Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Print   |    |  Comment

PJ/Case Law/2013-14/2031

Admissibility of service tax credit on Techno Feasibility study for rehabilitation.

Case:- JENSON & NICHOLSON (INDIA) LTD. Versus COMMR. OF C. EX., NOIDA

Citation:- 2013 (31) S.T.R. 626 (Tri. - Del.)


Brief Facts:- The appellant are manufacturers of paints and varnishes. They have factories at Panvel (Maharashtra), Naihati (West Bengal) and Sikandrabad (U.P.). Two of the appellant's factories in Panvel and Naihati have closed down and the company has become sick and gone to BIFR for finalizing rehabilitation package. In terms of the order of the BIFR, SBI Capital Market Ltd. conducted a techno feasibility study regarding rehabilitation and prepared a report in this regard regarding rehabilitation for further fund raising for the appellant-company. M/s. SBI Capital Market Ltd. for the service of preparing techno feasi­bility report regarding rehabilitation have charged some amount on which Ser­vice Tax amounting to Rs. 2,56,361/- had been paid and the appellant have taken credit of this amount. The department is of the view that this service received by the appellant from M/s. SBI Capital Market Ltd. is not covered by the definition of 'input service'. On this basis, the Jurisdictional Assistant Commissioner vide order-in-original dated 30th August, 2010 confirmed the Cenvat credit demand of Rs. 2,56,361/- along with interest and imposed penalty of equal amount. On appeal to Commissioner (Appeals), this order of the Assistant Commissioner was upheld vide order-in-appeal dated 31-12-2010 against which this appeal along with stay application has been filed.

Appellant Contentions:- The Appellant pleaded that the service of preparing feasibility report regarding rehabilitation had been received by the appellant from M/s. SBI Capital in terms of the orders of the BIFR, that report is regarding modalities of arranging the finance for reha­bilitation of the appellant-company, that the services received from M/s. SBI Capital have clear nexus with the manufacturing business of the appellant and hence the same are covered by the term "activities relating to business" in the definition of 'input services' as given in Rule 2(l) of Cenvat Credit Rules, 2004, that the impugned order denying Cenvat credit is, therefore, incorrect, that the appellant have a strong prima facie case and hence the requirement of pre-deposit may be waived for hearing of the appeal.

Respondent Contentions:- The Respondent op­posed the appellant's plea for waiver by reiterating the findings of the Commis­sioner (Appeals) in the impugned order. He pleaded that the service received is a financial service which is not covered by the definition of "input service" in Rule 2(l).

Reasoning of Judgment:- We have carefully considered the submissions from both the sides and perused the records. The service of preparing feasibility report for rehabilitation of the company had been received by the appellant from M/s. SBI Capital in terms of the directions of the BIFR. Without such feasibility report from the M/s. SBI Cap­ital rehabilitation package could not be finalized by the BIFR. Therefore, the ser­vice received by the appellant from SBI Capital has very much nexus with their manufacturing business and is covered by the term "activities relating to busi­ness" in the inclusive part of the definition of "input service", as given in Rule 2(l). In view of this, the requirement of pre-deposit of Cenvat credit demand, in­terest and penalty is waived for hearing of this appeal and recovery thereof is stayed till the disposal of the appeal. The stay application is allowed.

Decision:-Stay application allowed.

Comment:- The crux of this case is that the techno feasibility services received for rehabilitation of the company declared as sick are also eligible for credit in terms of the definition of input service given under Rule 2(l) of the Cenvat Credit Rules, 2004. It can be said such service has nexus with the manufacturing business and is covered by the term "activities relating to busi­ness" in the inclusive part of the definition of "input service".  

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com