In the identical facts where the service was performed in India but the reports of the sad service was sent to the foreign service recipient wherein it was held that performance of service not completed until progressive/analysis report delivered to the client. Delivery of report being essential part of service made outside India and used outside India. Such delivery of report to client outside India amounting to part of performance of taxable service outside India.
As relying on SGS India Pvt Ltd [2011 (2) TMI 54 - CESTAT MUMBAI] and B A Research India Ltd. [2009 (11) TMI 213 - CESTAT, AHMEDABAD] we find that since in the present case the service is complete only when the progress report is sent to the foreign service recipient. The service is partly performed outside India. Therefore, it clearly falls under the definition of export of service in terms of Rule 3 (ii) of Export of Service Rules, 2005. It is also not in dispute that against the service provided by the appellant to their foreign principals they have received the payment remittance in convertible foreign exchange. Therefore, there is no doubt that the appellant have provided the export of service. Accordingly, the demand is not sustainable.
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2024 (11) TMI 991
Denial of CENVAT credit - expenses incurred at unregistered branches - Appellant undertakes the services of the ‘Technical Testing & Analysis Service’ from the branches that are performed on the blood samples of the Volunteers obtained during the human trials - IP molecule which is administered to the Volunteers is sometimes mixed with ancillary products. Study of the samples are sent to the Ahmedabad office from where final report is prepared - appellant did not obtain centralised registration for three branches namely Mumbai, Nadiad and Mehsana, they fail to prove that the appellant was paying the Service Tax for the services at Ahmedabad for these branches
HELD THAT:- We find that though the appellant at Ahmedabad did not obtain the centralised registration but the overall business is accounted for at Ahmedabad and depending on the nature of the activity i.e. Technical Testing & Analysis Service, which were performed on the sample of the volunteers obtained during human trials. Since, this nature of activity has to be carried out at different places, but the same is carried out by the appellant at Ahmedabad only.
Therefore, merely because of obtaining the blood samples of volunteers at different places such as Mumbai, Nadiad and Mehsana but the final study of the samples are carried out at Ahmedabad office, where the final analysis report is prepared. For all the activities, as regards the expenses, the Ahmedabad office only making the payment for those expenses. Therefore, all the activities carried out irrespective at different places such as Mumbai, Nadiad and Mehsana, but same are accounted for and carried out from Ahmedabad only. Therefore, there is no reason to deny the credit in the peculiar facts of the present case.
Centralized registration - Revenue's contention that the appellant have not obtained the centralised registration, for this reason Cenvat credit cannot be denied as held in catena of the judgments that for the purpose of availment of Cenvat credit registration is not prerequisite. The only criteria to allow the Cenvat credit on any input service is that the service should be used in or in relation to output service. The service should be tax paid. These criteria is not under dispute. The appellant have centralised accounting at Ahmedabad only. Therefore, even though the part of the activity are carried at different places but for all the activities of different places, the accounting is done at Ahmedabad office only. Therefore, in our considered view there seems to be no reason to deny the Cenvat credit.
This issue has been considered by this Tribunal in the case of Manipal Advertising Services Pvt Ltd [2009 (10) TMI 434 - CESTAT, BANGALORE] wherein the Tribunal held that if a person is discharging service tax liabilities from his registered premises, the benefits of Cenvat Credit on the service tax paid by the service providers cannot be denied to the assesse only on the ground that the said services are in the name of branch offices. There is no dispute that the branch offices are not registered with the Service Tax Authorities and they are not discharging service tax liabilities.
Since, the entire service tax liabilities is of Ahmedabad office, all the activities irrespective carried out at different places, are ultimately attributed to the Ahmedabad office only. Therefore, availment of Cenvat credit at Ahmedabad is absolutely in order and as per the law.
Even though there is no centralised registration at Ahmedabad office but on the fact that all the services even if received at branch offices for same is attributed to the final output service of Ahmedabad. Therefore, in our considered view the Cenvat credit is admissible to the appellant.
Demand on account of difference of taxable income as appearing in the profit and loss account, vis-a-vis taxable value declared in the half yearly ST-3 return - As we find that firstly, merely on the basis of difference between the ST-3 return and books of accounts, the confirmation of demand is not sustainable unless until the Revenue establish that the difference is on account of any service and the nature of service if any performed. Therefore, on this ground itself, the demand of Rs. 1,50,829/- is not sustainable. Further we find that the appellant have provided the reconciliation statement, according to which the appellant paid service tax on the excess amount coming after the reconciliation. Therefore, there is no short payment of service tax. We have perused the reconciliation statement as Annexed-2 of the appeal memo. Accordingly, on this count also demand is not sustainable.
We place reliance on the decision in the case of Chartered Logistics Ltd [2023 (7) TMI 770 - CESTAT AHMEDABAD] dealing with the situation where there is a demand on difference of value shown in books of accounts and ST-3 return.
Merely on the difference between the value mentioned in books of accounts and ST-3 returns, demand of service tax cannot be confirmed.
Demand on the premise of totaling mistake and short payment of service tax to that extent - We find that the appellant have provided the explanation before the first Appellate Authority and as per the statement in Annexed at page No. 19 of the appeal it clearly shows that the appellant have correctly paid service tax on the taxable service and there is no calculation mistake as alleged by the revenue. Therefore, on this ground also the demand is not sustainable.
Demand on the basis of debit notes issued by Wockhardt Ltd the allegation of the department is that the appellant could not provide the proof of payment of service tax to the Government Exchequer. We find that the appellant have submitted that they have paid the service tax during the year 2019 and produced the documents evidence in that respect.
