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Office of the Commissioner, CGST & C. Ex, Navi Mumbai
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16th Floor, Satra Plaza, Palm Beach Road, Sector 19D, Vashi, Navi Mumbai - 400 705

0241267VW000000F6D D

V-Adj/CGST-NM/ADC/HCC-MMS I 43/2024-25
In-Original No. 28/CGST-NM/ADC/AKS/2024-25
Date of Order: 06.12.2024
Date of issue: 06.12.2024
SHRI ARVIND KUMAR SINHA
ADDITIONAL COMMISSIONER
CENTRAL GST & EX, NA VI MUMBAI

~ ~!?T {ORDER-L~-ORIGINAL)
BJECT: Show Cause cum Demand Notice issued to Mis. HCC-MMS Joint Venture,
House, LBS Road, Vikhroli West, Mumbai Suburban, Maharashtra, 400083 (GSTIN
H4620H1ZY)

SCNNo. SCN Date Amount

bGGI/MZU/ I&IS'B'/ 12(2)99 /2021 01.08.2024 Rs. 55,49,07,278/-

~ol!TTficlif.t;ft~~f.:t:~~cFl''l'ftt ITT~ 3ITT'!<T'5ffiTfcf;;:rr.p:rrt1

copy is granted free of charge for the private use of the person to whom it is issued.
'

olJTTfi ~ 3ITT'!iT it~~~ cTT 9T ~ ) ~ ( , ~ '1i "fl+1!ff, ~ 3ITT'!<T i:ri,:r cFl' ~ it BTo
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0 0 0 0 0 0
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14 #t ~ # <i 1/- liTI cFl' cITTi tfiltf cf RflRlf©a ~ ~ ;;rn:t:

rson deeming himself/herself aggrieved by this order may appeal to Commissioner (Appeals),
rh having his office at 5th Floor, C.G.O. Complex, C.B.D. Belapur - 400614. The appeal to the
issioner (Appeals) must be filed within a period of Sixty (60) days from the date receipt of this
; The appeal must bear a court fee of Rs.1/- only and must be accompanied by:
~ 2017 3it,:- ff) (!,fl ;,f) l1 f.=r:ri:r 2017 'ifi mcf'ITT'TT 'ifi ~ ~ 'ifi cfiRlJT cf ~ ffi mRi
"[RT~ ~mt-a- °@;
roi;ind~ of appeal and form of verification duly signed by the appellant in accordance with the
ions of the CGST ACT 2017 and CGST Rules 2017;
. ~ c f i ~ 'ifi 'cfiTTlllT 'ifi m1q ffi GST APL-01 i t ~ cfiT ffi 4 ~it~~~ c f ~ ~
11rc!;'t"~mmmc!;'t"~1
orm of appealing in form GST APL-01, including the statement of facts and the grounds of
Is, sh.all be filed in quadruplicate and shall be accompanied by a copy of this order.

!<r i ~ ~ m cpf ~~ m~ ~ ~ m it~. ~ aiR!<r it~

# "cfi1: cFl' ~ OOT cpf ~ ,;r@!<Rf *~ Dfti -;;n:rr ~ I , ~~~~~cf~
, ~m<li~cnTrnm~™1~1iJ:m-;:i-mq-"ff);,fj~flc1 ~ . 2017 #
07(6)(Gf) climcf~ cli ~ ~-6l';'t910ri cli cfiT{IJT ~ ~ 6lfcllcfil< ~ ;,rr ~n
erson desirous of appeal against this order shall, before filing the appeal, deposit a sum equal
per cent. of the remaining amount of tax in dispute arising from the said order, in relation to
the appeal has been filed and must produce proof of such payment along with appeal, failing
I
the appeal shall be liable to be rejected for non-compliance within the provision of Section
)(b) of CGST Act, 2017.

i
I,
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

1.
..HCC-MMS Joint Venture (hereinafter referred to as' the noticee'), are engaged in
able supplies, having their registered office and Principal Place of Business situated
\,', ! I

.. ouse 1 LBS Road, Vikhroli West, Mumbai Suburban, Maharashtra, 400083 and having
MBAEI4620H1ZY under Goods and Services Tax(GST) Act, 2017. They were
1·, ;:·: ' " ''t

the :supply of "Works Contract Services" covered under SAC 00440410 etc. Their
re business activity was Service Provider.

1
lligence was gathered that the noticee are engaged in construction of Metro Project in
d their business activity is in the nature of Works Contract. Under the provisions of
of the CGST Act, 2017, TDS at the rate of 1% is deducted from the amount paid by the
vernment / State Government / their agencies / local authorities / notified bodies to
le persons supplying goods or services to them. This amount was reflected in the GSTR-
led by the deductor. This deduction was required to be made on the payment made by
or to the deductee. It is noticed that the noticee was not discharging the GST correctly,
•nquiry was initiated.

jnvestigation was started by Directorate General of GST Intelligence, Mumbai Zonal

I t

tter fuode and the noticee vide letter dated 23.07.2021 was requested to submit the
'9n of v~lue declared in GSTR-3B and GSTR-7 and also to explain the difference.
o reply was received BY Directorate General of GST Intelligence, Mumbai Zonal Unit
ticey 1
her, a summons was issued on 28.06.2023 by Directorate General of GST Intelligence,
onal Unit to the noticee to submit the reconciliation statement of GSTR-3B and GSTR-
•discussed in aforesaid para and also to submit the reply to this office letter dated
1. In response to the said summons, the noticee requested for adjournment of twenty
their letter dated 04.07.2023. Further, the noticee submitted a letter dated 10.07.2023
ey had enclosed reconciliation statement for the period from October 2018 to March
ever the same was not self-explanatory. So once again, summons was issued on
3 by Directorate General of GST Intelligence, Mumbai Zonal Unit to explain the
econciliation statement. In response to the same, Shri Shailesh Phadke appeared before
e General of GST Intelligence, Mumbai Zonal Unit wherein difference in the
ion came out to be TDS deducted on advances and Interim Payment
~voi,ces) raised in the month of March 2019 which was not shown in GSTR-3B returns
•9 yYas rexplained.
: ~r,1.the noticee vide their email dated 02.11.2023 submitted brief note on the spillover
,~ the month of March 2019 which is reproduced as below:
cqse of continuous supply of works contracts (EPC contracts), several activities are
t different time from inception to its completions and hence stage wise such activities I
certified by competent engineers. The measurement of the activities for each quantity
rmed as 'Bill of Quantities' (BOQ). It also provides the rates that are payable for each
• pre-decided units of measurement (i.e., per cubic meter, per running meter etc.) or on
'. basis (where it is not measurable) as agreed between the parties.
. ring the currency of the contract, on achieving any milestone of work or any stage of
• contractor (HCC-MMS) sends a 'request for inspection' ('RFI') inviting engineers or
the client to thoroughly check and certify the work. After that the engineers of both sides
eer ofthe contractor and the client), jointly take the measurement, to ascertain the actual
during the period then it is entered into joint measurement record once the measurement
by the engineer of the client. Basis which, the contractor raises a running account bill
rk completed and submits inform IPC (i.e., interim payment certificate) as recommended
nt1 for the payment approval process at the client's end: Post submission, the client being

• ' Page 1 of 48 @
 Order-in-Original No. 28/CGST-NM/ADC/A

a government undertaking takes its own time for internal processes, spend budget
including allocation of fonds for disbursement, internal departments approvals
engineering, finance and accounts. Thereafter, we get instructions from client to do t
the amount certified or amended during any of the internal approval processes undert
That is how contractor raises its Running Account bill for the same. During this proce
submission of IPC submitted in the previous month for which we get instruction to bi
subsequent month. While client do so, they deduct and deposit TDS under GST and
tax in the month of approvals sought and advised us to bill in the subsequent mont
during all the months of the financial year such arrangement has no spillover issues
month of March, because the billings are getting spilled over in subsequent financial
words, !PC's for the month ofMarch, instructions received in April for billing these IP
case ofspillover of turnover in subsequent financial year.
Therefore, GST TDS deducted in March !PC's are getting billed in April po
\ .
instructions from the client. "
3.4. Further, the noticee vide their letter dated 12.01.2024 submitted the rec~ip
respect of IPC-32 and IPC-33 which were raised in the month of March 2019 arid sta 1

amount was received in the month of April 2019 and May 2019 and hence, GS
discharged in the return filed for the month of April 2019 and May 2019. :
3.5. Further, the noticee in response to various written communications, submitted
period July 2017 to March 2023.
3.6. Though, there were submissions made by the noticee in this regard but the
inconclusive as in the brief note submitted on 02.11.2023, the noticee have mentioned t
to raise running account statement after confirmation from client, however no such doc
than IPCs was submitted during investigation. Further, ongoing through the submissions
that there was mismatch in the taxable value as seen in the details uploaded in GS
physical invoices i.e Interim Payment Certificates (IPC). Also, there was mismatch
mentioned in IPCs and date entered against the entry for invoices in GSTR-1.
3.7. To complete the investigation in time bound manner, visit to the noticee's pr
made by the officers of Directorate General of GST Intelligence, Murn9ai Zon
21.06.2024. On the date of visit, statement dated 21.06.2024 ofShri Shailesh Phadke w
wherein he confirmed that they upload the details of invoices in GSTR-1 portal orlce,th
the amount in their bank account in terms of clause 14. 7 of the contract. Also, he stat
client deducts TDS while processing the invoice which might be earlier than the actua
date. On being asked regarding the communication which was mentioned in briefnote
on 02.11.2023 received from client regarding approval of IP Cs to which he replied that
written communication. Also, he stated that since they are EPC contractor, their service f:
continuous supply of service wherein time of supply is governed by Section 13(2)(a)
section 31(5)(b) of the CGST Act, 2017 which states that time of supply is date of iss
invoice. On being asked regarding some IPCs not seen in GSTR-1 portal, he stated tha
submit the reconciliation for the same within one week.
3.8. Since the aforesaid timeline was not adhered to, a fresh summons was issued on 01
by the officers of Directorate General of GST Intelligence, Mumbai Zonal Unit to S
Verma, GM-Taxation of the noticee. He appeared on 05.07.2024 and tendered his oral
On being asked regarding difference in taxable value observed in GSTR-1 and physical·
explained that they are deducting the value of pre-GST taxes from the certified value
the IPCs to arrive at the taxable value shown in GSTR-1. Also, he stated that they are •
dispute with their client on the value of pre-GST taxes. Further, with respect to time ors!
issuance of invoice, he stated that IPC is their running account statement and on receipt of
in their bank account, they discharge their GST liability. Also, he stated that other'than.
do not have anything to give to their client. Further, the noticee submitted copy of e-invo1
the period Oct-2020 onwards.
3.9. Further, the noticee vide their letter dated 05.07.2024 submitted that state GST a
have already conducted investigation for the FY 2017-18 to FY 2022-23 and they have s .

Page 2 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

OCl!IlJ.ents to them. So, they have requested to drop the proceeding under section 6(2)(b)
STA.bt,2017 .
. er, the noticee vide letter dated 08.07.2024 made additional submission wherein they
qsed}etter dated 11.08.2016 issued by the noticee to Managing Director of MMRCL in
:ak:.up o:rpre GST taxes has been mentioned.

n going through the brief note submitted by the noticee, it is observed that the noticee raised IPCs
•is of certain milestones achieved by them during their provision of works contract service. The
certified by the client and is eligible for payment from their client. The payment of the same is
aybe in the same month or in the subsequent month. On the basis of the receipt in the bank
nvoice is declared in the GSTR-1 return and GST is discharged on it. It has been mentioned that
ed invoice on subsequent instruction from client, however on further verification qf
/submission made by the noticee there appeared to be no such communication from the client

,n perusal of IPCs submitted by the noticee during the enquiry period, it appeared that in every
is a date on which client engineer has certified the breakup of amount for the work done by the
e same amount is to be paid by their client as per payment terms.
~e basis of extract of contract submitted by the noticee, it is observed at Sr. No 14.7 that the
o pa)" 80% of the certified amount within 14 days and rest 20% within 28 days which shows that
d IPqs are treated as invoices by their client for the payment to the noticee.
rrl ilie st~tement of Shri Shailesh Phadke dated 21.06.2024, it was observed that there was no
nal bill other than IPCs submitted by the noticee to their client. The accountant at site office
1
payrrieni"receipt details in their ERP software and on the basis of these receipt details, GSTR-1
ed and submitted for payment of GST liabilities. Maximum time taken by the client was 2-3
' !
payment of the work done and amount to be received in their bank account. As per noticee date
t of GST liabilities is governed on the basis of date of issuance of invoice.
om the statement of Shri Piyush Verma dated 05.07.2024, it is observed that the noticee upto
19 has discharged liability considering contract value inclusive of GST rate @18%/12% but later
ebruary 2019 onwards, they have raised the bill considering pre-GST taxes at the rate of
%. For this aforesaid rate difference upto Jan-2019, they have raised various debit notes to their
hich GST liability has been discharged by them. Since their agreement was of pre GST regime,
deducted pre GST taxes to arrive at taxable value for the purpose of discharging GST liabilities
till under dispute with their client and no further agreement is made in GST regime. Also, their
yment of GST liabilities depend on the date of receipt of payment in their bank account. Also,
ct ofcontract (FIDIC Conditions of Contract for plant and Design-Build contract, first edition,
itted by him, it was mentioned at Sr. no 13.7 that the contract price shall be adjusted to take
any ilicrease or decrease in cost resulting from change in the laws of the country (including the
n of :o.ew laws and the repeal or modification of existing laws). Therefore, the contract value
Qf tq GST regime cannot be directly taken to be the contract value inclusive of GST.
0

n{the e~invoices submitted by the noticee, similar discrepancy regarding date and value
for qischarging GST liability was noticed. Also, from the statement deposed by Shri Piyush
ould b~ ~certained that the same was not submitted and only IPCs are submitted to their client.
perusal of breakup of taxes shown in the letter addressed to MD of MMRCL by the
, was noticed that the contract value was inclusive of various taxes except Service Tax .
.ST regime, noticee was supposed to pay Service Tax on the similar service as provided
T period. Further, in terms of Section 15 of the CGST Act,2017 taxable value is inclusive
xcept GST. Therefore, it appeared that the deduction accounted by the noticee for
n of GST is incorrect and total certified amount as seen in the IPCs appeared to be the
able value on which noticee is liable to discharge GST.
e noticee vide email dated 02.11.2023 has stated that they were submitting IPC as per
instructions of their client regarding time of issuance ofIPC. However, it is the onus of
' to abide by the rules and regulations as mandated by the CGST Act, 2017 and Rules
•. under. Merely asking by the client to issue IPC, it appeared that the noticee had violated
·ons
'
of GST Law.
' I

I, Page 3 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AK

4.9 From the submission regarding investigation being conducted by state GST au
was observed that the issue taken up by state GST team pertained to ITC claim and non
of interest on taxes paid on mobilization advance. Therefore, the noticee's request to
proceeding under pretext of violation of Section 6(2)(b) of CGST Act,2017 appe
untenable as officers of Directorate General of GST Intelligence, Mumbai Zonal Unit ha
inquiry on entirely different issue of undervaluation and delayed uploading of invoices
in late discharge of GST liability.

QUANTIFICATION OF TAX LIABILITY:

5.1 On verification of the facts submitted by the noticee, it appeared that the noticee has dis
GST liability on receipt basis on reduced value and in some cases payment is made beyond stip
The noticee in their registration details mentioned SAC code for works contract as 00440410
service tax regime, but in the GST regime the same is classifiable under SAC 995421. The C
seen from the relevant notification in respect of Works contract service under SAC 9954 has b
from time to time as below:

Period CGST Rate Notification No

01.07.2017 to 25.01.2018 9% Notification 11/2017 Central
28.06.2017
26.01.2018 to 18.07.2022 6% Notification 01/2018 Central
25.01.2018
19.07.2022 to till date 9% Notification 03/2022 Central Tax(Rate)
13.07.2022

5.2 Further Based on the aforesaid facts, it appeared that, for arriving at the taxabl
noticee have deducted the value which are under dispute with their client to arrive at the t
for payment of GST liability. Also, the agreement was of pre-GST regime. There is no am:
upon between the noticee and the client on which GST liability is to be discharged.
amount certified as seen in the IPCs is taken as the taxable value. The calculation of th
below:
Taxable
Tax liability
value as per Tax
Tax paid as per paid
Period IPC Rate Tax Payable
GSTR-3B through
(Certified %
DRC-03
value)
1 2 3 4 5 6
2017-18 2727142431 18 490885637
432540104 0
2017-18 247142704 12 29657124
2018-19 6194961095 12 743395331 493823626 223089084
2019-20 6036889220 12 724426706 617945996 0
2020-21 3178333614 12 381400034 286547654 0
2021-22 3212525336 12 385503040 324355392 0
2022-23 1427458550 12 171295026 0
553304808
2022-23 3110839128 18 559951043 0
Total 26135292077 3486513943 2708517580 223089084

Thus, short paid GST liability amounts to Rs. 55,49,07,279/-.

i
5.3 Further, as observed from their submission, it was noticed that the noticee raised
basis of certain milestones achieved by them during provision of their works contract se
the IPC was approved by the engineer of their client which was a proof that a certain ,
been achieved and on the basis of which the noticee requests for payment from the client.j

Page 4 of 48
 Order-in-Original No. 28/COST-NM/ADC/AKS/2024-25

nt of Shri Shailesh Phadke, it has been ascertained that there was no separate bill raised by
to ,their client. Since, the noticee is involved in continuous supply of service, therefore, in
ctjon;31(5)(c) of the COST Act, 2017, the date when the IPC is signed by the client's
pepryd to be the date of invoice as that date satisfies the criteria for completion of event.
the dST liability arises on the date of completion of event and not when the same is
thC? b~!account as considered by the noticee, in violation to the terms of Section 13(2)(a)
Act, 2017 which states that time of supply for payment of OST liability should be earliest
of issue of invoice or date of payment. Thus, interest liability amounting to Rs.
/- has been worked out on delayed payment of tax through OSTR-3B on account of
orting of certain invoices in OSTR-1 returns.

e relevant legal provisions of the Act are as under:

ction 7 of the CGST Act, 2017

ction 6 of the CGST Act 2017
tion 9 of CGST Act 2017
tion 13 ofthe CGST Act 2017
' tion 15( 1) of the CGST Act, 2017
tion 35 of the CGST Act, 2017
tic;m 74 of the CGST Act, 2017
tiori $7(1) of the CGST Act, 2017
tion 39(1) of the CGST Act, 2017
tion P2(2) of the CGST Act, 2017
• ti~n of 5 of the IGST Act, 2017
tion of 20 of the IGST Act, 2017
tion 50 of the CGST Act
,ction 31(5) of the CGST Act

on the basis of investi ation w.r.t the noticee

•. on the available documents and relevant facts gathered during the investigation, it could be
.that the noticee raised IPCs on the basis of certain milestones achieved by them during their
fworks contract service. Also, the IPC is approved by the engineer of their client. The date when
s approved is considered to be date of invoice for purpose of time of supply. The GST liability
e same date of issuance of invoice and not when the same is received in the bank account as
by the noticee in terms of section 31(5)(c) read with Section 13(2) of the CGST Act, 2017. So,
which was initiated as mentioned at para 3 has resulted into the conclusion that there is
in date when the invoices are raised for the purpose of payment of GST liability and the date
ctual/physical invoice is issued which resulted in loss of revenue in the form of interest which
be payable by the noticee.
I
an: wrusal of IPCs for period under investigation, it appeared that there was deliberate
io~ in taxable value for the purpose of payment of GST liability which has led to huge revenue

mthe discussions contained in the above paragraph, it appeared that-

.e noticee has short paid/not paid GST by undervaluing their supply for the period from July
17 to March 2023 amounting to Rs 55,49,07,278/-
noticee has not paid interest of Rs 2,65,06,322 for the period from July 2017 to March 2023
delayed discharge of GST liability
appeared that the act of the noticee was deliberate, and with intent to suppress and
e facts with the sole intention to evade payment of proper OST along with interest and
penalty appeared liable to be recovered under the provisions of Section 74(1) of the
, 2017 read with Section 74(1) of the SGST Act, 2017 read with Section 20 of the IGST

(J)
Page 5 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AK

Act, 2017. Also, delayed discharge of OST liability made them liable for payment of int
Section 50 of the COST Act, 2017.

