BackgroundThe appellant’s bank accounts were provisionally attached by orders dated 17.10.2023 and 26.10.2023. Its objection dated 01.05.2024 under Rule 159(5) was never decided. When the attachments lapsed by efflux of one year, the respondent issued fresh attachment orders dated 13.11.2024 and 18.12.2024 describing them as a ‘renewal’, alleging large-scale fraud and apprehension of non-recovery. The Gujarat High Court dismissed the writ petition, holding that the law places no embargo on a second attachment after the first lapses.Final VerdictEndorsing Radha Krishan Industries on Section 83(1), the Supreme Court held that an authority exercising this draconian power must be empowered by statute or by executive instructions; absence of a prohibition is no source of power. Unlike Section 11DDA of the Central Excise Act and Section 28BA of the Customs Act, Section 83 contains no provision for extension, and permitting a fresh order after lapse would render Section 83(2) otiose; a fresh order on substantially the same grounds would do indirectly what cannot be done directly – “old wine in a new bottle”. Provisional attachment is a pre-emptive measure, not a recovery tool, and one year is enough for the revenue to conclude its investigation. The Court held that when a statute does not provide for an extension, renewal, re-issuance, revival – whatever be the nomenclature – the executive cannot overreach the statute, approved the Kerala High Court in Ali K., and noted with concern that debit freezes continue after the statutory lapse, as also flagged in the GST Council’s 53rd meeting agenda. The impugned attachment orders were set aside and the bank accounts directed to be de-freezed forthwith; the investigation may continue in accordance with law.
Kesari Nandan Mobile v. Office of Assistant Commissioner of State Tax (2), Enforcement Division – 5 14-08-2025
BackgroundThe appellant’s bank accounts were provisionally attached by orders dated 17.10.2023 and 26.10.2023. Its objection dated 01.05.2024 under Rule 159(5) was never decided. When the attachments lapsed by efflux of one year, the respondent issued fresh attachment orders dated 13.11.2024 and 18.12.2024 describing them as a ‘renewal’, alleging large-scale fraud and apprehension of non-recovery. The Gujarat High Court dismissed the writ petition, holding that the law places no embargo on a second attachment after the first lapses.Final VerdictEndorsing Radha Krishan Industries on Section 83(1), the Supreme Court held that an authority exercising this draconian power must be empowered by statute or by executive instructions; absence of a prohibition is no source of power. Unlike Section 11DDA of the Central Excise Act and Section 28BA of the Customs Act, Section 83 contains no provision for extension, and permitting a fresh order after lapse would render Section 83(2) otiose; a fresh order on substantially the same grounds would do indirectly what cannot be done directly – “old wine in a new bottle”. Provisional attachment is a pre-emptive measure, not a recovery tool, and one year is enough for the revenue to conclude its investigation. The Court held that when a statute does not provide for an extension, renewal, re-issuance, revival – whatever be the nomenclature – the executive cannot overreach the statute, approved the Kerala High Court in Ali K., and noted with concern that debit freezes continue after the statutory lapse, as also flagged in the GST Council’s 53rd meeting agenda. The impugned attachment orders were set aside and the bank accounts directed to be de-freezed forthwith; the investigation may continue in accordance with law.
