Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): While deciding upon the instant complaint concerning alleged unfair trade practice followed by Flipkart of tampering with a product’s MRP, the Bench of Mamidi Christopher (President), S. Sandhya Rani and K. Venkateshwarlu (Members) observed that there is tripartite contract between the seller, service provider (herein ‘Flipkart’) and the consumer. The seller and service provider are liable for any defect, deficiency of service and unfair trade practice on the services provided or good/product sold by them. It was held that Flipkart had tampered with the original MRP of the product (herein ‘oil sachet’) and charged an amount more than the MRP from the consumer, thereby illegally extorting the consumer and causing economic loss and mental agony. Flipkart’s conduct thereby falls within the ambit of deficiency in service and unfair trade practice.

Facts of the Case: Flipkart engages in providing trading/selling facilities over the internet through its website and mobile application- an online marketplace. Flipkart. The Complainant ordered 2 Freedom Refined Sunflower Oil pouches (1000 ml. each) from Flipkart and the order was successfully delivered on 25-04-2021. The value of the order is Rs. 480 (each oil packet cost Rs. 240), the shipping charge- Rs. 103 and total price was Rs. 583.

After receiving the order, the complainant discovered that Flipkart was selling the product at a price which was more than the MRP. The MRP was wiped off the products, however the complainant stated that the MRP of the oil pouches was Rs. 170, while the complainant had to pay Rs. 240 (total Rs. 480) for each oil pouch. As per the complainant, Flipkart in total collected extra Rs. 140/- on MRP.


The complainant submitted that wiping -off the MRP amounts to an unethical and unfair trade practice which also amounts to deficiency in service. The complainant further stated that due to the sufferings caused by COVID-19 it has become very hard to meet basic needs; but the E- Commerce portals are raking in huge cash by selling more than MRP.

Per- contra, Flipkart denied the allegations and contended that the 2017 Amendment in Legal Metrology (Packaged Commodity) Rules, 2011, provides that an E-Commerce entity shall ensure that all monetary declarations as specified in the Rules shall be displayed on the digital and electronic network used for e-commerce transactions. The responsibility for the correctness of such declaration shall lie with the manufacturer, the seller or the importer. It was submitted that a market-place model e-commerce entity, such as, has been exempted by the Rules from any responsibility regarding correctness of the information provided by the seller.

Flipkart further contended that it only acts as an intermediary through its web interface and provides a medium to various sellers all over India. It was argued that these sellers are separate entity being controlled and managed by different persons/stake holders; and Flipkart directly or indirectly does not sell any products. All the products on Flipkart platform are sold by third party sellers who avail the online market-place service so provided, and the terms are decided by the respective sellers only.

It was submitted by Flipkart that the contractual/commercial terms include price, shipping cost, payment method, payment terms, date, period and mode of delivery, warranty related to products and services and after sale services related to sales and services. Flipkart does not have any control or does not determine or advise or in any way involved in the offering or accepting of such contractual, commercial terms between the buyer and seller.

Observations: Upon perusal of the facts and contentions, the Commission considered that whether there existed a deficiency in service and the extent of such deficiency.

The Commission perused the relevant provisions of Consumer Protection Act, 2019 defining “deficiency”, “unfair trade practice” and the relevant provision of Consumer Protection (E-Commerce) Rules, 2020.

It was observed that Unfair Contract means a contract between a manufacturer or trader or service provider, having such terms which causes a significant change in the rights of such consumer, thereby imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage. The Bench pointed out that the Opposite Parties are the agents who sell the product, and are duty bound to ensure its quality and if the product is found defective, agent shall be vicariously liable for the loss caused to the purchaser, along with the manufacturer of the product.

The Commission pointed out that Opposite Parties are in contract and agreement with the manufacturer who are service providers through the e-commerce entity and are bound by the contract between the manufacturer, product seller and the consumer and therefore must provide the information and details about the product to the sellers offering goods.

Decision: With the afore-stated observations, the Commission held that the Opposite Parties have not performed their duties of sellers on market-place as laid down in the Consumer Protection E-Commerce Rules, 2020.

The complaint was allowed partly, and the Opposite Parties were directed jointly and severally to return the additional extra charge of Rs. 140 and to pay an amount of Rs. 50,000 towards compensation and Rs. 3,000 towards costs, to the complainant.

