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2025 (2) TMI 802
CENVAT Credit - nexus of input services with the manufacture of final products/output services - Management Consultancy Service - Maintenance or Repair Service - Clearing & Forwarding Agent Services - Insurance Auxiliary Services - GTA-Outward Transportation Service - Courier services - Mandatory and Additional Inspection Service - business support services - Casting Error - recovery agent services - warranty handling service - Insurance Services for the plant, machinery and insurance for employees - subscription fees - Works Contract Service.
Management Consultancy Service - denial of credit on the ground that these services are related to gratuity valuation, superannuation valuation, leave encashment valuation, post-retirement valuation, etc., which are part of welfare measures for the employees - HELD THAT:- The services which are related to R & D facility, finance accounting and taxation etc., have been subsequently allowed in Order-in-Original No.10/2017-18 dated 29.01.2018. It is also stated that the services related to salary profile in terms of welfare measures was only denied for the later period. In view of the above, the matter is remanded for verification of the documents submitted by the appellant to examine whether the management consultant service is related to R & D, finance, trading, legal services, production management etc.
Management Consultancy Services - services on gratuity and superannuation funds - HELD THAT:- The Commissioner has allowed cenvat credit on most of the Management Consultancy Services except for service tax credit relating to services on gratuity and superannuation funds, which are basically related to the salary profile of the employees. The same is rightly denied since these services are not related to the manufacturing activities of the appellant; hence, it is disallowed.
Maintenance or Repair Service - HELD THAT:- This service is related to the services rendered by the dealers to the clients of the appellant and the dealers get reimbursement of the cost of these services. The services are of mandatory free services and maintenance services. Since, these services were actually provided by the dealers after the removal of final products at the customer’s premises, the service was an ‘input service’ for the customers of the appellant. Hence, the Commissioner held that it cannot be said to be a service which was used by the appellant and therefore, the service tax paid on such services cannot be availed as cenvat credit - credit allowed.
Clearing & Forwarding Agent Services - HELD THAT:- These services are related to packing of spare parts outside the factory premises used for repairs of excavators, which have been already cleared from the factory. Since the transaction value for the machine includes the cost of such repair and maintenance services on which excise duty has already been discharged and since it is within the warranty period, cenvat credit cannot be denied - credit allowed.
Insurance Auxiliary Services - HELD THAT:- These are the services which are related to medical insurance of employees, insurance of warehouse/branch office, transit insurance for space and car insurance used for sales promotion. Since, all these services are related to and add value to the manufacturing activities of the appellant and since the above services are also statutory requirement, they are eligible for the cenvat credit, hence allowed.
GTA-Outward Transportation Service - HELD THAT:- Transportation of goods from warehouse to customer’s site, the Commissioner has already allowed the credit for transportation of goods from factory to depot and denied only to the extent of transportation of goods from factory to the customers’ premises. The goods transported from warehouse to customer’s site from multiple centres at different places in India for maintenance or repair services have also been denied of cenvat credit since the services are rendered beyond the place of removal - It would be pertinent to place reliance on the decision rendered by the Larger Bench of the Tribunal in M/s. The Ramco Cements Ltd. vs. The Commissioner of Central Excise [2023 (12) TMI 1332 - CESTAT CHENNAI-LB], wherein the Tribunal had discussed in detail with regard to the issue on whether the cenvat credit on GTA services for outward transportation of goods from the factory to the buyer’s premises be denied in cases where the goods are sold on FOR (buyer’s premises or should such matters be remanded to the lower authorities for determining what is the place of removal - In view of the above Larger Bench decision, this issue is remanded to determine the admissibility of CENVAT credit on the GTA Service up to the place of removal.
Courier Services - HELD THAT:- The Commissioner has denied the cenvat credit on the ground that the courier service is used for transportation of materials from central warehouse to feeder warehouse and branches for replacement of materials under warranty or for providing maintenance or repair services. It is pertinent to refer to decision rendered in the case of CCE vs. CCL Products (India) Ltd [2009 (3) TMI 136 - CESTAT, BANGALORE], wherein it was held that various services including courtier services were rendered in respect to business activity. Hence, credit is allowed.
Mandatory and Additional Inspection Service - HELD THAT:- The appellant submitted that the cost of mandatory service inspection during the warranty period is part of their cost on which excise duty has already been paid. It is also stated that these mandatory services are provided to their customers to ensure that the consumable and critical items like filter and oil are replaced on the machine, the dealer raises a bill with service tax on which credit has been availed, hence submitted that for these mandatory services, cenvat credit cannot be denied. So also, the additional services are provided after the warranty period for which bills are raised along with service tax payment on which credit has been availed. Since, these services are rendered after clearance of the final products, on which Excise duty has been already paid and also, they are registered under “Maintenance and Repair Service”, hence, credit on this is allowed.
Business Support Service - HELD THAT:- These are services rendered by the dealers of the appellant after sale of goods and covered under the warranty service. Since the cost of warranty is included in the invoice value, on which tax has been discharged, the credit on this cannot be denied. Hence, it is allowed.
Casting Error - HELD THAT:- Since, no documents have been produced as to the services rendered under this category is either before the Commissioner nor heres, the same is denied for want of documents to prove the nature of service. On reimbursement of service tax, an amount of Rs.48705/- has been denied only on the ground that no documentary evidences have been provided having paid the tax. Since, nothing is also placed, the same is upheld.