Facts :The petitioner company received a show cause notice under Section 73 CGST Act from State GST authorities for alleged tax shortfall and excess ITC.Subsequently, Central GST authorities conducted a search and issued summons under Section 70 requiring production of documents.The petitioner challenged the summons before Delhi High Court, contending that parallel proceedings on the same subject matter were barred under Section 6(2)(b).The High Court dismissed the writ petition, holding that summons and investigation are not “proceedings”.Court Decision:The Supreme Court upheld the High Court’s view and dismissed the SLP.It held that issuance of summons under Section 70 is part of inquiry/investigation and cannot be equated with “initiation of proceedings” under Section 6(2)(b).“Proceedings” under Section 6(2)(b) refer to adjudicatory actions such as assessment, demand, or penalty proceedings under Sections 73 or 74.Summons is only a step to collect evidence and precedes formal proceedings; hence, no bar on parallel inquiry by another authority.The Court interpreted Section 6 within the framework of “single interface” and “cross-empowerment”, holding that intelligence-based enforcement actions can be initiated by both Central and State authorities.Cases Referred:G.K. Trading v. Union of IndiaKuppan Gounder P.G. Natarajan v. Directorate General of GST IntelligenceAnurag Suri v. Director General of GST IntelligenceIndo International Tobacco Ltd. v. Vivek PrasadK.T. Saidalavi v. State Tax OfficerRais Khan v. Addl. CommissionerM/s R.P. Buildcon Pvt. Ltd. v. Superintendent, CGSTTvl. Metal Trade Incorporation v. GST Council SecretariatVivek Narsaria v. State of JharkhandStalwart Alloys India Pvt. Ltd. v. Union of IndiaKundlas Loh Udyog v. State of H.P.Chief Commissioner of CGST v. Safari Retreats Pvt. Ltd.K.P. Mohammed Salim v. CIT
Armour Security (India) Ltd. vs Commissioner, CGST, Delhi East Commissionerate & Anr. 06-03-2025
Facts :The petitioner company received a show cause notice under Section 73 CGST Act from State GST authorities for alleged tax shortfall and excess ITC.Subsequently, Central GST authorities conducted a search and issued summons under Section 70 requiring production of documents.The petitioner challenged the summons before Delhi High Court, contending that parallel proceedings on the same subject matter were barred under Section 6(2)(b).The High Court dismissed the writ petition, holding that summons and investigation are not “proceedings”.Court Decision:The Supreme Court upheld the High Court’s view and dismissed the SLP.It held that issuance of summons under Section 70 is part of inquiry/investigation and cannot be equated with “initiation of proceedings” under Section 6(2)(b).“Proceedings” under Section 6(2)(b) refer to adjudicatory actions such as assessment, demand, or penalty proceedings under Sections 73 or 74.Summons is only a step to collect evidence and precedes formal proceedings; hence, no bar on parallel inquiry by another authority.The Court interpreted Section 6 within the framework of “single interface” and “cross-empowerment”, holding that intelligence-based enforcement actions can be initiated by both Central and State authorities.Cases Referred:G.K. Trading v. Union of IndiaKuppan Gounder P.G. Natarajan v. Directorate General of GST IntelligenceAnurag Suri v. Director General of GST IntelligenceIndo International Tobacco Ltd. v. Vivek PrasadK.T. Saidalavi v. State Tax OfficerRais Khan v. Addl. CommissionerM/s R.P. Buildcon Pvt. Ltd. v. Superintendent, CGSTTvl. Metal Trade Incorporation v. GST Council SecretariatVivek Narsaria v. State of JharkhandStalwart Alloys India Pvt. Ltd. v. Union of IndiaKundlas Loh Udyog v. State of H.P.Chief Commissioner of CGST v. Safari Retreats Pvt. Ltd.K.P. Mohammed Salim v. CIT
