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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.  

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PJ/Case Laws/2012-13/1335

Whether Cenvat credit allowed on Input services for Construction of factory building on other side of road ?


Case:-Arya Vaidya Pharmacy (Coimbatore) LTD. Vs Commr. OF C. Ex., Calicut
 
Citation:- 2012(28) S.T.R. 415 (Tri. – Bang.)
 
Brief Facts:-Department has verified ER-1 returns filed by the assessee for the period from August 2007 to March 2008, it was found that appellant had taken credit on various services out of which they were not eligible for Cenvat Credit in respect of security services, telephone services, GTA, construction services, job work charges etc. and accordingly proceedings were initiated which culminated in the impugned order wherein the Cenvat Credit availed in respect of construction service, security service, telephone service and GTA service have been held to be inadmissible and consequently Cenvat Credit availed on construction service and availed and utilized on telephone, GTA and security services have been disallowed and demanded with interest from the appellant. A penalty has also been imposed under Rule 15(3) of Cenvat Credit Rules, 2004.
 
Appellant Contentions:- Appellant submits that he wanted to expand the production facilities and therefore constructed a factory building on the other side of the road. Credit has been denied on the ground that the factory was constructed away from the existing premises. According to the definition of 'input service' as it existed during the relevant period, input service included service used in relation to setting up of a factory also. So long as the manufacturer has used the service for setting up of a factory, the credit is admissible. It was also submitted that subsequently the factory has been registered and the registration number for the existing factory on the other side of the road and for the new factory set up is one and the same. This would show that the department itself has accepted subsequently that the appellant has set up a factory and proceeded to register the same. Under these circumstances, it is quite clear that the factory building constructed by the appellant was for setting up of a factory and therefore the service utilized by them is an 'input service' and therefore Cenvat credit has been correctly availed. It was also submitted that till date the credit has not been utilized because of the dispute. Under these circumstances, it is quite clear that the appellant is eligible for the benefit of Cenvat credit on the construction service utilized by them. As regards security services, Appellant further submits that this service is one of the services recognized as common service which when used by a manufacturer in respect of exempted goods as well as the dutiable goods credit can be taken. Therefore Cenvat credit of service tax paid on security service should be admissible and allowed.
 
Respondent Contentions:-Respondent submits that GTA service and telephone service, these two services are not covered by the list of common services in respect of which credit would be admissible if used for exempted as well as dutiable goods. In such a situation, assessee is required to maintain separate records for taking the credit and its utilization. Since assessee has failed to maintain separate accounts, the credit availed in respect of these two services has to be disallowed and has rightly been disallowed. To this extent the order of the Commissioner is required to be upheld.
 
Reasoning of Judgment:-We have considered the submissions on both the sides. According to the submissions made by the appellant, Tribunal has allowed cenvat credit in respect of construction services and security services and has confirmed the demand in respect of the remaining services. Consequently, the demand comes down subsequently to less than Rs. 35,000/-. Having regard to the size of the appellant and the amount involved, it was considered as appropriate that the penalty should be set aside. It was also noted that the show-cause notice has been issued within the normal limitation time. The appeal is disposed of in the above terms.
 
Decision:-Appeal disposed off.
 
Comment:-The analogy drawn from this case is settled position of law that cenvat credit of input services can be taken only if it is in respect of dutiable goods or taxable services and also in relation to providing taxable service or in relation to manufacture of dutiable goods.

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