We fail to understand that despite giving this documentary evidence which clearly show the payment of service tax, the Learned Commissioner (Appeals) for no reason discarded such documentary evidence, only on the basis that the same unsigned. It is the submission of the appellant that though they did not pay the service tax immediately upon issuance of debit notes in the month of July,2008. Since, the appellant have received money subsequently from Wockhardt Ltd., thereafter they paid the service tax with the department at the time of receipt of amount. I am convinced with the submission of the appellant which is supported by the documentary evidence. Therefore there was no reason for Learned Commissioner (Appeals) to uphold the demand. Hence, the same is not sustainable.
Invoking extented period of Limitation - We find that the period involved for the present matter is 2008-09 and the show cause notice has been issued on 22.10.2013. Hence, the entire demand is under extended period. In this regard we find that the appellant obtained service tax registration and the department had conducted various audits from the date of registration. The entire data on the basis of which the service tax demand was raised in the present case were retrieved from the existing books of accounts of the appellant. Therefore, there is no suppression of fact or any mala fide intention with intend to evade payment of duty on the part of the appellant. Therefore, in the facts of the present case also hold that the demand is not sustainable on the ground of limitation also.
The demands are not sustainable on merit as well as on limitation.
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2024 (11) TMI 990
Refund claim filled by service receiver - jurisdiction of Mumbai Service Tax authority or Kolkata Service Tax authority to deal with the refund application of the appellant - action of the Deputy Commissioner in returning the refund claimed filed by the Appellants, in terms of Section 103 of Finance Act 1994, as inserted by the Section 159 of the Finance Act, 2016 -
Difference of opinion among members of bench - difference of opinion between learned Member (Technical) and learned Member (Judicial) on the findings pertaining to jurisdiction of Mumbai Service Tax authority or Kolkata Service Tax authority to deal with the refund application of the appellant, filed in terms of Section 103 of the Finance Act, 1994.
Appellants have challenged this action, arguing that since the appellant was registered in the jurisdiction of Deputy Commissioner, Division 9, Service Tax VII, thus they had rightly filed the refund claim in the jurisdiction where they were registered for payment of service tax - Whether the Deputy Commissioner, Division-9, Service Tax-VII, action in returning the refund claim that has been upheld by the Commissioner (Appeals) is to be upheld by the CESTAT as opined by Member (Technical) or is to be set aside as opined by Member (Judicial)?
HELD THAT:- In the present case, due to non-obstante clause in Section 103 (1) of the Act of 1994, the charge of service tax itself and the assessment, if any, stands nullified by the legislated Act of the Parliament and thus, there is no need of ascertaining the fact, as to who would be considered as the jurisdictional proper officer for grant the refund of the service tax amount. In fact, Section 103(2) of the Act of 1994 mandates that refund shall be made of all such service tax, which has been collected, but which would have not been so collected, had sub-section (1) been in full force at all times.
Section 103 of the Act of 1994 is a complete code in itself and it does not mandate for filing of the refund claim at any specified jurisdiction. Once it is admitted that the recipient of the service is eligible to file refund claim, it is beyond the mandate of the law to insist that such claim should be filed with the proper officer, having jurisdiction over the service provider. Section 103(3) of the Act of 1994 also starts with a non-obstante clause and puts only condition that the refund application should be filed within six months. Thus, there is no other condition imposed, as to the specific officer, before whom the refund claim should be filed with.
The appellants in the present case have filed their refund claim before their own jurisdictional Service Tax divisional office, where they used to file the service tax returns. Even Section 11B of the Act of 1944, which has been strongly relied upon in the Interim Order, also does not mandate that the claim should be filed before the service provider's jurisdictional officer alone.
In fact, the principle laid down in Canon India [2021 (3) TMI 384 - SUPREME COURT] would support the appellant's case inasmuch as in the event of any erroneous grant of refund, the proper officer to issue the show cause notice for recovery of such erroneously granted refund would be the jurisdictional officer at the appellant’s end, and not the jurisdictional officer at the service provider’s end.
Thus, as per the reasoning given by the Hon'ble Member (Technical), the jurisdictional officer of the service provider will not have even geographical jurisdiction to issue any show cause notice to the appellants herein. Therefore, the expression ‘the assessing officer’, in the present case, would mean the jurisdictional officer of the appellants, and not that of the service provider. In any case, the appellants would not have any locus standi to file their refund claim before the jurisdictional officer of the service provider, as they are not registered in that jurisdiction.
In the present case, interpretation of the provisions of Section 27 (supra) is not in question and there is no dispute that the appellants have filed the refund claim within 6 months of the Presidential assent to Section 103 of the Act of 1994 and as such, is within the schedule time frame. Thus, recourse cannot be had to the provisions of 1872 Act or the 1963 Act.
The appellant's right to seek refund arose out of an act of the Parliament, by way of granting retrospective exemption, which overrides all assessments and hence, there is no question or need for seeking any re-assessment.
In paragraph 4.32 of the Interim Order, learned Member (Technical) has observed that Section 103 of the Act of 1994 or Section 11B of the Act of 1944, did not permit for filing of the refund claim in multiple jurisdictions. In the present case, it is not the case of the appellants that they wanted to file the claim in multiple jurisdictions. The appellants have in fact, filed the refund claim application only with their jurisdictional officer.
Therefore, this finding is of no relevance in the present context. In fact at the end of this paragraph, it is stated that we have no hesitation in agreeing to the observations made by the Tribunal to the effect that both the jurisdictions cannot refuse to entertain the refund claim filed by the recipient of service. If this be so, then the appellants are correct in filing the claim with their own jurisdiction. It is also stated in the said paragraph that filing of claim in multiple jurisdictions, will amount to double benefit in respect of the same transaction. In the present case, the appellants have filed the claim only in one jurisdiction and in any case, it is not the case of Revenue or of the Adjudicating or First Appellate Authority that the appellants is taking double benefit. Such a remark is unwarranted in the present case.
Thus, in agreement with the learned Member (Judicial) that the impugned order is required to be set aside and the appellants should be entitled to get the refund at Mumbai.
In view of the majority opinion, the impugned order is set aside and the appeal is allowed in favour of the appellants.