CONTRAVENTIONS:
8.1 From the discussions made in the foregoing paras, it appeared that the noticee have c
the following provisions of the CGST Act, 2017, and Rules made thereunder, provisions of the
2017 and the IGST Act, 2017. It is pertinent to mention that as the provisions of the CGST Ac
the provisions of the Maharashtra GST Act, 20 l 7(SGST) are almost similar except to certain
therefore unless a special reference is made to such dissimilar provisions, the reference made i
Cause Notice to the provisions of the CGST Act, 2017 would also mean the reference made to
provisions of the Maharashtra GST Act, 2017 also. The contraventions of the various provis
under-
(i) Provisions of Section 74(1) of the COST Act, 2017 read with Section 74(1) of
Act, 2017 read with Section 20 of the IGST Act, 2017 with intent to suppress and will
the facts with the sole intention to evade payment of proper OST. .
(ii) Provision of Section 15 of the CGST/SGST Act, 2017 read with Section 2d·o
Act, 2017 read with Rule 27 to 35 of the COST Rules, 2017 in as much as they hav
ascertain the correct value for their supply for declaring the same to the department.
(iii) Section 49 and Section 39(7) of the COST Act, 2017 read with Rule 85/86/87'
Rules, 2017 in as much as they failed to pay their OST liability for the period from Jul
March 2023 appropriately within the stipulated time limit.
(iv) Section 59 of the COST Act, 2017 and Rules made thereunder in as much as
failed to assess their tax liability and to discharge correct liability in return for each tax
specified under Section 39 of the said Act.
(v) Section 50 of the said Act and the Rules made thereunder in as much as they hav.
pay interest on their short paid/not paid OST liability for the period July 2017 to March

(vi) Section 31 of the CGST Act, 2017 read with Rule 46 of the CGST Rules, 2017 in as m
have failed to prepare correct invoices with proper value of their outward supplies and to di
liability accordingly.

(Vii) Section 13 of the CGST Act, 2017 and Rules made thereunder in as much as they ha
discharge tax liability in return at appropriate time as specified under Section 13 of thd sitid
resulted in non-payment of amount of interest under Section 50 of the CGST Act, 2017.

8.2 It appeared that the notice was well aware about the value of actual services supplied
further appeared that they were aware that their services are being supplied at value higher th
shown in their invoices thus resulting in undervaluation for the purpose of calculation of GST Ii
its payment thereof.

8.3 Further, in the OST regime, it is the duty of noticee to correctly assess, onus to de
pay applicable OST falls upon the noticee which the noticee in the instant case has
correctly by undervaluing their supply and paid tax on such lowered value or not paid
on certain supply. The issue came to light only after the Inquiry/investigation was con
this office. Had no such investigation/Inquiry would have been initiated, the said non-pa
appropriate tax, would not have come to the knowledge of the department resulting in
revenue to Government Exchequer. Therefore, on the basis of the above discussion, it
that they have wilfully suppressed the actual value of transaction to evade the pa
appropriate OST. Also, they have delayed uploaded the invoice resulting in delayed disc
OST liability in their return. Thus, it appeared that the noticee by such an act of omi
commission, have deliberately suppressed material facts from the department with the
evade payment of applicable OST liability and interest as per law. Therefore, it appear
fit case for demand and recovery of appropriate tax, by invoking extended period of
under Section 74 (1) of the COST Act, 2017 read with section 20 of IGST Act,2017

Page 6 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

t pr,oyisions of MGST Act, 2017 along with interest as applicable under section 50 of
1

t, 2017 read with section 20 of IGST Act,2017. For these very acts of commission and
tlle ,noticee appeared liable for imposition of penalty under Section 74(1) and penalty
tion i22(2)(b) of CGST Act, 2017 read with section 20 of IGST Act,2017 and the
·ngprovisions of the MGST Act, 2017.
;;: ' ; f' ".{

ppeared .that the noticee has short paid/not paid for the supply of goods under contention
iod from July 2017 to March 2023, therefore-
e GST amounting to Rs. 55,49,07,278/- (CGST-27,74,53,639 + SGST-27,74,53,639)
Jiable to be demanded and recovered under the provision of Section 74 of the CGST Act,
~ction 74 of the SGST Act, 2017 read with Section 20 of the IGST Act, 2017;
. e interest on the amount mentioned above appeared liable to be demanded and recovered
fprovisions of Section 50(1) of the CGST Act, 2017 and Section 50(1) of the SGST Act,
with Section 20 ofIGST Act, 2017;
nalty is liable to be demanded and recovered in terms of provisions of Section 74 of the
t, 2017 read with Section 74 of the SGST Act, 2017 and Section 20 of the IGST Act,
~ction 122(2)(b) of the CGST Act, 2017 .
.e :interest of Rs. 2,65,06,322/- (CGST- Rs.1,32,53,161 + SGST - Rs.1,32,53,161)
iable to be demanded and recovered in terms of provisions of Section 50(1) of the CGST
an~ Section 50(1) of the SGST Act, 2017 read with Section 20 of the IGST Act, 2017;

DRC-0lA dated 19.07.2024 was issued to the noticee. In response of the same, a
24!07.2024 has been received from noticee wherein they have requested that the
s initiated in the above intimation be dropped on various grounds mentioned in the said

1
e reply to DRC-OlA submitted by the noticee appeared to be untenable on the ground
ticee was very well acquainted with ground on which investigation was being conducted.
can be ascertained from the Sr. No.3 of reply to DRC-0lA and also from the
/submission of the noticee. Further, the noticee's contention that the DRC-0lA is in the
. format of intimation under forms under CGST Act, 2017 doesn't hold ground as the
escribed in the CGST Rules, 2017 which has to be followed by departmental officers .
.arious summonses were issued because documents as simple as invoices were not
fa timely manner. Summonses were very much clear about the requirements of
/information.

I
.N ¾e~arding submission of the noticee pertaining to their claim that they have not I.
any
;, t
1
facts doesn't hold ground as the value on which tax was supposed to be actually
e~~r declared in GST returns. Even the invoices shown during investigation were
an the one declared on GST portal. Value of invoices and date of invoice both were not
•th the details declared on the portal, so, there appeared to be willful misstatement and
of facts with intent to evade payment of tax. Therefore, judgements mentioned in their
ar to be inapplicable in the present case.

erefore, a Show Cause cum Demand Notice under F.No- DGGI/MZU/ I&IS'B' / 12(2)99
d 01.08.2024 was issued to the noticee asking them as to why:
i) GST amounting to Rs. 55,49,07,278/- (CGST - Rs.27,74,53,639/- + SGST -
Rs.27,74,53,639/-) (Rupees Fifty-Five Crore Forty-Nine Lakh Seven Thousand Two
Hundred and Seventy-Eight only) should not be demanded and recovered from them for
the period from July 2017 to March 2023 under Section 74(1) of the CGST Act, 2017
ead with Section 74(1) of the MGST Act, 2017 read with Section 20 ofIGST Act, 2017;

Page 7 of 48
 Order-in-Original No. 28/CGST-NM/ADC/

ii) Interest at appropriate rate should not be demanded and recovered fro
the amounts mentioned at SL No. (i) above under Section 50(1) of the CGS
and Section 50(1) of the SGST Act, 2017 read with Section 20 of the IGST
iii) Penalty should not be imposed on them on amount ofGST of Rs. 55,49,
demanded at SL No. (i) above under Section 74 of the CGST Act, 2017, Se
the SGST Act, 2017 read with Section 20 of the IGST Act, 2017, and also un
122(2)(b) of the CGST Act, 2017;
iv) Interest of Rs. 2,65,06,322/- (CGST- Rs.1,32,53,161/- + SGST-Rs.1,3
) (Rupees Two Crore Sixty-Five Lakh Six Thousand Three Hundred an.cl T •.
only) should not be demanded and recovered from them as discussed at par
under Section 50(1) of the CGST Act, 2017 and Section 50(1) of the :SGS
read with Section 20 of the IGST Act, 2017.

11. The list of relied upon documents is as detailed below in the SCN and the cop
supplied are as under:
S.No. Description
1. Office letter dated 23.07.2021.
2. Taxpayer letter dated 10.07.2023.
3. Taxpayer email dated 02.11.2023.
4. Taxpayer letter dated 12.01.2024.
IPCs raised during the period July 2017 to March 2023 (available
5.
with Taxpayer).
6. Statement of Shri Shailesh Phadke dated 21.06.2024.
7. Clause 14.7 of the contract.
8. Statement of Shri Piyush Verma dated 05.07.2024.
9. Taxpayer letter dated 05.07.2024.
10. Taxpayer letter dated 08.07.2024.
11. Copies of E invoices submitted (available with noticee).
12. Taxpayer's reply dated 24.07.2024.

WRITTEN SUBMISSION DATED 09.10.2024

12. The noticee submitted their reply vide letter dated 09.10.2024 which is as under:i
Brief facts f

2.1 Mis. HCC-MMS Joint Venture having its registered office located at Rincon Ho
Road, Vikhroli West, Mumbai -400083.
2.2 The Noticee is Engineering, Procurement and Construction ('EPC') contractor, s
engaged in the business of Design and Construction of underground sections inclu
underground stations at C.S.T, Kalbadevi, Girgaon and Grant Road and associate
Accordingly, the Noticee is registered with the Goods and Service Tax Depart
GSTINNo. 27AABAH4620H1ZY.
2.3 The Noticee is paying GST, wherever applicable, and filing returns in terms of.
37, 38 and 39 in various forms such as GSTR-3B, GSTR-1, GSTR-9 of the Cen •
& Service Tax Act, 2017 (CGST Act, 2017).
Transaction under dispute
Letter dated 23.07.2021
3.1 Vide letter DIN No. 20210DWW0000000A7CO dated 23.07.2021, the Ld.
Assistant Director of DGGI alleged that for FY 2018-19 as per the GSTR-7:th
paid on which TDS has been deducted is Rs. 372,22,06,460/- while as per' GST
taxable supply declared is Rs. 259,63,61,615/-.
3.2 Therefore, there is difference of Rs. 112,58,44,845/- creating potential GSTliabil
13,51,01,381/-. Basis which Noticee was requested to submit the reconciliation·
declared in GSTR-3B and value as per GSTR-7 along with documentary evidence,

Page 8 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

o direct~d the Noticee to explain difference of Rs. 112,58,44,845/-. A copy of letter

~Q 23; 07 .2021 is attached as Annexure 1.
1' date 30.07.2021
e' letter dated 30.07.2021, the Noticee filed a detailed reply along with required
•Ul)1ent explaining the discrepancies. The Noticee explained that the difference is mainly
to the value considered by Mumbai Metro Rail Corporation Limited ('MMRCL' /
ployer' / 'client'/ 'customer') for GST tax deduction at source under Section 51 of the
ST Act, 2017 was different.
3. •e Noticee explained that the client of the Noticee are Government undertakings who
uct TDS on the values which are different due to certain components, which were or
1
re not considered while deduction, resulting in the mismatch. The Noticee's reply not
ched to the relied upon documents for reasons best known to the Ld. DGGI. Further,
re is no mention of this reply in the SCN. A copy of the reply dated 30.07.2021 is
exed as Annexure 2.
, e Noticee submits that since no communication was made for a considerable period the
ticee assumed that the investigation was completed and submissions of the Noticee were
1
epted, and accordingly the investigation was closed.
ons dated 28.06.2023
w~v~r, tp utter shock and surprise on 28.06.2023, a summons was issued under Section
" • ''I

?f tl}e GGST Act, 2017, requesting the Noticee to appear in person on 10.07.2023
kiiig :c;1ocuments which were already provided by the Noticee. The Noticee requested
e tor ~e:;,.submission of documents. A copy of summons dated 28.06.2023 is annexed as
1

exu;e 3:
er dated 10.07.2023
1
e letter dated 10.07.2023, the Noticee provided a reply along with documents against
: summons dated 28.06.2023. A copy of the letter dated 10.07.2023 is annexed hereto
marked as Annexure 4.
ons dated 20.10.2023
20.10.2023, a summons was issued under Section 70 to produce documents and explain
reconciliation with reference to a letter dated 10.07.2023 submitted by the Noticee. A
y of summons dated 20.10.2023 is annexed hereto and marked as Annexure 5.
er dated 31.10.2023
3. e authorized representative of the Noticee, appeared to address the differences in Form
TR-7 and GSTR-3B for the FY 2018-19 and submitted reconciliation along with
es~ai;x documentations. Copy of detailed submission is enclosed as Annexure 6. The
I
·c~e yide various emails supplied additional documents were submitted, and the
,'' i'

e.dµrewas explained in detail. Further, information sought on the spillover turnover to

,seq~ent year. The Noticee elaborated on the turnover spill-over in the subsequent month
March, particularly in the context of continuous supply of works contracts (EPC
tracts) involving various certified activities at different stages. A copy of an e-mail letter
d. 03.11.2023 is annexed hereto and marked as Annexure 7.
process of measurement, certification, and billing for work completed was outlined,
hlighting the impact on turnover reconciliation between GSTR-7 and GSTR-3B. The
lanation emphasized the specific challenges related to billings and TDS deductions in
. ch leading to spillover in subsequent financial year, resulting in the observed mismatch.
was clarified that this discrepancy had been reconciled and addressed for record
oses.
er dated 12.01.2024
de letter dated 12.01.2024, the Noticee additionally submitted the receipt details of
oices IPC -32 & IPC-33 for which the client has deducted and deposited the GST TDS
e month of march and the amount was realized in bank in subsequent month/financial
. A copy ofletter dated 12.01.2024 is annexed as Annexure 8.
ice dated 17.04.2024

Page 9 of 48
 Order-in-Original No. 28/CGST-NM/ADC/

3.12 Vide letter DIN 202404DWW0000051553 l dated 17.04.2024, the Noticee was
submit the copies of interim payment certificate ('IPC') and corresponding invd
by Noticee from July 2017 till March 2024. A notice dated 17.04.2024 is
Annexure 9.
Summons dated 08.05.2024
3.13 On 08.05.2024, the proper officer issued a summon directing the Noticee to
documents. A copy of summons dated 08.05.2024 is annexed as Annexure 10. '.
Letter dated 15.05.2024
3.14 The Noticee provided the invoice copies to the department for the relevant pe
FY 2021-22 to FY 2023-24. Further, the Noticee requested 15-20 days-time to
invoices for FY 2017-18 to FY 2020-21 since the data was old and archived.
letter dated 15.05.2024 is annexed as Annexure 11.
Summons dated 28.05.2024
3.15 The proper officer again issued a summon dated 28.05.2024 to the Noticee •
balance documents. A summons dated 28.05.2024 is annexed as Annexure 12:
3.16 Vide letter dated 04.06.2024, the Noticee submitted the pending invoice copi
dated 04.06.2024 is annexed as Annexure 13.
Investigation visit by the department
3 .17 The proper officer along with the team have visited to the Noticee' s office on 2
and have conducted detailed investigation for the period starting from July 201 T
2018 to FY 2023-24.
Spot Summons dated 21.06.2024
3.18 Vide summons dated 21.06.2024, the proper officer sought oral evidence int
matter. The authorized representative of the Noticee appeared and stateme
Shailesh Phadke, Senior Manager, Indirect Taxation was recorded. A copy o
summons dated 21.06.2024 is annexed hereto as Annexure 14. Further, as
01.07.2024 was issued directing the Noticee to appear on 05.07.2024 for oral evi
to provide the reconciliations of turnover, as per physical IPC vis-a-vis turnov '
in GSTR returns. The authorized representatives attended and submitted th
reconciliation. The Statements of Mr. Piyush Verma, General Manager; Ind.ire
was recorded on July 05, 2024. The copies of the statements of authorised.repr
are being provided now with SCN.
Letter dated 05.07.2024
3 .19 On 05.07.2024 vide two letters, the authorised representatives of the Noticee ap
furnished the oral, physical evidence, requisite documentation, along with:
reconciliation and clarifications pertaining to the period spanning from July 2017
2024. A copy of the letter dated 05.07.2024 with additional submissions as req
furnished copy of the same is annexed as Annexure 15. Additionally, it was co
that the Assistant Commissioner of State Tax Investigation had previously unde
investigation covering the FY 2017-18 to July 12, 2023 had issued a summ
12.07.2023. It was emphasized that all pertinent documents had already been sub
the officer of State tax in this regard. A copy of the letter dated 05.07.2024 is a
Annexure 16.
3.20 Consequently, initiating proceedings on the same subject matter and for an•
timeframe by another GST department would lead to redundancy and a violati
Section 6(2)(b) of the CGST Act, 2017. Therefore, it is requested that th
proceedings be discontinued and dismissed.
3.21 On 08.07.2024 vide three letters, the Noticee as directed by the department sub
soft copies (electronic form) of Contract between the Noticee and Notice~'s cli
of acceptance ('LOA'), relevant copies of Bid documents or other documents/ i
asked. The Noticee supplied all the documents as specified on the same day.
letters dated 08.07.2024 is annexed as Annexure 17.
Form GST DRC-0lA dated 19.07.2024

Page 10 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

deletter DIN No. 202407DWW000001 l 161F the department issued the pre-show cause
tide'in Form GST DRC-0lA without any date.
•.·J. I '.
s m1portant to note that there are no findings provided by the department against all the
rn,is~ip11i5 made by the Noticee. In the said notice, the department has merely provided
amount of GST liability as given in Table -1 and interest payable on GST liability
c:harged belatedly as given in Table -2 below:

(Figures in INR)
Period Total Short GST Paid
2017-18 8,80,02,658
2018-19 2,64,82,621
2019-20 10,64,80,710
2020-21 9,48,52,380
2021-22 6,11,47,648
2022-23 17,49,41,261
Total 55,49,07,278

(Figures in INR)
CGST SGST Total
52,85,778 52,85,778 1,05,71,556
20,51,090 20,51,090 41,02,180
27,54,952 27,54,952 55,09,904
10,22,349 10,22,349 20,44,698
5,14,607 5,14,607 10,29,214
16,24,385 16,24,385 32,48,770
1,32,53,161 1,32,53,161 2,65,06,322

Para 3 thereof, it is alleged that the Noticee is indulged in GST evasion by

dervaluation. Therefore, the Noticee has been directed to pay the alleged short- paid GST
ounting to Rs. 55,49,07,278/- in terms of Section 74(5) of the CGST Act, 2017 along
th applicable interest.
1 to DRC 0lA dated 24.07.2024
Noticee filed a reply denying all the contentions and specified that there is no short
ent:oftax and the interest is not payable on various grounds. A copy of the reply dated
I', I

qI2024js annexed as Annexure 18.

Ndated 01.08.2024
3. 1gep¥1Went without considering the reply to the intimation dated 19.07.2024 issued
present show cause notice. A copy of the SCN dated 0 1.08.2024 is attached as Annexure

artment in the SCN dated 01.08.2024

3. Para 2.1 of the SCN, it has been alleged that intelligence was developed that the Noticee
, ngaged in projects of Mumbai Metro and the deduction of TDS at 1% is being deducted
the deductor as reflected in GSTR-7 returns. Further, it was alleged that the Noticee was
~ discharging the GST properly.
•Para 3 .1 and 3 .6 of the show cause notice, it has been alleged that the investigation was
de vide letter mode by issuing a letter dated 23.07.2021 seeking reconciliation of GSTR-
d GSTR-3B and further it is contended that the Noticee did not reply therefore, a
ons dated 28.06.2023 was issued seeking the documents. In response to the same
orized representative appeared and explained the reconciliation and provided a brief
e. It ;was further alleged that there was mismatch in the taxable value as seen in the
!

