Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
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.  

Comments

Print   |    |  Comment

PJ/CASE LAW/2014-15/2525

Whether credit deniable to job worker on ground that goods were cleared without payment of duty?

Case:- WESTERN INDIA FORGING P. LTD. VERSUS COMMISSIONER OF C. EXCISE, PUNE
 
Citation:-2014 (36) S.T.R. 637 (Tri. - Mumbai)
 

 
Brief facts:- The appellant is in appeal against the impugned order for denying the input service credit availed by them for Goods Transport Agency service and Business Auxiliary Service availed by them as manufacturer of excisable goods on job work basis.
The brief facts of the case are that the appellants are the job worker and during the course of their activity of job work, they availed the services of Goods Transport Agency and Business Auxiliary Service. They took credit of these services and did not pay Central Excise duty on the job work goods cleared by them to the principal manufacturer who suffered duty on the final product. They neither paid the Service Tax nor paid the duty.
Revenue is of the view that as the appellant is a job worker therefore, they are not required to pay duty or Service Tax. Therefore, they are not entitled to take Cenvat credit on the Goods Transport Agency and Business Auxiliary Service. Accordingly, impugned proceedings were initiated and the demand of reversal of credit along with interest and penalty were confirmed against the appellant. Against the said order, appellant is before the Tribunal.
 
Appellant’s contention:- Ld. counsel appeared on behalf of the appellant submits that as per Notification 214/86-C.E., dated 25-3-1986, the job worker can receive the goods from the principal manufacturer without payment of duty and after processing the goods, the job worker can clear the goods without payment of duty and further as per Notification 8/2005, dated 1-3-2005 again the job worker was allowed to avail services and not to pay Service Tax on their exempted services of job work. In these circumstances, whatever credit have taken by the appellant is entitled to take credit, as final product which were supplied by them to the principal manufacturer has suffered duty as per the decision in Sterlite Industries (I) Ltd. - 2005 (183)E.L.T.353 (T-LB).
 
Respondent’s contention:- On the other hand, ld. AR opposed the contention of the counsel and submits that as the appellant is providing exempted service as job worker, therefore they are not entitled to avail credit of the input services.
 
Reasoning of judgment:- In this case the appellant is a job worker and the final product which they supplied to the principal manufacturer has suffered duty. Therefore, the issue is to be examined in the scenario whether the final product has suffered duty or not. As per Notification 214/86 the job worker can receive the goods from the principal manufacturer without payment of duty and also procure the inputs on payment of duty and can avail the credit. He is also entitled to clear the goods without payment of duty to the principal manufacturer who cleared the final goods on payment of duty. The same treatment has been given by the Notification 8/2005 (ibid). In these circumstances, as it is an admitted fact that the final products which have been processed by the appellant have suffered duty, therefore, appellants are entitled to take the credit of the input service.
With these observations, Hon’ble Tribunal set aside the impugned order and allowed the appeal with consequential relief.
Decision:- Appeal allowed.
 
Comment:- The crux of this case is that the job worker is entitled to avail the cenvat credit of various inputs and input services used by them and the same cannot be denied on the ground that the goods cleared by them were without payment of duty. This is for the reason that the principal manufacturer uses the job-worked goods in manufacturing final products that are ultimately cleared on payment of duty. This reasoning was also confirmed by the Bombay High Court in the case of Sterlite Industries. 
 
Prepared by:- Monika Tak

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