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2024 (11) TMI 989
CENVAT Credit on the invoices issued by M/s. Rashmi Metaliks Ltd. and M/s. Neo Metaliks Ltd. - Evasion of Central Excise duty by way of willful suppression of material facts and intentional misuse of CENVAT Credit facility by adopting the modus operandi of non-receipt of their primary raw materials, namely Pig Iron in their factory and non- use of the same in the manufacture of final products - Levy of penalty - HELD THAT:- The whole of the case has been made out on the basis of the statement of appellant No.1 who stated that he is dealing with excise and VAT paid goods and not registered with the central excise department and clearing goods on their challans and no cenvat credit has been availed by the receiver of the goods as no excise paid challan or invoice has been issued by appellant No.1. During the course of investigation, statement of the Authorized Representative of the appellant No.3 was recorded and nowhere he has admitted that they are having any relation or have ever transacted with appellant No.1 and the goods which have been received by them have been used in manufacturing of their final product, which ultimately suffered duty. These facts are not in dispute.
In the absence of all the evidences it cannot be said that appellant No.3 has not received the goods. Moreover, the case against the appellant No.2 and 3 has been made on the basis of statement of appellant No.1. Demand cannot be raised on the basis of third party statement without any corroborative evidence thereon.
The cenvat credit in this case cannot be denied to the appellant No.3, therefore, no penalty can be imposed on the appellant No.2. Consequent to that, penalty on the appellant No.1 also cannot be imposed.
The impugned order is set aside - appeal allowed.
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2024 (11) TMI 988
CENVAT Credit on removal of waste and scrap as such - after use of plant and machinery removal of the same as used plant and machinery attract duty by deducting the depreciation as provided in Rule 3(5) of Cenvat Credit Rules or will be treated as removal of waste and scrap of capital goods attracting duty on transaction value in terms of Rule 3(5A) of Cenvat Credit Rules - denial of credit on the ground that M.S. Window Section cleared as such without any manufacturing process carried on such M.S. Window Section - shortage of 30.123 MT of Billets which was used in the furnace and subsequently dismantled and cleared in June, 2008.
Whether after use of plant and machinery removal of the same as used plant and machinery attract duty by deducting the depreciation as provided in Rule 3(5) of Cenvat Credit Rules or will be treated as removal of waste and scrap of capital goods attracting duty on transaction value in terms of Rule 3(5A) of Cenvat Credit Rules? - HELD THAT:- It is found that merely because the plant & machinery was sold in the Metric Ton and the buyer is the scrap dealer that alone cannot establish that the plant and machinery sold by the appellant is in the form of waste and scrap. As per the invoices raised by the appellant it is observed that in some of the invoices, the description clearly shown as old and used iron scrap. However, in some of the case it is declared as old and used machinery.
From the two sample invoices, it is observed that some of the goods were cleared as waste and scrap and some of the capital goods were cleared as old and used machinery without mentioning steel scrap. Therefore, the entire matter needs to be reconsidered after verification of facts on the basis of each invoice and wherever, the description of the capital goods is mentioned as waste and scrap, the same is liable to excise duty on the transaction value and in case of description mentioned as old and used capital goods the same shall be liable to duty after allowing the depreciation as prescribed in the Rules. The adjudicating authority shall also consider the submission of the appellant that at the relevant time there was no recovery proceeding which was brought in this statute only by Notification No.03/2013- C.E. (N.T.) dated 01.03.2013.
Whether this Cenvat Credit is liable to be denied on the ground that M.S. Window Section cleared as such without any manufacturing process carried on such M.S. Window Section? - HELD THAT:- It is the admitted fact that the appellant have cleared the M. S. Window Section involving Cenvat Credit of Rs.19,86,317/-on payment of duty amounting toRs.27,93,234/-, therefore, the amount of Cenvat Credit of Rs.19,86,317/-stands reversed/ paid by the appellant. On this ground the demand of Rs.19,86,317/- and consequent penalty and interest if any shall not sustain.
Whether demand of Cenvat Credit is correct on the ground of shortage of 30.123 MT of Billets which was used in the furnace and subsequently dismantled and cleared in June, 2008? - HELD THAT:- It is found that the stand of the appellant is that at the time of use of billets in the foundation of the furnace, they have reversed the Cenvat Credit. However, no evidence in respect of such reversal was brought here. Therefore, this factual aspect also needs to be verified by the adjudicating authority while passing denovo order.
The matter relates to the demand of Rs.54,38,305/- and Rs.Rs.1,04,249/-,it is remanded to the adjudicating authority and the demand of Rs.19,86,317/- on M.S. Window Section is set aside. The appeal is disposed of.
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2024 (11) TMI 987
Time Limitation - suppression of facts or not - concessional rate of duty - Interpretation of Notification No. 12/2012-CE and subsequent amendments regarding concessional rates of duty for goods falling under Chapter 85 - short payment of Central Excise duty due to misinterpretation of notification - HELD THAT:- The appellant had bonafide belief that goods attract 10% as per the rate prescribed under the Notification No.12/2012-CE dated 17.03.2012 even the notification was time bound wherein, the closure date was prescribed of31.12.2014. By amendment in the said notification, the appellant’s goods i.e. falling under85441190was excluded by Notification dated 11.07.2014. Since, the notification otherwise prescribed the time limit upto31.12.2014,the appellant had bonafide belief that 10% rate is effective till 31.12.2014. It is only because of the appellant was not aware of the notification, they continued to pay the duty at the rate of 10%. Appellant’s bonafide further get reinforced on the ground that the appellant have been declaring the goods with Chapter heading and the rate of duty, at the rate of 10% in their all ER-1 monthly return for the period July, 14 to December,14. The changes were brought by statutory amendment which is otherwise known to the department also. The department was also aware that the appellant prior to 11.07.2014 had been paying the duty at the rate of 10%.