Page 11 of 48
 Order-in-Original No. 28/CGST-NM/ADC/

details uploaded in GSTR-1 and the physical invoices i.e., Interim Payment C
('IPC').
3.29 At Para 3.7 and 3.10 of the SCN, it has been alleged that the investigation
conducted for the conclusion of the investigation and the statements of Mr.
Phadke and Mr. Piyush Verma were recorded, and relevant documents were pro
3.30 At Para 4 of the SCN, the observations of the department are specified. It has bee •
observed that the payment has been made in terms ofIPC and that there is no oth
which is made for payment. The Chartered Engineer provides for the bre
amount is sanctioned in terms of the contract. The Notice has completely misco
misinterpreted the provisions enshrined in the Section 15 of the Act. It is import '
out that the letter of MMRCL has been completely misread by the department a
points out that the bid price is inclusive of all taxes. It was specified that the in
of the Ld. DGGI is different from that of State Investigation.
3.31 At Para 5 of the show cause notice, the alleged quantification has been specified
that short-paid GST liability amounts to Rs.55.49 Crores.
3.32 At Para 6 of the SCN, the legal provisions are reproduced.
3.33 At Para 7 of the SCN, the conclusion of the investigation has been alleged. I.
stated that tax lliability arises on the same date of issuance of invoice and not,
same is received in the bank account as considered by the taxpayer in terms '
31(5)(c) read with Section 13(2) of the CGST Act, 2017 and that there is differen
when the invoices are raised for the purpose of payment of GST liability and the
the actual/physical invoice is issued which resulted in loss of revenue in th
interest. It has also been alleged that the Noticee has suppressed information an
Section 74 of the CGST/MGST Act, 2017.
3 .34 At Paras 8 to 16 of the SCN, alleges the contraventions of the Noticee and prd
demand in the above terms. The show cause also summarily deals with a repl
DRC- 0lA without considering the same. The list of Relied upon documents is
4. The Noticee submit that the above allegations in the aforesaid SCN are incorre •
as well as in law. The SCN is liable to be dropped on the following amongst oth
which are urged herewith without prejudice to one another:

SUBMISSIONS ,
A.l At the outset, the Noticee submits that the above SCN proceeds on an inc6rrect
well as legal basis. The Noticee denies and counters each and every ,'
contained/made in the SCN and nothing that is stated in the SCN is admitted or··
have been admitted unless so specifically admitted in this reply. Hence, the abo
liable to be dropped.
A.2 At the outset, it is clarified that the provisions of the CGST Act and MGST Act
same provisions in like matters except for certain provisions. Therefore, unless
is specifically made to such dissimilar provisions, a reference to the CGST Act
mean a reference to the corresponding similar provisions in the MGST Act.

No Short Payment of Tax - despite of detailed submissions / explanations/ do .

evidence, Ld. DGGI_affix a tax demand of Rs. 55,49,07,278/- with a clear i
create a demand by ignoring the following (explained in greater detail in the lat

a) Contract price / Bid price is inclusive of taxes as per the Contract signed
of Acceptances, despite of that, Contract price in running account state ••
periodically based on certification, were considered as taxable value for le
b) Double taxation - Advances against Material, Plant & Machinery ad
certified bill value, wherein GST on advances were already paid on receip
c) Invoice pertaining to pre-GST regime and also part of another show cause •
also considered in Notice for computing the GST liability of Rs. 55,49,07,

Page 12 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

Taxable value aggregating to Rs.2,613 Crores till 2022-23, exceeded the actual
Contract Price of Rs.2,523 Crores when the project is still underway, itself shows
erroneous computation of taxable value in the Notice.

e Noticee submits that there is no short payment of tax as alleged in the show cause
ice for the following reasons
st, the observation in Para 4.7, is factually incorrect. The department misunderstood the
ticee's letter to MMRCL and misconstrued the provisions of Section 15 of the Act. The
reement entered by Noticee with MMRCL clearly states that the Contract price is
lusive of taxes. The copy of the relevant page with relevant clause i.e., 14.1 of 'Particular
. nditions of the Contract' ('PCC') of the Contract is attached in Annexure 20. Similarly,
Contract price is inclusive of taxes is clearly mentioned in the first paragraph of' Letter
Acceptance' ('LOA') dated July 01, 2016 issued by MMRCL to the Noticee. The copy
LOA'. is enclosed Annexure 21. The copies of these Contract, LOA and letter to MD of
• I

. CL \yere all submitted to Ld. DGGI on 08.07.2024 (already enclosed inAnnexure 17

ve). pe~pite of knowing this, Ld. DGGI computed tax again on the entire value ofIPC's
·.ch were issued from July 01, 2017, wherein the tax amounts. Further, as admitted in
aph 4. 7 ,of the SCN that the letter addressed to the MD of MMRCL also clearly states
t the bid price is inclusive of all the taxes including Value Added Tax ("VAT") under
arashtra VAT Act, 2002, duties, royalties, cess etc. However, the department has with
afide intention alleged in paragraph 4.7 that "the contract value is inclusive ofvarious
es except Service Tax. Prior to GST regime, taxpayer was supposed to pay Service tax
•similar service as provided in post GST period". Despite of all information available
lli Ld. DGGI, SCN blatantly ignored the fact that the Financial Bid was submitted on
.02.2016 and the Notification No. 09/2016- SERVICE TAX F. No. 334/8/2016 - TRU
.ted 1st March, 2016 itself was introduced on 01.03.2016 (post bid submission) wherein
rvice tax on services by way of construction, erection, commissioning or installation of
ginal works pertaining to monorail or metro, was applicable from 01.04.2016.
erefore, the contention in the SCN is completely incorrect and bereft from reality. In
t, Noticee have paid service tax on all pre-GST invoices, the same will get a support
m t;hei submission made in paragraph B.10 of this reply. Thus, the allegation in the Notice
tlj.e ~ demand is not sustainable.
B. ,·
re,ar~ taxes at the Centre and State level are being subsumed into GST effective 1st July
t ,:,,1 1''

7. At the Centre level, the following taxes are being subsumed:

C~ntral Excise Duty,
Additional Excise Duty,
Service Tax,
Additional Customs Duty commonly known as Countervailing duty paid,
Special Additional Duty of Customs.

the State level, the following taxes are being subsumed:

Subsuming of State Value Added Tax/Sales Tax,

Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax
(levied by the Centre and collected by the States),
Octroi and Entry tax,
Purchase Tax,
1
~uxury tax, and
1 ·•·
•
Taxes
•' I
on lottery, betting and gambling.
(::,<.:; ' '!,
B. 'Nbdcee'.was governed by the provisions of the Maharashtra VAT Act, 2002 under the
I

.GST'. regime. The contract in question was signed prior to the introduction of GST, and
(,' ,/,,'' ''..: ·"! '
result, the price quoted during the bidding process included VAT and other applicable

Page 13 of 48
 Order-in-Original No. 28/CGST-NM/ADC/A

taxes. With the implementation of GST, which subsumed state VATYSale,

Noticee, while calculating the taxable turnover under GST, deducted the tax •
4.93% from the erstwhile tax regime, since the tendered price included pre-GST t
the Noticee not reduced the tax from the bidding price, it would have resulted •
tax situation, undermining the purpose of GST in eliminating the cascading effec
Consequently, the demand proposed in the Notice is liable to be dropped.
B.5 Second, the Noticee vide letter dated 11.08.2016 addressed to MMRCL had
detailed break up of taxes which were included in the contract price. The N
submitted the amount of tax as Rs.124.41 Crores in the total bid price. The afor
was also submitted to the department vide letter dated 08.07.2024. The d
conveniently ignored the submission.
B.6 Third, the authorised representative of the Noticee vide Statement dated 05.0
specified how the rate of tax @ 4.93% was calculated and the basis of the
department further did not ask for any clarification and arrived at conclusioh. t
short payment of taxes. The Noticee vide letter as well as the statement had cl
calculation adopted for payment of taxes. However, same was brushed aside.· ,
B.7 Fourth, before implementing of GST, the Noticee entered into an agteetn
21,15,30,00,007/- and USD 65,348,587 (Rs.2523 Crores approx .. ) this pride •
of all pre-GST taxes which was aggregating to Rs.124.41 Crores i.e., 4.93% o
Crores. This information was mandatorily declared as per PCC Sub Clause 14 .
Contract, to Noticee's client MMRCL via its letter dated 11.08.2016 (copi •
attached in Annexure 17). The relevant portions of the clauses 14.1 is reproduced
"14.1.1 The Contract Price, subject to any adjustment thereto in accordanc
the Contract shall be inclusive of all taxes, duties, royalties, cess, etc. incl
Value Added Tax (VAT) paid under Maharashtra VAT Act 2002 where w
done in Maharashtra and Value Added Tax (VAT) paid under other
Government VAT Act work is done in that state"
"14.1. 4 Nothing extra shall be payable over the quoted rates, notwithst
any provision to the contrary in any law for the time being in force, sa
except what is specifically provided in the GCC. "
B.8 In other words, the Noticee through reverse working and considering all
prevailing at the time of bidding was to the tune of Rs. 124.14 Crore for the total
was 4.93% of the total contract price. After the enactment of the GST for !the·
2017 to January 2019 due to confusion, the Noticee issued cum invoices (incl'
at the rate of 12%/18% as applicable on the amount. However, after February
Noticee started paying the tax after deducting taxes@ 4.93% as pre-gst taxes
debit notes for the differential tax from July 2017 to Jan 2019. The illustration o
is as below:
fllustration:
Bill Amount (inclusive of taxes) - Rs 100
Less: Amount of Pre-GST [email protected]% Rs. 4.93
Amount offered for GST (Tax Neutral Amount) Rs. 95.07
GST Levied and paid to Govt. @ 12% Rs. 11.40

The above illustration clarifies as to amount arrived by the Noticee. If the total v:
100. The Noticee has reduced 4.93% from the total amount i.e. Rs. 4.93/- to
Pre-GST amount which can also be called as tax-neutral value which wou
exclusive of taxes derived by reverse calculation. The Noticee has furth
government the tax at the appropriate rate on such a tax-neutral amount. This c
gets a support from the judgement of hon'ble Karnataka High Court in the
Chandrashekaraiah & Ors. vs. State ofKarnataka & Ors. [TS-253-HC(KAR)-2
wherein similar method was adopted by the Hon'ble court for pre-GST contra

Page 14 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

balampe works to be completed after June 30, 2017 in the original contract. The relevant
ion of the aforesaid judgement is reproduced as under:
"HC observed that the respondents/employers are required to honour the same -
after determining the differential tax burden, especially for the Assessee who are
before this court where "works contract" were entered prior to July 01, 2017
during KVAT regime and works are completed pre-GST but payments are made
post-GST or Contracts entered prior to July OJ, 2017 but partly executed pre-
GST and balance work executed post-GST or Contracts for which tenders were
invited during KVAT regime and finalised after July OJ, 2017 under GST regime
or contracts which were invited during KVATregime under old schedule ofrates
(SR) but finalised under GST regime and that a certain procedure is required to
be, followed to determine the amount payable by or to the works
contractors/Assessee.
#C gqve the following directions: -
~ Calculate the works executed pre-GST (prior to 01.07.2017) under KVAT regime
· and payments received by the assessee.
'-The.payments received by the Petitioners pre-GST for such of the works executed
before July OJ, 2017 are to be assessed under KVAT tax regime - either under COT
or VAT scheme as applicable.
- Calculate the balance works to be completed or completed after before July OJ,
2017, in the original contract.
- Derive the rate ofmaterials, KVAT items required or used to complete the balance
works.
- Deduct the "KVAT" amount from those materials and the service tax, ifapplicable.
- Add the applicable "GST" on those items.
- Input Credit on the materials is to be arrived at and be set offas against the output
GST, for those assessed under regular VAT
- Further, HC instructed that the "tax difference" should be calculated on such
balance works executed or to be executed after before July OJ, 2017 separately.
•- Based on the result obtained on calculation of the tax difference on the contract -
' vqlqe,, .concerned department/authority has to decide whether agreement needs to
·.~~ ;changed
\ ',i I :I
or not.
"'A $upplementary agreement may be signed with the Assessee for the revised GST-
. fr7clusive work value for the Balance Work completed or to be completed as
determined above and in case the revised GST inclusive work value for the Balance
' Work, completed or to be completed after before July OJ, 2017, is more than the
original agreement work value, the Assessee are to be paid /reimbursed, as the
case may be, the differential tax amount by the concerned employer; so also, in
case payments for works completed pre-GST are made post-GST, the concerned
employer has to pay or reimburse, as the case may be, the differential tax amount,
to the Assessee. "
refore, considering the above judgement which second Noticee's method of
• putation, hence there is absolutely no short payment of tax.
• ble taxation - Advances against Material, Plant & Machinery added to the certified biil
ue, wherein GST on advances were already paid on receipt
SCN blatantly ignored the submissions and reconciliations by Noticee but also have
red the GST returns filed by the Noticee wherein Noticee clearly declared and paid
' • I
on advances
• ••. ''. I '
aggregating to Rs. 292,62,82,502 /- (for the period 2027-18 to 2022-23)
'nst¥atyrial, Plant & Machinery on which Noticee have already paid the GST on
usivd basis. The Ld. DGGI after thorough understanding of the whole business, billing,
I ' I

<;~&,bank receipts for complete two days, once in Noticee's registered office on June
024 and second at DGGI office at Ballard Estate, Mumbai on July 05, 2024 till IO PM
i evening). Despite of the detailed submissions and explanations, Ld. DGGI again have
I

, Page 15 of48 C1.-

 [ ,,'

Order-in-Original No. 28/CGST-NWADC/

added the advances into the certified value of Rs. 2613,52,92,077/- and comp
the same again, which leads double taxation.
1
Invoice pertaining to pre-GST regime and part of another show cause noti
considered in Notice for computing the GST liability of Rs. 55,49,07,278/-
B. 10 An invoice bearing No. IPC 05 pertaining to pre-GST regime (Apr 2017 to J
considered in Notice for computing the GST liability of Rs. 55,49,07,278/-,
particular invoice IPC 05 was part of show cause notice bearing No. F.No.V.C
Dn -V/ R-III/ HCC-MMS Joint Venture/Audit I/207/2019-20/3532 dated
against DIN No 20220667VW050092499C (copy enclosed in Annexure •
proceeding under the aforesaid show cause was dropped via Order-in-O
237/PPK/AC/22-23, dated 13.01.2023 (copy enclosed in Annexure 23), accepti
Service tax was correctly paid by the Noticee for the services rendered in pre-
and the same cannot be doubly taxed. Thus, notice again considering the s
pertaining to Pre-GST and part of other SCN, is not legally correct.
Taxable value aggregating to Rs. 2,613 Crores till 2022-23, exceeded the actu
Price of Rs. 2523 Crores when the project is still underway, itself shows.
computation of taxable value in the Notice . ' ••
B.11 Interestingly, Ld. DGGI computed the taxable value aggregating to Rs. :26131, •
(say Rs. 2614 Crore) up to FY 2022-23, wherein the total Contract Price i~ Rs
when the works under the contract is still underway till October 2024. This it
that the computation in SCN is completely erroneous, incorrect and without app
mind.
B.12 Further, the Notice in its paragraph 5.2 states that;
"it appears that, for arriving at the taxable value they have deducted the
which are under dispute with their client to arrive at the taxable val
payment of GST liability. Also, the agreement is ofpre-GST regime. Ther
amount agreed upon between the taxpayer and the client on which GST li
is to be discharged Hence total amount certi zed as seen in the !PCs is ta
the taxable value.

From the above, it is evident that SCN admitted the fact that (1) the agreemen
GST regime (2) No amount agreed between the taxpayer and client on wh.i~
liability is to be discharged and hence the total amount certified as seen in the
j ':

taken as the taxable value. The SCN's clear admission of this vary fact that 1the e
of IPC's were considered as taxable value, itself confirms that the cdniputa
amounting to Rs. 55,49,07,279/-on those taxable value is erroneous~
completely illegal, despite of knowing the fact that the agreement was of pre-G
and the bid price was inclusive of pre-GST taxes. Even the copy of the entire a
contract with MMRCL was shared vide letter dated 08.07.2024 (copy already
Annexure 17). Therefore, SCN without jurisdiction and authority proposing a t
liable to be set-aside.
B.13 Considering the above submissions, facts, Noticee's replies, statement had expl
aforesaid calculations to the satisfaction of investigating officers, yet without any
only with an intention to affix a tax demand of Rs. 55,49,07,278/- (
Rs.27,74,53,639/- + SGST-Rs.27,74,53,639/-) for the period from July 201T
2023, on the Noticee, the present show cause has been issued. Thus, the show ca
is liable to be dropped.
Without prejudice, the department cannot re-write the agreements of the parties.
C.l The department cannot assume the contract to be in a particular fonnat. to 1

allegations, and re-write contract for parties. It is settled law that one canno~ go e
intention/commercial interest of the parties as stated in the commercial agree
contract between MMRCL and the Noticee clearly states in its clause 14J. e

Page 16 of 48
.
\
'
Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

ntract Price is inclusive of taxes. The relevant portion of the clause 14.1.1 is reproduced
,under:
"The Contract Price, subject to any adjustment thereto in accordance with the
Contract shall be inclusive of all taxes, duties, royalties, cess, etc. including
Value Added Tax (VAT) paid under Maharashtra VAT Act 2002 where work is
done in Maharashtra and value Added Tax (VAT) paid under other State
Government VAT Act work is done in that state"

e department has read the copy of the Contract which was also submitted by Noticee on
.07 .2024 (copy of enclosed in Annexure 17). This is contrary to the word and spirit of
contract, now DGGI cannot re-write the contract and as per paragraph 5.2 of the show
se, cannot consider the Contract price as taxable value and compute tax, which is
p~ete,ly unjust, erroneous and illegal. Therefore, the show cause notice is liable to be
pyed.
; fr \
Hon'ble Supreme Court in the case of Bhopal Sugar Industries Ltd. v. Sales Tax
, c~p-.:AIR 1977 SC 1275, has observed the following-
"Jt is well settled that while interpreting the terms of the agreement, the Court
has to look to the substance rather than the form ofit. The mere fact that the word
'agent' or 'agency' is used or the words 'buyer' and 'seller' are used to describe
the status of the parties concerned is not sufficient to lead to the irresistible
inference that the parties did in fact intend that the said status would be
conferred. Thus, the mere formal description ofa person as an agent or buyer is
not conclusive, unless the context shows that the parties clearly intended 'to treat
a buyer as a buyer and not as an agent. "
It is clear from the observations made by this Court that the true relationship of
the parties in such a case has to be gathered from the nature of the contract, its
terms and conditions, and the terminology used by the parties is not decisive of
the said relationship. "
. 11
s,whl:J.t the Supreme Court says above is that the form of the agreement is not important,
1
r~th~r the substance which has to be seen. The parties may use any words they like to
tl:ieit intention and it is therefore imperative that the agreement may not be taken as it
I
ut its nature/substance
' '.,•:,,l
", I :
has to be seen to arrive at the correct conclusions.
Of vs. Mahindra and Mahindra Ltd. 1995 (76) E.L.T 481 (SC) it was held that the
should proceed on the basis that the apparent tenor of the agreements reflecting the
i state of affairs.
C. ;Vodafone International Holding B. V Vs Union of India Anr.Civil Appeal No. 733 of
2, the Supreme Court held thus:
"68. In this connection, we may reiterate the "look at" principle enunciated in
Ramsay (supra) in which it was held that the revenue or the Court must look at
a document or a transaction in a context to which it properly belongs to. It is the
task of the Revenue/ Court to ascertain the legal nature of the transaction and
while doing so it has to look at the entire transaction as a whole and not to adopt
a dissecting approach. The Revenue cannot start with the question as to whether
the impugned transaction is a tax deferment/saving device but that it should apply
the look at "test to ascertain its true legal nature [See Craven v. White (supra)
1 which further observed that genuine strategic tax planning has not been

, qbfruloned by any decision of the English Courts till date. Applying the above
1
fesr, we are of the view that every strategic foreign direct investment coming to •
India, as an Investment destination, should be seen in a holistic manner. 11

