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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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PJ/CASE LAW/2016-17/3086

Admissibility of cenvat credit to the assessee for CHA Service provided by the sub contractor to the main contracto

Case-MRF LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI
 
Citation-2016 (41) S.T.R. 859 (Tri. - Chennai)
 
Brief Facts-The short dispute in this appeal is whether the contractor which had engaged sub-contractor to provide the services and the services so provided suffered service tax, shall disentitle the contractee to avail credit of the service tax so paid to the sub-contractor by the contractor.
The appellant took credit of service tax on the basis of invoices raised by M/s. VPC Freight Forwarders (P) Ltd., Chennai which was contractor for M/s. MRF Ltd. The service provider M/s. VPC Freight Forwarders (P) Ltd., engaged M/s. SRS Cargo International and others to provide the service meant for M/s. MRF Ltd. The services so provided by them were in the nature of a CHA. To such extent fact is not in dispute.
The dispute arose when bills raised by M/s. SRS Cargo International and others on M/s. VPC Freight Forwarders (P) Ltd., and such bills recovered service tax from M/s. VPC Freight Forwarders (P) Ltd., and M/s. VPC Freight Forwarders (P) Ltd. passed such liability to M/s. MRF Ltd., and M/s. MRF Ltd., claimed Cenvat credit of the tax so paid by it to M/s. VPC Freight Forwarders (P) Ltd.
Revenue’s dispute is that possibility of availing of Cenvat of the M/s. VPC Freight Forwarders (P) Ltd., may not be ruled out since service tax was paid by M/s. VPC Freight Forwarders (P) Ltd., to M/s. SRS Cargo International and others. But such an apprehension could not be established by Revenue without an enquiry done by the Department from any corner.
 
Appelants Contention-Learned counsel drew attention to Page 154 of the appeal folder in Appeal Record No. E/42430/2013. He says that M/s. VPC Freight Forwarders (P) Ltd., has categorically stated as to what was the modus operandi between it and the service providers i.e., M/s. SRS Cargo International and Others. M/s. VPC Freight Forwarders (P) Ltd., brought out that service tax paid to the service provider i.e., M/s. SRS Cargo International & Others was in respect of the same service that was provided to M/s. MRF Ltd., and it had not claimed Cenvat credit of the service tax so paid by it to M/s. SRS Cargo International and others. When an enquiry to this aspect was requested, department did not conduct the same at the end of M/s. SRS Cargo International and others.
 
Respondents Contention-Learned departmental representative submits that when there was no link between the services provided by sub-contractor and the service if any received by the appellant, the Cenvat credit is not allowable to it.
 
Reasoning Of Judgement-Heard both sides and perused the records. There is no difference on the fact that the services of CHA who were M/s. SRS Cargo International and others was availed by M/s. MRF Ltd., through its agency M/s. VPC Freight Forwarders (P) Ltd., who in turn engaged M/s. SRS Cargo International and others to clear the imports of M/s. MRF Ltd. The service provider M/s. SRS Cargo International and others were no doubt engaged by M/s. VPC Freight Forwarders (P) Ltd., to cater to the need of M/s. MRF Ltd. That is not in doubt. Once there is no question on provision of service and that is attributable to the goods imported by appellant, denial of the credit of the service tax paid by appellant, to M/s. VPC Freight Forwarders (P) Ltd., shall be prejudicial to the interest of justice. Department should have enquired as to whether any service tax was paid by M/s. VPC Freight Forwarders (P) Ltd., to M/s. SRS Cargo International and others and such taxes have gone to the treasury. For no such enquiry, the appeals where penalty was imposed on the Head Office of M/s. MRF Ltd., those are allowed; waiving such penalties as well as setting aside that part of the impugned orders and the appeals which involved the disallowance of Cenvat credit with interest and penalty are also allowed which are in respect of different units of M/s. MRF Ltd. setting aside the impugned order on that count. Consequential relief, if any shall follow in accordance with law.
 
Decision-Appeals allowed
 
Comment-In the given case servicesare received from main contractor who engaged sub-contractor for providing such services. The point of dispute here is whether the Credit of Service Tax paid on invoices issued by main contractor denied alleging main contractor would have availed credit on bills raised by sub-contractor. But in the given case Revenue does not made any enquiry as to whether main contractor taken credit in respect of bills raised by sub-contractor, denial of credit of Service Tax paid by assessee to main contractor not justifiable and accordingly assessee’s Head office as well as their other units entitled to credit and penalty also not imposable.

Prepared By-Neelam Jain
 

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