Recovery Agent Service - HELD THAT:- These services have nothing to do with the manufacturing activities but relates to recovery of amounts unpaid by their customers, hence rightly denied.
Warranty Handling Service - HELD THAT:- These post-manufacturing services being part of the warrant period hence credit allowed. Club membership fees (Rs.3,240/-) is rightly denied in view of the fact that the membership fees and service tax paid on the club membership has nothing to do with the manufacturing activities of the appellant. The packing services (Rs.39,270/-) are meant for packing of parts locally procured which are used for maintenance and repair, which forms part of sale process and relates to packing of final products manufactured by them, which has nexus with the manufacturing activities, hence allowed.
Insurance Services for the plant, machinery and insurance for employees - HELD THAT:- Insurance Services for the plant, machinery and insurance for employees have all been allowed and what is disallowed is only those insurance policies that cover the family members of the employee that is to the extent of Rs.5,42,966/-. Since, the policies are related to the family members, this has been rightly denied.
Subscription Fees - HELD THAT:- This is the fees paid on taking membership of Indian Construction Equipment Manufacturer Association in order to participate in their exhibitions, in order to promote their products. The cost of which is included in the manufactured final product; hence, it is allowed.
Works Contract Service - HELD THAT:- The service tax credit has been denied only on the imported services related to civil works which are excluded from the definition of ‘input services’, the same is upheld.
Conclusion - Services directly or indirectly related to manufacturing activities and statutory requirements were generally eligible for credit.
Appeal allowed in aprt.
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2025 (2) TMI 801
CENVAT Credit - denial on the ground that the invoices were issued from an unregistered premises - various input services such as Architect services, Event Management services, etc. - Demand of service tax on training kits sales and whether these constitute commercial training or coaching - Demand of service tax on the sale of software declared as exempt in their books of account - Demand of service tax on services supplied to SEZ units and the applicability of exemption under N/N. 4/2004-S.T. - Limitation period for invoking extended period for demand and imposition of penalties under Section 78 of the Finance Act, 1994.
Whether the appellant is eligible for cenvat credit on the invoices issued from a premises which is not registered under their Centralized Registration Certificate? - HELD THAT:- There is no dispute that these premises were not registered under the Centralized Registration Certificate. The appellant’s claim is that the invoices from Mumbai Unit were addressed to their registered premises at Bangalore, hence the same cannot be denied. The cenvat credit is related to the invoice where the rent was paid for the premises at Mumbai (Bandra) which was claimed to be used for marketing activities.
There is no dispute of the fact that the appellant was well aware that all the premises that are used for the manufacturing/marketing purposes are to be registered under centralized registration procedures. Hence, the rent paid on the premises which is not registered cannot be availed as cenvat credit for the simple reason that there is no evidence as such that the above premises was used for marketing or providing any output services, except for stating that the premises used to facilitate business meetings with existing and prospective customers. In view of the specified procedures laid down under Centralized Registration Procedures read with Rule 4 (5) of Service Tax Rules, 1994 and in accordance with the Cenvat Credit Rules, the cenvat credit cannot be extended on rent paid on unregistered premises in both the premises of Mumbai. Similarly, the premises at Bangalore were rented for training purpose, space for support team, space provided for telecommunication service and for support activity. From the description of the activities, it is clear that in these premises also no output service activities undertaken except for renting them for various other purposes as mentioned above. Since, these premises have nothing to do with manufacturing/output services of the appellant the question of extending cenvat credit for these premises does not arise, hence rightly denied.
Eligibility of cenvat credit on services - Architect service - Authorized Service Station Service - Event Management Service - denial of cenvat credit on the above services only on the ground that there is no nexus between the input service and the output service rendered by the appellant - HELD THAT:- The convention services are also used for day-to-day business operations/meetings. Similarly, design services, event management services, etc., are all services in relation to the activities undertaken by the appellant. Since, individual invoices have not been verified to examine whether these were in relation to the operations rendered by the appellant, the matter remanded to the Commissioner only to examine whether these services were rendered in connection with the operations of the appellant, without questioning the one-to-one corelation. However, all invoices issued from the 6 premises not registered under Centralized Registration are to be denied.
Demand of service tax on training kits sales - HELD THAT:- From the observations of the Commissioner in the impugned order, there are no evidence or discussion on payment of VAT on the above participation fees, hence the same is remanded for deciding the issue afresh after considering the fact that VAT is discharged on the value collected as participation fees, taking into consideration the decisions relied upon by the appellant.
Demand of service tax on sale of software where the turnover is declared as exempt in their books of account - HELD THAT:- The appellant claims that this software was subject to VAT/CST and the recipient issues Form-C and based on the agreements the appellant carries out the replication of the software in a CD/DVD the same needs to be considered as exempted service. Since the agreements were not placed before the Commissioner to prove that they are exempted services, and the Commissioner observes that ‘the assessee failed to produce the entire documents during the audit in spite of several opportunities provided to them and always argued that they have claimed exemption in the ST-3 returns filed by them as the same is liable for VAT and not taxable under the Finance Act, 1994’ - the matter is remanded to the Commissioner for further examination based on the documents placed on record by the appellant to prove that VAT has been discharged on the above software.
Demand of service tax on services supplied to SEZ units - HELD THAT:- The period of dispute is from October 2008 to March 2009 and as rightly stated by the appellant they are eligible for the benefit of the exemption for the services rendered to the SEZ unit as per the Notification No. 4/2004 dated 31.03.2004. Since no documents were placed before the authorities that these services were used within the SEZ premises for the authorised operations, the same is being remanded for this limited purpose of verification.