C. Show Cause Notice has erred in levelling the allegation that there is a short payment
ax. Hence, the show cause notice is liable to be dropped on this count alone.
,Page 17 of 48 @-
 Order-in-Original No. 28/CGST-NM/ADC/

The contract has to be read holisticall and the substance of the transaction is
be seen
D. l Without prejudice, Noticee submits that, the contract/work order is to'b~ read
and the substance of the transaction is required to be determined. No part of
agreements can be read in isolation. If the agreement/contract/work or~er is1
whole, the substance was to make the bid inclusive of all taxes.
D.2 It is settled law that true nature of the contract is important and not the nomencl
therein. Reliance is placed on the decision of the Hon'ble Supreme Court in
Union Territory of Chandigarh vs. Panipat Woolen and General Mills
Chandigarh, AIR 1976 SC 640 wherein while analysing section 10 of the Contra
Apex Court observed that in order to construe an agreement, the Court has to 1
substance or the essence of it rather than to its form. A similar view taken by
Supreme Court in the case of State of Gujarat Commissioner ofSales Tax, Ahm
Variety Body Builders AIR 1976 SC 2108.
D.3 The Hon'ble Supreme Court in the case of Super Poly Fabriks Ltd. vs. CCE, P
(10) STR 545 (SC) while analysing the liability to pay Service tax under cl
forwarding agent service, observed as follows:
"8. There cannot be any doubt whatsoever that a document has to be re
whole. The purport and object with which the parties thereto entered
contract ought to be ascertained only from the terms and conditibn~ t
Neither the nomenclature ofthe document nor any particular activity unde
by the parties to the contract would be decisive. "

D.4 Reliance is also placed on the decision in the case of Assam Scale Ind. Dev. Cor
Ors. v. JD. Pharmaceuticals and Anr. (2005) 13 SCC 19 wherein it was held as
"The expressions 'principal' and 'agent' used in a document are not de
The nature of transaction is required to be determined on the basis
substance there and not by the nomenclature used. Documents are
construed having regard to the contexts thereof where/or 'labels' may not
much relevance. "

D.5 The Noticee also places reliance on the decision of the Hon'ble Bombay Hig
Globolive 3D Pvt. Ltd. Vs Union of India and Ors Writ Petition 39 of2023 whe
been observed as under
"29. We are also in agreement with the petitioner when the petitioner co
that the stance as taken by the department would in fact nullify or ob liter
terms and conditions under the agreement in question which remain to be ' I

unquestionable in the absence of any contrary material. In •Bhopal

Industries Ltd. Vs. Sales Tax Officer 1 as relied by the petitioner, the Su
Court has held that it is well settled principle that the Court, while inter
the terms of the agreement, would be required to look to the substance
than the form of the agreement and that the true relationship of the partie
to be gathered.from the nature ofthe contract and its terms and conditions.
applying such well settled principle in interpretation of the terms and condz.
of the agreement in question, we may observe that the purport and intent •
agreement in question has been totally misconstrued by the appellate auth
Further from the reading of the impugned order, we also note that
reasons as set out in the impugned order were certainly not sufficient fi'
Appellate Authority to reach to a conclusion that the services in question w
export ofservice so as to deny the petitioner's the referred claim. "

Page 18 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

. view of the above, Noticee submits that reading the contract as exclusive of taxes is
!

ainst the letter and spirit of the contract. Therefore, the show cause notice is liable to be
pped on this count alone.

•olation of Section 6 2 b of the CGST Act 2017

e Noticee submits that there is a clear violation of Section 6(2)(b) of the CGST Act,
. 17. The Noticee orally on 21.06.2024 and vide reply dated 05.07.2024 had specified that
e Investigation Department of State Tax has already seized of the issue and has conducted
e investigation. However, the department has still proceeded in violation of Section
2)(b) of the CGST Act, 2017 and various decisions of the Hon'ble Courts.
E. 'Pru:a :4.9, the show cause notice alleges that the investigation of State Department was
th respect to ITC claim and non-payment of interest on taxes paid on mobilization
'' i
ance.
e Noticee
' .
submits that the contention is incorrect and illogical. The State Investigation
partnient has done a thorough investigation at registered address of the Noticee from
.07.2023 \o 13.07.2023. During this investigation for a period starting from 01.07.2017
31.03.2023, conducted by an investigation team of total six, comprising of two Assistant
, mmissioners and four inspectors, who have verified all the documentation, information
made copies for their records. The Noticee on the request had further provided all the
cuments to the State Department at their office. The State Department after verification
,all the documents raised the point of interest on Mobilisation Advance, this does not
an that the issue with respect to short payment of tax or delayed payment of tax as
eged in the show cause notice was not verified or examined. The State Investigation
partment after verification found that there was no alleged short payment of tax or
erest.
E. e Ld. DGGI should have written to the State Investigation Department and
ependently checked the investigation report and other documents. However, no such
i"l-ty was carried out by the Ld. DGGI. This is a clear case of violation under Section
)(b), of the. CGST/MGST Act, 2017. The Ld. DGGI has highhandedly carried out the
I'
e~g~tion in complete violation of provisions of CGST/MGST Act, 2017. I

E; , ~o~foee submits that if the interpretation of the Ld. DGGI is adopted, it would defeat
.purpose' of Section 6 (2)(b) of the Act.
weIFsettled that any interpretation that renders specific provision of law redundant or
se. or nugatory or inconsistent needs to be avoided. The legislature is a perfect
islative body. It is presumed to know all the laws when it enacts any particular
islation.
E. Union of India V/s Hansoli Devi (2002) 7 SCC 273, the Hon'ble Supreme Court has
served that the legislature never waste's it words or say anything in vain and a
struction which attributes redundancy to legislation will not be accepted except for
mpelling reasons .
.sultana Begum V/s Prem Chand Jain (1997) 1 SCC 373, at page 381, the Hon'ble Apex
urt has held that: (1) It is the duty of the courts to avoid a head-on clash between two
tions of the Act; (2) The provisions of one section of a statute cannot be used to defeat
other provisions unless the court, in spite of its efforts, finds it impossible to effect
' nciliation between them; (3) It has to be borne in mind by all the courts all the time
I
1
when there are two conflicting provisions in an Act, which cannot be reconciled with
h ?,~et, they should be so interpreted that, if possible, effect should be given to both.
sr~:tpe €fssence of the rule of "harmonious construction"; (4) The courts have also to
p in mind that an interpretation which reduces one of the provisions as a "dead letter''
'µ~fl¢~sAumber" is not harmonious construction; (5) To harmonise is not to destroy any
t6ry provision or to render it otiose.
E. • ·1ar1y, in CIT V/s Hindustan Bulk Carriers (2003) 3 SCC 57, at page 73, the Hon'ble
' reme Court has held that the courts will have to reject that construction which will
• ~ -

Page 19 of 48 ~
 Order-in-Original No. 28/CGST-NM/ADC/

defeat the plain intention of the legislature even though there may be some in e
the language used.
E.10 From the above settled legal position, it clearly emerges that a bare
interpretation of words and application of a legislative intent is devoid of c
purpose will reduce most of the remedial and beneficent legislation to futility.
in meaning is to see the skin and miss the soul. Words, phrases arid rules 6
statute are to be read together and not in an isolated manner. The le islation ne
to give one from one hand and take away from other hand. Therefore, the show ca
is liable to be dropped.
E.11 Reliance is placed on the ruling of the Hon'ble Gujarat High Court in th
Sureshbhai Gadhecha Proprietor of Anmol Traders vs. State
MANUIGJ/3489/2019 wherein the Hon'ble High Court ruled that there cann
parallel investigations under the State Act as well as the Central Act.
E.12 Hon'ble Delhi High Court in the case of RCI Industries And Technologi
Commissioner DOST Delhi & Ors. 2021-TIOL-138-HC-DEL-GST while exp
Parallel enquiries on the same GST issues by State & CGST authorities ruled
the action of the State and Central Authorities is overlapping, the Noticee w •
liberty to take action to impugn the same in accordance with the law.
E.13 The N oticee further places reliance on Raj Metal Industries vs Union ofIndia 2
744-HC-KOL-GST.
E.14 Further, vide circular F. No. CBEC/20/43/01/2017-GST dated 05.10.2018
regarding initiation of enforcement action by the Central tax officers in case b
assigned to the State tax authority and vice versa. The relevant portion ofth
dated 05.10.2018 is extracted below.
"2. In this regard, GST Council in its 9th meeting held on 16.01.20'
discussed and made recommendations regarding administrative div(
taxpayers and concomitant issues. The recommendation in relation to
empowerment ofboth tax authorities for enforcement of intelligence-based
is recorded at para 28 of Agenda note no. 3 in the minutes of the meetin
reads as follows:
viii. Both the Central and State tax administrations shall have the power•
intelligence-based enforcement action in respect ofthe entire value chain. '
accordingly clarified that the officers of both Central tax and State t
authorised to initiate intelligence based enforcement action on the•
taxpayer's base irrespective of the administrative assignment of the t
any authority. The authority which initiates such action is empowered to c
the entire process of investigation, issuance ofSCN, adjudication, recover
of appeal etc. arising out of such action. 4. In other words, if an office
Central tax authority initiates intelligence based enforcement action
taxpayer administratively assigned to State tax authority, the officers of
tax authority would not transfer the said case to its State tax counterpart an .
themselves take the case to its logical conclusions. 5. Similar position
remain in case of intelligence based enforcement action initiated by offi
State tax authorities against a taxpayer administratively assigned to the
tax authority. "

E.15 From the above circular, it is clear that once one authority had taken steps to in
the Noticee, the other authorities should have held their hands and could not in
the Noticee for the same transactions. Therefore, the show cause notice is lia
dropped.

The investi ation conducted b the Ld. DGGI in the resent matter is nothin but
enquiry

Page 20 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

e Noticee submits that the investigation conducted by the Ld. DGGI is nothing but a
shing enquiry.
e Ld. DGGI initiated the investigation on the basis of a mismatch of GSTR-3B and
STR- 7 (TDS) and concluded that there is a short payment on the basis of the rate of tax.
urprisingly, there is absolutely no discrepancy / allegation in the SCN with respect to
ismatch of GSTR-3B and GSTR-7 (TDS), for which the DGGI inquiry was first initiated,
ay back in 2021 Most importantly, the aforesaid issues are not even remotely
nterconnected with each other, how one cannot emphatically say that it is not a fishing
nquiry. The Ld. DGGI under the garb of investigation has carried out an entire audit. The
resent show cause notice is nothing but abuse of power. The investigation is entirely
, I
'thoutjurisdiction and in contravention to provisions of the law.
e: Ld~ :DGGI kept on seeking unnecessary documents from the Noticee and prolonged
e ~~estigation just to find some basis for raising the demand. On this ground alone the
ti~e is liable to be dropped .
. eNoticee submit that, the jurisdiction cannot be presumed, and authority cannot proceed
the matter, on the basis of presumption, unless it is duly vested with power, which, as
i
ated above, in the present case, on the face of it is absent, and nothing has been stated
w the jurisdiction has been assumed by the Ld. DGGI. The Hon'ble Supreme Court in
e case of CST, UP. v Sarjoo Prasad Ram Kumar, [1967] 37 STC 533 (SC) has held that
, e objection as to jurisdiction goes to the root of the case. Thus, it is settled law that the
'sdiction goes into the root of the subject matter.
he Hon'ble Bombay High Court in the case of Kiran Gems Pvt. Ltd vs. Union of India
021-TIOL-237-HC-MUM-STheld as under:
"19. Further submission of learned counsel for the Petitioner that the Central
Goods and Services Tax Act, 2017 has no provision empowering CERA to conduct
audit of the Petitioner's records also merits acceptance. Brief perusal of the
annexure to the impugned communication reveals that detailed audit of the
f1etitioner's accounts and records is sought for the period 2015-16 to 2017-18 i.e.
·, for ,a period of three years by Respondent No. 3. Such a detailed audit can only be i •
; p~lle:d for under relevant and specific statutes. It is settled law that jurisdiction
'.' gpesto the root ofa matter and power ofany authority invoking such jurisdiction
, ;to cap for special audit needs to be traceable to the relevant statutory provision. _
,,,)
1
t, :, :

In the absence of statutory backing, such an exercise ofpower would be invalid

and nonest. In the present case, the impugned notice I letter dated 10.01.2019 calls
for CERA audit and Respondents in their affidavit-in-reply have relied on the
provisions of Section 16 of the CAG's (DPC) Act to justify the impugned
communication. If that be the case then as discussed hereinabove, the
Respondent's action is wholly without jurisdiction and unconstitutional"
..... (emphasis supplied)

e Noticee submits that the entire proceedings are without jurisdiction. Thus, the notice
liable to be dropped.

on of Instructions F.No.DGGl/17/2023-INV-O/o Pr DG-DGGI-H -DELHI-

•Dated 08.02.2024

e)'-lq¥cef submits that in various instances the department has the violated the guidelines
ep qyDGGI.
t,th~ guideline prescribe that the investigation should be completed in one year. The
ent investigation is being carried out from 2021 and now the intimation/SCN/ Notice
been is~ued in August 2024.
ond, the guideline specify that the documents should not be sought by way of summons
ple letter would suffice, specifically in the cases where the assessee is co-operating.

Page 21 of 48 Q__
 Order-in-Original No. 28/CGST-NM/ADC/AKS

Yet, in the facts of the present case, seven summons have been issued e
investigation.
G.4 Third, the guideline specifies that summons should not be vague like haJing'. a su
as "GST Inquiry". In the present case, all the summons were issued with su
subjects specified as "GST Inquiry" being in clear violation of guidelines. • ' •
G.5 Fourth, in Para 9.2 of the Show Cause Notice it has been alleged that the;Notic
provide documents as simple as invoice and that is the reason for issuing \he 1

The contention of the department is absolutely incorrect. There is no letter/summ •

was not answered by the Noticee. The Noticee has been absolutely diligent. The d
has dragged the investigation for more than 3 years without any basis for con
fishing enquiry. Para No. 9 of the above guideline state that "Addressing letter/s
with context or content akin to a fishing inquiry is not acceptable."
G.6 Fifth, the Noticee submits that to cover up the mistakes of the department. The de
is blaming the Noticee. The delay and gap between the first letter dated 23.07.202
summons dated 28.06.2023 itself specifies malafide intention on the part of the L
and violation of Para No. 13.1.
Q.7 Sixth, the Noticee submits that there is a violation of Para 12 of the guideline w
that for obtaining approval to initiate an investigation with respect to a taxpaye
of initiation of inquiry, if any, already on same subject matter with respect to
taxpayer/GSTIN by another investigating office or tax administration must be as
The position must be placed before the approving authority. The Noticee was alr
investigation by the State department yet Ld. DGGI chose to investigat~. th
submits that no such approval was taken as it does not form part of the record.
G.8 Seventh, the Ld. DGGI has also violated Para 3(a) which states that ' 1The •.
investigation being taken up by DGGI should not take up a role not assigned
charter. ZU shall avoid taking up such functions, under provisions of law/rules,
appropriately fall in the purview of return scrutiny or audit, etc.". The allegati
present case is that the Noticee has not discharged the tax on an appropriate am
did not discharge interest on the delayed invoicing. The above allegations would fi
the purview of return scrutiny and audit.
G.9 As demonstrated above, the Ld. DGGI has contravened almost all the guidelines.
show cause notice is liable to be dropped.
G.10 The guidelines are binding upon the department. The Hon'ble Supreme Court in
of UNION OF INDIA Versus KAMLAKSHI FINANCE CORPORATION LTD
E.L. T 433 (S. CJ wherein it has been observed as under
"6. Sri Reddy is perhaps right in saying that the officers were not act
any mala fides in passing the impugned orders. They perhaps genuinely .
the claim of the assessee was not tenable and that, if it was accepted, the
would suffer. But what Sri Reddy overlooks is that we are not concerned, h •
the correctness or otherwise of their conclusion or of any factual m~la •
with the fact that the officers, in reaching their conclusion, by-passed two a
orders in regard to the same issue which were placed before them, on ,
Collector (Appeals) and the other ofthe Tribunal. The High Court has, in o
rightly criticised this conduct ofthe Assistant Collectors and the harassmen
assessee caused by the failure of these officers to give effect to the or
authorities higher to them in the appellate hierarchy. It cannot be too vehe
emphasised that it is of utmost importance that, in disposing of the quasi-}
issues before them, revenue officers are bound by the decisions of the a •
authorities. The order of the Appellate Collector is binding on the A
Collectors working within his jurisdiction and the order of the Tribunal is
upon the Assistant Collectors and the Appellate Collectors who function u ,
Jurisdiction of the Tribunal. The principles ofjudicial discipline require
orders of the higher appellate authorities should be followed unreservedl •

Page 22 of 48
I'
'·
Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

subordinate authorities. The mere fact that the order of the appellate authority is
not "acceptable" to the department - in itselfan objectionable phrase - and is the
subject-matter of an appeal can furnish no ground for not following it unless its
f!peration has been suspended by a competent Court. If this healthy rule is not
followed, the result will only be undue harassment to assessees and chaos in
administration of tax laws"

he Hon'ble Bombay High Court following decision in the matter of Om Siddhakala

sociates vs. Deputy Commissioner ofIncome Tax WRIT PETITION NO. 14178 OF 2023
at<Jd 28.04.2024 has held as under
1
'4. Therefore, Respondent No. 3 should have realized that the order of Income -
Tax Appellate Tribunal ("ITAT"), Pune was binding upon him and the principles
ofJudicial discipline required that orders of the highest Appellate Authorities
should be followed unreservedly by the subordinate Authorities. The mere fact that
'the brder is not acceptable to the department, in itself an objectionable phrase,
canfurnish no ground for not following it, unless its operation has been suspended
by the Competent Court. If this healthy rule is not followed, the result would only
be undue harassment to Assessees and chaos in administration of tax laws. " ·

herefore, the show cause notice is liable to be dropped.

terest under Section 50 1 of the CGST/MGST Act 2017

he Noticee submits that no interest is payable as there is no delay in paying the taxes.
ection 50(1) is reproduced as under
"(]) Every person who is liable to pay tax in accordance with the provisions of_
this Act or the rules made thereunder, but fails to pay the tax or any part thereof
to the Government within the period prescribed, shall for the period for which the
tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not
' '
exceeding eighteen per cent., as may be notified by the Government on the
IE

r,ecommendations of the Council:

I •

1
{Prpvfded that the interest on tax payable in respect of supplies made during a
it, ,'~ I

tax period and declared in the return for the said period furnished after the due
date• in accordance with the provisions ofsection 39, except where such return is
furnished after commencement of any proceedings under section 73 or section
74 in respect of the said period, shall be levied on that portion of the tax that is
paid by debiting the electronic cash ledger.]"