Court DecisionThe Supreme Court dismissed the Special Leave Petitions filed by the Union of India against the judgment of the Bombay High Court.The Court noted that the High Court had quashed the show cause notices seeking recovery of ₹3731 crores from the respondent, holding that:The basic jurisdictional requirements were not attracted for invoking Section 122(1A) and Section 137 of the CGST Act.No principle of vicarious liability could be read into Sections 122 and 137.The respondent was merely an employee and could not be fastened with the liability alleged against the company.The Supreme Court held that it saw no good reason to interfere with the common impugned orders passed by the High Court.However, the Court clarified that the question of law regarding the interpretation of Sections 122(1A) and 137 of the CGST Act was kept open.Accordingly, the Special Leave Petitions were dismissed and pending applications were disposed of. Cases Referred by the CourtShantanu Sanjay Hundekari vs. Union of India & Ors., WPL Nos. 30198/2023, 30199/2023, 30200/2023 & 30241/2023 (Bombay High Court, judgment dated 28 March 2024)
Union of India & Ors. vs. Shantanu Sanjay Hundekari & Anr. Etc. 24-01-2025
Court DecisionThe Supreme Court dismissed the Special Leave Petitions filed by the Union of India against the judgment of the Bombay High Court.The Court noted that the High Court had quashed the show cause notices seeking recovery of ₹3731 crores from the respondent, holding that:The basic jurisdictional requirements were not attracted for invoking Section 122(1A) and Section 137 of the CGST Act.No principle of vicarious liability could be read into Sections 122 and 137.The respondent was merely an employee and could not be fastened with the liability alleged against the company.The Supreme Court held that it saw no good reason to interfere with the common impugned orders passed by the High Court.However, the Court clarified that the question of law regarding the interpretation of Sections 122(1A) and 137 of the CGST Act was kept open.Accordingly, the Special Leave Petitions were dismissed and pending applications were disposed of. Cases Referred by the CourtShantanu Sanjay Hundekari vs. Union of India & Ors., WPL Nos. 30198/2023, 30199/2023, 30200/2023 & 30241/2023 (Bombay High Court, judgment dated 28 March 2024)
Case Facts:The respondent constructed a shopping mall for leasing purposes and paid GST on inputs like materials and services used in construction, accumulating substantial ITC. The department denied ITC relying on Section 17(5)(d), which blocks credit for construction of immovable property. The Orissa High Court read down the provision and allowed ITC, holding denial would defeat GST objectives. The Revenue challenged this before the Supreme Court along with similar matters questioning the constitutional validity of Section 17(5)(c) and (d).Court Decision:The Supreme Court examined the scheme of the CGST Act and held that ITC is a statutory right subject to conditions and restrictions under the Act. Section 17(5)(c) and (d) clearly restrict ITC on construction of immovable property (other than plant and machinery), and such restriction must be interpreted strictly.The Court upheld the validity of the provisions and rejected the interpretation adopted by the High Court. It held that:A taxing statute must be interpreted strictly based on plain language.ITC cannot be claimed contrary to express statutory restrictions.The legislature is competent to restrict ITC and such restriction does not violate constitutional provisions.The expression “plant or machinery” cannot be expansively interpreted to include buildings like malls merely to claim ITC.Accordingly, the Supreme Court set aside the High Court judgment and held that ITC is not available on construction of immovable property used for renting under Section 17(5)(d).Cases Referred by Court:Eicher Motors Ltd. v. Union of IndiaBharat Sanchar Nigam Ltd. v. Union of IndiaShreya Singhal v. Union of IndiaUnion of India v. Bharti Airtel Ltd.Federation of Hotel & Restaurant Association of India v. Union of IndiaR.K. Garg v. Union of IndiaTwyford Tea Co. Ltd. v. State of KeralaNitdip Textile Processors Pvt. Ltd.P. Laxmi Devi v. State of Andhra PradeshIndore Development Authority v. ManoharlalALD Automotive Pvt. Ltd. v. Commercial Tax OfficerHari Krishna Bhargav v. Union of IndiaJoseph Shine v. Union of IndiaCommissioner of Customs v. Dilip Kumar & Co.Sneh Enterprises v. Commissioner of CustomsVegetable Products Ltd.R.S. Raghunath v. State of KarnatakaUnion of India v. VKC Footsteps India Pvt. Ltd.
