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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/2012-13/1452

Whether extended period invokable without referring section 78?


Case:- M/s AVESTHAGEN LTD Vs COMMISSIONER OF SERVICE TAX, BANGALORE

 
Citation: - 2013-TIOL-348-CESTAT-BANG

Brief facts: -   The Application filed by the appellant seeks waiver of pre-deposit and stay of recovery in respect of the adjudged dues which include mainly the following amounts:
 
(i) Rs.3,36,83,803/- demanded as service tax and education cess under the head “Scientific and Technical Consultancy Service.
 
(ii) Rs.8,42,51,610/- demanded as service tax and education cess under the head "Intellectual Property Service".
 
(iii) Penalties under Sections 76 and 77 of the finance Act, 1994.
 
The total amount of service tax and education cess (over Rs.11.79 crores) has been demanded for the period from October 2004 to September 2009. The relevant show-cause notice was issued on 21.4.2010 invoking the proviso to Section 73 (1) of the Act on the alleged ground of suppression of facts with intention to evade payment of service tax.
 
Appellant’s Contention :-  The learned consultant for the appellant has also vehemently raised the plea of limitation by pointing out that the adjudicating authority did not invoke Section 78 of the Act (though invoked in the show-cause notice) and, therefore, that the authority ought not to have invoked the extended period of limitation. His submission is that the grounds for a penalty under Section 78 are similar to those for invoking the extended period of limitation under the proviso to Section 73 (1) of the Act. Further submitted that a considerable part of the 'Scientific and Technical Consultancy Service' was, in fact, exported and its value should not have been reckoned for the demand of service tax. It is further submitted that the amounts collected by the appellant from M/s Cipla Ltd. were also not to be reckoned as taxable value of 'Intellectual Property Service' inasmuch as that amount represented 50% of the cost incurred for execution of research as joint venture between the appellant and M/s Cipla Ltd.
 
Reasoning of Judgment:-  The Tribunal have not found a case for total waiver of pre-deposit inasmuch as most of the documents relied upon by the assessee before the adjudicating authority have been withheld from us. In the absence of the relevant agreements and connected documents, it has not been possible for us to evaluate the merits claimed by the appellant. Nevertheless found a valid point in the submission of the learned consultant that their plea of limitation is supported by certain findings of the adjudicating authority. It is not in dispute that, though Section 78 was invoked in the show-cause notice on apparently valid grounds, no penalty was imposed under that provision on the assessee by the adjudicating authority holding that the assessee cannot be held to have any intention to evade payment of service tax. It is not deniable that the grounds for invoking Section 78 are not different from those for invoking extended period of limitation. If that be so, there is a dichotomy in the impugned order in invoking the extended period of limitation and not invoking Section 78. Therefore the appellant has a fairly strong case on the ground of limitation. Their plea of financial hardships is also worth considering as it is supported by certain documents. An amount of Rs. 45 lakhs has, admittedly, been paid by them. In the totality of these facts and circumstances, direct the appellant to pre-deposit a further amount of Rs. 20,00,000/- (Rupees Twenty lakhs only) within six weeks and report compliance to the Assistant Registrar on 18.12.2012. The Assistant Registrar to report to the Bench on 26.12.2012. Subject to due compliance, there will be waiver and stay in respect of the penalties imposed on the appellant and the balance amount of service tax and education cess and interest thereon.

Decision: - Pre-deposit Ordered.
 
Comment:-The substance of this case is that partial stay was granted on the basis that there was a strong case on grounds of limitation and pleadings of financial hardship.

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