;he Noticee submits that interest under Section 50(1) is attracted when the tax remains
paid and is not deposited within the prescribed time period. In the present case, the
oticee has deposited the tax within the time prescribed under the act. The allegation of
elayed payment is illegal and without jurisdiction.
,he Noticee is engaged in providing works contract services to MMRCL. The Noticee is
,munerated for the work done on the basis of the work milestone which is based on certain
ameters. The Noticee sends a 'request for inspection' ('RFI') inviting engineers or
endes of the client to thoroughly check and certify the work. After that the engineers of
th,sides (i.e., the engineer of the contractor and the client), jointly take the measurement,
, ~c~rtain the actual work done during the period then it is entered into a joint
easuiement record once the measurement is certified by the engineer of the client. The
ot~pey cfor the work done and certified by the engineers in the particular period prepares
bruits Interim Payment Certificates ("IPC") to client i.e. To MMRCL. The IPCs are then
rified internally by the MMRCL and basis of internal approvals and fund allocation the
ount has to be disbursed to the Noticee. Thus amount of the IPC not be the same as the
ount certified by the engineers but it varied upon the decision of MMRCL. It is

Page 23 of 48 ~
 Order-in-Original No. 28/COST-NM/ADC/AKS

important to point ou0074 that the amount which is paid against the IPC com
knowledge of the Noticee when it is credited to their bank accounts and most of'
differs from the amount of IPC submitted to the client in their format.
H.5 Under this background, the Noticee follows Section 13(2)(b) and 31(5)
COST/MOST Act, 2017. Since the Noticee is into continuous supply of setvice
under Section 2(33) of COST / MOST Act, 2017 and therefore time ;ot:~uppl
determined as per Section 13(2)(b) read with Section 31 (5)(b) of the COST/M
2017. These relevant provisions are reproduced for convenience:
"Section 2(33). "Continuous supply of services" means a supply of 'Se
which is provided, or agreed to be provided, continuously or on recurrent:
under a contract, for a period exceeding three months with periodic pa
obligations and includes supply ofsuch services as the Government may, s
to such conditions, as it may, by notification, specify;

"Section 13. Time ofSupply ofServices. -

(1) The liability to pay tax on services shall

arise at the time ofsupply, as determined in accordance with the provisio
section.
(2) The time of supply of services shall be the earliest of the foUowi
namely:-
(b) the date of provision of service, if the invoice is not issued within t
prescribed under 1[****] section 31 or the date of receipt ofpaymknt, •
is earlier; or"
Section 31. Tax invoice.-

(5) Subject to the provisions of clause (d) of sub-section (3), in case of c

supply of services,-
(b) where the due date ofpayment is not ascertainable from the contract, th
shall be issued before or at the time when the supplier of service rec
payment;

H.6 The Noticee submits that they have rightly complied the above provisions and
the tax in the month ofreceipt of the amount from the MMRCL. The Noticee su.
the IPC is nothing, but a record of work certified. The payment of the IPC is diffi.
not the case that the amount exactly specified in IPC is getting credited. Nor in
the agreement that 80% gets paid. The MMRCL as per their internal verificatio
the work done and the amount to be credited. The Noticee comes to know th
received once it is credited to bank account. After the amount is reflected• iri
statement, the Noticee reconciles the certified IPC figures with the amountrecei
I .•
bank statement, in coordination with the internal team member of MMRCIJ. ·If
had paid OST based on the figures from the IPC and certification, Noticee w
either overpaid or underpaid OST, which is entirely inaccurate. For the Noticee
1
statement is the only final base or source document to decide the time supply £
invoices and determine the tax liability for paying the OST legitimately. The
any case is not privy to information about the amount getting credited. .
circumstances, as the amount is not ascertainable, the Noticee follows Section 13(
31(5)(b) of the COST/MOST Act,2017. The Noticee has rightly paid the taxes in
of receipt of payment as the amount was not ascertainable on the date of issuing
H.7 The Noticee has clearly specified this in the letters/replies. However, the same ar
aside. Therefore, the levy of interest on delayed payment is not applicable.
H.8 The Noticee submits that it is a settled principle of law that in cases where th
1
demand is not sustainable, interest cannot be levied. In view of the aforesaid su

Page 24 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

t is clear that the demand itself is not sustainable and hence, the question of imposing
terest does not arise. For this, reliance is placed on the following judicial precedents:
i) Coolade Beverages Limited- (2004) 172 E.L.T. 451 (All.)
ii) In Re: Victor Pushin Cords Pvt. Limited, 2013 (297) E.L.T. 312 (Commr. Appl.)
iii) Commissioner Of C. Ex. & S.T., LTU, Bangalore Vs. Bill Forge Pvt. Ltd., 2012 (279)
.L.T. 209 (Kar.)

urther, based on the submissions in earlier paragraphs of this reply, the tax demand
gre~ating to Rs. 55,49,07,278/- as proposed in the Notice is infructuous, legally not
nable.and liable to be dropped. Once this tax demand does not survive, the Notice propose
recc;,Vet interest on delay reporting of invoices aggregating to Rs. 2,65,06,322/- alone
'll'al~o not survive.
vjew of above, the show cause notice is liable to be dropped.
'', ' ! ,\

•
onsolidated show cause notice for multi le assessment ears contravenes the rovisions
f the CGST Act
he Ld. DGGI have issued single show cause notice covering multiple tax periods starting
om 2017-18 to 2022-23. Ld. DGGI bunching of show cause notices of six years is against
e provisions of Section 74 of the Act. The Constitution Bench of the Hon'ble Apex Court
' the decision reported in AIR 1966 SC 1350, State of Jammu and Kashmir and Others v.
altex (India) Ltd has held that where an assessment encompasses different assessment
ears, each assessment year could be easily split up and dissected and the items can be
parated and taxed for different periods. The said law was laid down keeping in mind that
ch and every Assessment Year will have a separate period oflimitation and the limitation
·11 start independently and that is the reason why the Hon'ble Supreme Court has held that
ch assessment year could be easily split up and dissected and the items can be separated
• d taxe.d for different periods. The said principle would apply to the present case as well.
e ~imi}ar rulings were given by Hon'ble High Court of Madras in case of Titan Company
d,t
\ ";"•
VsI' The Joint Commissioner ofGST & Central Excise /The Additional Commissioner
l '~ -

GSI' & Central Excise in WP.No.33164 of2023 and WMP.No.32855 of2023. Similar
d~io;n was recently given by Hon'ble High Court of Karnataka Mis. Veremax
hnologie Services Limited Vs. The Assistant Commissioner of Central tax 2024-VIL-
28-KAR, wherein courts stated;
"6. For the reasons aforementioned, this Court concludes that the show cause
notices issued by the respondent are fundamentally flawed. The practice of
issuing a single, consolidated show cause notice for multiple assessment years
contravenes the provisions of the CGST Act and established legal precedents."

e Ld. DGGI has acted be ond its 'urisdiction.

e Noticee submits that the function ofLd. DGGI is to detect cases involving the evasion
tax. In the present case, admittedly the Ld. DGGI is alleging short payment and interest
delayed payments. The aforesaid alleged violation cannot by any stretch of the
agination can be called as "Evasion of Tax". -
e Noticee relies upon the Charter of Functions of the DGGI wherein it has been specified
,j ' ' f'
unde~
':Coliect~on, collation and dissemination of intelligence relating to evasion of GST &
Ce4tral Excise on an all-India basis .
. Investigating offences having ramification in one or more than one Commissionerate's
• './!States: including investigation of complicated cases.
Studying the modus-operandi of evasion of GST and to alert the concerned field
formation about it and to suggest policy measures to CBIC.
Coordinating action with other enforcement agencies like CEIB, Income Tax, ED, State
GST Departments etc.

Page 25 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS

5) Supplementing and coordinating the efforts of field formations in the inve

wherever necessary.

J.3 The Changing role of DGGI has been stated in the Annual Report of DGCl'fo:r
wherein it has been stated under
"GST with its emphasis on advanced IT infrastructure, made a pctrad(
towards technology and data driven indirect tax administration in elndia:
has, in recent years, invested a lot in development of data analytical
predictive modelling, data visualization tools and big data analysis so as t
its officers with world-class IT infrastructure. The DGGL as an organiza .
no exception to this ongoing change. It has steadily moved towards intell
gathering by way of various advanced tools of data analytics in addi •
intelligence network across the country. DGGI has transformed the conto
intelligence gathering by using the enormous database of GST Network to
!

on areas of tax evasion. Many new modus operandi in the GST era hav
unearthed by using,these sophisticated tools. The intelligence collecte
developed by DGGI is either ploughed into action directly by its officers, or
with the Commissionerate depending upon the scale and reach of the c
most significant outcome of the federal nature of GST is the partnership o
and State in enforcement actions. The jurisdiction ofState enforcement aut
extends to the entire state whereas the jurisdiction of Centre enfo
authorities (such as DGGI) extends to the whole territory of India. the
better suited to carry out operations in cases where there are multiple ju~is
involved. "

J.4 Thus, it is clear that the DGGI has been vested the power to investigate matt~rs
the evasion of tax. In the facts of the present case, there is no evasion therefore
investigation is bad in law. The issue of short payment and interest on delayed p
beyond the purview of evasion of tax thus the intimation is beyond the jurisdicti
J.5 The Noticee submits that intervention by Revenue is permitted in specified circ
subject to specified conditions along with necessary checks and balances in
situation where intervention is warranted. By a general or special order of de
Proper Officers are empowered to carry out verification of the correctness of co
under section 65 of GST Acts (' Audit Enquiry'). And where there are sufficient :
believe, based on cogent material taken on record by Proper Officer not below
Joint Commissioner, that 'evasion of tax' has taken place may authorize an
designated to be the Investigating Officer under section 67 of GST Acts
Inquiry'). The proper Officer empowered to conduct an Audit Enquiry i
Investigating Officer authorized to conduct Evasion Inquiry as per law. The
extent of an Evasion Inquiry is a sub-set of the scope and extent of an Audit E
of utmost importance is the fact that the Proper Officer is vested with authomtyto
duties under sections 65 and 67, respectively, of GST Acts are not the satne per
J.6 Neither of these proceedings -Audit Enquiry or Evasion Inquiry- can be cond
prior approval or authorization. GST Acts lays down entirely dissimilar pre-req ,
pre-conditions to invoke authority under section 65 to conduct Audit Enquiry '
section 67 to carryout Evasion Inquiry. Difference between 'enquiry' and 'i
brought out well in Baleshwar Bagarti v. Bhagirathi Dass !LR 35 Cal 701 whe ,
held that:
"the traditional distinction between the verbs 'enquire' and 'inquire' '
enquire is to be used for general senses of 'ask', while inquire is reserved
meaning 'make a formal investigation'".

And this distinction in law touches the very pith of authority.

Page 26 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

. ere any Audit Enquiry or Evasion Inquiry results in demand for tax, credit or refund,
apter XV of GST Acts requires that demand be raised by issuing a 'show cause notice'.
, notice of demand is required to be issued under section 73 of GST Acts where the
mand is on account of bona fide misadventure in self-assessment of Output Tax resulting
rt:ax not paid or short paid or erroneously refunded or input tax credit wrongly availed ~r
"lised ('Regular Notice'). And where the pre-notice proceedings reveal mala fides in self-
essment and demand unearthed by investigation fraught with such extenuating or special
1
umstances that expose indulgence in perpetrating fraud or any wilful-misstatement or i
' '
pr,ession of facts ('Evasion Notice') when the notice of demand is required to be issued
~;,s~cti~n 74 of GST Acts. It is important to note that section 75(2) of GST Acts permits
ta notice for Evasion Notice issued under section 74 will be "deemed as if' the notice
s i~ued under section 73 of GST Acts if the extenuating or special circumstances of -
aud or any wilful-misstatement or suppression of facts" - are not satisfied.
J. e difference between Regular Notice and Evasion Notice is that (i) the limitation is
ger and (ii) penalties are aggravated, in Evasion Notice compared to notice for Regular

, t every instance of non-payment of tax for whatever reason is tantamount to 'evasion of

'. That is not the scheme of the law. Evasion of tax requires (i) liability found to be
discharged in self-assessment by taxpayer (ii) while being seized of knowledge about
•stence of such liability (iii) means deployed that either conceals relevant material or
ders detection impossible without use of investigative methods and (iv) gains directly
deliberated derived by such taxpayer, that would not have been exposed but for
estigation. In the absence of all of these ingredients, every benign demand cannot be
•sted as an Evasion Notice, as it would not only be illegal for being without authority of
bpt iru~o for being a demand without jurisdiction were issued by an Officer who is not
Pfopyr Officer.
' ,, . ! i ,
e Noticee places reliance on the Circular No. 1053/02/2017-CX dated 10.03.2017 issued
CBIC.wherein it has been stated that the extended period oflimitation cannot be invoked
ln:i~tt~~s involving the interpretation wherein it has to be decided with respect to levy
short Ie-ey. The aforesaid circular is binding upon the department as held by various
n'ble Courts.

•e Noticee submits that the scope of jurisdiction ofLd. DGGI is "evasion of tax" Once it
been held that there is no evasion of tax the Ld. DGGI should have closed the
ceedings. If there are any findings with respect to eligibility of ITC same could have
en very well communicated to the proper officer for Audit/ Scrutiny in terms of Section
of Section 61. The department has resorted to exercising the powers of Scrutiny/Audit
ich is beyond jurisdiction as the jurisdiction of officers of DGGI is confined only to
.asion .of tax.

us 1the impugned show cause notice is liable to be dropped.

, • . ~· ! '

reliance can be laced on the statements recorded b the de artment

,fR:0~ c~use notice is issued on the basis of the assumption and conjectures. The above
w' cause notice is vague and beyond comprehension and hence, the show cause notic,e
~il9 paye ,been dropped.
' 1,, ', •

e show cause notice has merely placed the reliance only on the statement recorded of
Noticee and employees of the Noticee. There appears to be no application of mind
fore issuance of the notice. The present Show Cause Notice, being bereft of reasoning,
$no legs to stand and hence, is liable to be quashed.

Page 27 of 48
 Order-in-Original No. 28/CGST-NM/ADC/

K.3 The Noticee submits that the statement, in no manner, establishes the fact that t
payment of tax. It is pertinent to note that the entire statement should be read
It is well settled that a statement has to be accepted in full or rejected in full
relied upon in parts to suit the allegations contained in the show cause no •
precisely what is being sought to be done by the department in the present

K.4 As a matter of fact, the Noticee submits that statement does not in any manner
conclusion that the there is a short payment. Per contra, on a close perusal •
statement, it becomes clear that there is no short payment or delayed payment
the Noticee.

K.5 Without prejudice to the above submissions, as a matter of fact, the Noticee
submits that in a matter of interpretation of law such as the one involved in the p
i.e. the amount on which tax has to be charged or the date to place reliance
statement of the authorised persons of the Noticee would be of no assistance tot
the Revenue. Having failed to establish that there is a short payment, the entire
department should go.

K.6 The Noticee further state and submit that Ld. DGGI being a fact-finding auth
have asked for further clarifications/documents/information if any could have
from the Noticee as well as its employees. However, the same has not beerid
Ld. DGGI. Ld. DGGI cannot just wash away its hands and put the onus./ bl
Noticee without even putting them to notice. Ld. DGGI being a fact-finding:a~th
have asked for anything which they failed to do so and subsequently puf the' 6
Noticee to prove their claim where they themselves have failed to put Noticee to.

K.7 Hence, the impugned show cause notice is liable to be set aside.
Cross examination is a must/ mandatory in the facts of the present case

L.1 The Noticee submits that heavy reliance is placed on statements recorded by the de
of the employee's of the Noticee. The Noticee seeks cross examination
employee's.
L.2 The Noticee submit that cross-examination is mandatory. Reliance is placed on
Timber Industries Vs. Commissioner of Central Excise, Kolkata-II-2015 (324) E
(S.C.), wherein the Hon'ble Supreme Court held that refusal to conduct cross-ex
is a serious flaw and leads to violation of principles of natural justice. Relevant .
reproduced as under for reference-
"6. According to us, not allowing the assessee to cross-examine the witne
the Adjudicating Authority though the statements ofthose witnesses were m
basis of the impugned order is a serious flaw which makes the order •
inasmuch as it amounted to violation of principles of natural justice be
which the assessee was adversely affected It is to be borne in mind that the
of the Commissioner was based upon the statements given by the a/oresa
witnesses. Even when the assessee disputed the correctness of the stateme
wanted to cross-examine, the Adjudicating Authority did not grant this oppo
to the assessee. It would be pertinent to note that in the impugned order pas ••
the Adjudicating Authority he has specifically mentioned that such an oppo
was sought by the assessee. However, no such opportunity was granted a
aforesaid plea is not even dealt with by the Adjudicating Authority. As far
Tribunal is concerned, we find that rejection of this plea is totally untenabl
Tribunal has simply stated that cross-examination of the said dealers coul
have brought out any material which would not be in possession of the ap

Page 28 of 48
• r

.I

Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

themselves to explain as to why their ex-factory prices remain static. It was not for
the Tribunal to have guess work as to for what purposes the appellant wanted to
cross-examine those dealers and what extraction the appellant wanted from
them."

L. Swadeshi Polytex Limited vs. CCE - 2000 (122) ELT 641 (SC), it was held that if the
judicating Authority "intends to rely upon the statement of any such persons, the
'.udicating Authority should give an opportunity ofcross-examination to the petitioner".
L. •areill)l Electricity Supply vs. Workmen - (1971) 2 SCC 617, the Hon'ble Supreme Court
:P,elp that when a document is produced in a Court or Tribunal, "mere production ofthe
'~'fheht does not amount to proof of it or the truth of the entries therein ............. The
ter must be produced or his affidavit in respect thereof be filed and an opportunity
1
ord~d to the opposite party who challenges this facf'.
K,alp~na}ndustries Ltd & Ors vs. Union of India & ors - 2018-TIOL-397-HC-MUM-
S, the Hon'ble High Court of Bombay held that the principle of natural justice would
•· lude right to cross-examination. The relevant extract of the said decision is extracted
.ow for ready reference.
"13. The well-known principles of natural justice which have been evolved the
judicial process including the administrative and quasi-judicial process constitute
the basic elements ofa fair hearing and ensure fair play and justice in the decision
making process and they are recognized as fundamental principles of justice,
ensuring that the authority conducting the proceedings acts fairly. The said
principles which have been so recognized and evolved through the process of
judicial interpretation and are sacrosanct to the proceedings and any infraction
of the said principles, invite an action of striking down the decision-making .
Proc;ess, being violative of principles of natural justice. This corollary and
::wetghtage
:·,:if
attached to the principles of natural justice would also include a right
!(o ;<;ross-examination and through various judicial pronouncements the said right
has been evolved as part and parcel ofthe principles ofnatural justice. "
1

.;.• (emphasis supplied)

, e c~se of Basudev Garg vs. Commissioner of Customs - 2013 (294) ELT 353 (Del.),
bivi~ion Bench of the Delhi High Court has held that the statement against the assessee
ot be used without giving them opportunity of cross-examination. Cross-examination
valuable right of the Noticee in quasi-judicial proceeding which can have adverse
sequences for them.
L. Commissioner of Central Excise vs. Kurele Pan Products Pvt Ltd - 2014 (307) ELT 42
l) the Honorable High Court of Allahabad held that not-providing the opportunity of
ss-examination amounts to violation of principle of natural justice. The relevant extract
the said decision is reproduced below.
"6. It is a settled principle of law that if the authority wants to rely upon the
statement ofany witness, the opportunity ofcross-examination ought to have been
given to enable the party to prove its case. Non-providing of the opportunity of
cross-examination amounts to violation of the natural justice and in absence of
·, ;denigl of natural iustice. such documents cannot be relied upon. "
, ... (underlining supplied)

't:iwiqf the above submission, unless cross examination of above persons and data/
ly is gr~ted, no reliance can be placed on the same to make a case against the Noticee.
I',
(
I
tic:

Page 29 of 48
 Order-in-Original No. 28/CGST-NM/ADC/

M.1 The Noticee submits that the impugned intimation and show cause notice is •
vague and fail to explain why the liability has been fastened. The detailed expi'
reasons are completely missing. Hence, on this ground, the notice is liable to

M.2 In support of the above submission, the Noticee relies upon decisiori df
Supreme Court in the case of Amrit Foods vs. CCE - 2005 (190) ELT 4~3 (S
the Hon'ble Supreme Court has held that the assessee has to be put on notibens
nature of contravention for which he is liable. Relevant extract from the said •
reproduced herewith as under:

"5. The Revenue has preferred an appeal from the order of the Tribuna
aside the imposition of penalty under Rule J 73Q of the Central Excis
1944. The Tribunal has set aside the order ofthe Commissioner on the gro •
neither the show cause notice nor the order of the Commissioner specifie
particular clause ofRule 173 Q had been allegedly contravened by the Res .
We are of the view that the.finding of the Tribunal is correct. Rule 173Q
six clauses the contents ofwhich are not same. It was, therefore, necessar
assessee to be put on notice as to the exact nature of contravention for w
assessee was liable under the provisions of the 173Q. This not having be'
the Tribunal's finding cannot be faulted. "

'I ,,

M.3 The Hon'ble Supreme Court in CCE vs. Brindavan Beverages (P) Ltd- (2007
487 (SC) has explained the importance of a show cause notice in the following
I \ •:',, '

"10 ... ... The show cause notice is the foundation on which the depttrtme
build up its case. If the allegations in the show cause notice are not spec
are on the contrary vague, lack details and/or unintelligible that is su.ffi .
hold the Respondent was not given proper opportunity to meet the alle'
indicated in the show cause notice .... "

M.4 In the present case, it was incumbent upon the show cause notice to explain the p
reasoning as to how the Noticee was liable to discharge the tax which, it is submitt •
the intimation fails. Hence, the show cause notice being completely bereft of
should be quashed and set aside.

