Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/Case Laws/2011-12/1319

Cenvat Credit on Air Travel Agent;s Service & Online Auction Service

Case: M/s ADC INDIA COMMUNICATION LTD v/s CCE, BANGALORE
 
Citation: 2011-TIOL-1158-CESTAT-BANG
 
Issue:- Whether appellant is eligible for CENVAT Credit of service tax paid on Air Travel Agent's service and online auction service (BAS)?
 
Brief Facts:- Appellant availed Air travel agent's services for business-related air travel by employees of appellant and the Online auction services for sale of scrap generated during manufacture of final products through online auction.
 
Department raised demand under head ‘Business Auxiliary Service’ and under head ‘Travel Agents Service’ for the period from May, 2007 to November, 2008. The demand was confirmed and penalty imposed.
 
Appellant is in appeal before the Tribunal. An application is for waiver of pre-deposit and for stay of recovery of demand service tax and equal amount of penalty.
 
Appellant’s Contention:- Appellant submits that air travel agent's service was availed for business-related air travel by employees of the company and, therefore, the appellant was entitled to take CENVAT Credit of the service tax paid on the amounts paid to the air travel agent. It was further submitted that the scrap arising out of the manufacture of final products was disposed or through online auction. Hence the service received by the appellant from the auctioning agent also qualified 'Input service' for the appellant, in the category of 'Business Auxiliary Service'. It was submitted that appellant had a prima facie case.
 
Respondent’s Contention:- Revenue submitted that any nexus is yet to be established between the air travel by the employees of the company and the manufacture/clearance of their final products. In respect of auction of scrap also, the appellant has failed to make out a coherent case against the proposal to recover CENVAT Credit.
 
Reasoning of Judgment:- The Tribunal noted that in the show cause notice air travel agent’s service was not accepted as an input service as the nexus between service and manufacture & clearance of final product was held to be absent. With regard to online auction, the show cause notice did not recognize the same as a taxable service at all. It was noted that nowhere in the show cause notice any specific classification of the services under Section 65 (105) was given. The auction of scrap is mentioned as “Business Auxiliary Service’. It was noted that the issue to be decided was that whether the appellant has succeeded in establishing any nexus between the activities in question and the manufacture/clearance of their final products. The Air travel was undertaken by the employees for business purposes of the company. From the particulars of Air travel, it was noted by the Tribunal that no copy of any bill nor any other document has been produced to disclose the purpose of travel. Thus, it cannot be said that the appellant has successfully established nexus between air travel and manufacture/clearance of final products. No documentary evidence produced to coherently support the claim that scrap generated during manufacture of final products was disposed of by online auction.
 
No prima facie case made out. Pre-deposit ordered.
 
Decision:- Pre-deposit ordered.
 
Comment:- There is another angle in this issue. The earlier High Court in case of Ultratech Cement as well as in case of Cococola, it was held that the credit will be allowed if it is business expenditure but this decision has again brought the nexus theory in picture. However, the definition of “input services” is changed from this budget and it is held that the credit will not be allowed on expenses “primarily used as personal expenditure” of employee. Hence it has to be proved now that the employee has gone on business purpose. But here also, the word “primarily” gets the weightage.
 
The earlier definition of “input service” was settling in view of High Court decisions but the department has once again amended the same. Let us see another round of litigation. But by the time, it will be settled, we hope to see the GST. So, it is true, “litigation never ends.” 

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