Chief Commissioner of Central Goods and Service Tax & Ors. Vs. Safari Retreats Private Ltd. & Ors. 03-10-2024
Case Facts:The respondent constructed a shopping mall for leasing purposes and paid GST on inputs like materials and services used in construction, accumulating substantial ITC. The department denied ITC relying on Section 17(5)(d), which blocks credit for construction of immovable property. The Orissa High Court read down the provision and allowed ITC, holding denial would defeat GST objectives. The Revenue challenged this before the Supreme Court along with similar matters questioning the constitutional validity of Section 17(5)(c) and (d).Court Decision:The Supreme Court examined the scheme of the CGST Act and held that ITC is a statutory right subject to conditions and restrictions under the Act. Section 17(5)(c) and (d) clearly restrict ITC on construction of immovable property (other than plant and machinery), and such restriction must be interpreted strictly.The Court upheld the validity of the provisions and rejected the interpretation adopted by the High Court. It held that:A taxing statute must be interpreted strictly based on plain language.ITC cannot be claimed contrary to express statutory restrictions.The legislature is competent to restrict ITC and such restriction does not violate constitutional provisions.The expression “plant or machinery” cannot be expansively interpreted to include buildings like malls merely to claim ITC.Accordingly, the Supreme Court set aside the High Court judgment and held that ITC is not available on construction of immovable property used for renting under Section 17(5)(d).Cases Referred by Court:Eicher Motors Ltd. v. Union of IndiaBharat Sanchar Nigam Ltd. v. Union of IndiaShreya Singhal v. Union of IndiaUnion of India v. Bharti Airtel Ltd.Federation of Hotel & Restaurant Association of India v. Union of IndiaR.K. Garg v. Union of IndiaTwyford Tea Co. Ltd. v. State of KeralaNitdip Textile Processors Pvt. Ltd.P. Laxmi Devi v. State of Andhra PradeshIndore Development Authority v. ManoharlalALD Automotive Pvt. Ltd. v. Commercial Tax OfficerHari Krishna Bhargav v. Union of IndiaJoseph Shine v. Union of IndiaCommissioner of Customs v. Dilip Kumar & Co.Sneh Enterprises v. Commissioner of CustomsVegetable Products Ltd.R.S. Raghunath v. State of KarnatakaUnion of India v. VKC Footsteps India Pvt. Ltd.
1. BackgroundThe proceedings before the Supreme Court arose from the final judgment and order dated 02 August 2023 passed by the High Court at Calcutta in MAT No. 1218/2023 and CAN No. 1/2023. The Assistant Commissioner of State Tax and other authorities challenged that order before the Supreme Court by filing Special Leave Petitions.The Supreme Court heard the learned Senior Counsel appearing for the petitioners and considered the facts and circumstances of the cases, including the extent of the demand involved. The record supplied does not set out the underlying GST dispute or the detailed reasoning of the Calcutta High Court.2. Court ObservationThe Supreme Court observed that, having regard to the facts and circumstances of the cases and the extent of demand being on the lower side, it was not inclined to interfere with the impugned judgment in exercise of its jurisdiction under Article 136 of the Constitution of India.3. Final VerdictThe Supreme Court dismissed the Special Leave Petitions and accordingly declined to interfere with the judgment and order of the Calcutta High Court. The delay in refiling/curing defects was also condoned.
Assistant Commissioner of State Tax, Ballygunge Charge & Ors. v. Suncraft Energy Private Limited & Ors. 14-12-2023
1. BackgroundThe proceedings before the Supreme Court arose from the final judgment and order dated 02 August 2023 passed by the High Court at Calcutta in MAT No. 1218/2023 and CAN No. 1/2023. The Assistant Commissioner of State Tax and other authorities challenged that order before the Supreme Court by filing Special Leave Petitions.The Supreme Court heard the learned Senior Counsel appearing for the petitioners and considered the facts and circumstances of the cases, including the extent of the demand involved. The record supplied does not set out the underlying GST dispute or the detailed reasoning of the Calcutta High Court.2. Court ObservationThe Supreme Court observed that, having regard to the facts and circumstances of the cases and the extent of demand being on the lower side, it was not inclined to interfere with the impugned judgment in exercise of its jurisdiction under Article 136 of the Constitution of India.3. Final VerdictThe Supreme Court dismissed the Special Leave Petitions and accordingly declined to interfere with the judgment and order of the Calcutta High Court. The delay in refiling/curing defects was also condoned.
Facts :The petitioners filed Special Leave Petitions challenging the judgment and order dated 02.08.2023 passed by the High Court at Calcutta. The dispute pertained to tax demand raised against the respondent. The matter was placed before the Supreme Court for admission, including an application for condonation of delay.Court Decision:The Supreme Court condoned the delay but declined to interfere with the impugned judgment of the High Court in exercise of its jurisdiction under Article 136. The Court noted the facts and circumstances of the case and the relatively low tax demand, and dismissed the Special Leave Petitions.
