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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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PJ/Case Laws/2011-12/1357

Imposition of Penalty for utilising ineligible credit before 27.02.2010

Case: M/s Devangere Sugar Company versus CCE, Bangalore-II Commissionerate
 
Citation: 2011-TIOL-1197-CESTAT-BANG
 
Issue:- Appellant-manufacturer utilized ineligible credit – whether penalty can be imposed under Section 11AC of CEA, 1944 read with Rule 15 (2) or under Rule 15 (3) as it stood before amendment from 27.02.2010?
 
Brief Facts:- Appellants are manufacturer of sugar and molasses falling under sub-heading 17011190 and 17031000 respectively of Central Excise Tariff Act, 1985. They are registered under Central Excise and are availing the facility of Cenvat Credit under provisions of CCR, 2004.
 
On verification of appellant’s records, Department officers observed that the appellant-unit had a co-generation plant for production of electricity in their factory premises. The electricity so produced was found to be used in the factory of production. The excess power generated was supplied to the State Electricity Board for a price. As the electricity produced in the factory did not attract payment of Central Excise duty and as they had not maintained any separate accounts for receipt, consumption and inventory of input services meant for use in the manufacture of dutiable final products and non-dutiable goods, it appeared that the appellant during the year 2006-07 had availed ineligible credit of Service Tax paid on Courier, Clearing and forwarding, Telephone and GTA services amounting to Rs. 518217/- and had contravened the provisions of Rule 3, 4 and 6 (2) read with Rule 6(5) of CER, 2004.
 
A show cause notice was issued to the appellants proposing to disallow and demand the cenvat credit amounting to Rs. 518217/- alongwith interest. Imposition of penalty u/s 15 (3) & 15(4) of CER, 2004 was also proposed.
 
The Adjudicating Authority confirmed the demand and appropriated the amounts paid by the assessee along with interest. In addition, he imposed penalty under Rule 15 of the CCR, 2004 readwith Section 11AC of CEA, 1944.
 
Appellant preferred appeal wherein the Commissioner (A) upheld the Original Order but modified the same by reducing the penalty to 25% of the amount as per the provisions of Section 11AC.
 
Hence, appellant preferred appeal before the Tribunal.
 
Appellant’s Contention:- Assessee submitted that they are not challenging the amount reversed by them alongwith interest. But they are challenging the amount of penalty imposed by the Adjudicating Authority under Section 11AC an upheld by the Commissioner (A).
 
Appellant submitted that during the relevant period, provisions of Rule 6 of CENVAT Credit Rules, 2004 were not applicable in this case as the credit sought to be denied by the Lower Authorities is in respect of credit of service tax paid on input services.
 
Appellant referred to Rule 15 of the CENVAT Credit Rules, 2004 and also submitted that the said Rule has been amended from 27.02.2010 wherein provisions of Rule 15(2) and (3) included the input services on which credit has been wrongly availed.
 
Appellant submit that before the amendment, Rule 15 (3) will only be applicable and at the most they are liable for penalty of an amount Rs. 2000/-.
 
Respondent’s Contention:- Revenue contended that availment of credit of service tax paid on the input services and that these services were utilized for the goods, which were cleared without payment of duty was suppressed. That once suppression is held against the assessee, provisions of Rule 15 (2) also will apply or Section 11AC would apply.
 
Reasoning of Judgment:- The Tribunal perused the order of the Commissioner (Appeal) and noted that the Commissioner (A) has not correctly appreciated the appropriate provisions of Rule 15 of the CENVAT Credit Rules, 2004 as it was before amendment.
 
The Tribunal perused the provisions of Rule 15 and noted that provisions of sub rule (2) can be brought into the picture only where Cenvat credit, of duty on inputs or capital goods is availed on account of fraud, willful misstatement. Provisions of sub-rule (3) can be brought into play for denial of Cenvat Credit of input services and penalty can be imposed as indicated therein prior to amendment. It is seen that provisions of Section 11AC of CEA or Rule 15(2) could not be invoked, as the issue was of credit on input services. At the most, for the violations of availing ineligible credit, the appellant can be penalized under the provisions of Rule 15 (3) for an amount of Rs. 2000/- only. The provisions of Rule 15(4) cannot be invoked in this case as it is undisputed that appellant is a manufacturer and not provider of output service. In view of the above, the Tribunal modified the order of the Comm (A) to the extent that penalty imposed by the Adjudicating Authority u/s 11AC and as upheld by the comm. (A) is set aside, while holding that the appellant is liable to be penalized and penalty imposed by the adjudicating authority should be in accordance with Rules 15 (3) of the CCR, 2004.
 
Decision:- Appeals disposed off accordingly. 

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