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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/2012-13/1273

Whether Cenvat credit admissible on various professional services availed for expansion of manufacturing plant?

Case: - KERNEX MICROSYSTEMS (I) LTD. versus COMMISSIONER OF C. EX., HYDERABAD
 
Citation: - 2012 (27) S.T.R. 42 (Tri. – Bang.)

 
Brief Facts:-The application filed by the assessee seeks waiver of pre-deposit and stay of recovery in respect of duty, equal amount of penalty and interest on duty. The demand arises of denial of CENVAT credit on certain amounts paid by the appellant as con­sideration for professional services received from certain agencies in connection with implementation of expansion project, for which an initial public offer was issued. The services received by the assessee were in the nature of appraisal of business plan, assistance to public issue of equity shares, underwriting commis­sion, advertisement etc. The department did not recognize these services to be 'input services' within the definition given under Rule 2(1) of the CENVAT Credit Rules, 2004, manufacture of machinery in the appellant's factory. According to the Revenue, there was no relation between the aforesaid services and the manufacturing of the machinery.
 
 
Appellant Contention’s:-The appellant submits that the services in question were availed for the purpose of expanding their manufacturing plant and were squarely covered by definition of 'input service' under Rule 2(1). The appellant has particularly referred to the inclusive part of the definition and has submitted that business activities relating to financing are expressly covered by the inclusive part of the definition. It is submitted that the activities mentioned in the inclusive part of the definition were also having a relation with the manufac­ture of the final products inasmuch as a direct or indirect relation is what is en­visaged in the definition. The Appellant relied upon following cases:
 
Ø  Commis­sioner of C. Ex., Nagpur v. Ultratech Cement Ltd.
Ø  Commissioner of C. Ex., Bangalore-III v. Stanzen Toyotetsu India (P) Ltd.
The appellant has quoted both the judgments in support of the plea that the services availed by the appellants for expanding their manufactur­ing activity clearly passed the test laid down by the Hon'ble High Courts.
 
Respondent Contention’s:-The respondent submits that he has opposed the present application on the strength of the findings in the order-in-original and the order-­in-appeal.
 
 
Reasoning of Judgement: -We have considered the submissions made by both the sides. It appears from the records that the taxable value determined by the department comprises amounts paid by the appellant to various agencies as consideration for services received in connection with expansion of their manu­facturing plant. Prima facie, the services availed in connection with floating initial public offer and the allied business activities would fall within inclusive part of the definition of input service under Rule 2(1) ibid in terms of the test laid down by the Hon'ble High Courts. We have also taken note of the partial pre-deposit made by the appellant. There will be waiver of pre-deposit and stay of recovery in respect of the balance amount of service tax and also the penalty imposed on the appellant.
 
Decision: -Appeal Allowed.
 
 
 
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PRADEEP JAIN, F.C.A.

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