Time Limitation - HELD THAT:- Unless any positive allegation of misdeclaration or suppression with intention to evade is brought on record the question of suppression cannot be alleged. In the instant case audit visited the unit in December 2011 and January 2012, the show cause notice was issued in 2014. The show-cause notice clearly mentions that a letter dated 08.02.2013 was issued to the appellant followed by letter dated 25.02.2013. The appellant in his reply to show-cause notice submitted that vide letter dated 04.02.2013 a list of documents was submitted which was already placed before the audit team and again vide letter dated 22.02.2013 further documents such as Software Distribution Agreement, Rental Agreement and sample purchase orders were filed. In response to the audit enquiry note dated 06.03.2013 a detailed reconciliation of expenses was filed vide their letters dated 09.05.2013 and 16.05.2013. In view of the above, since there is no allegation that regular returns have not been filed alleging suppression of any of the specific documents, the question of mis-declaration or suppression cannot be sustained.
Conclusion - i) Cenvat credit is disallowed for invoices from unregistered premises. ii) Other issues were remanded for further examination. iii) Since there is no allegation that regular returns have not been filed alleging suppression of any of the specific documents, the question of mis-declaration or suppression cannot be sustained.
Appeal disposed off.
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2025 (2) TMI 800
100% EOU / STPI - Classification of service - Manpower Recruitment and Supply Agency service or Consulting Engineer Service - time and material project - suppression of facts or not - invocation of extended period of limitation penalty.
Classification of service - HELD THAT:- The issue is no more res integra in as much as the agreements with M/s. Philips Electronics India Ltd. in the present case was similar to the agreement entered by M/s. Aztecsoft Ltd. with M/s. Philips Electronics India Ltd. in [2024 (7) TMI 312 - CESTAT BANGALORE] and this Tribunal on examination of these agreements had clearly held that the services rendered by the appellant is nothing but a ‘Manpower Recruitment and Supply Agency service’.
There are no reason to disagree with the decision and therefore, the demand of service tax as manpower supply service is upheld.
Extended period of limitation - suppression of facts or not - penalty - HELD THAT:- Since the ST-3 returns placed on record categorically show that they had declared the services rendered by them as exempted services under ‘Consulting Engineer Service’ and in view of the fact that the services were exempted till 16.05.2008 under consulting Engineer Service, the same cannot be considered as mis-declaration or suppression of facts. Hence, the impugned order is modified to the extent of confirming the demand for normal period and the penalties imposed under Section 76 and 77 are upheld and penalty imposed under Section 78 is set aside.
Conclusion - i) "Time and Material Projects" provided by the appellant constituted "Manpower Recruitment and Supply Agency Service", subject to service tax. ii) The appellant's classification of services as "Consulting Engineer Service" was based on a bona fide interpretation of the law, and there was no willful suppression or mis-declaration. The extended period of limitation was not applicable due to the absence of willful suppression. iii) The penalties under Sections 76 and 77 were upheld, but the penalty under Section 78 was set aside.
Appeal allowed in part.
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2025 (2) TMI 799
Short payment of service tax - amount received for construction of roads - Manpower Supply Service (on reverse charge basis) - Extended period of limitation.
Whether the demand of service tax amounting to Rs.33,04,058/- on the amount received for construction of roads is valid under the applicable service tax exemption provisions? - HELD THAT:- There are several entries wherein amounts have been received towards construction of road. These funds have been received either from DRDA, Gorakhpur or Gorakhpur Development Authority, out of MP/MLA funds. It is found that entry 13(a) of Notification No.25/2012 dated 20.06.2012 grants exemption from payment of service tax on construction of road, bridge, tunnels or terminals for road transportation for use by general public. The said amount of Rs.2.20 crore having been received towards construction of road was exempted from payment of service tax. Therefore, the demand of Rs.33,04,058/- is liable to be set aside.
Demand of service tax on availing Legal and Manpower Supply service - Extended period of limitation - HELD THAT:- A similar matter of limitation had come up for consideration before the Division Bench of this Tribunal in the case of G. D. Goenka Pvt. Ltd. [2023 (8) TMI 995 - CESTAT NEW DELHI]. In the said case, the demand had been raised consequent to audit. The extended period of limitation was invoked on the ground that under self assessment, the Appellant assessee was required to assess its own tax due on the services provided by it and file returns under Section 70. By claiming the wrong Cenvat credit, the Appellant willfully and deliberately suppressed the facts from the Department.
The Division Bench referred to the decision of the Hon’ble Supreme Court in the case of Pushpam Pharmaceuticals Company Vs. CCE, Mumbai [1995 (3) TMI 100 - SUPREME COURT] and made detailed observation for holding that extended period of limitation could not have been invoked.
Thus, the Appellant’s case on limitation is squarely covered by aforesaid order of the Division Bench of the Tribunal. Respectfully following the aforesaid order, it is held that the demand of service tax (Rs.33,04,058/- as well as Rs.8,259/-) could not have been raised by invoking of extended period of limitation. As the demands itself are being set aside, penalties under Section 78(1) as well as Section 77(2) are also liable to be set aside.
Conclusion - i) Exemption under Notification No.25/2012 is applicable to road construction projects funded by government bodies, negating the service tax demand. ii) Regular filing of service tax returns precludes the invocation of the extended period of limitation absent evidence of willful suppression. iii) Penalties cannot be imposed when the underlying tax demand is invalidated.
