I-T - Once assessee has failed to prove execution of agreement or their possession, then AO should adopt stamp price of land as actual sale price in light of Sec 56(2)(vii)(b) r/w 1st & 2nd proviso therein: ITAT

I-T - Addition made w.r.t. profits from diamond purchases is upheld, where assessee is not shown to have sufficient bank balance to purchase diamonds & is unable to explain how such purchases were made: ITAT

I-T - There is no legal capacity for two parties to transaction entered by way of registered deed to cancel same, except with permission of Court as prescribed u/s 31 of Specific Relief Act: ITAT

Cus - CESTAT's reasoning and conclusion that LCD panels [used in TV sets; Audio systems in automobiles] are classifiable under CTH 9013.8010 is sound and unexceptionable: SC

CX - Once the order-in-original sanctioning refund came to be set aside in a proceeding u/s 35E, there is no question of any further notice u/s 11A: SC

GST - Amendment to Rule 89(4)(C) of CGST Rules is illegal, arbitrary, unreasonable, irrational, unfair, unjust & ultra vires Section 16 of IGST Act & Section 54 of CGST Act as well as Articles 14 & 19 of Constitution; hence merits being quashed: HC

ST - Re-insurance does not cover the risk to the asset; is not excluded from the definition of 'input service': HC

CX - Since there is no loss of goods at loading and unloading stage, no duty demand is sustainable accordingly, duty so paid by appellant is required to be refunded: CESTAT

Cus - Merely because appellant has been issued a License by Drugs & Cosmetics Act, it cannot be said that Saccharomyces Boulardii are known and understood as medicine, same are to be classified under Chapter 21: CESTAT

ST - Rejection of refund claim by referring to ST-3 return, cannot be justified, provided the fact of admissibility and availability of credit claimed as refund can be determined from records maintained under CER, 2002, CCR, 2004, or STR, 1994: CESTAT

2023-TIOL-380-HC-KAR-GST

Tonbo Imaging India Pvt Ltd Vs UoI

CGST - M/s Tonbo Imaging India Pvt Ltd, is engaged in designing, developing, building and deploying various types of advanced imaging and sensor systems to sense, understand and control complex environments - The petitioner is engaged in developing innovative designs in micro-optics, lower power electronics and real-time vision processing to design imaging systems for real world applications in fields of military applications, critical infrastructures for modern day battlefields, unmanned reconnaissance, transport vehicles driving in the dark etc., wherein the customized products provide effective visualization in different and challenging environments - The petitioner exported various aforementioned customized / unique products during the period from May 2018 to March 2019 - Since exports made by the petitioner are "zero rated" under Section 16 of the Integrated Goods and Services Act, 2017 , the petitioner filed refund applications with the Department on 25.05.2020, 27.05.2020 and 28.05.2020 and claimed refund of unutilized input tax credit under Section 54(3)(i) of the Central Goods and Services Act, 2017 read with Rule 89 of the CGST Rules - Meanwhile, Rule 89(4)(C) of the CGST Rules having been amended w.e.f 23.03.2020, Show Cause Notices dated 27.05.2020, 03.06.2020 and 04.06.2020 were issued by the Department on the ground that the petitioner had not given proof, which was required to be given in terms of the amended Rule 89(4)(C) of the CGST Rules and that therefore, the refund claims could not be considered - The petitioner submitted replies dated 04.06.2020, 08.06.2020 and 09.06.2020 to the show cause notices inter-alia stating that the amended Rule 89(4)(C) of the CGST Rules would not be applicable in the instant case, as the period for which refund was being claimed (i.e., May 2018 to March 2019) was much prior to the amendment of Rule 89(4)(C) (i.e., on 23.03.2020) and that therefore, the petitioner would be governed by the old/un-amended Rule 89(4)(C) and not the amended Rule 89(4)(C) - Thereafter, the Department proceeded to pass the order dated 30.06.2020 rejecting the refund claim of the petitioner, who is before this Court by way of the present petition not only assailing the impugned order but also the validity of Rule 89(4)(C) of the CGST Rules as well as the Explanation to Rule 93 of the CGST Rules.

