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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/2011-12/1301

Requirement to pay penalty when service with interest deposited

Case: COMMR. OF SERVICE TAX, NEW DELHI v/s INDEPENDENT NEWS SERVICES P. LTD.
 
Citation: 2011 (23) S.T.R. 23 (Tri. - Del.)
 
Issue:- When payment of service tax with interest made, then under Section 73 (3), insisting upon payment of 25% penalty not warranted. 
 
Brief Facts:- Respondent had collected service tax for certain period but did not remit such tax collected to the Government account. Upon being pointed out by the department, respondent paid the tax along with applica­ble interest before issuance of show cause notice.
 
In view of the provision of Section 76(3) of the Finance Act, 1994, the Commissioner dropped the show cause notice issued for imposing penalty under Sections 76 and 77 of the Finance Act, 1994.
 
Appellant’s Contention:- Revenue contended that they had not paid penalty equal to 25% of the service tax amount prescribed under Section 73(1A) and therefore, immunity from penalty under Sections 76 and 77 cannot be granted.
 
Respondent’s Contention:- Respondents submitted that as per provision of Section 73, there is no need to pay any penalty and payment of penalty equal to 25% of duty de­manded arises only in situations where duty is paid after issue of show cause notice.
 
Respondent also relies on CBEC Circular No. 137/167/2006-CX-4., dated 3rd Oc­tober, 2007 in the matter.
 
Reasoning of Judgment:- The Tribunal perused the provisions of Section 73 and noted that the section does not envisage payment of any penalty once service tax is paid in full with interest. It lays down that the concerned authorities shall not serve any notice under sub-section (3) in respect of amount so paid.
 
The intention of Section 73(1A) has already been explained via Para 8(g) of the post budget instructions issued by TRU vide DOF No. 334, dated: 28.02.2006 where in it has been clarified that this sub-section provides for conclusion of adjudication proceedings in respect of person who has voluntarily deposited service tax.
 
The circular in fact clarifies the position that once the provi­sion under Section 73(1A) or Section 73(3) as the case may be, are complied with it results in conclusion of the proceedings. This is a case under Section 73(3). Sec­tion 73(3) does not envisage any penalty. It is not open for the Revenue to say that penalty as applicable under Section 73(1A) is to be paid when benefit under Section 73(3) is claimed. After making provision in law, the Revenue should re­spect the provision made rather than feel aggrieved that the provision is too leni­ent.
 
Decision:- Appeal dismissed.
 
Comment:- This is very good decision wherein it is held that the tax is paid along with interest then there is no need to issue show cause but the department normally issues show cause notice saying that there was intention to evade payment of tax. Though the invoice is raised and service tax charged. The only thing is delay in payment of service tax but there was no intention to do so. However, there is change in penal provisions both in Central Excise and Service tax from this budget. Let us wait and watch the interpretation of the same by tribunal and High Courts.

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