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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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GST Update no. 101 on UTILISATION OF CENVAT CREDIT BALANCE AS ON 30.06.2017 AGAINST SERVICE TAX DEMAND IN GST ERA

GST Update no. 101 on UTILISATION OF CENVAT CREDIT BALANCE AS ON 30.06.2017 AGAINST SERVICE TAX DEMAND IN GST ERA
The transition of credit into GST regime has not been smooth as was expected. This is evidenced from the number of petitions filed before various High Courts regarding the technical glitches faced by the assessees while transitioning their credit into the GST regime. Hence, it can be concluded that the assessees had to face a lot of tussle in migrating their credit balance into GST regime. However, the assessee who intentionally did not carry forward their credit into GST regime are also not spared from the rigours of litigation as recently, a decision was reported before the Delhi Tribunal in the case of UTTARANCHAL CABLE NETWORK VERSUS COMMISSIONER, CUSTOMS, CENTRAL EXCISE & SERVICE TAX [SERVICE TAX APPEAL NO. 50294 OF 2021-SM] wherein the utilisation of cenvat credit balance which was not transitioned into GST was disputed by the revenue department. The analysis of the judgment is the subject matter of discussion of our present update. The issue involved in the case is regarding utilisation of CENVAT credit available prior to introduction of GST law i.e. as on 30.06.2017 for discharging the short-paidservice tax detected after implementation of GST regime. When the GST law was introduced i.e. on 01.07.2017, the assessees were having unutilised CENVAT Credit available with them as per CENVAT Credit Rules. They were allowed to transfer the said credit in GST Law after opting to file TRANS-1. However, filing of TRAN1 was not mandatory. The appellant contended that transferring credit to GST regime was optional and not mandatory. Moreover, provision contained in section 142 of the CGST Act, 2017 does not mandate any disability in adjustment of tax liability out of the cenvat credit available in the earlier law which was not carried forward to the GST regime. The revenue authorities contended that the amount of unutilised cenvat credit as on 30.06.2017 could not be adjusted against the service tax demand payable as Cenvat Credit Rules, 2004 are no longer applicable. The Commissioner Appeals also held that the amount of credit as on 30.06.2017 could not be utilised or adjusted except as provided in the transitional provisions. The Tribunal rejected the reliance placed by the department on the decision given in the case of Mountain Valley Springs India Pvt. Ltd. Versus Assistant Commissioner of GST, Chennai [2019 (24) GSTL 342 (Mad)] and Indus Ind Media Communication Ltd. Versus Union of India [2019 (20) GSTL 10 (Kar)] wherein it was held that benefit of cenvat credit cannot be given as there was failure to file transitional return due to technical glitches. However, this is not the point of dispute in the present case. Furthermore, the Tribunal held that there is no bar or restriction under section 140(1) read with section 142 of CGST Act, on an assessee for claiming adjustment of the tax demand from the unutilised input tax credit as on 30.06.2017 which has not been carried forward to the GST regime. Hence, the appeal was allowed. The above decision fortifies the general principle that if demand is fastened against assessee, the consequential benefits should also be extended. There have been numerous judgments in the Central Excise Laws wherein it was held that even in cases of clandestine clearances, the benefit of cenvat credit as available should be extended to the assessee. Likewise, merely because the cenvat credit balance as on 30.06.2017 was not transferred to GST electronic credit ledger, the said accrued vested right cannot be extinguished by the department. The closing balance of cenvat credit balance as on 30.06.2017 is a substantive right that has been legitimately accrued to the assessee which cannot be snatched on flimsy grounds such as non-transition of credit to GST regime. In this context, reference may be made to the Apex Court decision in the case of EICHER MOTORS LTD. VERSUS UNION OF INDIA [1999 (106) E.L.T. 3 (S.C.)] wherein it was held that right to adjustment of tax on final products accrued to the assessee on the date when they paid tax on the raw materials and provisions of the statue do not enable authorities concerned to frame rule enabling lapse of balance lying in credit account. The analogy of this decision is aptly applicable in the present case as the legitimately earned cenvat credit balance as on 30.06.2017 cannot be lapsed for non-transition into GST regime. Therefore, the above decision will be definitely be fruitful to the assessee struggling to utilise cenvat balance not transitioned into GST regime.
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