Held - There is no gainsaying the fact that one of the fundamental principles to make exports competitive in the international market is that taxes are not added to the cost of exports - This intention cannot be carried out by merely exempting the output goods or services - The impugned amendment to Rule 89(4)(C) of the CGST Rules is illegal, arbitrary, unreasonable, irrational, unfair, unjust and ultra vires Section 16 of the IGST Act and Section 54 of the CGST Act for the following reasons:-

(a) Rule 89(4)(C) of the CGST Rules is ultra vires Section 54 of the CGST Act read with Section 16 of the IGST Act; the very intention of the zero-rating it to make entire supply chain of "exports" tax free, i.e., to fully 'zero-rate' the exports by exempting them from both input tax and output tax; accordingly, Section 16(3) of the IGST Act allows refund of input taxes paid in the course of making a zero-rated supply, i.e., supplies which covers exports as well as supplies to SEZs. The rule in whittling down such refund is ultra vires in view of the well settled principle of law that Rules cannot override the parent legislation.

(b) Rule 89(4)(C) of the CGST Rules is violative of Article 14 and 19(1)(g) of the Constitution of India; the quantum of refund of unutilized input tax credit is restricted only in cases falling under Section 16(3)(a) of the IGST Act, i.e., in cases where export of goods is made without payment of duty under a Bond/Letter of Undertaking(LUT); however, no such restriction is imposed on cases falling under Section 16(3)(b) of the IGST Act, i.e., in cases where export of goods is made after payment of duty; by virtue of the above, there is a hostile discrimination between two class of persons, viz., (i) the class of exporters who opt to obtain refund of unutilized input tax credit where export of goods are made without payment of duty under a bond/LUT in terms of Section 16(3)(a) of the IGST Act read with Rule 89(4) of the CGST Rules and (ii) the class of exporters who opt to obtain refund of tax after payment of duty in terms of Section 16(3)(b) of the IGST Act read with Rule 96A of the rules; the guarantee of equal protection of the laws must extend even to taxing statutes; if person or property of the same character has to be taxed, the taxation must be by the same standard, so that the burden of taxation may fall equally on all persons holding that kind and extent of property; if the same class of property or persons similarly situated is subjected to an incidence of taxation, which results in inequality, the law may be struck down as creating an inequality amongst holders of the same kind of property or persons.

+ The respondents-revenue contend that the impugned amendment was based on the minutes of the GST Council's 39th meeting held on 14.03.2020, which discloses that the above the only ground for amendment seems to be a possible misuse without any factual data supporting the same; the reasons for such amendments based on possible misuse without adequate defining data cannot be countenanced as having a reasonable basis in law. Issue of misuse cannot be generalized. Every such misuse is required to be ascertained and verified before asserting that there has been misuse. It is also well settled that if the government perceives that there could be a possibility of abuse of a provision, it should adopt measures to keep a check on the same; however, the law cannot be amended on the premise of distrust.

+ It is also relevant to note that in the aforesaid GST Council Meeting, it was stated that the FOB value of exports will not be changed, which would mean that there is no doubt about the valuation of the goods; therefore, if there is no doubt about the value of the goods, the artificial restriction of refunds by taking the value of domestic supplies seems irrational. Further, the policy of the Government itself will have to satisfy the test of rationality and must be free from arbitrariness and discrimination.

+ the impugned Rule 89(4)(C) of the CGST Rules, 2017 as amended vide Para 8 of the Notification No.16/2020-Central Tax dated 23.03.2020 deserves to be declared ultra vires and invalid and consequently deserves to be quashed. So also, the impugned order dated 30.06.2020 which is based on the impugned amended Rule also deserves to be quashed and consequently, respondents are to be directed to accept the refund applications of the petitioner and grant refund in favour of the petitioner together with applicable interest within a stipulated time frame;

+ The impugned offending words, "or the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed supplier" appearing in Rule 89(4C) of the Central Goods and Services Tax Rules, 2017 as amended vide Para 8 of the Notification No.16/2020-Central Tax(F.No.CBEC-20/06/04/2020-GST) dated 23.03.2020 is declared ultra vires the provisions of the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017 as also violative of Articles 14 and 19 of the Constitution of India and resultantly, the same are hereby quashed; the order in question stands quashed.

