Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
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.  

Comments

Print   |    |  Comment

PJ/Case Laws/2011-12/1512

Imposition of Penalty under Section 11Ac - when credit availed by mistake and reversed voluntarily

Case: HINDUSTAN PETROLEUM CORPORATION LTD versus COMMR.OF C.EX. MUMBAI- II
 
Citation: 2012 (25) S.T.R. 161 (Tri.- Mumbai)
 
Issue:- Inadmissible credit availed – reversed voluntarily on being pointed out – Held, credit availed procedural infringement and due to interpretation – ingredients of Section 11AC missing – No penalty imposable.
 
Brief Facts:- The Appellant, a PSU, is engaged in the manufacture of various excisable goods falling under Chapter 27 of CETA, 1985. The Appellant also avails CENVAT credit of duty paid on inputs capital goods. During the course of audit from the Appellant record it was found that they have wrongly availed CENVAT credit of 161806/- during the financial year 2004-05 inasmuch as, availed CENVAT, (i) credit on inputs short received, (ii) excess credit than the duty paid on inputs and (iii) CENVAT credit on the basis of extra copy of the invoice. They also availed CENVAT credit amounting to Rs. 154711/- during March 2007 to July 2007 on the input service in respect of services received by them before 10-9-2004 which was not allowed on or after 10-9-2004 as per the law prevailed at that time. On being pointed out the appellant reversed the inadmissible credit. Thereafter show-cause notices dated 30-4-2008 and 27-5-2008 were issued against the appellant. The lower adjudicating authority appropriated the duty and interest and also imposed equal amount of penalty under Section 11AC of Central Excise Act, 1944. The Appellant challenged the imposition of penalty. The Id. Commissioner (Appeals) upheld the imposition equal amount of penalty.
 
Appellant’s Contentions:- The contention of the Appellant that they did not have any intention to evade payment of duty. As regards the inadmissible credit amounting to Rs. 161806/- taken on account of input short received, excess credit than the duty paid input and CENVAT credit on the basis of extra copy of the invoice is not due to intention to evade payment of duty and is only a bona fide mistake, at best it can be termed as procedural infringement and not misdeclaration or suppression of facts with intention to evade payment of duty. So far as the CENVAT credit amounting to Rs. 1,54,711/- availed from March 2007 to July 2007 on input service received by them before 10-9-2004.  They further submit that the department has failed to bring out that there was any suppression or misdeclaration and the other ingredients incorporated under proviso to Section 11A and under Section 1lAC. Therefore equal amount of penalty is not imposable in this case.
 
Respondent’s Contentions:- The Id. JDR reiterates the finding of both lower authorities. He also submitted that Hon'ble Supreme Court in the case of UOI v. Rajasthan Spinning & Weaving Mills - 2009 (238) E.L.T. 3 (S.C.) held that once Section 11AC is applicable in a case a concerned authority would have no discretion in quantifying the amount and penalty must be equal to the duty determined under sub-section (2) of Section 11A.  In countering the above, Id. counsel submitted that Hon'ble High Court of Karnataka in the case of C.C.E. v. Geneva Fine Punch Enclosures Ltd. - 2011 (267) E.L.T. 481 while referring to Hon'ble Supreme Court decision in Rajasthan Spinning & Weaving Mills (supra) upheld the Tribunal's finding. The entire duty paid voluntarily on being pointed out and cost of evasion of duty is not mentioned in the show-cause notice. Therefore, penalty under Section 11AC is not imposable and thus upheld the Tribunal's order.
 
Reasoning of Judgment:- The Tribunal noted that Appellant paid the duty and interest voluntarily on being pointed out during the course of audit and that they have availed inadmissible credit. The above facts are not in dispute. There was no determination of duty thereafter. The lower adjudicating authority in the case has found that the Appellant could not have reversed the inadmissible CENVAT credit after following the correct position as per Central Excise Act, 1944 and not waited for someone to point out the mistake and They came to the conclusion that in this case where they had intention to evade the Central Excise duty. So far as the CENVAT credit amount of Rs. 161806/- input service received by them before 10-9-2004, undisputedly, the appellant has reversed the CENVAT credit along with interest as soon as they were pointed out. The Tribunal found force in the contention of the Appellant that they did not have any intention to evade payment of duty and inadmissible credit taken on the ground of input short received, excess credit than the duty paid input and CENVAT credit on the basis of the extra copy of the invoice is not due to the intention to evade payment of duty and is only a bona fide mistake and at the best it can be termed as procedural infringement and not misdeclaration or suppression of facts with intention to evade payment of duty. So far as CENVAT credit amount to Rs. 154711/- availed from March 2007 to July 2007 on input service received from them on or before 10-9-2004 in this case also appellant have reversed the CENVAT credit along with interest as soon as it was pointed out.
 
The Tribunal agreed with the contention of the Appellant that there was no intention to evade payment of duty. This could at the best be termed as interpretational error. Further the contention of the Appellant throughout has been that there was no intention to evade payment of duty in the case. Ld. Commissioner (Appeals) has not given any finding other than quoting the Hon'ble Supreme Court's decision. The department failed to bring out ingredients expressly stated under proviso to Section 11A and Section 11AC of Central Excise Act, 1944. There was also no determination of duty after the Appellant reversed the CENVAT credit involved in this case. The Hon'ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills (supra) held that application of Section 11AC would depend on the existence of other-wise of the condition expressly stated in the section.  Further Hon'ble High Court in the case of Geneva Fine Punch while deciding the Revenue's appeal held that "The Tribunal in the instant case on a careful consideration of the material on record has held firstly that there is no determination of duty. Secondly, the aforesaid requirement i.e. the cause of evasion of duty is not mentioned in- the show-cause notice. Further that entire duty and interest was paid voluntarily on being pointed out. It held that no case for imposing the penalty is made out. The Commissioner as in total error in passing the order & imposing the penalty. Under these circumstances, we do not find any infirmity in the order passed by the Tribunal. No substantial question of law involved in this appeal that arises for consideration. Hence the appeal is dismissed”. Therefore the Tribunal concluded that Commissioner (Appeal) order is not sustainable in law and therefore liable to be set aside.
 
Decision:- Appeal allowed.

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