Appeal allowed.
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2025 (2) TMI 798
Refund claim of Excise Duty paid wrongly - alleged mistake in classification and payment - absence of a challenge to the assessment or self-assessment - maintainability of refund claims filed without challenging the initial assessment - HELD THAT:- The appellant has produced on record number of documents cited supra viz. copy of PLA for the months of July 1999 to December 1999 evidencing payment of Excise Duty for the clearance affected from 15.07.1999 to 31.12.1999, photocopies of TR-6 Challans No.71 dated 01.07.1999 to No.198 dated 13.12.1999 vide which the Excise Duty was originally deposited during July 1999 to December 1999, list of invoices issued during July 1999 to December 1999 showing clearance of above consignment of imported SKO - The appellant has also produced certificate of Chartered Accountant who certified on the basis of books of accounts of the appellants duly certifying total payment of duty on same SKO Customs Duty cargo.
In view of the plethora of judgments, the learned Commissioner (Appeals) has not considered the same and has come to the finding that the appellant has not been able to establish that double payment has been made. Once it has come on record that no Excise bonded SKO was pumped by any refinery during the year 1999 to 2000 in the pipeline which clearly shows that the Excise Duty paid by the appellant is by mistake which is liable to be refunded to the appellant. As regards the preliminary objections raised by the Revenue, it is to be noted that this Tribunal in the case of M/s Shree Balaji Warehouse etc. has held that refund of service tax is maintainable in the absence of any challenge to assessment or self-assessment.
As regards the preliminary objections raised by the Revenue, it is to be noted that this Tribunal in the case of M/s Shree Balaji Warehouse etc. [2023 (9) TMI 1478 - CESTAT CHANDIGARH (LB)] has held that refund of service tax is maintainable in the absence of any challenge to assessment or self-assessment. The said decision was followed by the Tribunal in the case of M/s Grand Prix Engineering Pvt. Ltd. [2023 (10) TMI 731 - CESTAT CHANDIGARH], which was a case of refund under the Excise Act and it was held that refund claim would be maintainable in the absence of any challenge to assessment or self-assessment in appeal.
Conclusion - i) Once it has come on record that no Excise bonded SKO was pumped by any refinery during the year 1999 to 2000, the excise duty paid was clearly a mistake. ii) Refund claims can be maintained without challenging the assessment if it is demonstrated that duties were paid erroneously. iii) Refund of the excise duty paid erroneously by the appellant is allowed.
The impugned order is not sustainable in law - Appeal allowed.
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2025 (2) TMI 797
Doctrine of promissery estoppel - Rejection of the respective eligibility certificates applied under the relevant provisions of the Industrial Policy of 2008 - rejection of eligibility certificates without due and proper appreciation of the facts and materials available before the respondent-Department of Industries - industrial unit was “non-functioning” or not - validity of assessments made by the Department of Finance and Taxation, during the pendency of eligibility certificate applications.
Whether the rejection of eligibility certificates by the Department of Industries and Commerce under the Industrial Policy of Assam, 2008, on the grounds of being "non-functioning," was justified? - HELD THAT:- The period of validity of the Industrial Policy of 2008 was for a period of five years with effect from 01.10.2008 till 30.09.2013. The eligibility criteria as per the said Policy was all new units as well as existing units which go in for substantial expansion and which had commenced commercial production within the period of validity will be eligible for the incentives from the date of commencement of commercial production for the period applicable for each incentive. In the said Industrial Policy of 2008, various fiscal incentives such as interest subsidy on term loan, power subsidy, subsidy of quality certification/technical knowhow and subsidy on drawal of power line were given.
The respondents were permitted to place before the Court the materials on the basis of which the General Manager, DICC submitted its report of ‘non-functioning’ unit. The Court considered it apposite to permit the respondent authorities to place such materials to show the relevant date(s) when the physical inspection was made and the said unit was found to be non-functioning. On the other hand, the Sales Tax Department completed the assessments and raised the demand on the petitioner and other similarly situated petitioners. The assessment order clearly reveals that the assessment and the consequential demand was made after due examination of the books of accounts. The assessment of tax was made on the turnover of the unit/industry. Consequently, there appears to be a contrary stand reflected by the two departments of the Government namely, the Industries and the Finance Department. It is trite to mention here that in the State Level Committee constituted to examine and issue eligibility certificates, representatives of both the industries as well as the Finance and Taxation Department are members and which fact is not disputed by the respondents. Under such circumstances, it cannot be understood as to how a unit which was found to be non-functioning by the industries department could have reflected the turnover of goods manufacture and on the basis of which the assessments were carried out and demands were raised by the Finance and Taxation Department.
In Duroply Industries Limited Vs. The Union of India & 5 Ors [2023 (11) TMI 1353 - GAUHATI HIGH COURT], the Co-ordinate Bench of this Court held that the Petitioner’s unit was duly functioning at the time when the claims for Transport Subsidy were made, and the said unit has to be closed down subsequently due to the financial crisis and shortage of raw material and thereby the State Level Committee ought not to have rejected the claims of the Petitioner on the ground that with effect from January, 2018 the Petitioner unit was not functioning.