The officers have verified those documents while processing the rebate claim and/ or the clearance is under bond. Therefore, all the facts were available on record before the department and nothing was prevented from the department to initiate the action for demanding the differential duty within the normal period. However, the show cause notice for the period July,14 to December, 2014 was issued only on 18.10.2017 by way of show cause notice. Therefore, the entire demand is within the extended period.
Since there is no suppression of fact on the part of the appellant, the demand for extended period shall not sustain. Accordingly, the demand of duty confirmed by the lower authorities is set aside on the ground of the time bar itself.
The appeal is allowed.
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2024 (11) TMI 986
Exemption from Excise Duty under N/N. 6/2006-CE dated 1.3.2006 - goods supplied against international competitive bidding - appellant contended that they were entitled to the benefit of Notification No. 6/2006-CE dated 1.3.2006, in view of the fact that there was no dispute with respect to the goods which were supplied against international competitive bidding - HELD THAT:- Considered the fact that the Tribunal in the appellant’s own case M/S WPIL LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-III [2023 (7) TMI 298 - CESTAT KOLKATA] has observed that 'the Appellant is eligible for the benefit of Notification No. 6/2006-CE dated 1.3.2006, as they have fulfilled all the conditions required to avail the said exemption. Accordingly, we hold that the demands made in the impugned order are not sustainable and the same is liable to be set aside.'
The appellant is entitled for the benefit of Notification No.6/2006-CE dated 01.03.2006, as they have fulfilled all the conditions required to avail Cenvat credit, therefore, no demand is sustainable against the appellant.
Appeal allowed.
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2024 (11) TMI 985
Clandestine removal - Gutkha pouches and related materials - retraction of statements - Confiscation of goods - 90 bundles containing 1872720 Gutkha pouches and related materials, three packaging machines - demand of duty with interest and penalty - HELD THAT:- Undisputed facts of the case are that Gutkha pouches brand-named “Raj Kolhapuri” along with other related materials, three packaging machines and one lorry were seized by the Banavasi Police on 03.11.2009 which was later, with the intervention of the Central Excise Department, on direction by the Hon’ble Principal JMFC was handed over to the Central Excise Department for further investigation. The said materials were again seized on 09.12.2009 and statements of persons were recorded again to ascertain the quantum of offence. From analysis of the statements, it revealed that the Gutkha and three packing machines were seized from the premises viz. House No.6, Plot No.21, Golikatta Village, Gudnapura – 581 318, Banavasi, Sirsi Taluk Uttara Kannada which was given on rent by the owner of the said premises Shri Dhananjaya Krishna Hegde for a period of one month to the appellant by an understanding recorded on 28.10.2009 was manufactured in the said premises and cleared without payment of duty.
The appellant from the very beginning expressed his ignorance about the said labourers and undertaking the manufacture of Gutkha in the said premises. However, no request for cross-examination of the witnesses was requested by the appellant before the adjudicating authority. Neither the appellant nor Mr. Dhananjaya Krishna Hegde, the owner of the said premises has claimed before the authorities that the Gutkha packed in the plastic pouches having mark of ‘Raj Kolhapuri Gutkha’ belongs to them or the seized machineries have been claimed to belong to them and requested for its release to them. On the other hand, both of them denied being involved in the manufacturing of Gutkha in the said premises.
Since duty paid character of the Gutkha has not been established and on the basis of the statements given by the labourers and lorry driver and retrieving the three machineries from the manufacturing premises, it is clear that the said Gutkha bearing name ‘Raj Kolhapuri’ manufactured in the said premises and cleared without following procedure and discharging duty payable on the same. Consequently, the Gutkha as well as the three packaging machines and other related materials seized by Police on 03.11.2009 and later by Central Excise Department on 09.12.2009 are liable for confiscation and hence the order of the Commissioner directing the confiscation of the same does not require any interference.
More or less, similar views expressed by the Tribunal in a series of cases, including the cases COMMR. OF C. EX., HYDERABAD VERSUS DHARIWAL INDUSTRIES LTD. [2010 (4) TMI 890 - CESTAT, BANGALORE]; GOYAL TOBACCO CO. PVT. LTD. SHRI RAJESH GOYAL, DIRECTOR VERSUS CCE & ST, JAIPUR-I [2017 (3) TMI 57 - CESTAT NEW DELHI], COMMISSIONER OF CENTRAL EXCISE, DELHI-I, M/S KUBER TOBACCO INDIA LTD, SHRI DHANPAT SINGHEE, DIRECTOR, SHRI CHATAR SINGH BAID, SHRI VIKAS MALU VERSUS M/S KUBER TOBACCO INDIA LTD, COMMISSIONER OF CENTRAL EXCISE, DELHI-I [2016 (4) TMI 622 - CESTAT NEW DELHI] Hence, the demand in absence of evidence of the nature narrated above being not adduced by the Department, hence cannot be sustained, only on the basis of the date of installation of electricity meter at the said premises. In these circumstances, the demand confirmed by the learned Commissioner is liable to be set aside. Accordingly, the same is set aside and consequently penalty imposed on the appellant under Section 11AC of the Central Excise Act, 1944 also set aside.
The impugned order is modified to the extent of upholding confiscation of the seized goods, three machines and related materials; however, confirmation of demand, interest and imposition of penalty on the appellant is set aside. Appeal is disposed of.
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2024 (11) TMI 984
Rejection of refund claim over and above the value addition - appropriation of pre-deposit made - HELD THAT:- The appellant has filed the refund claim of the pre-deposit along with interest on the basis of CESTAT Final Orders dated 23.03.2018 and 28.08.2018 but the Assistant Commissioner vide two Order-in-Original 512 and 514 sanctioned the refund along with interest but appropriated the said refund of Rs. 15,00,000/- and Rs. 32,77,590/- against the total demand of Rs.2,17,35,588/- on account of value addition confirmed for the period February 2012 to April 2012.
