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

Comments

Print   |    |  Comment

PJ-Case law-2013/14-1601

Limitation prescribed in law applies to interest demand also.

Case:- M/s GUJARAT STATE FERTILISERS & CHEMICALS LTD Vs COMMISSIONER OF CENTRAL EXCISE, VADODARA-I
 
Citation:- 2013-TIOL-845-CESTAT-AHM

Brief facts:- This appeal is directed against order in appeal. The relevant facts that arise for consideration are, appellants are engaged in the manufacture of Fertilizer, Caprolactum etc. The appellants had procured Naphtha without payment of duty for the manufacture of fertiliser by following the procedure prescribed under Central Excise (Removal of goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. Appellants used some quantity of Naphtha, so procured at nil rate of duty, for purposes other than for the manufacture of Fertilizer. In respect of the quantity of Naphtha which was not so used for the prescribed purpose, the appellants voluntarily paid up the appropriate duty involved on such quantity. The payment of duty on the quantity of Naphtha not used in the manufacture of Fertilizer was made in the respective following months after removal of the Naphtha for other purposes. A show cause notice issued to the appellants proposing to impose penalty and charge interest in respect of the aforesaid transactions. The show cause notice was adjudicated vide the order-in-original by confirming the charges levelled in the show cause notice. Being aggrieved, the appellants preferred an appeal before the Commissioner (Appeals), who vide order upheld the order. On further appeal, Tribunal vide order no. remanded the matter to the original authority. Being aggrieved by the order passed by the adjudicating authority in de-novo proceedings, assessee preferred an appeal before the first appellate authority, raising various questions of law and disputing the liability to pay the interest. The first appellate authority after following due process of law, did not agree with the contentions raised by the appellant before him. He concurred with the views of the first appellate authority and held that there is no infirmity in the order in original and coming to such a conclusion, the appeal was rejected, hence this appeal.
 
Appellant’s Contention:-  The appellant submits that show cause notice demand of interest is blatantly time barred as it was issued after normal period of one year and there is no allegation of any willful suppression of facts etc. and relies upon the decision of this Tribunal in the case of Emco Ltd. -2011 (272) ELT 136 (Tri.) = (2011-TIOL-1585-CESTAT-MUM)and the judgment of Hon'ble High Court of New Delhi in the case of Kwality Ice Cream Company & Anr. - 2012-TIOL-252-HC-DEL-CX and also on the judgment of the Apex Court in the case of TVS Whirlpool Ltd. - 2000 (119) ELT A177 (SC).It is also his alternate submission that in the event of interest liability is upheld, the interest liability needs to be recalculated from that the first date of the month succeeding the month in which the duty have to be paid and it is his submission that the duty liability as per the invoices raised by the appellant is liable to be paid as per the provisions of rule 8 of the Central Excise Rules, 2002 and according to that, due date of payment of the liability of the goods used is 5th of the next month in which the goods were cleared for captive consumption. It is also an alternative submission, that whatever duty has been paid by the appellant for clearance of Naphtha for captive consumption for non fertiliser's unit is availed as cenvat credit by the appellant and such credit is not disputed by the department. Hence there is no revenue loss and it seems as it is the case of revenue neutrality, no interest is payable as interest is a compensation for withholding somebody's money. The Respondent reiterates the findings of the lower authorities and submits that there is no dispute that the appellant has used the Naphtha which was procured under concessional rate of duty for consumption in manufacture of fertiliser, but some quantity of the said Naphtha has been diverted for manufacturing of use of non fertilisers.
 
Respondent’s Contention:-  Ld. DR reiterates the findings of the lower authorities and submits that there is no dispute that the appellant has used the Naphtha which was procured under concessional rate of duty for consumption in manufacture of fertiliser, but some quantity of the said Naphtha has been diverted for manufacturing of use of non fertilisers. It is his submission that provisions of Rule 6 of the said concessional rate of duty would apply wherein liability arises on the appellant as soon as he diverts the non duty paid Naphtha for non specific use.
 