In Sukhamoy Paul Vs. State of Tripura & Ors. [2021 (5) TMI 1077 - TRIPURA HIGH COURT] while dealing with a similar situation with regard to the Transport Subsidy Scheme, the Tripura High Court held that the eligibility period for claiming subsidy may be 5 years, the scheme nowhere provides that only if a new industrial unit continues such manufacturing activity for a period of 5 years that it can claim the transport subsidy. Therefore, even if, as pointed out by the respondents, the petitioner at some later point of time after commencing its production got engaged into the same activity as a job worker, this would not amount to breach of any of the eligibility conditions of the scheme.
The aforesaid two judgments of this Hon’ble Court and that of Tripura High Court are squarely applicable in the present case.
Whether the doctrine of promissory estoppel applies to prevent the government from denying benefits promised under the Industrial Policy of Assam, 2008, after the petitioners had altered their position based on those promises? - HELD THAT:- Under the doctrine of promissory estoppels where the Government has made a promise and the prose relying on the promise has altered it’s position to its detriment the Government is not exempt from it’s liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex-parte appraisement of the circumstances in which the obligation has arisen - The Apex Court in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. [1978 (12) TMI 45 - SUPREME COURT] observed that that the doctrine was not limited only to cases where there was some contractual relationship or other pre-existing legal relationship between the parties. The principle would be applied even when the promise is intended to create legal relations or affect a legal relationship which would arise in future. The Government was held to be equally susceptible to the operation of the doctrine in whatever area or field the promise is made — contractual, administrative or statutory.
The Doctrine of Promissory Estoppel has been repeatedly applied by the Apex Court in statutory notifications. In Pournami Oil Mills v. State of Kerala [2020 (12) TMI 1241 - SUPREME COURT] the Government of Kerala by an order dated 11-4-1979 invited small-scale units to set up their industries in the State of Kerala and with a view to boost industrialization, exemption from sales tax and purchase tax was extended as a concession for a period of five years, which was to run from the date of commencement of production. By a subsequent notification dated 29-9-1980, published in the gazette on 21-10-1980, the State of Kerala withdrew the exemption relating to the purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the said notification.
After elaborate discussions of the law on Promissory Estoppel as laid down by the Apex Court, it is seen that the State authorities as well as its limbs covered under the sweep of Article 12 of the Constitution of India being treated as ‘State’ within the meaning of the said article, can be made subject to the equitable doctrine of promissory estoppel in cases where because of their representation the party claiming estoppel has changed its position and if such an estoppel does not fall under any statutory prohibition, absence of power and authority of the promisor and/or is otherwise not opposed to public interest, and also when equity in favour of the promisee does not outweigh equity in favour of the promisor entitling the latter to legally get out of the promise.
Whether the assessments made by the Department of Finance and Taxation, during the pendency of eligibility certificate applications, were valid? - HELD THAT?- The assessment orders itself reflects that the books of accounts etc were examined and pursuant to which the assessment orders and the consequential demands were raised. Therefore, in the facts of the present case, besides the other departments which had the occasion to examine the papers submitted for establishment of the industry as well as assessment order and the consequential demands raised by the Finance Department, the fact remains that there is no mala fide alleged against the industry or unit by the respondent authorities. There is also no allegation that undue advantage has been sought to be taken by the industries in respect of Industrial Policy concerned. Under such circumstances, the department of Finance as well as the Industries Department, being representatives of different department but a part of the same Government and a constituent members of the State Level Committee,- the State Level Committee being the mouth piece of the Government in so far as the Industrial Policy is concerned they must speak in one voice by taking into various views and evaluations undertaken by each of the constituent members.
The sole ground for assailing the assessment orders in these writ petitions is that the Finance Department ought not to have proceeded with the assessments in question as the relevant applications for grant of eligibility certificates in respect of the industries or units were pending before the appropriate authority under the relevant Industrial Policy. As a consequence thereof, the benefit of exemptions by the petitioners could not be availed off as the returns could not be filed on the online mode supported by the eligibility certificate as is required under the procedure. These returns were filed in the physical mode with due representations that the claims for eligibility are under consideration and the department is required to await the grant of eligibility certificate by the Industries Department.
Conclusion - i) The rejection of eligibility certificates on the grounds of being 'non-functioning' is contrary to the objectives of the Industrial Policy and the evidence of operational status as indicated by tax assessments. ii) The assessments conducted by the Finance Department without awaiting the outcome of eligibility applications are procedurally flawed and must be reconsidered. iii) The doctrine of promissory estoppel applies, binding the government to its promises under the Industrial Policy, as the petitioners relied on these promises to their detriment. iv) The Court directed the State Level Committee to reconsider the eligibility applications and issue certificates, ensuring that the petitioners receive the benefits they are entitled to under the Industrial Policy. v) The Court ordered that once eligibility certificates are granted, the petitioners should receive tax exemptions and any necessary refunds or adjustments.
Petition disposed off.
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2025 (2) TMI 796
Validity of auction conducted by respondent No.1 (Bank) for the sale of the secured asset - right of redemption of the secured asset by respondent No.2 under Section 13(8) of the SARFAESI Act - HELD THAT:- Section 54 of the Transfer of Property Act, 1882, defines a “sale” as the transfer of ownership in exchange for a price that is either paid, promised, or part-paid and part-promised. This provision further describes the manner in which a sale is effected. It stipulates that, in the case of tangible immovable property valued at one hundred rupees or more, the transfer can be made only through a registered instrument. The use of the term “only” signifies that, for tangible immovable property valued at one hundred rupees or more, a sale becomes lawful only when it is executed through a registered instrument. Where the sale deed requires registration, ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration. The registration of the sale deed for an immovable property is essential to complete and validate the transfer. Until registration is effected, ownership is not transferred.