It is found that when the appeal against the Order-in-Original was pending before the Commissioner (Appeals), the appellant Voluntarily deposited the demand against all three OIOs relating to February 2012 to April 2012 and intimated the jurisdictional Deputy commissioner Jammu vide letters dated 14.08.21 duly acknowledged on 26.08.2021 and the copies of challans have also been produced showing the payment of the entire demand of Rs. 2,17,35,588/-. Further, it is found that the appellant has voluntarily deposited the entire demand amount and informed the Department but the Department did not acknowledge the same in spite of challans showing payments being attached.
Since, the appellant has voluntarily made the complete payment thereafter appropriation of the pre-deposit amount of refund sanctioned against the said demand is not legally sustainable - further it is found that the appellant specifically intimated to the department regarding the payment of the entire amount of Rs. 2,17,35,588/- and also produced the challans but in spite of that the Ld. Commissioner has upheld the Order-in-Original, appropriating the refund claim against the demand which has already been paid, when the department has collected the entire demand confirmed by the various orders thereafter, the Department is not justified to retain the sanctioned refund and appropriated the same.
The both impugned order dated 08.12.2022 are not sustainable in law and is set aside - appeal allowed.
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2024 (11) TMI 983
Refund claim under Rule 5 of Cenvat credit rules - input services - Rule 5 of Cenvat credit rules 2004 - it is alleged that input service involved in the refund claim has no nexus with the manufacture of export goods - HELD THAT:- It is found that it is undisputed that at any stage the revenue has not issued any show cause notice or adjudicated thereupon the issue of admissibility of input service in terms of rule 14 of Cenvat Credit Rules, 2004 therefore the allowance of the credit on the input service in question attained finality and when this be so then by filing the appeal against the sanctioned order of the refund dispute about admissibility of the service for purpose of allowing the Cenvat credit cannot be raised. The learned Commissioner (Appeals) on this very ground rejected the appeal of the revenue.
From the findings of the Commissioner (Appeals) it can be seen that the Commissioner (Appeals) rejected the appeal of the revenue on the threshold point that the department has not taken any action under rule 14 for disputing the admissibility of input service in question. The findings of the learned commissioner (Appeals) based on various judgments. Therefore, this issue is no longer res-integra. Without prejudice, it is also found that all the service which were questioned by revenue are admissible input service as held in various judgment as cited by the appellant in their synopsis.
It is further found that though the revenue in the appeal before the Commissioner (Appeals) as well as before this tribunal reiterated that the input services involved in present case have no nexus with the manufacture of the export goods, however, no reasoning is given that why these services are not essential in or relation to the manufacture of exports goods. For this reason also the revenue’s appeal is hollow and without any basis. As per the above discussion, there are no infirmity in both the orders passed by authorities below.
The impugned order is upheld - Revenue’s appeal is dismissed.
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2024 (11) TMI 982
Classification of goods - Biovita - to be classified under heading 3101 0099 or under Central Excise heading as 3105 of Central Excise Tariff? - HELD THAT:- A perusal of show cause notice shows that it relies on the CBEC Circular 1022/10/2016-CX dated 06.04.2016. The said circular prescribed that micronutrient could not be classified under Chapter 31 as ‘fertilizer’. It also relies on the fact that the appellants had in the month of July 2015 themselves classified the goods under Central Excise Tariff Heading 3808 and in the months of June, August, September-2015 classified the product under Central Excise Tariff Heading 3105 as per directions of M/S. P.I. INDUSTRIES LIMITED (FORMERLY M/S. ISAGRO (ASIA) AGROCHEMICALS PVT. LTD.) ; M/S. AGRO PACK; SHRI PARTH H. PATEL VERSUS COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, SURAT-II, SURAT [2024 (9) TMI 1655 - CESTAT AHMEDABAD (LB)] the principal manufacturer. It is noticed that subsequent to the impugned order, the issue regarding classification of goods between Chapter 31 and Chapter 38 was referred to the Larger Bench in the case of PI Industries (the Principal Manufacturer itself).
It is seen that while the products in the instant case are not identical but similar in nature, therefore, the principles laid down by Larger Bench of Tribunal in the case of PI Industries would equally apply to the product in the instant case.
In view of above, the impugned order is set aside and matter remanded to the original adjudicating authority for fresh decision in the light of observations made by Larger Bench in the case of PI Industries.
Appeal is allowed by way of remand.
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2024 (11) TMI 981
Allowing the claim of second sale exemption contrary to established facts that the so-called sellers were either non-existent or had not handled the goods - Deletion of consequential penalty under Section 12(5)(iii).
Whether the Tribunal was legally right in allowing the claim of second sale exemption despite the sellers being non-existent or not having handled the goods? - HELD THAT:- When the burden was on the dealer to prove the factum of second sale, the respondent had not discharged the burden of proving the actual first sale, for him to successfully claim the exemption on the ground of second sale. The Tribunal had erroneously shifted the burden from the dealer to the revenue, which is against Section 10 of the Act and had come to the conclusion that the revenue had not established by proving that the purchase of the respondent was a first sale.
Similar issue in M/S. MKR CASHEW EXPORTS VERSUS THE SECRETARY, TAMILNADU SALES TAX APPELLATE TRIBUNAL (MB) , CHENNAI, THE DEPUTY COMMERCIAL TAX OFFICER, PANRUTI (RURAL). [2024 (8) TMI 1485 - MADRAS HIGH COURT] where the dealer was not able to prove the factum of first sale to claim the exemption on the ground of second sale, as the burden of proof was on the assessee to prove the transaction.
Further, in A.S.Ganapathy Chettiar Vs. The State of Tamil Nadu [1976 (3) TMI 209 - MADRAS HIGH COURT], relied on by the learned Government Advocate for the appellant, the Division Bench of this Court has held that the burden of proving that there was an earlier taxable sale was on the assessee.
