Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/Case Law /2016-17/3302

Whether registration is pre-requisite for taking input tax credit?

Case:-PITHAMPUR TOOLS PVT. LTD. VERSUS COMMISSIONER OF C. EX., INDORE
 
Citation:- 2016 (43) S.T.R. 465 (Tri. - Del.)

 
Brief Facts:-The brief facts of the case are that the appellant is engaged in manufacture of copper quoted/non-quoted steel tubes classifiable under Chapter 73 of the Central Excise Tariff Act, 1985. The appellant undertook such manufacturing activity on job work basis and availed the duty exemption in terms of Notification No. 214/86, dated 14-3-1986 issued by the Central Government. Upon commencement of the production activities, the appellant was registered with the Central Excise department on 14-11-2008. The appellant availed Cenvat credit of service tax on the strength of invoice dated 31-10-2008 issued by M/s. INTERARCH Building Products (P) Ltd. Such credit was taken by the appellant on 1-3-2009. Taking of such Cenvat credit was disputed by the Central Excise Department on the ground that the invoices basing on which credit has been taken pertains to the period prior to obtaining the Central Excise registration and since no transitional provisions have been provided in respect of input services in Rule 3(2) of the Cenvat Credit Rules, 2004, taking of Cenvat credit is not in conformity with law. The Cenvat credit amounting to Rs. 8,21,940/- taken by the appellant was disallowed in the adjudication order and the same was also confirmed in the impugned order dated 22-6-2011. Hence this present appeal before this Tribunal.
 
Appellants Contention:-Sh. Abhishek Jaju, the ld. Advocate appearing for the appellant submits that service tax paid on the Industrial and Construction Service relates to construction of the new factory building for housing the machines/machineries for commencement of the manufacturing activities. He further submits that since Central Excise registration was taken by the appellant on 14-11-2008, the service tax indicated in the invoices dated 31-10-2008 was taken by the appellant on 1-3-2009, which is after the commencement of the production activities. According to the ld. Advocate, since the taking of credit is in conformity with Rule 3(1) of the Cenvat Credit Rules, denial of such benefit by referring to sub-rule (2) of the said rules is not proper. To substantiate his stand that the credit cannot be denied to the appellant under such circumstances, the ld. Advocate has relied on the two decisions of this Bench of the Tribunal in the case of Imagination Technologies India (P) Ltd.v. CCE, Pune-IIIreported in 2011 (23) S.T.R. 661 (Tri.-Mum.) and Well Known Polyesters Ltd.v. CCE, Vapi reported in 2011 (267) E.L.T. 221 (Tri.-Ahmd.).
 
Respondents Contention:-Per contra, the ld. DR Sh. R.K. Gupta appearing for the respondent reiterates the findings recorded in the impugned order and further submits that at the time of undertaking the construction activities of the factory building, the appellant was engaged in the activities of manufacturing goods on job work basis, which was exempted from payment of Central Excise duty in terms of Notification No. 241/86, dated 14-3-1986. Thus, according to the ld. DR, taking Cenvat credit prior to commencement of manufacturing activity and obtaining Central Excise Registration Certificate is contrary to the Provisions of Cenvat Statute.
 
Reasoning of Judgement:-Heard the ld. counsel for both the sides and perused the records. Rule 3(1) of the Cenvat Credit Rules is the enablingprovision, which entitles a manufacturer to take Cenvat credit of duties and taxes paid on the input, capital goods and the input services received by the manufacturer. So far as taking of Cenvat credit on the input service is concerned, the requirement of the said Rule is that the input service has to be received by the manufacturer of final product on or after the 10th day of September, 2004. On perusal of the Cenvat Credit Rules, 2004, it reveals that no restrictions have been imposed providing for not taking the Cenvat credit prior to obtaining the Central Excise registration. Therefore, they are of the considered view that in absence of any specific prohibitions contained in the Cenvat statue to that effect, Cenvat credit cannot be denied to the appellant.
 
With regard to the observations of the lower authorities that no transitional provisions having been provided in respect of input services in Rule 3(2) of the Cenvat Credit Rules, 2004, and thus, taking of credit is not in conformity with the said Rules, they are of the view that the said sub-rule has no application in the case of capital goods or service tax for the reason that the goods or services are not in relation to the raw material or input that is specifically used for manufacture of the exempted/dutiable final product. Therefore, in absence of specific mention of input service in the said Rule, Cenvat credit of Service Tax paid on the taxable service is permissible under Rule 3(1) of the said Rules. They also find support from the decisions cited by the ld. Advocate for the appellant wherein it has been held that input service received prior to Central Excise registration cannot be the reason for denial of Cenvat credit on the service tax paid on the taxable services. In view of above, they are of the considered opinion that denial of Cenvat benefit on the disputed services to the appellant is not in conformity with the Cenvat statute and thus, the impugned order is liable to be set aside. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellant.
 
Decision:- Appeal allowed.

Comment:- The essence of the case is that in the absence of any restriction under statutory provisions regarding inadmissibility of credit of input services prior to taking registration under Central Excise, credit could not be denied for construction service of factory.
 
Prepared by:- Neelam Jain
 

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