In the present case, the original owner/borrower, Champa Ben Kundia, ‘sold’ the secured asset to her son, Chandu Bhai by an unregistered sale deed dated 28.04.2000. Subsequently, the basement of the secured asset was “transferred” to Satnam Singh and Surinder Wadhwa through another unregistered sale deed dated 30.03.2001. Further, an unregistered agreement to sell, dated 23.04.2001, allegedly transferred the basement of the secured asset to respondent No.2. Therefore, all the documents relied upon by respondent No.2 to claim ownership of the basement of the secured asset are unregistered documents and fail to meet the requirements of a valid sale under Section 54 of the Transfer of Property Act.
This Court in Babasheb Dhondiba Kute vs. Radhu Vithoba Barde [2024 (2) TMI 1516 - SUPREME COURT] held that the conveyance by way of sale would take place only at the time of registration of a sale deed in accordance with Section 17 of the Registration Act, 2008. Till then, there is no conveyance in the eyes of law.
It is now a well-settled principle that a sale by way of public auction cannot be set aside until there is any material irregularity and/or illegality committed in holding the auction or if such auction was vitiated by any fraud or collusion. This Court in V.S. Palanivel vs. P. Sriram [2024 (9) TMI 625 - SUPREME COURT] held that unless there are some serious flaws in the conduct of the auction as for example perpetration of a fraud/collusion, grave irregularities that go to the root of such an auction, courts must ordinarily refrain from setting them aside keeping in mind the domino effect such an order would have.
Conclusion - i) The Ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration. ii) A public auction sale cannot be set aside without evidence of "material irregularity and/or illegality committed in holding the auction or if such auction was vitiated by any fraud or collusion.
The impugned order of the High Court is set aside - Appeal allowed.
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2025 (2) TMI 795
Dishonour of Cheque - legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881 - discharge of rebuttal of presumption of consideration under Sections 118(a) and 139 of the NI Act - HELD THAT:- In the present case, learned Trial Court has categorically observed that the petitioner herein failed to prove its case beyond reasonable doubt and the respondent has created reasonable doubt over the veracity of the story of the petitioner.
It is pertinent here to discuss the law regarding the nature and extent of legal presumption in favour of complainant under NI Act and the possibility and manner of rebuttal of the same by the accused while balancing reverse onus of proof under the NI Act and presumption of innocence of accused under normal criminal jurisprudence.
The Hon’ble Supreme Court in Kumar Exports v. Sharma Carpets [2008 (12) TMI 682 - SUPREME COURT] has held that where the complainant (respondent therein) did not produce any books of account or stock register maintained in the course of regular business or any acknowledgement for delivery of goods to establish that as a matter of fact woolen carpets were sold to the appellant therein (accused), it was opined that the complainant has failed to establish its case under section 138 of NI Act as required under law.
This Hon’ble Court in Pine Product Industries & Another v. R.P. Gupta & Sons & Another [2006 (12) TMI 553 - DELHI HIGH COURT] has held that if the complaint itself is vague about the nature of liability in discharge of which the cheques were issued and no details as to how the amount in question was arrived at, mere liability of the respondent to pay her dues towards purchase of goods is not enough to proceed under section 138 of NI Act.
It is now well settled that the accused can always rely upon the material and circumstances brought on record by the complainant. It is also well settled law that the accused is not required to prove innocence by establishing the defence beyond all reasonable doubts as accused can always prove his innocence on basis of preponderance of probabilities - in the instant nature of the particular case in hand, the mandatory presumption under sections 118 (a) read with section 139 of NI Act does not relieve the petitioner from establishing the foundational facts.
From a perusal of the testimonies, it is clear that the petitioner did not lead any evidence regarding transaction, supply of materials against which the cheques in question were issued. Further, the bills have neither been placed on record nor proved by the complainant/petitioner - the witnesses of the petitioner cannot be treated as credible witnesses and neither the sale tax forms nor the statement of account can be relied upon safely, due to various inconsistencies and contradictions. Hence, the learned Trial Court has correctly acquitted the respondent.
Conclusion - The respondents have successfully rebutted the statutory presumption under section 118 (a) read with 139 of NI Act. Once the respondent has successfully rebutted the presumption, the petitioner is not able to prove its case beyond reasonable doubt. The impugned judgment passed by the learned Trial Court is well reasoned based upon the evidences and materials and documents placed on record.
The leave to appeals are dismissed.
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2025 (2) TMI 794
Dishonour of Cheque - Challenge to order directing the payment of interim compensation under Section 143A of the Negotiable Instruments Act, 1881 - HELD THAT:- A perusal of the reasoning given by the learned Metropolitan Magistrate if tested on the touchstone of the law laid down in Rakesh Ranjan Srivastava [2024 (4) TMI 719 - SUPREME COURT] shows that the learned Metropolitan Magistrate has not prima facie evaluated the merits of the case of the complainant nor the defence of the petitioner/accused has been considered. Further, there is neither any application of mind to the quantum of interim compensation to be granted nor the factors like, nature of the transaction, the relationship, if any, between the accused and the complainant, financial distress etc. have been considered.