- Writ petition allowed: KARNATAKA HIGH COURT

2023-TIOL-25-SC-CUS

CCE Vs Videocon Industries Ltd

Cus - Revenue is aggrieved by the CESTAT order(s) classifying LCD Panels imported by the respondents under in CTH 9013.8010 - It is the case of the Revenue that the goods [in the case of Videocon] are classifiable as 85.29 "parts of goods falling under heading 85.28" [television sets] and as "Car Audio or Video Players" under either CTH 8519 or 8555 [in the case of Harman] being part of audio systems in automobiles. Held: Bench has difficulty in accepting the revenue's argument, in this case, inasmuch as that it jumps over interpretive instructions - One, General Note (1) states that classification has to be in consonance with terms and headings in chapter notes - Two, Rule 3(a) categorically enjoins that in regard to classification, the heading providing for a "more" specific description prevails over the general one - Three, Note 1(m) - in Chapter 85 excludes the application of articles falling in Chapter 90 - In this court's opinion, this note, along with the General Note 3(a) [of the General Rules of Interpretation] that headings that are specifically provided, should be preferred over the general ones, is decisive - Thus, the revenue's contention that by virtue of Note 2(b) to Chapter 85, the goods are to be classified based on their principal or sole use is insubstantial because of the clear mandate of Note 1(m), which excludes Chapter 90 goods (which includes LCD panels) - More importantly, Note 2 opens with the expression "subject to Note 1" - This subordinates the entire subject matter in Note 2; it is only where the article is a "part" which acts as an accessory, that the enumerated portions of Chapter 85 come into play - It is, therefore, clear that when goods are excluded from a particular chapter, the "pull in" through a note has to be narrowly construed, as otherwise, the basis of exclusion would be defeated, and the earlier note (of exclusion) rendered redundant - CESTAT's reasoning and conclusions, in both cases, that the LCD sets were classifiable under Chapter 90, Entry 9013.8010, is sound and unexceptionable - Revenue appeals are dismissed: Supreme Court [para 25, 28, 29]

- Appeals dismissed: SUPREME COURT OF INDIA

2023-TIOL-24-SC-CX

CCE Vs Morarjee Gokuldas Spinning And Weaving Company Ltd

CX - Appellate Tribunal held that the show cause notice under Section 11A of the Central Excise Act, 1944 is required to be issued in case of erroneous refund of the duty - Division Bench of the High Court has dismissed the appeal preferred by the Revenue and has affirmed the judgment and order passed by the Appellate Tribunal, therefore, the present appeal. Held: Once the order in original sanctioning the refund came to be set aside in a proceeding under Section 35E of the Act and the proceedings under Section 35E was initiated within the time prescribed under Section 35E of the Act, thereafter there is no question of any further notice under Section 11A of the Central Excise Act - High Court has without giving any reasons how the same is misplaced has ignored to follow the decision of this Court in the case of Asian Paints (India) Ltd. ( 2002-TIOL-498-SC-CX-LB ) and rather has followed its earlier decision in the case of Bajaj Auto Ltd ( 2003-TIOL-330-HC-MUM-CX ) which admittedly was prior to the decision of this Court in the case of Asian Paints (India) Ltd. (supra) - Order passed by the High Court and that of the Tribunal are hereby quashed and set aside and the order passed by the Commissioner (Appeals), Mumbai dated 13.05.2005 is hereby restored: Supreme Court [para 7.5, 8, 9]

- Appeal allowed: SUPREME COURT OF INDIA

2023-TIOL-379-HC-DEL-ST

CCE & ST Vs Oriental Insurance Company Ltd

ST - CENVAT - CESTAT had held that the Oriental Insurance Company Ltd. (OIC) is entitled to avail Central Value Added Tax (CENVAT) credit on re-insurance services (Indian as well as Foreign Insurance) - According to the Revenue (appellant), the CESTAT's conclusion is erroneous because by virtue of Rule 2(l) of the CENVAT Credit Rules, 2004 (CCR, 2004) as applicable during the period 01.04.2011 to 20.07.2012, CENVAT Credit was unavailable for insurance in respect of a motor vehicle. Held : According to OIC, the re-insurance services availed by it could not be stated to be in relation to 'a motor vehicle' - The re-insurance premium was paid by the respondent for re-insurance to mitigate its risks - The quintessential difference being that whereas the respondent had issued policies relating to a motor vehicle, the re-insurance premium was paid for re-insurance to cover or mitigate its risks - It is clear from the definition of re-insurance given under Section 2(16B) of the Insurance Act, 1938 that the re-insurance is insurance of part of the insurer's risks by another insurer - Thus, what the re-insurer, in effect, does is to insure the risks of another insurer - This is qualitatively different from the risks of the policy holder covered by the insurance policy issued by the insurer - The insurer, in fact, covers the risks of the policy holder - Re-insurance is a matter between one insurance company and another, where the former insurer company indemnifies the latter against part of the loss that the latter insurance company may sustain under policy or policies issued by it - Re-insurance is, essentially, to distribute the risks assumed by an insurance company, thus ensuring stability to the business of the insurance company that is covered by re-insurance - There is merit in the contention that the insurance company that reinsures another insurance company covers the business risks of that insurance company; it does not cover the risk to the asset or other risks, covered by that insurance company - Bench finds no infirmity with the decision of the CESTAT that re-insurance services were not excluded from the definition of 'input service' as defined under Section 2(l) of the CCR with effect from 01.04.2011 - Question projected by the Revenue in this appeal are answered against the Revenue and in favour of OIC - Appeal dismissed: High Court [para 32, 34, 35, 36, 39, 43, 44]