Reasoning Of Judgment:-The Tribunal considered the submissions made at length by both sides and perused the records, the Tribunal find that the duty liability on the Naphtha not used for intended purpose i.e. Naphtha used for non fertiliser use was for the period from April 2001 to March 2004 and the appellant had discharged the duty liability and gave the details to the revenue authorities. Despite having such details with them, the revenue authorities did not chose to issue any show cause notice to the appellant and on 26.04.05 issued a show cause notice to the appellant for demanding the interest from them. On perusal of the said show cause notice, it is found that the said show cause notice did not allege suppression of facts or suppression or mis-statement of facts with intention to evade payment of duty. The said show cause notice which is annexed at page No.56-62 of the appeal memoranda indicates that the appellant had contravened the provisions of Rule 2 of removal of goods at concessional rate of duty for manufacture of Excisable Goods Rules, 2001 and only indicates that this act of non payment of duty immediately at the time of removal of the duty free procured goods for purposes other than for which it was procured, appears to be an offence of the nature prescribed under Rule 25 of the Central Excise Rules, 2002. This allegation is found specifically at paragraph no.11 of the show cause notice. This would indicate that the show cause notice which has been issued on 26.04.05, at the most can be pressed into service for demand of the interest by the Revenue for a period of one year from the date of show cause notice i.e. from 26.04.04 while the demand of the interest is for the period April 2001 to March 2004. There is strong force in the contentions raised by the ld. counsel that an identical issue came before the Division Bench of the Tribunal in the case of Emco Ltd. (supra).The Central Excise Act provides a time limit of one year from the relevant date for demand of duty in normal circumstances and a time limit of five years for demand of duty in cases where fraud, suppression of facts, collusion, etc. are involved. In the instant case, there is no allegation that the assessee delayed payment of duty on account of any of these elements. On the other hand, it is very clear that the assessee had discharged the differential duty liability on their own. The differential duty payments were made during the period from May, 2004 to March, 2009 and were also reflected in the corresponding monthly returns filed by the assessee. Thus, the department was fully aware that the assessee was raising supplementary invoices for recovery of differential prices subsequent to the clearance of the goods and they were also discharging differential duty liability on issue of supplementary invoices. Therefore, it was incumbent on the department to recover interest which the assessee had failed to pay within a reasonable period. Respectfully following the said decision, we hold that when the normal time limit prescribed is one year from the relevant date, (the date of filing of return) for recovery of the principal amount, (excise duty, in this case), it will be reasonable to adopt the same period for recovery of interest as well. Therefore, in the instant case, we are of the view that the department should have initiated the proceedings for recovery of interest within a period of one year from the date of filing of monthly returns. Since the demand notice is issued only on 7-8-2009, the demand for recovery of interest for the period prior to July, 2008 will be beyond the reasonable period of one year and, therefore, the same is barred by limitation. Only for the period from July, 2008 (for which the return is required to be filed in August, 2009), the demand for interest can be considered to be within the reasonable period. Accordingly, we set aside the impugned order and direct the original adjudicating authority to re-quantify the interest liability for the normal period of one year as discussed above and communicate the same to the appellant who shall, thereafter, discharge the interest liability. The appeal and the stay application are disposed on in the above terms.Tribunal also refers to their lordship's decision in the case of Kwality Ice Cream Company & Anr. (supra) wherein their lordship relying upon the judgment of TVS Whirlpool Ltd. (supra). In view of the foregoing judicial pronouncements, it is found that show cause notice issued on 26.04.05 for the demand of the interest for a period from April 2001 to March 2004 is blatantly time barred and any order confirming the demand of the interest due under such show cause notice is unsustainable. As the issue has been decided only on the limitation, Tribunal do not record any findings on the various other submissions made by both the sides. In Tribunal’s view, the judicial pronouncements as indicated herein-above, will cover he issue squarely in favour of the assessee. The impugned orders confirming the demand of the interest on the appellant being blatantly time barred, and so is set aside and the appeal of the appellant is allowed.
 
Decision:-  Appeal allowed.
 
Comment:-  It is clear from this case is that the Central Excise Act provides a time limit of one year from the relevant date for demand of duty in normal circumstances and a time limit of five years for demand of duty in cases where fraud, suppression of facts, collusion, etc. are involved. If the demand for recovery of interest goes beyond the reasonable period of one year without alleging fraud, suppression, collusion etc.,  the same is barred by limitation and is liable to be set aside.

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