[Shaikh Umar Farooq v. Flipkart Internet Private Limited, 2022 SCC OnLine NCDRC 519, decided on 26-07-2022]

Advocate who appeared in this case :

A. Narendar Rao, Advocate, for the Opposite Party No. 1,

*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Case BriefsSupreme Court

Supreme Court: The bench of MR Shah* and Sanjiv Khanna, JJ has reversed the ruling of Customs, Excise & Service Tax Appellate Tribunal, Delhi (CESTAT) wherein it was held that the services rendered by a “Consulting Engineer” were not subjected to service tax.


In the case at hand, a Chinese Government Company Sepco Electric Power Construction Corporation entered into a contract with Bharat Aluminium Co. Ltd. (BALCO) for providing “Design Engineering Services” and “Project Management & Technical Services”. In terms of the said agreement, it rendered “Consulting Engineer Services” to BALCO.

Pursuant to the CESTAT order, the question that fell for consideration before the Supreme Court was regarding the scope of definition of “consulting engineer” under Section 65(31) of the Finance Act, 1994, specifically as to whether a “body corporate” is covered within its sweep prior to the amendment in 2005.

It is important to note that post 2005, the definition of “consulting engineer” under Section 65(31) has been amended and now it specifically includes a “body corporate”. Therefore, as such, with respect to the proceedings post amendment 2005, there will be no difficulty. After the amendment, any “body corporate”, a service provider providing the services as “consulting engineer” is liable to pay the service tax.


Under the Finance Act, 1994, the definition of “consulting engineer” in Section 65(31) covers services provided to a client by a professionally qualified engineer or an engineering firm consisting of professionally qualified engineers. The taxable attribute is that the services must be rendered in a professional capacity.

Prior to amendment 2005, by a Circular/Trade Notice dated 4.7.1997, the definition of “consulting engineer” under the Finance Act, 1994 was specifically explained and as per the said Trade Notice, “consulting engineer” means any professionally qualified engineer or engineering firm who, either directly or indirectly, venders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering. It also further clarified that “consulting engineer” shall include self-employed professionally qualified engineer who may or may not have employed others to assist him or it could an engineering firm – whether organised as a sole proprietorship – partnership, a private or a Public Ltd. company.

Also, in many places under the Finance Act, 1994, the Parliament/Legislature has used the word “person” (Sections 68, 69 and 70). At this stage, Section 3(42) of the General Clauses Act, 1897 is also required to be referred to, considered and applied. The word “person” includes any company or association or body of individuals, whether incorporated or not.

Hence, it could be seen that it was never the intention of the legislation to exclude a “body corporate” from the definition of “consulting engineer” and from the “service tax net”.

Further, if it is held otherwise, in that case, it would remove all companies providing technical services, advice or consultancy to their clients from the service tax net, while any such services rendered by an individual or a partnership firm would continue to remain taxable. That does not seem to be an intention on the part of the legislature to exclude the “body corporate” from the definition of “consulting engineer”. There does not seem to be any logic to exclude “body corporate” from the definition of “consulting engineer”.

If the submission on behalf of the respondent is accepted and the “body corporate” is excluded from the service tax, in that case, it would not only lead to absurdity but also would create two different classes providing the same services. That cannot be the intention of the legislature to create two separate classes providing the same services and to exclude one class.”

Ruling on facts

Applying the aforementioned law to the case at hand, the Court held that the respondent, being a service provider providing consultancy engineering services, was/is liable to pay the service tax for such services being “consulting engineer” within the definition of Section 65(31) of the Finance Act, 1994 and therefore and thereby liable to pay the service tax under Section 66 r/w Section 68 of the Finance Act, 1994.

[Commissioner of Central Excise v. Sepco Electric Power Construction Corporation, 2022 SCC OnLine SC 833, decided on 11.07.2022]

*Judgment by: Justice MR Shah


For Revenue: Additional Solicitor General of India Balbir Singh

For Respondent: Advocate P.K. Sahu

Case BriefsHigh Courts

Delhi High Court: Sanjeev Narula, J., refused to interfere in the interim arbitral award whereby the sole arbitrator had allowed certain claims of the respondent in arbitration proceedings against the appellant-IRCTC.

IRCTC sought the setting aside of the interim arbitral award, whereby Sole Arbitrator had allowed certain claims of the Respondent in arbitration proceedings.

