Law on Service of Notice and Confiscation Order under CGST Act, 2017

Law on Service of Notice and Confiscation Order under CGST Act, 2017

Introduction

CGST Act, 2017 has recently concluded 8 years. A recent decision has answered some crucial issue associated with CGST Act, 2017

In case of Mathai M.V. v. Senior Enforcement Officer [2025] GCtR 1307 (Kerala), a detention order under S.130 of CGST Act, 2017 was passed by the authorities affecting vehicle of the petitioner. Petitioner had challenged those Orders.

The case dealt with Service of notice prior to confiscation and service of confiscation order under the CGST Act, 2017.

The Petitioner has placed on record a notice to show cause dated 5 November 2024 issued under Section 130 of the CGST Act, 2017, which is addressed to M/s. Petroliv Petroleums, calling upon it to show cause why the goods and the conveyance should not be confiscated. There was no clarity in the counter affidavit filed by Tax Department as to the action for confiscation of the vehicle taken under Section 130 of the Act of 2017.

Legal Principles

Section 130 of the CGST Act, 2017 provides for the confiscation of goods or conveyances and the levy of penalty.  Under Section 130(4), no order of confiscation of goods or conveyance shall be issued without giving the person an opportunity of being heard. That is so because the owner of the conveyance under Section 130(1)(v) has an opportunity to prove that the conveyance was used without his knowledge and connivance, or that of his agent or the person in charge of the conveyance. For giving this opportunity, notice has to be served on the owner. The manner of serving notice under the Act of 2017 is provided under Section 169.

Findings

In this case, the Petitioner admittedly is the owner of the vehicle (conveyance). The statute prescribes the mode of notice. The notice stated to have been sent to the Petitioner/owner through WhatsApp is not a mode of service contemplated under Section 169 of the Act of 2017. While such a practice was permitted during the COVID-19 pandemic, it no longer constitutes a valid mode of issuing notice under the provisions of the Act of 2017, and there is no debate regarding the same. It was held that the notice served on the Petitioner before holding that the proceedings under Section 130 are concluded against the Petitioner is not placed on record. It was held that there is a serious lacuna in the procedure adopted by the Tax Department as far as confiscation of the Petitioner’s vehicle is concerned. 

Service Tax : Bunker/Fuel/Water and Its Treatment For Tax Purposes

 Service Tax : Bunker/Fuel/Water and Its Treatment For Tax Purposes

In a recent case, the dispute was that the value of banker/fuel and water delivered, while supplying the vessel by the appellants to their charterers, have not been included in determining the assessable value for discharging service tax under ‘Supply of Tangible Goods for Use (STGU)’ service and the disputed period covered in the SCN is from October, 2009 to September, 2014. 

It was held in Shipping Corporation of India Ltd v. CCE & ST [2025] GCtR 1272 (CESTAT, Mumbai) that from plain reading of the legal provisions, it transpires that service tax is liable to be paid in respect of taxable services provided by one person i.e., service provider to the other person i.e., service receiver. It is not in dispute that the appellants-vessel owner is the service provider and their customer-charterers are the service receiver, in respect of the taxable service. Further, it also transpired that for the period relating to the pre-negative list regime i.e., prior to 1-7-2012, the taxability of service tax was determined in terms of coverage of an activity under the service tax net by defining taxable services under section 65(105) of the Finance Act, 1994, which enumerated each of the specified services. For the period post-negative list regime, the category of services hitherto defined under the erstwhile regime were merged under a common phrase i.e., 'service' as defined under section 65B(44) of Finance Act, 1994, which was brought into effect from 1-7-2012. The relevant entry of the specific taxable service in the present case is 65(105)(zzzzj). Subsequent to introduction of Negative list regime from 01.07.2022, the services that are subject to levy of service tax have been explained in Section 66B of Finance Act, 1994

It was clearly brought out that such activity of delivering the vessel is not part of the services, and therefore the fuel/bunker and water charges, incurred by the appellants, prior to the delivery of the vessel, in no case would become part of the services agreed upon between the parties. Therefore, the value of the bunker/fuel and water, which do not form part of the taxable services cannot be added to the taxable value of the services. 

Allegedly Wrongly Availing ITC and a Case of Incorrect GSTN : Tax Department's Order Set Aside

 Allegedly Wrongly Availing ITC and a Case of Incorrect GSTN : Tax Department's Order Set Aside

In a recent case, the Order passed by Tax Department has been set aside.

Invoices for the products purchased from Z were raised by Z on the Petitioner, however, the said invoices inadvertently reflected the Bombay address and Bombay GSTN of the Petitioner, instead of the Delhi GSTN number. 

Argument raised was incorrect reflection of Petitioner's Bombay GSTN on the invoices was merely an error by the supplier.

When the matter went into litigation, "on a direct query being put to the ld. Standing Counsel for the Respondent/Department, he fairly admits that no other entity has also claimed at the ITC on these purchases. The only basis for rejecting the ITC is the mention of the Bombay office GSTN instead of the Delhi office GSTN."

