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 law/2013-14/1635

No restriction to distribute credit of service tax prior to taking input service distributor registration.

Case:-DAGGER FORST TOOLS LTD. Versus COMMISSIONER OF C. EX., MUMBAI-I

Citation:-  2013 (30) S.T.R. 206 (Tri. - Mumbai)
 
Brief Facts:-The Appellant M/s. Dagger Forst Tools Ltd., have a number of manufacturing units at Thane, Ambernath and Aurangabad. Their office at Thane has registered themselves as input service distributor with effect from 4- 10-2008. Thereafter, they distributed the credit of Service Tax paid on common input service such as Consultancy services, advocate services, house keeping, security etc., to their various units in proportion to the turnover of the unit. These services were received by them during the period February, 2008 to Octo­ber, 2008. The Department was of the view that since the appellant registered themselves as input service distributor only from 4-10-2008, they can distribute credit only of the taxes paid on or after 4-10-2008 and not the taxes paid prior to 4-10-2008. Accordingly, a show cause notice was issued and the appellant was denied credit on the ground that the services were received prior to 4-10-2008 and the taxes were also paid prior to that date and, therefore, the appellant could not have distributed the credit in respect of the taxes paid. The appellant was also imposed with a penalty of an equivalent amount. The appellant preferred an appeal before the lower Appellate Authority who dismissed their appeal, hence the appellant is before Tribunal.

Appellant’s Contention:-The Appellant submits that they have reg­istered as input service distributor as per the provisions of Rule 4A of the Service Tax Rules, 1994. Sub-rule (2) to the said Rule says that once a person has regis­tered as an input service distributor, he can distribute the credit by issuing seri­ally numbered and dated invoices/bills indicating therein the name, address and registration number of person providing input services, the name and address of the input service distributor, the name and address of the recipient of the credit distributed and the amount of the credit distributed. There is no restriction pro­vided in the said Rule with respect to the date on which the tax liability has been discharged in respect of the credit distributed. In other words, his contention is that even in respect of the taxes paid prior to the registration as input service dis­tributor, he is entitled to distribute the tax credit.

Respondent’s Contention:-The Respondent reiterates the findings of the lower authorities. However, on a specific query as to whether there is any specific restriction in the Cenvat Credit Rules, 2004 which provides that credit can be distributed only in respect of taxes paid on or after the date of registration as input service distribu­tor, he fairly concedes that the Rule does not specifically provide for any such restriction.
 
Reasoning of Judgment:-After considering the facts & submissions by the appellant, Tribunal is of the view that the ap­peal itself can be disposed of at this stage. Therefore, after dispensing with the requirement of pre-deposit of the dues adjudged, the appeal is taken for consid­eration and disposal. Input service distribution is a facility granted to a manufac­turer/service provider who operates from a number of premises. There is no re­striction under the Cenvat Credit Rules, 2004, with regard to the period for avail­ing Cenvat credit of Service Tax paid. In other words, a manufacturer/input ser­vice provider can avail Cenvat credit of the Service Tax paid irrespective of any time limitation. The only condition to be satisfied is that they should have paid the Service Tax prior to availing the credit. So long as this condition is satisfied, there is no time-limit prescribed in the Rule within which the Cenvat credit has to be taken. If that be so, there is no reason why in the case of input service dis­tributor alone, a restriction should be placed with respect to availment of Cenvat credit i.e. input service distributor is permitted to distribute only taxes paid on or after registration. Such a restriction is totally unwarranted and is not provided for in the law. Therefore the order passed by the lower Appellate Authority is not in accordance with the law and the same is liable to be set aside. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief, if any. The stay application is also disposed of.
 
Decision:-Appeal Allowed.

Comment:- The essence of this case is that when there is no restriction of time limit for availing cenvat credit in respect of input services, then the allegation of denying credit with respect to input service distributor on the sole contention that credit can be distributed only after taking registration as input service distributor is totally devoid of merits. Credit can be availed any time as far as the service tax stands paid on the input services.
 

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