The present notice appears to have been issued with a pre-determined mind
N. A show cause notice is the foundation on which department bases its case. It is s
that the show cause notice should be issued in an unbiased and fair manner. It shou
lay down the allegations with reference to facts and legal provisions concerned ..
allow the Noticee to make a proper defence. A show cause notice should not co
Noticee with definite conclusions. Judgment in the case of Oryx Fisheries Ptriva:
vs UOI 2011 (266) ELT 422 (SC)] refers.

Demand under Section 74 of the Act is not sustainable

0.1 The present notice proposes demand of tax under Section 74 of the CGST Act. The
extract of Section 74 of the Act is reproduced hereunder:

"74. (1) Where it appears to the proper officer that any tax has not been p
short paid or erroneously refunded or where input tax credit has been wr
availed or utilised by reason offraud, or any wilful-misstatement or suppr
offacts to evade tax, he shall serve notice on the person chargeable with tax •
has not been so paid or which has been so short paid or to whom the refu
erroneously been made, or who has wrongly availed or utilised input tax c:

Page 30 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

requiring him to show cause as to why he should not pay the amount specified in
the notice along with interest payable thereon under section 50 and a penalty
equivalent to the tax specified in the notice. "

e Noticee submits that the ingredients to be established for invocation of Section 74 of

e CGST Act are as under:
Fraud or
:Wilful misstatement or
S1,1ppression of facts to evade tax
i ,') :
.the present case, there is no suppression / wilful misstatement of facts. The notice is
ister~d with the department. The Noticee has paid GST, wherever applicable. The
,1>1, I

ticee has filed GSTR-3B returns. In fact, the Noticee has paid GST on the above
tract. This fact is recorded in the GSTR-3B returns and the financials/books of the
Hee. The Noticee had also submitted GSTR-9/9-C for the relevant financial year. The
•ove contract has been seen and scrutinized by the State Investigation Department. Once
•s is the case, there is no and can never be any case of suppression of facts. The Noticee
aves leave to refer and rely on documentation in support of this submission.
a 8.3 of the SCN alleges that the Noticee undervalued their supply, resulting in alleged
ort or non-payment of taxes on certain supplies. Furthermore, the DGGI claims that this
ue only came to light after their inquiry/investigation. Learned DGGI assert that, had
's investigation not been initiated, the non-payment of taxes would not have been
covered. The Noticee, however, completely deny these allegations, stating that the
usations are based solely on assumptions and presumptions. The Noticee, further
mits,. Jhat a prior investigation was already conducted by the Maharashtra State
! ;1

~stig~tion Department, during which the Noticee provided all requested information,
lu~~g d9cuments, invoices, and working details, without suppressing any information.
11~1y, q.uring the DGGI investigation, the Noticee presented all relevant working
ers, ~etail~d invoice register linking each invoices its receipt in bank and its reporting
,, . /., I :
ST returns, complete reconciliation of each invoice with books / bank / GST returns,
•v,idec;l al~ supporting documents, bank statements, invoices, copies of MMRCL contract,
, ~ submissions for pre-GST taxes, State investigation letter along with their summons
SCN etc., during the inquiry and personal hearing. The Noticee have not concealed or
pressed any information from the investigating officer. The allegation of suppression
• acts to invoke Section 74 of the Act is completely unfounded and illegal. As a result,
, demand proposed in the Notice should be dismissed.
'
e Noticee would like to reaffirm and clarify that the information provided during the
estigation was given "as is basis" in good faith and without any malicious/ malafide
ent. All details shared with the investigating officer were complete and transparent, with
•' suppression or concealment of facts or information. The documents and information
vided were free from any deliberate misstatement or tax evasion.
out prejudice, the Noticee submits·that in the present case, notably the present show
se:pdtice has nowhere explained the ingredients which are required to be proved so as
U:b.stail.tiate suppression of facts and / or contravention of provisions of CGST Act or
' (,,, ;\ i : ,,,

~ fraµied thereunder by the Noticee to justify issuance of a show cause notice under
tion 74 of the CGST Act. There is not an iota of evidence on record to prove suppression
~cp; :;indJ or contravention of provisions of CGST Act or rules framed thereunder, by
Noticee. i; I

Noticee further submits that on December 13 th , 2023, the Central Board of Indirect
s a.Q.d Customs (CBIC) issued a directive Instruction No. 05/2023-GST instructing
cials that the application of Section 74(1) of the CGST Act for issuing show cause
\es should only occur when investigations reveal concrete evidence of fraud, deliberate
,representation, or withholding of facts to avoid tax. Furthermore, this evidence must be

Page 31 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AK

explicitly included in the show cause notice. The Judgment of the Hon'ble Supr
in the case of Northern Operating Systems Private Limited (NOS).
"3. 1 It has also been represented by the industry that in many cases in
secondment, the field formations are mechanically invoking extended •
limitation under section 74(1) of the CGST Act.

3.2 In this regard, section 74 (I) of CGST Act reads as follows: '1(1)
l . ,>

appears to the proper officer that any tax has not been paid br ..short
erroneously refunded or where input tax credit has been wrongly av
utilized by reason offraud, or any wilful-misstatement or suppression o
evade tax, 3.3 From the perusal of wording of section 74(1) ofCGST
evident that section 74(1) can be invoked only in cases where there is a
willful mis- statement or suppression offacts to evade tax on the part of
taxpayer. Section 74(1) cannot be invoked merely on account of non-pa
GST, without specific element offraud or willfal misstatement or suppres
facts to evade tax. Therefore, only in the cases where the investigation i
that there is material evidence offraud or willful misstatement or suppre •
fact to evade tax on the part of the taxpayer, provisions ofsection 74(1) o
Act may be invoked for issuance of show cause notice, and such evidence
also be made a part of the show cause notice.

4. The above aspects may be kept in consideration while investigating such

issuing show cause notices. " /

0.8 Basis the above, it is submitted that the action of the notice issuing authority
Section 74 of the CGST Act to issue Pre-show cause notice is withou~ any;
evidence. Consequently, the present pre-show cause notice is liable to be drop ••
ground alone.
0.9 The department has absolutely failed to adduce any evidence with respect to ei
misstatement or suppression. It is the principle of law that "one who alleges has
the department has not brought on record a single piece of evidence specifyin
Noticee has committed fraud, misstatement or suppression. Thus, the notice is li
dropped on the ground that Section 74 of the Act is not applicable.
0.10 Without prejudice, the Noticee vehemently submits that Section 74 was invok
for the reason that in terms of Notification No. 9/2023 and 56/2023-CT dated 2
the last date to pass an order under Section 73 of the CGST Act for 2017-18 was 3 •
and for 2018-19 was 30.04.2024. Merely because the time limit to pass an o:
Section 73 was time barred, the notice Ld. DGGI has invoked section 74 of the
which is nothing but a clear abuse of power by the notice issuing authority.
No Penalty
P. It is a well-settled principle of law that where there is no demand of GST,, pen
be imposed. See: Coo lade Beverages Limited (2004) 172 ELT 451 (),\11).
involved in the instant case is purely interpretational in nature. The issue isi leg
1
The issue involves alleged short payment and interest on delayed paymeilt Iri vi
facts, no penalty shall be/ can be imposed on the Noticee. Further, it is wells ,
a case involving interpretation of law, no penalty can be imposed. See: CCE ;
Tanneries Limited - 2005 (184) ELT 217 (T) and CCE Vs. Explicit Trading & •
Ltd. - 2004 (169) ELT 205 (T). In view of the above no penalty under section
imposed on the Noticee.
Q. The Noticee submits that the entire proceedings are without jurisdiction and in
contravention of the principles of natural justice.

Page 32 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

AL HEARING
.ersonal hearing was fixed on 14.10.2024 which was attended by Shri Sachin Karkhanis,
axation; Shri Shailesh Phadke, Senior Manager Taxation and Shri Hitesh Japi, Senior
• Taxation.
ersonal hearing, they reiterated earlier written submissions dt. 09.10.2024 submitted on
4 and further stated that
e':Contract price/bid is inclusive of taxes as per Contract.
s:t otfp.dvances was already paid on receipt and hence should not be subject to double
atiop.. :
k i, ,

or in calculating GST since invoices pertaining to pre-GST era have also been taken
o :~~ow.:Cause Notice.
able value aggregating to as 2,613 Crores till 2022-23, exceeded the actual contract
. ice 6f Rs. 2,523 Crores when the project is still underway showing erroneous
mputation of taxable value in the impugned Show Cause Notice.
uted to consider their submissions written as well as oral and drop the charges levelled in
gned Show Cause Notice.
asked to show the copy of invoices, they stated that they require at least 3 weeks' time
t documents as well as additional written submissions. They were informed that they
bmit all documents as well as written submission if any on or before 08.11.2024 and in
ocuments/ written submissions is received by that time, matter will be decided based on

N SUBMISSION
temis of personal hearing on 14.10.2024, the noticee vide letter dated 08.11.2024
as under:
ei~ ~s. HCC-MMS Joint Venture ('We'/ 'Noticee' /' JV'), refer to above mentioned SCN
,. :· I

gust 01, 2024, for which we have filed and uploaded our reply on GST portal on
, '0.9~., 2024; and attended the Personal Hearing ('PH') through our representatives on
4, 20204. Further, as required, we wish to submit additional submission as under.

• the outset, the Noticee re-iterates the grounds made in the reply filed before the
1

I/Joint Commissioner, CGST & Central Excise, Navi Mumbai Commissionerate. The
t being repeated here for the sake of brevity. The same shall be treated as part and parcel

e facts are succinctly defined and explained in the reply filed dated October 09, 2024,
prolixity, the same are not being explained/reproduced in this submission.

· wrongly levied interest of Rs.2,65,06,322/- when 80% of the !PC/Invoice amount is

.as aqvance within 14 days ofreceipt ofIPC and reported as advance received on GST
ediat~1y in the same month of receipt and the balance 20% within 20 days.
,, '·,,,I!\'

~cee: re~ers to Contract Clause No. 14.7 relating to the payment to the Contractor, . !
I
: bmployer /Client i.e. Mumbai Metro Rail Corporation Ltd. ('MMRCL') shall release l!

~ certified amount within 14 days of preliminary scrutiny and certification by the

.dthe balance 20% shall be paid within 20 days from the date of certification. We
Annexure - A, the copy of the relevant page of the contract wherein the reference of
clause 14.7 of the contract is mentioned. The extract of the aforesaid clause is also
as under
1
liminary scrutiny and certification by the Engineer, payment of 80%of the certified
ount shall be made by the Employer within 14 days. The amount certified shall be
or all deduction, including statutory deductions, recoveries for advances and any

Page 33 of 48
@
 Order-in-Original No. 28/CGST-NM/ADC/AKS

amounts die form the Contractor. The balance 20% shall be paid within 28 days from t
preliminary certification by the Engineer
Next 80% interim shall be made only after I 00% payment or proceedings interim i
certification has been completed. .
The Employer shall pay the amount certified in the Final payment Certification withi •
from the date of issue of the certificate.
Payment ofLocal currency shall be made into bank account nominate by the cJntrdctor.
of Foreign currencies shall be made through Letter of credit. "

2.1.1 Therefore, on perusal of the above-mentioned payment condition in thb co

Noticee reports this 80% of advance received immediately in the month of receipt an
20% is also gets reported on GST portal in the month of receipt. Thus, there is no questio
in reporting by the Noticee here and are fully complied with the provision of time of sup
Section 13 read with Section 31 of the Act.

2.1.2 In case of continuous supply of works contracts (EPC contracts), several acti
involved at different stages. Consequently, such activities / works get certified by c
engineers at different stages. The measurement of the activities for each quantity given .
as 'Bill of Quantities' (BOQ). It also provides the rates that are payable for each activi
decided units of measurement (i.e., per cubic meter, per running meter etc.) or on lump-
(where it is not measurable) as agreed in contract between the parties i.e. JV and Client.

2.1.3 Noticee upon achieving the milestone submits the bill reflecting the actual qu
work performed in accordance with rates specified in the BOQ at the end of the· nio
sends a 'request for inspection' ('RFI') inviting engineers or agency of the client to
check and certify the completed work along with the bill. In the interim as stated in the
2.1 above, upon receipt of the submitted bills the client is obliged to release of 80%
amount as mandatory payment to the Noticee.

2.1.4 The interim payment received by the Noticee which constitutes 80% of the bill
completed is considered an advance payment in the Noticee's financial records. This
not recognised as revenue until the final certification of the work is completed by
Accordingly, Noticee declared this payment as an advance and discharges the GST l'
GSTR-1 return in the tax period in which it was received.

2.1.5 As stated in the Paragraph 2.1.4 above, the Noticee sends a 'request for inspectio
inviting engineers or agency of the client to thoroughly check and certify the work. Sub'
the engineers of both sides (i.e., engineer of the contractor and the client), jointl •
measurement, to ascertain the actual work completed and certifies the work done during
Once the measurement is certified by the client's engineers they are recorded
measurement books. Based on the certification and as continuous supplier Noticee raise
account statement for the work completed and submits in form of IPC (i.e., interi
certificate) in the format recommended by the client.

2.1.6 Subsequently, upon submission of the IPC by the Noticee, MMRCL vetlfi
internally again. Based on the internal approvals, budget and fund allocation f~r the.
MMRCL credits the amount to the Notices account post deductions / recovery, if
deductions include statutory deductions, recoveries for advances etc. Thus, the amount
the Noticee account may not be similar to the amount ofIPC certified by the engineers.
vary subject to final decision ofMMRCL. Further, while disbursing the payment agains
certified amount, client retains the interim amount previously paid (i.e. 80% of the amo
the time of bill submission) and releases the remaining balance to the Noticee accoun

Page 34 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

e Noticee gets the balance 20% of the certified amount post recoveries and deductions if

s explained in the paragraph 2.1.6 above, the actual payment received by the Noticee may
' the decision of MMRCL, and in most of the cases amounts received does not match
. t c,ertified by the engineer. It is important to point out here that the amount which is
.st t:h~.JJ;>C comes to the knowledge of the Noticee only when it is credited into Noticee's
Ullf. :Upc;m knowledge, the amount credited into the bank account the Noticee does the
~icin bf the figures with the amounts certified.
:i ,l•, , l

• titee' upon realisation of the amount in the bank account, this amount received is
under•Work Bill receipt ('WBR') in books of accounts.

nder this background, the Noticee follows Section 13(2)(b) and 31(5)(b) of the
.GST Act, 2017. Since the Noticee is into continuous supply of services defined under
.(33) of CGST / MGST Act, 2017 and therefore time of supply will be determined as per
13(2)(b) read with Section 31(5)(b) of the CGST/MGST Act, 2017. These relevant
s are reproduced for convenience:
2(33). "Continuous supply ofservices" means a supply ofservices which is provided, or
: be provided, continuously or on recurrent basis, under a contract, for a period exceeding
nths with periodic payment obligations and includes supply of such services as the
ent may, subject to such conditions, as it may, by notification, specify;
113. Ti111e ofSupply ofServices. -

i'
,( ''
eqfsupply ofservices shall be the earliest ofthe following dates, namely:-
t~ i()/pr()yision ofservice, if the invoice is not issued within the period prescribed under
.ection 31 or the date ofreceipt ofpayment, whichever is earlier; or"
., Tiµ invoice. -
t ;o /he,provisions of clause (d) of sub-section (3), in case of continuous supply of
! ' ;

the due date of payment is not ascertainable from the contract, the invoice shall b-e
ore or at the time when the supplier ofservice receives the payment;

n perusal of Section 13(2) (b) of the Act, it is important to note that for continuous
f services, 'time of supply' is applicable as per Section 31(5) of the Act. There is a clear
under Section 13(2) (b) of the Act that has been culled out for cases which are covered
. ction 31. The Noticee submits that they have rightly complied with the above provisions
. ited the tax in the month of receipt of the amount. The Noticee submits that the IPC is
' ut a running account statement which is required by the client on which the client records
ertified and process payments. Most importantly, at the stage of issuing IPC the amount
ill IPC may not get processed and exactly credited, it must go under various checks,
and 14~ductions from the client. Therefore, it is a challenge for the continuous service
p d~~~e
·f ' (' . , ,
~' ', '1
the exact amount finally getting paid by the client at the end of each life
IPG. For the Noticee, the bank statement is the only final base or source document to
tµne,
1
supply for issuing invoices and determine the tax liability for paying the GST
ly: The Noticee in any case is not privy to information about the amount getting credited.
ircumstances, as the amount is not ascertainable, the Noticee follows Section 13(2)(b)
(b) of the CGST/MGST Act, 2017. As per GST provisions, the Noticee has rightly paid
'.in the month of receipt of payment as the amount was not ascertainable on the date of
.IPC.

•e Notice in its paragraph 7 .1 on the basis of available documents and the facts gathered
uded that, the date when the IPC is approved by the engineer is considered to be date of

Page35of48 ~~
 Order-in-Original No. 28/CGST-NM/ADC/AKS

invoice for the purpose of 'time of supply' provisions under OST. The OST liability ari •
same date of issuance invoice and not when the same is received in the bank, therefo
difference in date when the IPCs were raised and payment received i.e., advance of 80%
by balance 20%. Without prejudice to the submissions made, computation of interest
to. Rs.2,65,06,322/- on the entire amount of IPC (including 80% advance) by the SCN is·
.

and are against the law and liable to be dropped.

'. .

2.1.12 Without prejudice to the submissions made thus far, even if OST is payable on t
value from the date when the IPC was issued, the notice erroneously computed ii.rite
entire value of IPC amount instead of 20% final payment, since the 80% of th~ JP
reported in the same month of receipt. This was explained with the help of bank statdm.
of accounts, IPC' s and with detailed reconciled workings to the satisfaction of the D
This was already part of Annexure -15 of SCN reply. In other words, and as stated in:
paragraph 2.1.3 & 2.1.4 above, Noticee has paid the OST on the interim advance pay
80% ofIPC) as OST on advances, therefore only 20% of the balance was received after
so there could be at best a delay only to the extent of OST on that balance 20% amount
the entire amount. Notice is trying to illegally recover interest on the entire value ofIPC.
without accepting, Notice at best, could computed interest only on the outstanding 20°
amount of IPC, rather on the entire IPC amount.

2.1.13 Form the facts stated in paragraph 2.1.12 above, although the conclusion in the
levy the interest on delayed GST payment itself is incorrect. As per 'time of supply'
enshrined under Section 13(2)(b) and 31(5)(b) of the Act, Noticee correctly fulfilled
obligations for the interim and final payments. Consequently, there is no timing diffe
1 'f
hence no interest as such is applicable on any amounts as such.

3. Basis the above, the Noticee submits that no interest is payable as th.er~ iSh
paying the taxes. Further, allegation of short payment and interest on delayed payhlent
the purview of evasion of tax and hence show cause notice is liable to be dropped.:

DISCUSSIONS AND FINDINGS:

15. I have carefully gone through the impugned Show Cause Notice (SCN)
submissions, documents relied upon, records of personal hearing and laws related to the

16. The noticee are engaged in construction of Metro Project in Mumbai and thei,
activity is in the nature of Works Contract as mentioned in Para 2.1 of the impugned
Noticee in their reply stated that they are Engineering, Procurement and Constructio
contractor, specifically engaged in the business of Design and Construction of un •
sections including four underground stations at C.S.T, Kalbadevi, Girgaon and Grant
associated tunnels. Accordingly, the noticee are registered with the Goods arld Se
Department vide GSTIN No. 27 AABAH4620H1ZY.