Somewhat similar is the position in case of the impugned order passed by the learned Principal District & Sessions Judge, South-East, District Court Saket, New Delhi. The revisional court has not even prima facie evaluated the merits of the case set up in the complaint as well as defence of the petitioner/accused. The factors to be borne in mind for deciding the quantum of interim compensation have also not been adverted to.
Conclusion - The matter is remanded back to the learned Metropolitan Magistrate for deciding the application of the complainant/respondent under Section 143A of the Act afresh, keeping in mind the law down in Rakesh Ranjan Srivastava.
Petition disposed off by way of remand.
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2025 (2) TMI 793
Cancellation of GST registration without giving any opportunity of hearing or without any SCN - Violation of principles of natural justice - HELD THAT:- The bare reading of this order would indicate that according to the Department, the petitioner – herein had given some reply dated 14-4-2022 in response to the show cause notice dated 4-4-2022. Immediately, in the second line, the order reads that no reply to show cause notice was submitted by the petitioner. The effective date of cancellation of the registration is shown to be 31-3-2022.
The case of the petitioner is that no show cause notice was at all served upon him and, therefore, there is no question of giving any reply - Issue Notice, returnable in four weeks.
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2025 (2) TMI 792
Rejection of appeal of the petitioner without entering into the merits for non-compliance of section 107(6)(b) of the GST Act, which provides for a pre-deposit of 10% of the amount of tax in dispute in order to maintain the appeal - petitioner submits that once the mandatory condition of pre-deposit is made good, the impugned order cannot be sustained in the eyes of law and therefore, a direction may be issued to decide the petitioner's Defective Appeal No. GST-0010/2023/D expeditiously.
HELD THAT:- The impugned order dated 10.04.2023 passed by the respondent no. 2 in Defective Appeal No. GST-0010/2023/D cannot be sustained in the eyes of law. The same is quashed.
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2025 (2) TMI 791
Levy of tax and penalty - technical error in the e-way bill regarding the shipping address - auto-populated e-way bill - HELD THAT:- The Court is of the opinion that e-way bill is the document which is generated and accompanying the goods in transit, so that department may come to know about the movement of goods from one place to another place. So that at the time of passing final assessment, the particular transaction may not escape from levy of tax as per the prevalent provisions, under the GST Act - Further, the e-way bill can be cancelled within its validity as provided under the Act.
The case in hand, the e-way bill was automatically generated on 14.12.2022, which was valid up to 16.12.2022. In the present case, the e-way bill has not been cancelled within its validity, therefore, no adverse view can be taken against the petitioner that if the goods were not intercepted, transaction in question could have escape to assessment.
This Court in the case of M/s Sun Flag Iron and Steel Company Limited Vs. State of UP and others [2023 (11) TMI 456 - ALLAHABAD HIGH COURT] has held that the purpose of e-way bill is that the department should know the actual movement of the goods and once the e-way bill is not cancelled within the prescribed period, the genuineness of the transaction cannot be questioned.
Conclusion - Merely on technical ground that in the e-way bill accompanying with the goods in question, the place of shipment has wrongly been mentioned, the seizure or levy of penalty cannot be made. The proceedings initiated against the petitioner is not justified in the eyes of law.
Petition allowed.
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2025 (2) TMI 790
Power of Appellate Authority to condone the delay in filing an appeal beyond one month of the prescribed period under Section 107 of the West Bengal Goods and Service Tax Act, 2017 - HELD THAT:- Admittedly in this case, it would appear that the appeal had been dismissed solely on the ground that the same had been filed beyond one month of the time prescribed for filing the appeal. The appeal therefore, was obviously barred by limitation. However, at the same time, the aforesaid could not prevent the petitioner from maintaining an application for condonation of delay by invoking the provisions of Section 5 of the Limitation Act, 1963. The issue whether the Appellate Authority is competent to condone the delay beyond one month from the prescribed period for filing of an appeal has already been conclusively decided by the Hon’ble Division Bench of this Court in the case of S. K. Chakraborty & Sons Vs. Union of India [2023 (12) TMI 290 - CALCUTTA HIGH COURT].
The Appellate Authority ought to have taken note of the explanation given in the application for condonation of delay under Section 5 of the Limitation Act, 1963.
Taking note of the fact that no fruitful purpose will be served by remanding the aforesaid matter on the issue of condonation of delay to the Appellate Authority and also considering the explanation given by the petitioner, the petitioner has been able to sufficiently explain the delay in filing the appeal belatedly.
The writ petition is disposed of.
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2025 (2) TMI 789
Challenge to order passed u/s 73 of the GST Act - appeal has been dismissed as being beyond limitation - passed without giving a mandatory hearing - principles of natural justice - HELD THAT:- Considering the fact that the mandatory provisions of Section 75(4) are essentially to be followed and the same has not been followed as is clear from the perusal of the orders impugned. On the said limited ground, the impugned orders 13.12.2023 and the order dated 30.01.2025, are quashed. The writ petition is allowed.
The matter is remanded to pass orders afresh after giving opportunity of hearing to the petitioner.