Assistant Commissioner of State Tax, Ballygunge Charge & Ors. v. Suncraft Energy Private Limited & Ors. 14-12-2023
Facts :The petitioners filed Special Leave Petitions challenging the judgment and order dated 02.08.2023 passed by the High Court at Calcutta. The dispute pertained to tax demand raised against the respondent. The matter was placed before the Supreme Court for admission, including an application for condonation of delay.Court Decision:The Supreme Court condoned the delay but declined to interfere with the impugned judgment of the High Court in exercise of its jurisdiction under Article 136. The Court noted the facts and circumstances of the case and the relatively low tax demand, and dismissed the Special Leave Petitions.
BackgroundThe assessee provided back-office and operational support to its overseas group companies (USA, UK, Ireland, Singapore and others). Employees of those companies were seconded to it and worked under its control, but remained on the overseas payroll for social security; the overseas entity paid their salaries and recovered them from the assessee through debit notes without mark-up, while the assessee issued them employment letters and deducted TDS. Four show cause notices covering October 2006 to September 2014 demanded service tax under reverse charge. The Commissioner confirmed two and dropped the later two, and CESTAT ruled in the assessee’s favour. The Revenue appealed.Final VerdictApplying substance over form, and holding that the nomenclature of a contract is not decisive and no single test governs, the Supreme Court read the agreements together. Though the assessee had operational control, the secondees stayed on the overseas payroll, were paid in foreign currency with a hardship allowance under the overseas employer’s policy, served for a fixed tenure and were repatriated under its global mobility policy; the overseas group’s business was to deploy its skilled personnel. Consideration was implicit in the reimbursement and the economic benefit derived, and revenue neutrality was held irrelevant to the incidence of tax. The Court held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service. However, since the assessee’s view was bona fide, being supported by CESTAT rulings and by the Revenue itself dropping the later notices, the invocation of the extended period of limitation was unjustified. The appeals were partly allowed and the demand was confined to the normal period.
Commissioner of Central Excise & Service Tax, Bangalore (Adjudication) v. M/s Northern Operating Systems Pvt. Ltd. 19-05-2022
BackgroundThe assessee provided back-office and operational support to its overseas group companies (USA, UK, Ireland, Singapore and others). Employees of those companies were seconded to it and worked under its control, but remained on the overseas payroll for social security; the overseas entity paid their salaries and recovered them from the assessee through debit notes without mark-up, while the assessee issued them employment letters and deducted TDS. Four show cause notices covering October 2006 to September 2014 demanded service tax under reverse charge. The Commissioner confirmed two and dropped the later two, and CESTAT ruled in the assessee’s favour. The Revenue appealed.Final VerdictApplying substance over form, and holding that the nomenclature of a contract is not decisive and no single test governs, the Supreme Court read the agreements together. Though the assessee had operational control, the secondees stayed on the overseas payroll, were paid in foreign currency with a hardship allowance under the overseas employer’s policy, served for a fixed tenure and were repatriated under its global mobility policy; the overseas group’s business was to deploy its skilled personnel. Consideration was implicit in the reimbursement and the economic benefit derived, and revenue neutrality was held irrelevant to the incidence of tax. The Court held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service. However, since the assessee’s view was bona fide, being supported by CESTAT rulings and by the Revenue itself dropping the later notices, the invocation of the extended period of limitation was unjustified. The appeals were partly allowed and the demand was confined to the normal period.
