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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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PJ\CASELAW\3571

Whether processing of waste sand provided by foundries is treated as job work?
Issue: - Whether processing of waste sand provided by foundries is treated as job work? Brief Facts: - The applicant M/s Kolhapur and Engineering Cluster (KFEC), is involved in promotion of commercial activities relating to Foundry Industry & preservation of environment through its Sand Reclamation Plants. Used / waste sand of Foundry Industry is neither capable of being reused nor being capable of being dumped anywhere in open, due to environmental reasons, like contamination of futile soil / water pollution. Accordingly, its value is treated as zero. Applicant processes such waste sand vide heat treatment & various other set of small procedures and 80% of Input (Waste Sand) is recovered as finished material (Fresh sand) after 20% loss. During this process the chemical properties of Sand are changed in such manner due to heat and other processes, that the quality of the reclaimed sand is better for foundry use as compared to freshly mined sand. The question raised before the AAR was that whether the processing carried out on waste sand is to be considered as ‘job work’ or not. Appellant’s contention: - The learned advocate appearing for the appellant approached the Maharashtra AAR seeking advance ruling on whether the activity carried on by it would amount to “Supply of Goods” or “Job Work services” and whether the waste sand, which is valued at nil, will have any impact on output valuation. Applicant also submitted that there is no direct correlation between the exact amount of sand supplied by the foundry units and that the same amount being taken up by the said units after processing. Further it is impossible to segregate the quantities, understand and identify as to which sand was given to whom, as the processing is done for the complete lot and the same goes against the basic principle of jobwork which is “process is undertaken on material belonging to some another registered person” Reasoning of the Judgement: - After considering the submissions made by the applicant and from the combined reading, it was noted that: - The definition of ‘job work’ and the procedure of job work as prescribed u/s 143 of the CGST Act and Rule 45 of the CGST Rules, it is the principal who will send inputs to the job worker for undertaking any treatment or process that may or may not amount to manufacture and will bring back same after the completion of job work. Thus, the person who sends goods to the job worker is the principal and the person who undertakes treatment / processing is a job worker. - It is found that, the applicant by applying different processes and treatment on the waste sand received and using its own consumables to bring into existence, afresh new finished usable product, which is distinct commodity and has commercial value. Therefore, in our view, the activity undertaken by the applicant satisfies the conditions of term ‘manufacture’ u/s 2(72) of the CGST Act. Hence such activity amounts to ‘manufacture’. - Considering the quality, composition, distinct character and use of the product emerges from the process and treatment undertaken, it was held that the finished product satisfied the definition of the term ‘Goods’ mentioned u/s 2(52) of CGST Act. The AAR do not hesitate to treat this new product as “Goods”. - Input received is waste material which is dumped at applicant’s location due to environmental concerns. The intention of the foundries / suppliers is not to treat the waste sand as semi or finished goods for the purposes of further process. Actually, waste sand is a raw material for the applicant and after the processing, usable sand is produced which is then sold to the foundries as when orders are received. The sand is not sold to the foundries in a fixed ratio to the waste sand received. No processing charges are collected by the applicant rather the fresh sand is sold to foundries at Rs 2.50 per kg, whereas freshly mined sand is available as Rs 3 per kg and difference being minor shows that the applicant is not a job worker in the subject case. - Reliance was placed on the case of Prestige Engineering (India) vs. Commissioner of Central Excise [1994(73) ELT 497 (SC)], The SC had observed that where the principal sends minor input to the job-worker and all other goods utilised in the final product belongs to the job worker, then the said process cannot be considered as job work. - In the present case, the value of final product only consists of plant and machinery, operation cost and other overheads whereas value of inputs received from custom is of nil valuation in the costing of final product. Accordingly, the activity carried on by it should be considered as supply of goods and not job work services. - Further the activity undertaken by the applicant satisfies the condition of term “manufacture” as per Section 2(72) of CGST Act and the finished product is different in character, name and use than the waste sand received as input. The new product is movable property so AAR concluded that the transaction in question will be treated as “supply of goods”. Decision: - Activity is sale of goods and not job work.Comment: - In the referred case, AAR deliberated on job work vs. supply of goods i.e., difference between a job work and supply of goods. Reference was made to the decision given by the Apex Court in the case of Prestige Engineering India wherein it was held that where the principal sends minor input to the job worker and all other inputs and goods utilized in the final products belongs to the job worker then said process cannot be considered as a job work. The decision stated that if the quantum of goods employed by the job worker on its own account was high, the activity undertaken is to be considered as manufacture rather than processing and only activity of processing is to be considered as job work. The above decision appears to be improper as the law does not specify the quantum of inputs to be used by the job worker on his own account. Moreover, in the present case, it was pointed that there was no nexus between the waste sand sent by foundry and the processed sand purchased by the foundry from the applicant. The job work requires one to one co-relation with the inputs sent for processing on job work. This is the main reason for treating the present activity as sale of goods rather than job work.
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PRADEEP JAIN, F.C.A.

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