Summary of Facts

Respondent, a private railway catering service provider empanelled with IRCTC and entitled to be considered for allotment of temporary licenses on category ‘A’ trains. on 07th September, 2016, IRCTC published a limited tender inviting bids from empanelled parties for providing on-board catering services in respect of Train No. 12951- 52/12953-54 (Rajdhani/August Kranti Express) for six months.

On being the highest bidder, respondent was awarded a temporary license.

What was the dispute?

Welcome drink served to the passengers was provided by IRCTC. Later, IRCTC decided that:

  • service provider to provide welcome drink to passengers at no extra-charge receivable by it, and if unwilling to do so, it could opt to exit the temporary license;
  • where service provider was providing meals to passengers on account of short supply by IRCTC, it would be reimbursed production charges @ Rs. 84/- (inclusive of taxes) per passenger for lunch/dinner for 2nd and 3rd A.C. passengers.
  • where additional meals were being served due to late running of train for more than 2 hours, service provider would be reimbursed @ Rs. 26.40 + service tax, per passenger.

For the above-stated policy decision, DC raised the following concerns:

  • DC reasoned that welcome drink was not included in the tender document;
  • expressed reservation with regard to reimbursement of charges on account of late running of trains for more than 2 hours.
  • emphasised that having made a substantial investment in setting up a base kitchen and infrastructure, it was unwilling to exit from the contract.

Later, on 13-2-2017, respondent intimated that it would provide the welcome drink in case the same would not be provided by IRCTC, but it would be charging for services as well as production charges for the same. In the event of train being late, charge of Rs 30 would be applied along with service tax for additional meal.

From 5-03-2017, the above-said service commenced. Further, in the month of April, IRCTC sought an unconditional acceptance of the policy decision from respondent and unless unconditional acceptance would be tendered, it would be presumed that respondent are not interested in extension of the license.

Further, it was added that, for a certain period when respondent did not provide the welcome drink and IRCTC had to provide the same, the charges in that respect would be adjusted against the bills raised by respondent.

Respondent raised an issue with regard to the above-stated, asserting that it was not liable for the charges. It further raised the issue of non-payment of service tax on service charge for food and drink for the period from 19th December 2016 to 04th March 2017, as well as other charges allegedly payable to it.

Respondent unconditionally accepted the policy decision and a 6-month extension of license was granted.

Respondent invoked arbitration with regard to deductions made on account of welcome drink as well as other issues. Hence, a petition was filed under Section 11 of the Arbitration and Conciliation Act.

What all were the claims?

  • Claim towards non-payment for a welcome drink: DC contended that the welcome drink did not form part of the tender document. It should not be liable to serve the same or reimburse the expenses incurred by IRCTC for serving the same from 19th December, 2016 to 04th March, 2017.
  • Reimbursement of GST on production charges/supply of meals with effect from 1st July 2017.
  • Claim towards wastage of food due to cancellation/non-turning- up of passengers.

Two claims of respondent were allowed: (i) payment with respect to welcome drink; and (ii) reimbursement of GST on production charges.

IRCTC filed an objection against the impugned award before District Judge at Patiala House Court Complex, Delhi, however, the claim calculated by IRCTC exceeded its pecuniary jurisdiction as per the provision of Section 12(2) of the Commercial Courts Acts, 2015.

Analysis, Law and Decision

Whether welcome drink formed a part of initial period of contract?

As per the tender document which refers to CC No. 32 of 14 states the Clause 2.1 requires the service provider to deliver free of cost catering to passengers.

Arbitrator meticulously examined the tender conditions, circulars issued by Railway Board, IRCTC’s policy, contractual provisions and testimonies of the witnesses and went on to answer the question in negative.

CC No. 32 of 14 dated 6-08-2014 laid down rates of composite contract for the service provider and noting the admitted position that catering services under the tender were invited through the mode of partial unbundling of services, the learned Arbitrator noted that respondent was required to provide quotations for the sector-wise services mentioned in Annexures, which had no direct or specific reference to the condition of providing a welcome drink. In the said circumstances, it was concluded that the bid was not invited for the service of provision of welcome drink, and thus no charge was quoted towards the same.

Arbitrator gave a finding that there was no contractual stipulation in the tender document that specifically put the obligation on respondent to provide welcome drink and the said finding was held to be sound, credible and comprehensive by the High Court.