- Appeal dismissed: DELHI HIGH COURT

2023-TIOL-251-CESTAT-AHM

Nayara Energy Ltd Vs CCE & ST

CX - The plea of appellant is that there is no difference in overall quantity which was pointed out by department is not of physical shortage but due to contraction in goods which occurs due to difference in temperature - Weight of product remains unchanged or very minor difference as compared to difference shown in K15 and KL of a liquid product which obviously varies at a time of a particular temperature and at different time at a different temperature, appellant have also shown that temperature at the time of loading and unloading were different - There is shortage of quantity in KL whereas, quantity in MT is almost same except variation in 0.847 MT as against total weight of 64030.568 MT which is negligible - It can be seen that when total quantity of goods in weight is same and quantity in KL varies at different time due to different temperature, there is absolutely no case of shortage or loss of goods - If there is physical loss due to handling, transit, storage or in case of accident or natural calamity or whatsoever, no remission shall be permitted - Quantity quantity remains the same, variation in KL is only due to density of goods that due to different temperature at the time of loading and unloading therefore, it cannot be said that there is any loss of quantity of goods consequently, there is no violation of para 2(v) of Commissioner's letter - Since there is no loss at all, there is no question of seeking remission therefore, process of remission of duty is not relevant - Since there is no loss of goods at loading and unloading stage, no duty demand is sustainable accordingly, duty so paid by appellant is required to be refunded to appellant - As regard unjust enrichment, appellant have accepted that amount of refund shown as received in their books of accounts therefore, they have satisfied that incidence of refund amount has not been passed on to any other person - Accordingly, impugned order is set aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

2023-TIOL-250-CESTAT-MAD

Dr Reddy's Laboratories Ltd Vs CC

Cus - The moot point to be decided is, whether imported goods merit classification under 29183090 as adopted by appellant or under 21021090 as determined by Department - The appellant imported a consignment of Saccharomyces Boulardii in bulk vide Bill of Entry under DEPB Scheme - Appellant has furnished medical literature to argue that Saccharromyces Boulardii is used as medicine for diarrohea - However, there is no evidence to show that this product is known in market in ordinary parlance as a medicament for gut related problems - Appellant has failed to show that it is sold as a medicine for diarrhoea - Merely because appellant has been issued a License by Drugs & Cosmetics Act, it cannot be said that imported goods are known and understood as medicine - In case of Kasturi Foods & Chemicals, similar issue came up for consideration before Tribunal - The assessee therein had imported dried yeasts (BPC 73) or pharma yeast - The decisions passed by Tribunal as to classification in case of Kasturi Foods and Products Ltd. as well as in case of M/s. Zymonutrients Pvt. Ltd. 2020-TIOL-174-CESTAT-MAD would apply and impugned goods are to be classified under Chapter 21 as determined by Department - Impugned order is sustained: CESTAT

- Appeal dismissed: CHENNAI CESTAT

2023-TIOL-249-CESTAT-MUM

Warburg Pincus India Pvt Ltd Vs Asstt.Commissioner

ST - The appellant is providing "Banking and other financial services" - They filed two refund claims for the period April 2005 to Dec. 2005 and for the period from January 2006 to September 2006 on the ground that they were not in a position to utilize cenvat credit of duty service Tax taken on input services used in providing output services exported without payment of service tax - Appellant is eligible to avail Cenvat Credit of input services for period prior to 14.03.2006 - It is not even the case of revenue that CENVAT Credit is not available in respect of these services however said credit has not been reflected in return filed by appellant during period 2005-06 or as opening balance in ST-3 return filed for period April to September 2006 - ST-3 return has not been mentioned as document relevant for purpose of considering admissibility of credit and refund - Accordingly, rejection of refund claim by referring to ST-3 return, cannot be justified, provided the fact of admissibility and availability of credit claimed as refund can be determined from records maintained under CER, 2002, CCR, 2004, or STR, 1994 - It is stated/ unstated policy which govern the exports of goods or services across the globe that local taxes should not be exported along with goods or services exported - No merits found in impugned order to this extent: CESTAT

- Appeal allowed: MUMBAI CESTAT