In view of the above decisions and the fact that the respondent dealer had failed to prove the transaction of the factum of first sale, the first question of law is answered in favour of the revenue and against the assessee.
Whether the deletion of the consequential penalty under Section 12(5)(iii) by the Tribunal is legally tenable? - HELD THAT:- In the instant case, the respondent had put forth a claim of second sales and further they submitted the documents, which on enquiry were found to be bogus and fictitious and the respondent had made no attempts to produce the documents through dealers before the authorities for confirmation of the alleged first sale. In view of our findings arrived at question No.1, the respondent, who is liable to pay tax had not filed any return for the assessment year 1982-83 and have wilfully suppressed taxable turnover and therefore, the Assessing Officer had rightly imposed the penalty under Section 12(5)(iii) of the Act - the decision of the Tribunal in deleting the penalty imposed by the Assessing Officer under Section 12(5)(iii) of the Act cannot be sustained. Under such circumstances, the second question of law is also answered in favour of the revenue and against the assessee.
The impugned order of the Tribunal is set aside and the assessment order as confirmed by the appellate authority stands restored - this Tax Case stands allowed.
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2024 (11) TMI 980
Jurisdiction of Micro and Small Enterprises Facilitation Council to refer the purported disputes obtaining between MRPL and Driplex for adjudication via arbitration - Validity of the "No Claim Certificate" issued by the supplier and its impact on the claims -
Jurisdiction of Micro and Small Enterprises Facilitation Council to refer the purported disputes obtaining between MRPL and Driplex for adjudication via arbitration - HELD THAT:- In the instant matter, MRPL and Driplex entered into an agreement on 01.12.2009. Driplex submitted a memorandum to register itself as a small enterprise under the 2006 Act on 09.12.2011. Concededly, Driplex completed its work and obtained a certificate from MRPL after registration under Section 8 of the 2006 Act i.e., only on 11.03.2013. Since Driplex had been awarded a turnkey contract, the work, quite naturally, would have continued even after it filed a memorandum i.e., obtained registration under the 2006 Act.
The judgment in Shanti conductors’ case [2019 (1) TMI 1906 - SUPREME COURT], which was rendered by a three-judge bench of the Supreme Court and concerned pari materia provisions contained in the 1993 Act tilts the balance in favour of Driplex as it, inter alia, holds that the applicability of the Act i.e., the 1993 Act would be determined on the date when the goods were supplied, and services were rendered and not the date when contract was entered into between the disputants.
It is noted that MRPL had filed a reply dated 20.02.2016 in which the jurisdictional issue appears to have been raised before the Council. This was clearly given up at the later stage as, concededly, this issue was not raised before the learned Single Judge - thus, the Council had the jurisdiction to refer the disputes under Section 18 of the 2006 Act to the arbitral tribunal.
Whether the present claims are tenable in the light of the No-Claim Certificate dated 25.09.2013 issued by the Claimant? - HELD THAT:- This area need not be delved upon since a petition preferred by MRPL under Section 34 of the Arbitration Act is pending adjudication.
Appeal disposed off.
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2024 (11) TMI 979
Levy of penalty for availing excess Input Tax credit - delay in filing the appeal by the petitioner - HELD THAT:- This Court allows the writ petition on the grounds that the delay in filing the appeal by the petitioner was due to an unavoidable personal circumstances, including the critical illness of her husband, which required extensive medical attention. The petitioner provided supporting medical documentation, but the Appellate Authority refused to condone the delay. This rigid approach fails to account for genuine extenuating circumstances, reflecting a lack of judicial empathy and an unreasonable interpretation of statutory time limits.
Given the petitioner's situation, this decision by the Appellate Authority to dismiss the appeal based solely on timing considerations was unduly harsh and legally unsound. Moreover, the petitioner’s right to further appeal has been obstructed by the non-formation of the GST Appellate Tribunal, effectively denying her a statutory right to a higher appeal.
In light of the procedural irregularities, the arbitrary nature of the actions and the statutory misapplication, this court finds the petitioner’s case to be meritorious. Accordingly, the writ petition is allowed, and the impugned orders dated May 24, 2024 is quashed. The petitioner’s rights under the WBGST Act, 2017, are restored, with all benefits that accompany this decision, without any adverse consequences arising from the annulled orders.
Application disposed off.
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2024 (11) TMI 978
Scope of Supply - GST on supply “agreed to be made” - Constitutional validity of Sections 7, 12, 13, and 16 of the CGST Act and corresponding MGST Act - Entitlement to Input Tax Credit (ITC) on receipt vouchers - the case of the petitioner is that the petitioner was precluded from availing of the Input Tax Credit (ITC) of the GST paid to L&T (its constituent) for the reason that Section 16 (2) (b) of the CGST and MGST Act provided that no ITC could be taken unless the service had been received - Refund of GST and ITC - HELD THAT:- It is not in dispute that for execution of the project work, purchase orders dated 23 March 2018 back-to-back with the Contract Agreement, were issued by the petitioner to its member, i.e. L & T. Reciprocally the constituent of the petitioner would raise bills on the petitioner for the portion of the work executed by it each month. In turn, the petitioner would raise a single consolidated invoice on the employer (MMRDA). On availing of these advances, the petitioner issued “advance receipt vouchers” to the MMRDA for both the first and second installment of the mobilization advance received by it. Such ‘advance receipt vouchers’ as issued/ executed by the petitioner in favour of the MMRDA, indicated several details inter alia the total amount of advance claimed before tax and the GST amounts payable on such advance and the total invoice value.