17. There are two issues involved in the instant case. First issue is of underval
delayed uploading of invoices resulting in late discharge of OST liability as menti6nJd
of the impugned SCN and thus, demand of Rs. 55,49,07,278/- for the period from J
March 2023 under Section 74(1) of the COST Act, 2017 including proposal for pen
Section 74(1) of the COST Act, 2017 and Section 122(2)(b) of the COST Act, 2017; an
of interest under Section 50(1) of the COST Act, 2017. The second issue is ofrecovery •
of Rs. 2,65,06,322/-, as discussed at para 5.3 of the impugned SCN, under Section 50
COST Act, 2017 was also proposed.

18. Intelligence gathered by the officers of Directorate General of OST Intelligence

Zone from GSTR7 returns filed by the deductor that the deductor deducted TDS on pay '

Page 36 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

oticee and the noticee have not discharged the GST correctly. Therefore, investigation
e noticee was initiated.

· uring investigation, on going through the submissions of the noticee, it was observed that
mismatch in the taxable value as seen in the details uploaded in GSTR-1 and the physical
i.e: In~~ritn Payment Certificates(IPC) and also, there was mismatch in the date mentioned
d date entered against the entry for invoices in GSTR-1. This has been deposed by Shri
~ e in his statement of dated 21.06.2024 which is mentioned inPara4.4 of the noticee's
1
d 09.10.2024.

e noticee vide their reply dated 30.07.2021 explained that the difference was mainly due
ue considered by Mumbai Metro Rail Corporation Limited ('MMRCL' I 'employer' I
customer') for GST tax deduction at source under Section 51 of the CGST Act, 2017 was
This is mentioned in Para 3.3 of the noticee's reply dated 09.10.2024.

he noticee vide their email dated 02.11.2023 submitted brief note on the spillover of
in the month of March 2019 which states that under:
ving any milestone of work or any stage of work, the contractor (HCC-MMS) sends a
or inspection' ('RFI') inviting engineers or agency of the client to thoroughly check and
e work. After that the engineers of both sides (i.e., engineer of the contractor and the
intly take the measurement, to ascertain the actual work done during the period then it
into joint measurement record once the measurement is certified by the engineer of the
sis, rYhi9h, the contractor raises a running account bill for the work completed and
for~ !PC (i.e., interim payment certificate) as recommended by the client, for the
0rqval:process
h: ·• 1, ,i
at the client's end.
een mentioned in Para 3.3 of the impugned SCN.

& PENALTY UNDER SECTION 74 OF THE CGST ACT 2017

was proposed in the impugned SCN that the noticee short paid GST liability of Rs.
;279/- during the period July 2017 to March 2023.

was alleged in Para 4.3 of the impugned SCN that the client has to pay 80% of the
amount within 14 days and rest 20% within 28 days which shows that the certified IPCs
as invoices by their client for the payment to the noticee as per Sr. No 14.7 of extract
t.

er, it was alleged there was no separate final bill other than IPCs submitted by the
their client. The accountant at site office upload the payment receipt details in their ERP
don the basis of these receipt details, GSTR-1 was prepared and submitted for payment
•bilities. ,

: ' ; ', 't

i Piyush Verma, GM-Taxation of the noticee in his statement dated 05.07.2024 recorded
ion 70 of the CGST Act, 2017 stated that, with respect to time of supply for issuance of
Cis: their running account statement and on receipt of payment in their bank account,
. ge their GST liability. Also, he stated that other than IPC they do not have anything to
ir client. This has been mentioned in Para 3.8 of the impugned SCN.
clear that the noticee have discharged their GST liability on receipt of payment in their
unt and not on receipt of Interim Payment Certificates (IPC). In this matter, I find that,
Cs, there is a date on which client engineer has certified the breakup of amount for the
e by the noticee. Therefore, I find that the GST liability arises on the same date of
• f Interim Payment Certificates (IPC) and not when the same is received in the bank

Page 37 of 48 ~
 Order-in-Original No. 28/COST-NM/ADC/AKS

account as considered by the noticee in terms of section 31(5)(c) read with Section 13
COST Act, 2017.

26. Shri Shailesh Phadke in his statement dated 21.06.2024 was recorded under Sec '
the COST Act, 2017 confirmed that they upload the details of invoices in OSTR-1 portal
receive the amount in their bank account in terms of clause 14. 7 of the contract. He also:
since they are EPC contractor, their service falls under continuous supply of service ':Vh
of supply is governed by Section 13(2)(a) read with section 31(5)(b) of the COST Acl,'20
states that time of supply is date of issuance of invoice. This has been mentioned in fara
impugned SCN.

27. It was also alleged in the impugned SCN that, in the extract of contract (FIDIC
of Contract for plant and Design-Build contract, first edition, 1999) submitted by hi
mentioned at Sr. no 13.7 that the contract price shall be adjusted to take account of any in
decrease in cost resulting from change in the laws of the country (including the introd
new laws and the repeal or modification of existing laws). Therefore, the contract value
prior to OST regime cannot be directly taken to be the contract value inclusive of OST.

28. On perusal of breakup of taxes shown in the letter addressed to MD of MMRd

noticee, it was noticed that the contract value was inclusive of various taxes except Se
Prior to OST regime, noticee was supposed to pay Service Tax on the similar service as '
in post OST period. Further, in terms of Section 15 of the COST Act, 2017 taxable
inclusive of taxes except GST. Therefore, it was alleged that the deduction accourtt
noticee for calculation of OST is incorrect and total certified amount as seen in the IPCs.
t9 be the correct taxable value on which noticee is liable to discharge GST. Tliis
mentioned in Para 4.7 of the impugned SCN.

29. The noticee replied to this observation vide Para B.2 of their reply dated' 09 .l
under:
1
"First, the observation in Para 4.7, is factually incorrect. The department misunde
Noticee's letter to MMRCL and misconstrued the provisions of Section 15 of the
agreement entered by Noticee with MMRCL clearly states that the Contract price is inc
taxes. The copy of the relevant page with relevant clause i.e., 14.1 of 'Particular Conditi
Contract' ('PCC') of the Contract is attached in Annexure 20. Similarly, the Contrac
inclusive of taxes is clearly mentioned in the first paragraph of 'Letter of Acceptance'
dated July O1, 2016 issued by MMRCL to the Noticee. The copy of LOA is enclosed
21. The copies of these Contract, LOA and letter to MD of MMRCL were all submi
DOOI on 08.07.2024 (already enclosed in Annexure 17 above). Despite of knowing
DOOI computed tax again on the entire value of IPC's which were issued from July
wherein the tax amounts. Further, as admitted in paragraph 4.7 of the SCN that the letter
to the MD of MMRCL also clearly states that the bid price is inclusive of all the taxes
Value Added Tax ("VAT") under Maharashtra VAT Act, 2002, duties, royalties,,
However, the department has with malafide intention alleged in paragraph 4.7 that "th
value is inclusive ofvarious taxes except Service Tax. Prior to GST regime, taxpayer was
to pay Service tax on similar service as provided in post GST period. Despite of al(in
available with Ld. DOGI, SCN blatantly ignored the fact that the Financial Bid was su
17.02.2016 and the Notification No. 09/2016- SERVICE TAX F. No. 334/8/2016 -
1st March, 2016 itself was introduced on 01.03.2016 (post bid submission) wherein Serv
services by way of construction, erection, commissioning or installation of orig·
pertaining to monorail or metro, was applicable from 01.04.2016. Therefore, the conten
SCN is completely incorrect and bereft from reality. In fact, Noticee have paid service
pre-OST invoices, the same will get a support from the submission made in paragraph B.
reply. Thus, the allegation in the Notice and the tax demand is not sustainable."

Page 38 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

µrther, as mentioned in Para 5.2 of the impugned SCN, the noticee have deducted the
··ch are under dispute with their client to arrive at the taxable value for payment of GST
. r arriving at the taxable value. There is no amount agreed upon between the noticee and
I

1Jrt:W,1:ricµ GST liability is to be discharged. Hence, total amount certified as seen in the
9.be:~en as the taxable value. Therefore, it was alleged in the impugned SCN that the
o~ p~icl GST liability of Rs. 55,49,07,279/- during the period July 2017 to March 2023.
ation is substantiated by Shri Piyush Verma, GM-Taxation of the noticee in his statement
7.2024 recorded under Section 70 of the CGST Act, 2017 wherein he stated as:
',\' : ,,, I

: Please state how you derived taxable value from Gross value of!PCs submitted
li~nt and elaborate the process ofthe same.
er: The JV followed the Contract Price I Bid Price which is inclusive of taxes
er clause 14.1 of the Contract (relevant extracts submitted) and hence the pre-
taxes were reduced from the Contract Price to arrive at the taxable value or tax
•tral value. Post arrival of taxable or tax neutral value, GST rate is applied.

. It is seen from your reconciliation statement submitted by you today that you
derived taxable value from Gross value of!PCs treating cum tax @18% or 12%
ny other rates (as applicable) raised for the period.from July-2017 to Jan-2019.
you derived the same and what was the basis of the same?
er: As explained in Q. 2 above, JVfollowed the Contract Price I Bid Price which
clifslr,e of taxes as per clause 14.1 of the Contract and hence the pre-GST taxes
:r~d'l1_ced from the Contract Price to arrive at the taxable value or tax neutral
er ~{~ce: {he Contract Price was to be kept constant and there is no extra amount
MJ·'rhmbursed by the client over the quoted rates as per clause 14.1.4 of the
"': ! \
,act IV, had no choice but to continue following the instructions of the client to
d noh-payment. Thus. JV raised the !PC's on cum 18%/12% GST rates (changed
'
;
I
~eer,z t~e FY) on Contract I Bid price till Jan 2019. This arrangement was not
ptable to JVas this was leading to unrecovered cost and loss to JV and therefore.
aised a dispute and its contention from the beginning and from Feb 2019
ards that whatever Pre-GST taxes were involved in Bid Price should be
,idered i.e., @4.93% and accordingly have arrived the taxable value of !PC's
Feb 2019 onwards, taking the effect of 4.93%(Pre-GST taxes). Additionally,
it Note bearing No. TODN-5591-Jul Jan dated Sept 30, 2018 giving effect ofPre
taxes of4.93%/or the period July 2017 to January 2018 and Debit Note bearing
;TODN 5591-Feb Mar dated Sept 30, 2018 to give the effect ofPre-GST tax rate
.93% covering the period Feb 2018 & March 2018 were issued. Furthermore,
it Note bearing No. TODN-5591. Apr Jan dated Feb 28, 2019 giving effect of
GST taxes of 4.93%for the period April 2017 to January 2019 was issued and
,, , 'I

• a~ pqid accordingly. Since Feb-2019 to March-2023, we had considered Pre-

lG;f;/q(e of4.93% in all our supplies.
)c/fffng pur persistent follow-ups with client. Client appointed the external tax
cy i.e; Ekbote Deshmukh and Co. to review the matter and give a final initial
tdatedAugust 27, 2022 on GST impact/reimbursement on the subject issue. As
,i ',:, ',

his agency's report arrived at the rate of 11.83% (inclusive basis) and 10.58%
usive, basis) but have not agreed to JV's Pre-GST rates. Post threadbare
ssion at length with client, JV considered Pre-GST tax rate of5. 66% from April
billings.
re still under dispute with respect to Pre-GST taxes and have not agreed to the
• ts workings of 11.83% (inclusive basis) and 10.58% (exclusive basis).
pective of client non- payment of GST to JV but still JV being prompt and duty
d taxpayer have been paying its taxes correctly under GST. As per the client
tence we have not followed 11.83% (inclusive basis) and 10.58% (exclusive

Page 39 of 48 ~/
 Order-in-Original No. 28/CGST-NM/ADC/AK .

basis) pre-GST tax rates as this would led to lesser taxes to the exchequer/Govt, a
in fact have been paying higher GST

Q.3 What is the basis oftax rates of4.93% & 5.66% considered pre-GST tax rate
billing to client? Please elaborate.
Answer: These are the percentages are ofPre-GST taxes which were included in
Bid Price, since the contract was ofpre-GST period and no further agreement
implementation ofGST

Q. 5. Why there is difference of no. and date of certain physical invoic~s(JP

submitted by you and details of invoices uploaded in GSTR-1 returns.
Ans. There is typo graphical error while typing the !PC No. while uploading:on G
portal but there is no change in the amount of taxable value and tax amount. Th
are no missing IPC from reporting to GST portal and there is no short reporting t'

31. From the above statement of Shri Piyush Verma, GM-Taxation of the noti
05.07.2024 recorded under Section 70 of the CGST Act, 2017, I find that there wa
between the noticee and their client for which external tax agency i.e. Ekbote Deshm
was appointed and they have submitted their final initial report dated August 27, 202
impact/reimbursement on the subject issue. The said report was not agreed to N's Pre-
and as per this agency's report arrived at the rate of 11.83% (inclusive basis) and 10.58%
basis). Thus, the taxable value was disputable till March 2023. The noticee considered
tax rate of 5.66% from April 2023 billings as stated by Shri Piyush Verma, GM-Taxatio

32. The noticee in Para B .4 of their reply dated 09.10.2024 replied to impugned SC
~ere governed by the provisions of the Maharashtra VAT Act, 2002 under thb pre~G •
The contract in question with MMRCL was signed prior to the introduction of GST ~ and
the price quoted during the bidding process included VAT and other applicable truces, •
further stated that, with the implementation of GST which subsumed state VAT/~al~s
while calculating the taxable turnover under GST, deducted the tax portion of 4.93%
erstwhile tax regime, since the tendered price included pre-GST taxes. The noticee in P
their reply dated 09.10.2024 further stated that, through reverse working and consideri'.
taxes prevailing at the time of bidding was to the tune of Rs. 124.14 Crore for the total b
was 4.93% of the total contract price; and after the enactment of the GST for the period J
to January 2019 due to confusion, the noticee issued cum invoices (inclusive basis) at
12%/18% as applicable on the amount. The noticee also submitted that, after February
Noticee started paying the tax after deducting taxes @ 4.93% as pre-gst taxes and is
notes for the differential tax from July 2017 to Jan 2019. The illustration of the same is
lllustration:
Bill Amount (inclusive of taxes) - Rs 100
Less: Amount of Pre-GST tax @4.93% Rs. 4.93
Amount offered for GST (Tax Neutral Amount) Rs. 95.07
GST Levied and paid to Govt. @ 12% Rs. llA0.

33. In view of above submissions, I.find that the noticee accepted that they have Clo
calculation for arriving at taxable value by deducting taxes @4.93% as pre-gst taxesfor
June 2017 to January 2019. The GST rates were 18% during 01.07.2017 to 25.01.2018, 1
26.01.2018 to 18.07.2022 and again 18% during 19.07.2022 to till date of issuande of
1
SCN. Therefore, I find that suo-moto deduction of 4.93% from contract value by the n
calculating taxable value and consequently less payment of GST is illegal and not as per
there was no service tax in existence. I also find that the noticee have not provided any
to their contract with MMRCL with a clause of inclusion of GST in their contract value.

Page 40 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

.also find that the taxable value was disputable till March 2023 between the noticee and
'nt. When there was dispute between the noticee and their client for which external tax
.e. Ekbote Deshmukh and Co, the claim of Contract price is inclusive of taxes as per
' C:o~ditions of the Contract' ('PCC') of the Contract and also as mentioned in the first
'of ~Lf;)tter of Acceptance' ('LOA') dated July 01, 2016 issued by MMRCL to the noticee
y1:14d; This is clear-cut suppression of the fact with intent to evade tax regarding taxable
• bich the noticee have to pay GST. Thus, I find that the noticee have suppressed value
ess GST with intent to evade tax by suo-moto deduction of 4.93% from taxable value
' ratd ofbST prevailing at that time.

view of above, it was stated by the noticee that they were governed by the provisions of
ashtra VAT Act, 2002 under the pre-GST regime and the noticee issued cum invoices
basis) at the rate of l 2%/18% as applicable on the amount after the enactment of the
e period June 2017 to January 2019 due to confusion. Thus, I find that there was clear-
aluation of taxable value with intent to evade tax. If the noticee have claimed more
from contract value say 12% or 18%, the amount received by the noticee is obviously
whatever they have getting in service tax era by deducting say 4.93%. This seems to be
.ason for dispute between the noticee and their client. Such stand on valuation by the
, beyond comprehension.

e noticee in support of suo-moto deduction of 4.93% from taxable value relied on

fhori'ble
: '''/ ;,,'
Kamataka High Court in the matter of Sri Chandrashekaraiah & Ors. vs. State
. cl:.,& prs. [TS-253-HC(KAR)-2023-GST]. I have gone through this decision where
J~pnf were issued and some of the relevant directions are as under:
n th~. result obtained on calculation of the tax difference on the contract value,
~
department/authority
' ' ! ~ ' ' >
has to decide whether agreement needs to be changed or not.
'mentary agreement may be signed with the Assessee for the revised GST-inclusive work
the Balance Work completed or to be completed as determined above.

erefore, in view of the above direction of the Hon'ble High Court, I fmd that the noticee
. ecute and submit revised supplementary agreement for the revised OST-inclusive work
the Balance Work completed or to be completed. In absence of the said supplementary
t and. dispute on taxable value of the noticee with their client, I find that the contract
able value and applicable GST has to be paid by the noticee and any short payment of
s to be recoverable under Section 74(9) of the CGST Act, 2017. In view of above, I find
.of decisions of the Hon'ble Supreme Court in case of UOI vs. Mahindra and Mahindra
(76) E.L.T. 481 (SC) and Vodafone International Holding B. V. Vs Union of India
Appeal No. 733 of 2012)(SC) are not squarely applicable in the instant case.
I'
us., ;.(find that the noticee have short paid GST of Rs. 55,49,07,278/- (Rs. Fifty Five
. ~~e
l , , ,

1
/ : : \'

L,akh Seven Thousand Two Hundred Seventy Eight only) (CGST-27,74,53,639

'27,7ft,,53,639) with intent to evade the tax by suppressing the fact of dispute with their
~able value
,i-, J) '
(,
which is to be rightly recoverable under Section 74(9) of the CGST Act,
'1,,

. find that the noticee is liable for penalty under Section 74(9) of the CGST Act, 2017
rpcoyery of interest under Section 50 of the CGST Act, 2017.

was alleged in Para 4.8 of the impugned SCN that the noticee vide email dated
have stated that they were submitting IPC as per directions/instructions of their client
.time of issuance of IPC. Merely asking by the client to issue IPC, it appeared that the
d violated the provisions of GST Law. In this matter, I find that the noticee have to abide
sand regulations as mandated by the CGST Act, 2017 and Rules made thereunder.

ONTETIONS OF THE NOTICEE

Page 41 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS

40. The noticee in Para B.10 submitted that an invoice bearing No. IPC 05 pertaini
GST regime (Apr 2017 to Jun 2017) was considered in Notice for computing the GST
Rs. 55,49,07,278/-, wherein this particular invoice IPC 05 was part of show cause noti •
No. F.No.V.CGST -NM I Dn -V/ R-III/ HCC-MMS Joint Venture/Audit I/207/201
dated 07.06.2022. The SCN demand is issued on the basis of GSTR3B.and IPC issued
period July 2017 to March 2023. As the invoice bearing No. IPC 05 pertaining to pre-G
(Apr 2017 to Jun 2017), the noticee would have paid the service tax as per the Finance
Therefore, question of demanding GST on invoice bearing No. IPC 05 will not arisen.
contention of the noticee is not acceptable.