Tax Department's Order was set aside where the only basis for rejecting the ITC is the mention of the Bombay office GSTN instead of the Delhi office GSTN. Petitioner was found entitled to avail ITC.

🌏 For details, refer B Braun Medical India Pvt Ltd v. Union of India [2025] GCtR 716 (Delhi).

🌍 Also refer S.2(63) of CGST Act, 2017 which defines “input tax credit” means the credit of input tax. One may also refer S.2(59) of CGST Act, 2017 which defines “input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. One may also refer S.2(62) of CGST Act, 2017 which defines "input tax credit". One can refer A.300A of Constitution of India.

Immovable Property and Taxation : Important Decisions

 Immovable Property and Taxation : Important Decisions

Here are some important decisions that deal with issue of service tax for renting of immovable properties under Indian taxation regime before CGST Act, 2017 came into force.

1. M/s Shubh Timb Steels Limited v UOI [2010] GCtR 5961 (P&H) : "It cannot be held that renting of property did not involve any service as service could only be in relation to property and not by renting of property. Renting of property for commercial purposes is certainly a service and has value for the service receiver."

2. HOME SOLUTIONS RETAILS LTD. v UOI [2011] GCtR 5962 (Delhi) : In this case, Section 65(90a) read with Section 65(105)(zzzz) of the Finance Act, 1994 as amended by the Finance Act, 2007, Finance Act 2008 and Finance Act, 2010 were sought to be declared as ultra vires the Constitution of India as there is colourable exercise of power inasmuch as the Legislature does not have the legislative competence in this field as it basically pertains to List II of the Seventh Schedule of the Constitution of India. The petition was dismissed.

3. Retailers Association of India (RAI) v UOI [2011] GCtR 5963 (Bombay): "The notes on clauses when the Finance Bill of 2007 was introduced in Parliament would indicate that the intent of Parliament was specifically to bring the renting of immovable property within the fold of taxable services when used in course or furtherance of business or commerce."

4. N.K. Bhasin v Union of India [2017] GCtR 5964 (Lucknow, Allahabad) : Court has negatived the arguments that service tax on service of renting of property is exclusively covered by Entry 49 List II of Constitution of India and therefore, argument of lack of legislative competence has also been negatived. 

Indirect Tax Decisions [1-5 Jan 2024] - Part 1

Indirect Tax Decisions [1-5 Jan 2024] - Part 1

Shyam Coach Engineers v CCE [2024] GCtR 163 (CESTAT) - Refund of duty either under Central Excise Act, Customs Act, in a Civil Suit or in a Writ Petition can be granted only when it is established that burden of duty has not been passed on to the others. It has been held that the person ultimately bearing the burden of duty can only legitimate its refund.

Commissioner of customs v Suresh Bhonsle [2024] GCtR 164 (CESTAT) - Once it is found that the gold recovered was not under valid documents, the same would be treated as prohibited goods liable to confiscation and consequently, penalty is inbuilt and is leviable under Section 112 of the Customs Act, 1962.

Dinesh Irrigation Pvt Ltd v CCGST [2024] GCtR 31 (CESTAT) - Once the disputed CENVAT credit on the insurance service which was used both for dutiable and exempted goods has been reversed, nothing survives in the demand because the case of the Revenue was that the person had taken CENVAT credit on common input services and had not maintained separate accounts and this credit has already been reversed.

Principal Commissioner of Customs v M/s. Go IP Global Services Pvt. Ltd [2024] GCtR 32 (CESTAT) - 'And’ used between Multiple Input/Multiple Output (MIMO); Long Term Evolution (LTE) is a conjunctive joining of both the said terms (MIMO/LTE).

Chopra Constructions v Commissioner (Appeals) [2024] GCtR 165 (CESAT) - Show cause notice issued after the period held to be time barred.

Raajhans Spices Pvt Ltd v Commissioner of Customs [2024] GCtR 166 (CESTAT) - Exporter had challenged action of Department. Market survey was done by Department and goods were directed to be confiscated. Market survey was done in the absence of the representative of the exporter, it is in gross violation of principle of natural justice. Action of Department set aside.

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters/blogs without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made by the violator. All disputes shall be subject to Delhi Jurisdiction. Reproduction of judgment or publication of judgment unless expressly prohibited by Court according is not an infringement of copyright according to S. 52 (1)(q)(iv) of Copyright Act, 1957. This is not to be considered as any professional legal advice and does not constitute client-attorney relationship.

GST Refund : HC Allows the Petition Seeking Refund

 GST Refund : HC Allows the Petition Seeking Refund

Section 2 (17) of CGST Act, 2017 defines "business". Section 2 (74) of the CGST Act, 2017 defines "mixed supply". Section 22 (1) of the Act fixes an amount of Rs. 20 lacs. Section 29 deals with cancellation of registration.

In an interesting case citation [2019] GCtR 3119, the petition filed for refund of GST was allowed and the GST Department was directed to refund the amount to the petitioner.

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction. Reproduction of judgment or publication of judgment unless expressly prohibited by Court according is not an infringement of copyright according to S. 52 (1)(q)(iv) of Copyright Act, 1957.