In State of M. P. Vs. Rakesh Kohli & Anr. [2012 (5) TMI 262 - SUPREME COURT], the Court was considering the challenge whether the High Court was justified in declaring Clause (d) of Article 45 of Schedule 1-A of the Indian Stamp Act, 1899 which was brought in by the Indian Stamp (Madhya Pradesh Amendment) Act, 2002 as unconstitutional being violative of Article 14 of the Constitution of India. In such context, the Supreme Court, not agreeing with the view taken by the High Court, held that the well defined limitation in the constitutional validity of the statute enacted by the Parliament or the State Legislature has not been kept in mind by the High Court.
On a plain reading of Section 7, the expression “supply” includes “all forms of supply of goods or services or both”, such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration (as defined under Section 2 (31)) by a person in the course or furtherance of business. It is well settled that every word as contained in the provision as used by the legislature, is required to be given its due meaning, so as to gather the object and intention behind the provision as intended by the legislature. In the context of Section 7 (1) (a), it is apparent that it inter alia includes “all forms of supply of goods or services or both”, of the nature as specified therein which are “made” or “agreed to be made” for a “consideration” by a person in the course or furtherance of business - Once the test in such form is satisfied in relation to the supply of goods or services, the levy of collection of tax under Chapter III and more particularly, Section 9 (charging section) would stand attracted. As to how the expression “in the course or furtherance of business” is legally understood and interpreted by the Courts can be discussed.
Adverting to the interpretation of the expression “in the course of business” and in the present context, an expression added to it namely of the words “in furtherance of business”, as used in Section 7 (1) (a) would necessarily mean that the supply is connected to or in relation to the activities in question or is the integral part of such activity. By applying such interpretation, it cannot be denied that once an advance was received by the petitioner in the course of or in furtherance of the contract in question, it would necessarily amount to a supply attracting payment of GST - the legislative intention behind Section 7 is quite clear that such composite contract would fall within the definition of supply as envisaged by Section 7 (1) (a).
The petitioner’s case challenging the vires of Section 12 and 13, is to the effect that these provisions are invalid and ultra vires as they apply to ‘supply agreed to be made’, for the reason that Article 246A applies only in respect of the ‘supply of goods or services’ and not in relation to supply “agreed to be made” - It is hence the petitioner’s case that once the actual supply itself is not made, there is no warrant for the levy in question either by virtue of the applicability of Section 7 read with Section 9 and Sections 12 and 13.
The petitioner merely referring to the provisions of Article 246A read with Article 366 (12A) of the Constitution which provide that the Parliament as also the State Legislature would be empowered to make laws in respect of goods and services tax to be imposed by the Union or a State, would be required to be interpreted in a broad sense. Thus, the Parliament as also the State Legislature were within their constitutional authority, to not only enact the provisions which are assailed by the petitioner, but also to prescribe / stipulate the manner and the method under which the scheme of the GST laws ought to work, in regard to the applicability of such provisions, was also the domain of the respective legislatures.
In the present case as contended on behalf of the petitioner, the provisions of Section 31 read with Rule 36 are being applied by the Revenue to deny the input tax credit to the petitioner on the ground that on account of lack of supply, no invoice was available or issued so as to entitle the petitioner to claim the input tax credit - the rigour and the mandate of sub-section (1) and (2) of Section 31 is not applicable to the operation of sub-section (3) which stands on its independent legs, when it recognises the tax paying documents as referred thereunder. In any event sub-section (3) of Section 31 is also required to be read in the context of the companion provisions namely sub-section (4), (5), (6) and (7). These provisions contemplate a variety of situations, even when at a belated stage, an invoice can be issued and which can be a situation of advance payment being received in relation to the transactions between the parties. Thus, Section 31 is required to be holistically read so as to make the provision meaningful and more particularly in the context in hand. For such reason, when the petitioner satisfied the requirements of Section 31 (3) (d) as also accepted by the revenue to be a tax paying document, it would not be correct in law that the petitioner is denied input tax credit, merely because the petitioner has not complied with the part of the provisions, namely sub-section (1) of Section 31 read with Rule 36.
The prayers of the petitioner challenging the constitutional validity and legality of Sections 7, 12, 13 and 16 (2) (b) of the CGST/MGST Act are rejected - It is declared that in the peculiar facts of the case on the basis of Receipt Voucher issued by L&T in favour of the petitioner, the petitioner was entitled to avail the Input Tax Credit under section 16 of the CGST/MGST Act.
Petition disposed off.
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2024 (11) TMI 977
Maintainability of the writ petition - Jurisdiction of SCN - quashing the exercise of the jurisdiction vested in this Court under Article 226 of the Constitution of India - challenge to Ext.P9 notification which relates to the rate of GST for commission received in terms of the provisions contained in Section 21(1)(b) of the Chit Funds Act, 1982.
Maintainability of the writ petition - HELD THAT:- The contention of the Senior Standing Counsel appearing for the respondents that this Court should not interfere with a show cause notice should be accepted in normal circumstances. However, where on admitted facts, the show cause notice is found to be without jurisdiction, it is not that an objection raised to the maintainability of the writ petition is sustainable. It is settled law that where the proceedings are challenged as being without jurisdiction, the availability of an alternate mechanism for resolution of disputes (here through adjudication of the show cause notice) is no ground for the Court to refuse to exercise jurisdiction.
The judgment of a Constitution Bench of the Supreme Court in Calcutta Discount Co. Ltd. v. ITO and Anr, [1960 (11) TMI 8 - SUPREME COURT] is the authority for this proposition. When faced with an argument that the question as to whether re-assessment notices were properly issued under the provisions of Section 34 of the erstwhile Indian Income Tax Act, 1922 should not be investigated in a writ petition under Article 226 of the Constitution of India it was held 'We have therefore come to the conclusion that the Company was entitled to an order directing the Income Tax Officer not to take any action on the basis of the three impugned notices.'
In the facts of the present case, it is clear on the authority of the judgment of the Supreme Court in Oriental Kuries Limited [2019 (11) TMI 1818 - SUPREME COURT] and the provisions of Notification No.12 of 2017 that the issuance of a show cause notice alleging that the transactions, which are the subject matter of Ext.P1 show cause notice, should be subject to a levy of GST is clearly without jurisdiction. There are no disputed questions of fact.