BackgroundThe appellant, a lead manufacturer at Kala-Amb, had claimed ITC of about Rs. 5.03 crore on invoices of its supplier GM Powertech, against whom a case of fake ITC was detected. An earlier attachment of the appellant’s receivables was withdrawn on 30.01.2019. After the Commissioner delegated his Section 83 power on 21.10.2020, the Joint Commissioner on 28.10.2020 again provisionally attached the appellant’s receivables from its customers Fujikawa Power and Deepak International. The appellant’s objections were rejected on 06.11.2020 without a hearing, and the High Court of Himachal Pradesh dismissed the writ petition holding that an appeal under Section 107 was an alternative remedy.Final VerdictThe Supreme Court held that the Joint Commissioner acted as a delegate of the Commissioner, so no appeal lay under Section 107(1) and the writ petition was maintainable. On merits, it held that the power to order a provisional attachment is draconian in nature and the conditions prescribed by the statute for a valid exercise of the power must be strictly fulfilled; the Commissioner must form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any, and “necessary” postulates more than mere expediency, so pre-emptive strikes merely because property is available are impermissible. Under Rule 159(5) the assessee is entitled to dual safeguards – to file objections and to be heard – and the objections must be decided by a reasoned order. The attachment order disclosed no tangible material, showing clear non-application of mind; a second attachment on the same grounds after withdrawal of the first, without change in circumstances, was also impermissible; and once the final order under Section 74(9) was passed on 18.02.2021, the attachment had in any case to come to an end. The appeal was allowed and the attachment orders dated 28.10.2020 were set aside.
Radha Krishan Industries v. State of Himachal Pradesh & Ors 20-04-2021
BackgroundThe appellant, a lead manufacturer at Kala-Amb, had claimed ITC of about Rs. 5.03 crore on invoices of its supplier GM Powertech, against whom a case of fake ITC was detected. An earlier attachment of the appellant’s receivables was withdrawn on 30.01.2019. After the Commissioner delegated his Section 83 power on 21.10.2020, the Joint Commissioner on 28.10.2020 again provisionally attached the appellant’s receivables from its customers Fujikawa Power and Deepak International. The appellant’s objections were rejected on 06.11.2020 without a hearing, and the High Court of Himachal Pradesh dismissed the writ petition holding that an appeal under Section 107 was an alternative remedy.Final VerdictThe Supreme Court held that the Joint Commissioner acted as a delegate of the Commissioner, so no appeal lay under Section 107(1) and the writ petition was maintainable. On merits, it held that the power to order a provisional attachment is draconian in nature and the conditions prescribed by the statute for a valid exercise of the power must be strictly fulfilled; the Commissioner must form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any, and “necessary” postulates more than mere expediency, so pre-emptive strikes merely because property is available are impermissible. Under Rule 159(5) the assessee is entitled to dual safeguards – to file objections and to be heard – and the objections must be decided by a reasoned order. The attachment order disclosed no tangible material, showing clear non-application of mind; a second attachment on the same grounds after withdrawal of the first, without change in circumstances, was also impermissible; and once the final order under Section 74(9) was passed on 18.02.2021, the attachment had in any case to come to an end. The appeal was allowed and the attachment orders dated 28.10.2020 were set aside.
Facts:The dispute arose from demands of sales tax on supply of food and drinks by clubs to their permanent members. The clubs contended that such supplies were governed by the doctrine of mutuality and did not constitute “sale”. The Tribunal and High Court held that no taxable sale occurred as members and the club were not distinct persons. The matter was referred to a larger Bench to examine the impact of the 46th Constitutional Amendment on the doctrine of mutuality. Court Decision:The Court held that the doctrine of mutuality continues to apply even after the 46th Constitutional Amendment. It ruled that Article 366(29-A)(e) applies only to unincorporated associations and does not cover incorporated clubs. The Court held that in members’ clubs, there is no transfer of property from one person to another, as members and the club are not distinct. Accordingly, supply of food and beverages by clubs to their members does not constitute a “sale” and is not liable to sales tax/VAT. Cases Referred by Court:• C.T.O. v. Young Men’s Indian Association • State of Madras v. Gannon Dunkerley & Co. • Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi • State of Punjab v. Associated Hotels of India Ltd. • Deputy Commercial Tax Officer v. Enfield India Ltd. • Bacha F. Guzdar v. Commissioner of Income Tax • Graff v. Evans • Trebanog Working Men’s Club and Institute Ltd. v. Macdonald• BSNL v. Union of India