41. The noticee in Para D .1 contested that the contract/work order is to be read hoiis
the substance of the transaction is required to be determined, No part of any oftheiagree
be read in isolation. If the agreement/contract/work order is read as a whole, the stlbst'
make the bid inclusive of all taxes.
In this regard, I find that there was dispute between the noticee and their client •
external tax agency i.e. Ekbote Deshmukh and Co was appointed as deposed by S
Verma, GM-Taxation of the noticee in his statement dated 05.07.2024 recorded under S
of the CGST Act, 2017, and they have submitted their final initial report dated August
on GST impact/reimbursement on the subject issue. He further stated that the noticee
agreed to said report. Thus, the taxable value was disputable till March 2023. When
dispute between the noticee and their client for which external tax agency i.e. Ekbote
and Co, the claim of Contract price is inclusive of taxes as per 'Particular Conditi
Contract' ('PCC') of the Contract and also as mentioned in the first paragraph of
Acceptance' ('LOA') dated July 01, 2016 issued by MMRCL to the noticee, the contra
invalid. Therefore, I find that the contention of the noticee is not acceptable and also
case laws referred the noticee has not relevant in this case.

42. The noticee in Para C of their reply dated 09.10.2024 contested that the:departm
re-write the agreements of the parties. In the instant case, I find there was dispute
noticee and their client for which external tax agency i.e. Ekbote Deshmukh and Co. The
• I

was about various conditions of the contract with their client. Therefore, the contenti.
noticee is not tenable. I also find that case laws referred the noticee are not relevant int

CROSS EMPOWERMENT under Section 6 of the CGST Act, 2017

43. The noticee contested that initiating proceedings on the same subject matter
identical timeframe by another GST department i.e. by Assistant Commissioner of
Investigation would lead to redundancy and a violation as per Section 6(2)(b) of the C
2017 and therefore, it is requested that the current proceedings be discontinued and dis •
this regard, I find that Section 6 of the CGST Act, 2017 provides for cross empowerm
Central and State Tax officers, with pari materia provisions in the SGST Act.

44. Section 6(2)(b) of the CGST Act, 2017 stipulates that where a Proper Officer
SGST Act has initiated any proceedings on a subject matter, no proceedings shall b~. •
the corresponding Proper Officer under the CGST Act on the same subj~ct matte'
provision is reciprocated in the State/Union Territories GST Laws.

45. Section 6 of the CGST Act, 2017 reads as under:

6. Authorisation of officers of State tax or Union territory tax as proper officer
circumstances:-
(1) Without prejudice to the provisions of this Act, the officers appointed under the Sta
and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised 1
proper officers for the purposes of this Act, subject to such conditions as the Government
the recommendations of the Council, by notification, specify.

Page 42 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS/2024-25

ect to the conditions specified in the notification issued under sub-section (1 ),-
.e any proper officer issues an order under this Act, he shall also issue an order under the
ods and Services Tax Act or the Union Territory Goods and Services Tax Act, as
d byithe, State Goods and Services Tax Act or the Union Territory Goods and Services
~ the 1case may be, under intimation to the jurisdictional officer of State tax or Union
tax;
e a proper officer under the State Goods and Services Tax Act or the Union Territory
d Services Tax Act has initiated any proceedings on a subject matter, no proceedings
nitiated by the proper officer under this Act on the same subject matter.

•have gone through Para 4.9 of the impugned SCN wherein it was mentioned that officers
•orate General of GST Intelligence, Mumbai Zonal Unit had initiated inquiry on entirely
issue of undervaluation and delayed uploading of invoices resulting in late discharge of
, ility. Therefore, I do not find any force in the contention of the noticee as mentioned in
f their reply dated 09.10.2024 and also I find that ratio of case laws referred by the noticee

,he noticee in Para F of their reply dated 09.10.2024 contested that the Ld. DGGI initiated
tigation on the basis of a mismatch of GSTR-3B and GSTR- 7 (TDS) and concluded that
a short payment on the basis of the rate of tax and the investigation was entirely withol;!t
.µ, 0~4 in cpntravention to provisions of the law. In this matter, I find that the DGGI has
11.:duct~d. the enquiry and detected possible revenue of loss which is in accordance with
'thm%risdiction. I find that this contention of the noticee is baseless and I also find that
1-
~{ Idws ~eferred by the noticee in this matter is not applicable in this case.
: •

,''i 1 ''. i·'

e noticee in Para G of their reply dated 09.l 0.2024 contested that in various instances
ent has the violated the guidelines issued by DGGI vide Instructions
GI/17/2023-INV-O/o Pr DG-DGGI-HQ-DELHI-Part(l)/ Dated 08.02.2024 such as the
Hon should be completed in one year. In this matter, I find that instructions issued by the
in the nature of guidelines and not law. Secondly, I find that the decisions of Hon'ble
Court in case of UNION OF INDIA Versus KAMLAKSHI FINANCE CORPORATION
. 1 (55) E.L.T. 433 (S.C.) and Hon'ble Bombay High Court in case of Om Siddhakala
s vs. Deputy Commissioner of Income Tax WRIT PETITION NO. 14178 OF 2023 dated
24(HC-BOM) are regarding judicial disciple and as such ratio of these case laws referred
ticee is not applicable in this case. Therefore, I do not find any force in the contention of

• e noticee in Para I of their reply dated 09.10.2024 contested that bunching of show cause
I ,,. l
. si,xy~ars is against the provisions of Section 74 of the Act. They relied on decision of
it;u,tiqn B,ench of the Hon'ble Apex Court in the decision reported in AIR 1966 SC 1350,
~~ and Kashmir and Others v. Caltex (India) Ltd and Hon'ble High Court of Madras
Titan Company
. '
Ltd., Vs The Joint Commissioner of GST & Central Excise I The
' . \f;o,nlflissioner of GST & Central Excise in W.P.No.33164 of 2023 and
I' '
o.32855 of2023.
,',. ;, I'

this :regard, I find that the case of Caltex (India) Ltd was related to the assessment of
for the period from January 1, 1955 to September 6, 1955 whereas instant case is of
on of fact with intent to evade tax, and thus the ratio of decision in case of Caltex (India)
squarely applicable in the instant case. Further, lfind that the issued involved in decision
High Court of Madras in case of Titan Company Ltd is of assessment and thereafter
;of SCN under Section 73 of the CGST Act, 2017 whereas in the instant case SCN was
suppression of facts with intent to evade tax under Section 74 of the CGST Act, 2017.
, I find that ratio of decision in case of Titan Company Ltd is not squarely applicable in

Page 43 of 48

: i
 Order-in-Original No. 28/CGST-NM/ADC/AKS

50. The noticee in Para K of their reply dated 09.10.2024 contested that show cause
vague and beyond comprehension and hence, the show cause notice ought to have been:
and DGGI being a fact-finding authority could have asked for further clarifications/cl
/information if any could have asked for from the Noticee as well as its employees.
I
through the impugned SCN, I find that the notice was issued after thorough investigati •
DGGI. Therefore, I find that this contention of the noticee is not acceptable.

51. The noticee in Para L of their reply dated 09.10.2024 contested that heavy reliance
on statements recorded by the department of the employee's of the Noticee and tross-~x
is mandatory.

52. I also find that Section 70 and Section 136 of CGST Act, 2017 is very ni
that statement recorded under Section 70 of CGST Act, 2017 shall be deemed to be
proceedings.

53. The text of Section 70 and Section 136 ofCGST Act, 2017 are reproduced a
"70. Power to summon persons to give evidence and produce documents.-
(]) The proper officer under this Act shall have power to summon any person wh
attendance he considers necessary either to give evidence or to produce a docum
or any other thing in any inquiry in the same manner, as provided in the case ofa c
court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).
(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a "judic
proceedings" within the meaning of section 193 and section 228 of the Indian Pe:
Code (45 of 1860). '

13 6. Relevancy ofstatements under certain circumstances. -

1
A statement made and signed by a person on appearance in response to anysumm
issued under section 70 duri~g the course ofany inquiry or proceedings undehhis
shall be relevant, for the purpose ofproving, in any prosecution for an offence u
this Act, the truth of the facts which it contains,-
(a) when the person who made the statement is dead or cannot be found, o .
incapable of giving evidence, or is kept out of the way by the adverse party, or wh
presence cannot be obtained without an amount of delay or expense which, under •
circumstances of the case, the court considers unreasonable; or
(b) when the person who made the statement is examined as a witness in the c
before the court and the court is ofthe opinion that, having regard to the circumstan
of the case, the statement should be admitted in evidence in the interest ofjustice."

54. Further, I find that the Supreme Court had held in Romesh Chandra Mehta.
of West Bengal that Customs officers are not police officers. The ratio of this jud
applicable to proceedings under Section 70 of CGST Act, 2017 also. Further, I
Shri. Shri Piyush Verma and Shri Shailesh Phadke, employee of the noticee, have hever
their statements recorded Section 70 of CGST Act, 2017. Therefore, statemen~s
under Section 70 of CGST Act, 2017 are admissible. The cross-examination
sought for examination of witness. In the instant case, I find that there is no witne
I do not find it necessary cross examination in the instant case. ' •'

55. The noticee in Para M of their reply dated 09.10.2024 contested that the i:rnpug
cause notice is completely vague and fail to explain why the liability has been fasten
detailed explanation and reasons are completely missing. The noticee in Para N of their r
09.10.2024 contested that the show cause notice should be issued in an unbiased and fai.

Page 44 of 48
 ..
Order-in-Original No. 28/COST-NM/ADC/AKS/2024-25

ould; dearly lay down the allegations with reference to facts and legal provisions
•On going through impugned SCN, I find that the above contentions are baseless.

e noticee in Para O of their reply dated 09.10.2024 contested that

he Noticee have not concealed or suppressed any information from the investigating
1cer,
e information provided during the investigation was given "as is basis" in good faith and
"thout any malicious/ malafide intent.
11 details shared with the investigating officer were complete and transparent, with no
uppression or concealment of facts or information.
f

,he present show cause notice has nowhere explained the ingredients which are required
; be proved so as to substantiate suppression of facts and / or contravention of provisions
J
• C,G~T Act or rules framed thereunder by the Noticee to justify issuance of a show cause
tice tinder Section 74 of the COST Act.
I•>,: l·i ,

i$ Jh~
k, I
principle
'
of law that "one who alleges has to prove" the department has not brought
record a single piece of evidence specifying that the Noticee has committed fraud,
·sspi~em~n{ or suppression.
er~ly be~ause the time limit to pass an order under Section 73 was time barred, the notice
. DGOihas invoked section 74 of the COST Act, which is nothing but a clear abuse of
wer by the notice issuing authority.

ese above contentions are not acceptable as they are far away from fact of the case (i.e.
•on of the facts of taxable value by the noticee) which are discussed in the foregoing paras.

Para 9.6 of the impugned SCN, it was alleged that even the invoices shown during
ion were different than the one declared on OST portal also value of invoices and date
, both were not matching with the details declared on the portal, so, there appeared to be
isstatement and suppression of facts with intent to evade payment of tax. In this regard, I
e noticee is silent on these allegations. This strengthen allegations of the department.

. UNDER SECTION 74 OF THE COST ACT, 2017

.r !
Wl;\s, proposed in the impugned SCN to impose penalty under Section 74(1) of the COST
l;lS the noticee was well aware about the value of actual services supplied by them and
aware that their services are being supplied at value higher than the one shown in their
hicb. resulted into undervaluation for the purpose of calculation of OST liability and its
ereof. It was also mentioned in the impugned SCN that this issue of undervaluation by
e came to light only after the Inquiry/investigation was conducted by DOOL

this regard, I find that the taxable value was disputable till March 2023 between the
d their client. When there was dispute between the noticee and their client for which
agency i.e. Ekbote Deshmukh and Co, the claim of Contract price is inclusive of taxes
icular Conditions of the Contract' ('PCC') of the Contract and also as mentioned in the
aph of 'Letter of Acceptance' ('LOA') dated July 01, 2016 issued by MMRCL to the
come invalid. Further, I find that the noticee have suppressed value by suo-moto
of 4.93% from taxable value and paid less OST with intent to evade tax. This is clear-
" • I'
s~~OJ?. of,the fact with intent to evade tax regarding taxable value on which the noticee
,:0.$T~ ~ also find that suppression of facts to evade tax is established for invocation of
of
. ..
the
i
COST Act, 2017.

Page 45 of 48
 Order-in-Original No. 28/CGST-NM/ADC/AKS

60. Had no such investigation/Inquiry would have been initiated, the said non-pa
appropriate tax, would not have come to the knowledge of the department resulting in
revenue to Government Exchequer. Therefore, I find that penalty under Section 74 (9) of
Act, 2017 read with section 20 ofIGST Act, 2017 and the concurrent provisions ofM
2017 is imposable on the noticee.

61. Further, I find that various Courts including the Apex Court had clearly laid
principle that tax liability is a civil obligation and therefore, the intent to evade paym
cannot be established by peering into the minds of the taxpayer, but had to be establish .
evaluation of tax behavior. The responsibility of the taxpayer to voluntarily ,makeii '
disclosures is much greater in a system of self-assessment. Had the enquiry not been i
the Department, the said facts would not have come to light.

62. The noticee in Para P of their reply dated 09.10.2024 contested that it is a·.w
principle of law that where there is no demand of GST, penalty cannot be imposed by •
decision of Hon'ble High Court in case of Coolade Beverages Limited (2004) 172
(All). The noticee also contested that issue involved in the instant case is purely interpre
nature and no penalty can be imposed in view of decision of Tribunal in case of CCE
Tanneries Limited - 2005 (184) ELT 217 (T) and CCE Vs. Explicit Trading & marke.
-2004 (169) ELT 205 (T). In this case, I find that GST of Rs. 55,49,07,278/- is recove
the noticee under section 74 of the CGST Act, 2017 as discussed in foregoing paras. Furt
that the issue involved in this case is suppression of taxable value by the noticee with
evade tax by suomoto deducting certain percentage from the contract value which was
and this is supported by appointment of external tax agency i.e. Ekbote Deshmukh
resolve dispute between the noticee and their client. Therefore, I find that the contenf
noticee that the instant case is purely interpretational in nature is not acceptable.

INTEREST
63. It was proposed in the impugned SCN for recovery of interest from the notic~e
short paid by suppressing the taxable value under Section 50(1) of the CGST Act; 2017
50(1) of the SGST Act, 2017 read with Section 20 of the IGST Act, 2017. This was1oti b
fact that there was difference in date when the invoices were raised for the purpose of p
GST liability and the date when the actual/physical invoice was issued which resulted
revenue in the form of interest which is recoverable from the noticee.

64. The noticee in Para Hof their reply dated 09.10.2024 contested that no interest i
as there is no delay in paying the taxes and it is a settled principle of law that in cases
original demand is not sustainable, interest cannot be levied. In this matter, I find that t
is liable to pay short payment of GST of Rs. 55,49,07,278/- in forgoing paras, therefor
on short payment of the noticee is recoverable from the noticee in terms of Section 50
CGST Act, 2017. Thus, I do not find any force in the contention of the noticee.

Part-B
INTEREST of Rs. 2,65,06,322/-
65. It was also alleged that interest liability amounting to Rs. 2,65,06,322/- on cfelaye.
of tax through GSTR-3B on account of delayed reporting of certain invoices in GS~~l
recoverable from the noticee.

66. The noticee in Para 2.1.12 of their reply dated 08.11.2024 contested that, bvbn
payable on the invoice value from the date when the IPC was issued, the notice e .
computed interest on the entire value of IPC amount instead of 20% final payment, since
of the IPC is being reported in the same month of receipt. The noticee further stated that
explained with the help of bank statement, books of accounts, IPC' s and with detailed r
Page 46 of 48
 Order-in-Original No. 28/COST-NM/ADC/AKS/2024-25

,vorkings to the satisfaction of the DOOI team. Therefore. the noticee stated that_ in paragraph
~.1.1~ ~bove. although the conclusion in the notice to levy the interest on delayed OST payment
itself 1s mcorrect. As per •time of supply· provisions enshrined under Section l 3(2)(b) and 31 (5)( b)
of the Act. Noticee correctly fulfilled their OST obligations for the interim and final payments.
Consequently. there is no timing difference and hence no interest as such is applicable on any
amounts as such. Basis this. the Noticee contested that no interest is payable as there is no delay
in paying the taxes.

6 7. In this regard, I find that the noticee have substantiated their claim along with statistical
data v,ith documentary evidences. I also find that the OST liability arises on the same elate of
issuance of Interim Payment Certificates (lPC) and accordingly the interest liability of Rs.
2.65.06.322/- on delayed payment was calculated on the basis of delay between date of issuance
oflnterim Payment Certificates (IPC) and date of filing of OSTR-3B as mentioned in worksheet
of interest calculation annexed to the impugned SCN which was discussed in the foregoing paras.
Thus, I do not find any force in the contention of the noticee. Therefore. interest 1iabi Ii ty of Rs.
2,65.06.322/- on delayed payment is recoverable under Section 50(1) of the CGST Act_ 2017.

68. All case laws referred by the noticee have been considered and the decision has been
arrived on the basis of facts and material evidences and documents relied upon by the noticee.

69. [n view of above fact and finding, I pass the following order:
ORDER
Part-A
i) I confirm the demand of OST amounting to Rs. 55,49.07278/- (CGST
Rs.27.74.53.639/- + SOST Rs.27.74.53,639/-) (Rs. Fifty Five Crore Forty Nine Lakh
Seven Thousand Two Hundred Seventy Eight only) for the period from July 2017 to
March 2023 under Section 74(9) of the CGST Act 2017 read with the MGST Act.
2017 & the IOST Act. 2017 and order its recovery from M/s. HCC-MMS Joint Venture
under Section 74(9) of the CGST Act. 2017 read with the MGST Act. 2017 & the IGST
Act. 2017:
ii) I order recovery of interest on demand of Rs. 55.49,07.278/- under Section 50(1) of the
COST Act, 2017 read with the SOST Act. 2017 & the JOST Act. 2017 from Mis. HCC-
MMS Joint Venture:
iii) I impose penalty of Rs. 55.49.07.278/- (COST-Rs. 27.74.53.639/- + SGST-Rs.
27.74.53.639/-) (Rs. Fi±1y Five Crore Forty Nine Lakh Seven Thousand Two Hundred
Seventy Eight only) on M/s. HCC-MMS Joint Venture under Section 74(9) of the
COST Act. 2017 readwith the SOST Act, 2017 & the IOST Act. 2017:
iv) I do not impose penalty under Section 122(2)(6) of the COST Act. 2017 on M/s. HCC-
MMS Joint Venture; and
Part-B
v) 1 order recoverv of interest of Rs. 2.65.06.322/- (COST-Rs.1.32.53.161/- SGST-
Rs.1.32,53J 61/-) (Rs. Two Crore Sixty Five Lakh Six Thousand Three Hundred
Twenty Two only) under Section 50(1) of the COST Act. 2017 read with the ..~OST
Act. 2017 & the IOST Act. 2017 from M/s. HCC-MMS Joint Venture. ~ //
,,/:? :&})
... ----2_ .,,AYY'w-LQ-::::.
"C5l,. \ 2_. ··v~ ~
/J,

(' ""(/·6 (/CJ

(~~~)
3-f(R~,
aj)GftQflt13ITT~~~-
~ ~ '31 llJcRi ItF-l

Page 47 of 48
 Order-in-Original No. 28/CGST-NM/ADC/ AKS/2024-25

F.No. V-Adj/CGST-NM/ADC/HCC-MMS / 43/2024-25 (3CJ---~-

Navi Mumbai dt. 06.12.2024 f ~~
.~ . )
0
- 6"'1 \ 1 ")
To:
/

~\1/s. HCC-MMS Joint Venture.

Hincon House. L.B.S. Road.
Vikhroli (West). Mumbai - 400083

Copy to:
1) The Commissioner, CGST and C.Ex. Navi Mumbai Commissionerate
2) The Additional Director. DGGL Mumbai Zonal Unit N.T.C. House. Third Floor. 15. N.M.
Road.Ballard Estate. Mumbai-400001
3) The Deputy/Assistant Commissioner. Review Section CGST and C.Ex. Navi Mumbai
4) The Deputy/Assistant Commissioner. TRC Section CGST and C.Ex. Navi Mumbai
5) The Deputy/Assistant Commissioner. Division-\!. CGST & C.Ex. Navi Mumbai
6) The Superintendent. Range-IIL Division-V. CGST a C.Ex. Navi Mumbai with direction to
upload DRC-07.
7) Master File

Page 48 of 48