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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 LAW/13-14/2071

Whether credit deniable on the ground that at the time of availment of credit, no output services were provided ?
Case:-  M/s AMBATTUR DEVELOPERS PVT LTD. Vs. COMMISSIONER OF SERVICE TAX, CHENNAI
 
Citation:- 2014-TIOL-242-CESTAT-MAD
 
 
Brief Facts:- The applicant has constructed a hotel during the period April 2007 to July 2010 and took Cenvat credit on input services used in such construction activity during the said  period. Revenue was of the view that at the time when they were taking Cenvat credit they were not providing any output service using the input service and therefore the credit taken was not allowable. Revenue was also of the view that the input services in question was for constructing an immovable property and had no direct nexus with the output service to be provided. Revenue issued a show-cause notice proposing to deny such credit. On adjudicating, an amount of Rs. 85,30,411/- is confirmed along with interest and penalty against the applicant. Aggrieved by the order, the applicant has filed an appeal before this tribunal along with a stay petition for waiver of pre-deposit of dues for admission of the appeal.
 
Appellant’s Contention:-The learned counsel for the appellant  submits that during the time when credit was taken, the applicant was registered for payment of service tax on various other services and since the applicant was setting up a facility for the purpose of providing output services like outdoor catering, mandap keeping, health and fitness club, dry cleaning etc. they took credit of input services used for construction. He submits that during the relevant period the definition of input services at Rule 2(l) of the CENVAT Credit Rules, 2004 covered the services for setting up of premises of provider of output services and there is no reason for denying the Cenvat credit as per the impugned order. 
 
Respondent’s Contention:- The learned counsel for the respondent contends that the definition in the Rule 2(l) of Cenvat Credit Rule, 2004 defines input service as services "used by a provider of output service for providing an output service" and not as services "intended to be used by a provider  of output service for providing an output service". Since the word "used" is in past tense, the services should have been used when the credit was being taken and in this case at the time of taking credit, the applicant was not providing any output service using the input service in question. Therefore, the order is legal and proper. He also relies on the argument that immovable property is neither subjected to central excise duty nor service tax and credit shall be taken only for input service used for manufacture of dutiable excisable goods or for providing taxable output service. In this case, an immovable property that is a hotel has come into existence which is neither goods nor service and hence credit could not be taken.
 
Reasoning of Judgment:- After carefully considered submission made by both the sides, the analysis of the word “used” was done by the Tribunal.  The word “used” is used in the definition of "inputs", "capital goods" and "input service" is not used as past tense of "use" but as past participle which is an adjective to the words in question. In the case of capital goods normally the goods arrive much earlier than it is put to use and credit of duty paid thereon is always allowed and there is no reason why a different interpretation should be adopted for input services.
 
And  in the matter of immovable property coming into existence in between Input service and output service we find that the Hon'ble Andhra Pradesh High Court in the case of CCE, Visakhapatnam Vs. Sai Sahmita Storages (P) Ltd. - 2011 (270) ELT 33 (AP) = (2011-TIOL-863-HCAP-CX) and the Tribunal in the case of M/s. Navratan SG Highway Properties Pvt. Ltd. Vs. CST, Ahmedabad - 2011-TIOL-1703-CESTAT-AHMhave held that input services can be allowed in such cases. Considering these decisions, prima facie, we find it proper to waive the requirement of pre-deposit of dues for admission of the appeal. Further there shall be stay on collection of such dues during the pendency of the appeal.
 
Decision:- Stay granted.  
 
Comment:-  The essence of this case is that the provision of a statue should not be interpreted in a manner so as to defeat its very purpose. When the credit on duty paid on capital goods is allowed even before when the manufacturing is started, there is no reason for denying the credit on input services on the ground that at the time such services were being availed, no output services were being provided by the service provider. In the instant case, the service tax paid on construction services availed for construction of hotel was primarily held to be admissible even when the hotel provided output services much after the availment of credit.  
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