State of West Bengal & Ors. v. Calcutta Club Limited & Ors. 03-10-2019
Facts:The dispute arose from demands of sales tax on supply of food and drinks by clubs to their permanent members. The clubs contended that such supplies were governed by the doctrine of mutuality and did not constitute “sale”. The Tribunal and High Court held that no taxable sale occurred as members and the club were not distinct persons. The matter was referred to a larger Bench to examine the impact of the 46th Constitutional Amendment on the doctrine of mutuality. Court Decision:The Court held that the doctrine of mutuality continues to apply even after the 46th Constitutional Amendment. It ruled that Article 366(29-A)(e) applies only to unincorporated associations and does not cover incorporated clubs. The Court held that in members’ clubs, there is no transfer of property from one person to another, as members and the club are not distinct. Accordingly, supply of food and beverages by clubs to their members does not constitute a “sale” and is not liable to sales tax/VAT. Cases Referred by Court:• C.T.O. v. Young Men’s Indian Association • State of Madras v. Gannon Dunkerley & Co. • Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi • State of Punjab v. Associated Hotels of India Ltd. • Deputy Commercial Tax Officer v. Enfield India Ltd. • Bacha F. Guzdar v. Commissioner of Income Tax • Graff v. Evans • Trebanog Working Men’s Club and Institute Ltd. v. Macdonald• BSNL v. Union of India
Background: The issue before the Court was whether “soft serve” dispensed at McDonald’s outlets was classifiable as “ice-cream” under Heading 2105.00, attracting excise duty at 16%, or under Heading 04.04 or the residuary Heading 2108.91. For the period April 1997 to March 2000, the Revenue issued show-cause notices proposing classification under Heading 2105.00. The Tribunal instead classified the product under Heading 2108.91, relying on technical literature and the standards under the Prevention of Food Adulteration Act, 1955, including the product’s lower milk-fat content. The Supreme Court held that neither the relevant tariff entries nor their notes prescribed a technical definition or specifications for “ice-cream”; therefore, classification had to be determined by the common-parlance or commercial-understanding test. The product’s marketing as “soft serve” and its technical composition were not decisive because an average consumer would understand and consume it as ice-cream or softy ice-cream. The Court emphasised that “mere semantics cannot change the nature of a product” as perceived in the market.Final Verdict: The Supreme Court allowed the Revenue’s appeals and set aside the Tribunal’s orders, holding that “soft serve” marketed by the assessee during the relevant period was classifiable under Heading 2105.00 as “ice-cream”. The Court held that the Tribunal had erred in law by placing the product under the residuary Heading 2108.91 instead of applying the common-parlance test. The assessee’s claim for exemption under Notification No. 16/2003-CE (NT) was not entertained as it had not been urged before the Tribunal; the Court further observed that the notification did not apply because duty was being levied in this case. The parties were directed to bear their own costs.
Commissioner of Central Excise, New Delhi v. M/s Connaught Plaza Restaurant (P) Ltd. 27-11-2012
Background: The issue before the Court was whether “soft serve” dispensed at McDonald’s outlets was classifiable as “ice-cream” under Heading 2105.00, attracting excise duty at 16%, or under Heading 04.04 or the residuary Heading 2108.91. For the period April 1997 to March 2000, the Revenue issued show-cause notices proposing classification under Heading 2105.00. The Tribunal instead classified the product under Heading 2108.91, relying on technical literature and the standards under the Prevention of Food Adulteration Act, 1955, including the product’s lower milk-fat content. The Supreme Court held that neither the relevant tariff entries nor their notes prescribed a technical definition or specifications for “ice-cream”; therefore, classification had to be determined by the common-parlance or commercial-understanding test. The product’s marketing as “soft serve” and its technical composition were not decisive because an average consumer would understand and consume it as ice-cream or softy ice-cream. The Court emphasised that “mere semantics cannot change the nature of a product” as perceived in the market.Final Verdict: The Supreme Court allowed the Revenue’s appeals and set aside the Tribunal’s orders, holding that “soft serve” marketed by the assessee during the relevant period was classifiable under Heading 2105.00 as “ice-cream”. The Court held that the Tribunal had erred in law by placing the product under the residuary Heading 2108.91 instead of applying the common-parlance test. The assessee’s claim for exemption under Notification No. 16/2003-CE (NT) was not entertained as it had not been urged before the Tribunal; the Court further observed that the notification did not apply because duty was being levied in this case. The parties were directed to bear their own costs.