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2025 (2) TMI 788
Condonation of delay of 94 days in filing the appeal - penalty for wrong utilization of input tax credit - HELD THAT:- The issue decided in M/S. GREENSTAR FERTILIZERS LIMITED, REP. BY ITS CHIEF OPERATING OFFICER, E. BALU VERSUS THE JOINT COMMISSIONER (APPEALS) , THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, TUTICORIN [2024 (6) TMI 667 - MADRAS HIGH COURT] where it was held that 'considering the fact that the petitioner has availed input tax credit, which was not eligible to be availed, but could have resulted in wrong utilization of input tax credit, a token penalty of Rs.10,000/- is imposed on the petitioner. The observation of the first respondent by placing reliance on the decisions of the Hon'ble Supreme Court, referred to supra, is also not relevant as Section 74 of the CGST Act deals with a situation where the credit is availed or utilized by reason of fraud or any wilful misstatement or suppression of facts.'
The impugned order dated is set aside and the matter is remitted back to the second respondent to consider the matter afresh, and pass appropriate orders on merits and in accordance with law - Petition disposed off by way of remand.
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2025 (2) TMI 787
Scope of SCN - Non-mentioning about the “Security Wages” in the SCN - to fall under Administration Expenses or not - Seeking opportunity of personal hearing to present the case - violation of principles of natural justice - HELD THAT:- In the case on hand, though the entire impugned order has been challenged, the learned counsel for the petitioner has restricted his relief only with regard to the “security wages” and requested this Court to grant liberty to the petitioner to file an appeal against all the other issues pertaining to the impugned assessment order dated 30.08.2024.
As rightly contended by the petitioner, the respondent found “Security Wages” and disputed the same, only upon production of documents by the petitioner. Prior to the furnishing of documents, no such issue was raised either vide show cause notice or in any other manner. In the show cause notice also, the respondent had stated only with regard to the “Administration Expenses”.
Conclusion - This Court is of the considered view that it is a fit case to interfere on the aspect of non-providing of any opportunity of personal hearing to the petitioner. Therefore, this Court is inclined to set aside the impugned order only to the extent of “Security Wages”. As far as the remaining issues are concerned, as requested by the petitioner, this Court grants liberty to them to file an appeal against the impugned order. However, it is not proper for the petitioner to file their appeal in a piecemeal manner.
The impugned order dated 30.08.2024 is set aside and the matter is remanded to the 1st respondent for fresh consideration only on the aspect of “Security Wages” - Petition disposed off by way of remand.
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2025 (2) TMI 786
Challenge to assessment order in Form GST DRC-07 - said proceedings did not contain a DIN number - HELD THAT:- The question of the effect of non-inclusion of DIN number on proceedings, under the G.S.T. Act, came to be considered by the Hon’ble Supreme Court in the case of Pradeep Goyal Vs. Union of India & Ors [2022 (8) TMI 216 - SUPREME COURT]. The Hon’ble Supreme Court, after noticing the provisions of the Act and the circular issued by the Central Board of Indirect Taxes and Customs, had held that an order, which does not contain a DIN number would be non-est and invalid.
A Division Bench of this Court in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT], on the basis of the circular, dated 23.12.2019, bearing No.128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings. Another Division Bench of this Court in the case of Sai Manikanta Electrical Contractors Vs. The Deputy Commissioner, Special Circle, Visakhapatnam [2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT], had also held that non-mention of a DIN number would require the order to be set aside.
Conclusion - The Writ Petition challenging the assessment order was disposed of, allowing the respondent to conduct a fresh assessment with the requirement of assigning a DIN number and excluding the period from the original assessment order to the current decision for limitation purposes.
Petition disposed off.
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2025 (2) TMI 785
Discrepancies in the petitioner's tax filings under the Goods and Services Tax Act, 2017 - neither the show cause notices nor the impugned order of assessment has been served on the petitioner by tender or sending it by RPAD - petitioner is ready and willing to pay 25% of the disputed tax and that they may be granted one final opportunity before the adjudicating authority - HELD THAT:- The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order - The impugned order dated 16.03.2024 is set aside.
Petition disposed off.
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2025 (2) TMI 784
Challenge to assessment order - the proceeding does not contain the signature of the assessing officer - HELD THAT:- The effect of the absence of the signature, on an assessment order was earlier considered by this Court, in the case of A.V. Bhanoji Row Vs. The Assistant Commissioner (ST), in W.P.No.2830 of 2023, decided on 14.02.2023 [2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT]. A Division Bench of this Court, had held that the signature, on the assessment order, cannot be dispensed with and that the provisions of Sections 160 & 169 of the Central Goods and Service Tax Act, 2017, would not rectify such a defect - Following this Judgment, another Division Bench of this Court, in the case of M/s. SRK Enterprises Vs. Assistant Commissioner [2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT], had set aside the impugned assessment order.
Another Division Bench of this Court by its Judgment in the case of M/s. SRS Traders Vs The. Assistant Commissioner ST & ors [2024 (4) TMI 894 - ANDHRA PRADESH HIGH COURT], following the aforesaid two Judgments, had held that the absence of the signature of the assessing officer, on the assessment order, would render the assessment order invalid and set aside the said order.
Conclusion - The impugned assessment order would have to be set aside on account of the absence of the signature of the assessing officer, on the impugned assessment order.
Petition disposed off.
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2025 (2) TMI 783
Seeking release of admitted liability towards the difference of GST - HELD THAT:- Reliance placed on an order Division Bench of this Court in M/S APEX STRUCTURE PVT. LTD. [2024 (12) TMI 928 - MADHYA PRADESH HIGH COURT] wherein it is observed that 'Respondent No.4 which is a State GST Department, according to which also the rate of GST has been enhanced from 12% to 18% and same is liable to be paid by respondent No.2 which is a Government Entity.'
Petition disposed off.
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