 Binding Effect of Respondent’s ‘unconditional acceptance’

the policy decision dated 07-02-2017 became a part of the contract between the parties has rightly been disallowed by the learned Arbitrator, by holding the same to be a fresh policy decision brought in by IRCTC post entering into the licensing agreement with DC. IRCTC could not give any justification for bearing the burden for the initial period between 19-12-2016 to 4-03-2017, despite it’s alleged understanding to the contrary. Its continued supply of welcome drink without expressly affirming that the contractual obligation for the job lay on DC, reaffirms the uncertainty of contractual obligations.

On the basis of the conduct and the testimony of witnesses, the Arbitrator rightly held that the actions of IRCTC exhibit ambiguity about DC’s contractually stipulated obligations, which were then redressed by way of the ex post facto policy decision.


The GST laws has replaced the erstwhile indirect taxation regime.

Respondent had explained that since the trains were moving through several states and each state had a different rate of tax under State VAT laws, it was not feasible to account for the same, therefore production charges were paid inclusive of taxes.

Besides, no Input Tax Credit was available to IRCTC for VAT.

However, the position underwent a change with the introduction of GST laws.

GST is available as Input Tax Credit for paying the outgoing tax liability. With restructuring of indirect tax system, railways introduced CC No. 44/17 which specifically provides for GST on catering services in the subject trains. The bifurcation of production charges was done under the afore-noted circular and it was advised that GST is to be reimbursed to the service provider on submission of proof of deposit.

the said circular specifies the revised catering apportionment charges for the trains in question where catering charges are built-in to the ticket fare. The table thereunder shows ‘catering charges disbursed to the service provider’ both with and without 18% GST in separate columns.

 Hence, IRCTC’s contention that claim of service tax on production charges was identical and since the same had been given up, the claim of GST would not survive.

Further, it was added that,

Applicability of service tax on production charges is a different plea intertwined with determination of factual position of whether there is an incidence of service in the activity of production or if the nature of service could be held as a composite supply.

GST is clearly attracted on supply of food. 

The claim of service tax over and above the amounts agreed to, was premised on a different footing and cannot be read at par with the claim of GST.

Arbitrator has given a finding that GST has been deposited by DC and proof thereof had been furnished to IRCTC. Court found no fault in interpretation of terms of contract.

Hence no ground for interference was made out. [Indian Railway Catering & Tourism Corporation Ltd. v. Deepak & Co., 2021 SCC OnLine Del 3609, decided on 5-07-2021]

Advocates before the Court:

For the Petitioner: Mr Nikhil Majithia and Mr Piyush Gautam, Advocates

For the Respondent: Mr Naresh Thanai and Ms Khushboo Singh, Advocates

About Justice Sanjeev Narula

Born on 24th August, 1970. Studied at St. Mary’s Presentation Convent School, Jammu. Graduated in B.Sc.(Computer Science) from Kirorimal College, University of Delhi. He acquired Degree in Law in 1994 from Law Faculty, University of Jammu and got enrolled with Bar Council of Delhi in 1995.

Practiced primarily before the Delhi High Court and also before the Supreme Court of India, District Courts of Delhi and various judicial forums in Delhi. Advised and represented clients in litigation relating to Civil, Commercial, Corporate, Criminal, Customs, Indirect taxes, Service, Banking & Finance, Land &Property, Arbitration, Indirect Taxes, GST, Intellectual Property, Constitutional, Cyber, E-Commerce, Consumer and Family Laws.

He was appointed as Central Government Standing Counsel; Senior Standing Counsel (Customs and Indirect Taxes) and Standing Counsel for Central Information Commission (CIC) for the Delhi High Court, positions he retained until he was appointed as a Judge.

Appointed as Permanent Judge of Delhi High Court on 22nd October 2018.

Source: Delhi High Court Website

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ramesh Nair (Judicial Member) allowed an appeal which was filed against the denial order of the Commissioner (Appeals) where the issue was to decide whether the appellant was entitled to Cenvat credit in respect of Dredging Services and Marine Consultancy Services provided by the service provider for smooth navigation of the vessels at the private jetty which is used by the appellant.