The matter can be decided purely as a matter of law. Therefore, the fact that this writ petition has been filed challenging a show cause notice is no ground to refuse the exercise of jurisdiction under Article 226 of the Constitution of India.
Ext.P1 show cause notice is confined to the interest received from the defaulting subscribers. In such circumstances, for reasons indicated, it must be held that the amount of interest received by the foreman of a chit on defaulting subscriptions cannot be said to be amounts received as consideration for the supply of services.
It is declared that Ext.P1 show cause notice is issued without jurisdiction. It is accordingly quashed - this writ petition is allowed.
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2024 (11) TMI 976
Violation of principles of natural justice - notices were uploaded on the “view additional notices and orders” tab of the GST portal - the petitioner asserts that he was unaware of proceedings - HELD THAT:- On examining the impugned order, it is evident that the order pertains to discrepancy between the petitioner’s GSTR-3B return and the auto populated GSTR-2A and also reconciliation of turnover as per the Income Tax return and GSTR-3B return. It is also clear that the tax proposal was confirmed because the petitioner did not reply to the show cause notice. In these circumstances, albeit by putting the petitioner on terms, it is just and necessary that the petitioner be provided an opportunity to contest the tax demand on merits.
The impugned order dated 9-8-2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is directed to submit a reply to the show cause notice - petition disposed off.
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2024 (11) TMI 975
"Governmental Authority" or "Local Authority" - Government of Karnataka holds 99.99% of equity in the Corporation - exemption from filing of Annual Return in Form GSTR9 and Form GSTR9C - input tax credit on the inward supply of goods and services, which are capitalized in the books of accounts - input tax credit on the inward supply of services against output taxable supplies of support and auxiliary services and other supply of taxable goods - input tax credit (on inputs, input services and capital goods) proportionately on the taxable output supply of support services and goods (scrap etc.) - eligibility to claim taxes paid under RCM, as input tax credit - levy of Additional Surcharge collected from Open Access Consumer - taxability of "Wheeling and Banking Charges allowed by Commission (KERC) as 5% and 2% of the energy input into the distribution system by Open Access consumer.
HELD THAT:- The clause 8.5.4 of the Tariff Policy, 2016 notified by the Ministry of Power, Government of India provides that: "The additional surcharge for obligation to supply as per section 42(4) of the Act should become applicable only if it is conclusively demonstrated that the obligation of a licensee, in terms of existing power purchase commitments, has been and continues to be stranded, or there is an unavoidable obligation and incidence to bear fixed costs consequent to such a contract. The fixed costs related to network assets would be recovered through wheeling charges."
As per National Electricity Policy, an additional surcharge be levied for meeting the fixed cost of the distribution licensee arising out of his obligation to supply in cases where consumers are allowed open access. As per Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulation, 2004, the open access customer shall be liable to pay such additional surcharge as may be determined by the Commission from time to time. It is also noticed that Regulation 3 of KERC (Electricity Supply) Code, 2004 empowered the appellant to charge additional surcharge from their open access consumers. Thus, it is apparent that the appellant is collecting additional surcharge as per the Electricity Act; Tariff Policy; National Electricity Policy of Ministry of Power, Government of India and Karnataka Electricity Regulatory Commission (Terms and conditions for open Access) Regulation, 2004, KERC (Electricity Supply) Code, 2004 of Karnataka Electricity Regulatory Commission, Government of Karnataka from the open access customers, and therefore it forms part of tariff for the supply and distribution of electricity.
It is found that collection of Additional Surcharge from OA consumers on the basis of quantum of energy wheeled from the private generators of OA consumers is only to meet the fixed cost of the appellant arising out of this obligation to supply. Such collection mechanism is backed by an Act and policies of Central Government as well State Government. In the instant case, the Appellant has entered into agreements with their customers, basically for supply of electricity - From the submissions of the appellant, there are no independent arrangement entered into by the appellant for tolerating an act against which the consideration is collected as Additional Surcharge. It is found that such amounts do not constitute payment (or consideration) for tolerating an act, rather these amounts are collected only to cover the fixed costs the appellant has to incur in terms of power purchase agreements they have entered into with power generating companies.
The Additional Surcharge levied under Electricity Act from their customers who opted for sourcing electricity from open access, over and above the consideration charged towards supply and distribution of electricity should form part of taxable value, determined in terms of Section 15 of the CGST Act, 2017 - the supply of electricity as goods and/or distribution of electricity as service are covered under exemption either in terms of entry No. 104 of Notification No.02/2017 CT(R) dated 28.06.2017 applicable to goods and /or entry No.25 of the Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 applicable to services.
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2024 (11) TMI 974
Exemption from charge of GST under Notification No.32/2017-Central Tax (Rate) dated 13-10-2017 (entry number 21A) & IGST Notification No.33/2017-IGST(Rate) dated 13-10-2017 (entry number 22A) - supply of pure service made by our organization, (being a GTA- cum-Packing & Moving Company) to or on behalf of a foreign entity unregistered in India (unregistered person) - HELD THAT:- From the description of service in the aforesaid entry at S.No 21A it is evident that the said exemption is exclusively in respect of Services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person, other than certain specified recipients. The term "goods transport agency" is defined in para 2 (ze) of the Notification supra, "goods transport agency" means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. In the instant case the applicant has nowhere claimed to have issued a consignment note in relation to transport of goods and therefore his claim that he is providing goods transport agency service is not justified. It is also observed that applicant is providing a bundle of services of customs clearance (CHA service), loading & unloading services, port handling, liner fee and destination services in India. Further it is observed from the copy of invoice raised by the applicant that many services are individually charged.
The exemption is not applicable to the applicant's case.
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