The counsel for the appellant, Mr Jigar Shah submitted that the service was provided by the service provider to the appellant and not to anyone else and the expenses for the service were borne by the appellant and services were availed for their own business purpose in order to smooth navigation of vessels, which was provided by jetty. Therefore, there was no dispute that service recipient was the appellant and they had paid the service charge. Therefore, the service clearly falls under the ambit of Input Service, as defined under Cenvat Credit Rules, 2004.

The Tribunal observed that there is absolutely no dispute that the appellant themselves were the service recipient. They borne the service charges along with service tax paid by the service provider. The Tribunal relied on the judgment of Sanghi Industries Ltd. v. CCE, 2019 (12) TMI 528 CESTAT Ahmedabad where it was held,

            “6.6 In respect of dredging services we find that the same was in respect of jetty in the factory premises and is used for transportation as well as import and export of goods. Since the services are related with the business of the company, the Appellant are eligible to avail credit of the same. As regard denial of credit on excess tax charged by the service provider, we find that the assessment at the end of the service provider has not been challenged. The Appellant has paid the amount of service tax charged to thorn. In such case, the credit cannot be denied to them. We thus are of the view that the Appellant are eligible for availing cenvat credit on impugned services, Resultantly we allow all the appeals filed by M/s Sanghi Industries Limited in the above terms with consequential reliefs, if any.”

The Tribunal while allowing the appeal set aside the impugned order and explained that location, where the service was provided, is immaterial what’s important was to see that irrespective of such services have been provided anywhere but it is for the purpose of the assessee and it is received by the assessee. If that test is qualified then it cannot be said that the service was not received by the assessee.[Ultratech Cement Ltd. v. Commr. of CE & ST, 2021 SCC OnLine CESTAT 116, decided on 15-03-2021]

Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): S.S. Garg (Judicial Member) allowed appeals directed against the common impugned order passed by the Commissioner (Appeals) whereby the Commissioner had rejected appeals of the appellant and upheld the order passed by the original authority. Both appeals were taken together since the issue in both the appeals was identical.

The appellant is a private limited company and registered as 100% EOU under the Foreign Trade Policy, engaged in the business of rendering services of medical transcription for hospitals situated outside India and is registered as a service provider under the category of Business Auxiliary Service under the Finance Act, 1994 read with Service Tax Rules, 1994. During the period in dispute, appellant has availed CENVAT credit on input services used for export of services and filed refund applications with the Assistant Commissioner along with various documents. Assistant Commissioner issued show-cause notices proposing to reject the refund claims filed by the appellant on various grounds and after considering the submissions of the appellant the adjudicating authority rejected the refund claims, aggrieved by which the appellant had filed appeals before the

Commissioner (Appeals) who had rejected the same.

The counsel for the appellant submitted that the impugned order was not sustainable in law as the same has been passed without properly appreciating the Cenvat Credit Rules and Notification. He further submitted that the only solitary finding on which refund application has been rejected in the impugned order is that the closing balance of the cenvat credit at the end of the quarter as per ST-3 was ‘nil’ which was less than the refund amount for the respective quarter. He further submitted that the appellant has reversed the CENVAT credit and produced the evidence along with refund claim in order to claim the refund.

The Tribunal observed that there was no dispute with regard to the export of service and the receipt of foreign exchange. The only ground on which the refund has been rejected was that the closing balance of cenvat credit at the end of the quarter as per ST-3 return was ‘nil’ which was less than the refund amount for the respective quarter. The Tribunal further found that the objection of the Department that the appellant has not debited the cenvat credit account before filing the refund claim is not factually correct, in fact, the appellants have debited the cenvat credit account before filing the refund claim and the same is clearly shown in the ST-3 returns also. The Tribunal followed the judgment of the Supreme Court in Ranbaxy Laboratories Ltd. v. Union of India, (2011) 10 SCC 292 where the court had held that interest on delayed refund is payable under Section 11BB of Central Excise Act, 1944 on the expiry of period of three months from the date of receipt of application under Section 11B (1) ibid and not from the date of order of refund or Appellate Order allowing such refund and further held that the appellant was entitled to the interest. The Tribunal set aside the impugned order and allowed the appeals holding that the respondent had erred in not appreciating the facts as also the condition envisaged in Notification.[Scribetech India Healthcare (P) Ltd. v. Commr. of Central Tax, 2020 SCC OnLine CESTAT 203, decided on 13-10-2020]

Suchita Shukla, Editorial Assistant has put this story together