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/2016-17/3174

Whether SCN can be issued for demand of interest and penalty under section 11A (1) and (2) of CEA, 1944.

Case:-  M/s SMITA STEELS ROLLING MILLS PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, THANE

Citation:-2016-TIOL-932-CESTAT-MUM

Issue:- Whether SCN can be issued for demand of interest and penalty under section 11A (1) and (2) of CEA, 1944.

Brief Facts:-  These appeals are directed against Order-in-Appeal No. VSK/74 TO 75/Th-I/2010 dated 26/3/2010 passed by the Commissioner (Appeals) Central Excise, Mumbai Zone-I, wherein Ld Commissioner (Appeals) upholding the demand of interest and penalty, rejected the appeal of the appellant. The issue involved in the present case is that the show cause notice was issued only for the demand of interest and imposition of penalty under Section 11AB and 11AC respectively for the alleged offence that the appellant had availed Cenvat credit to the extent of 100% in respect of Capital goods instead of 50%.

Appellant’s Contention:- The show cause notice were issued only for demand of interest and penalty under Section 11AB and Section 11AC respectively. However, no show cause notice was issued for demand of any wrong availment of Cenvat credit. Therefore there is neither the show cause notice under Section 11A(1) and nor any Adjudication Order under Section 11A(2) was issued and consequently there is no determination of duty under Section 11A(2). He submits that under provisions of Section 11AB and Section 11AC the penalty and interest can be demanded only if the duty was determined under Section 11A(2). He placed reliance on following judgments:
(a) Commissioner of C.Ex. Chandigarh Vs. Groz Beckert Asia Pvt Ltd [2009 (240) ELT 222 (Tri. Del.)]
(b) Madura Coats Pvt Ltd Vs. Commissioner of Central Excise, Tirunelveli [2006 (193) ELT 470 (Tri. Bang.)] = 2005-TIOL-1425-CESTAT-BANG 
(c) Eicher Demm Vs. Commissioner of C. Ex. Chandigarh [2002 (140) ELT 227 (Tri. Del.)]
(d) Commissioner of C. Ex. Chandigarh Vs. Eicher Demm [2010 (252) ELT 519 (H.P.)]
(e) Dhillon Kool Drinks Beverages Vs. Commissioner of C.Ex. New Delhi [2000 (120) ELT 81 (Tri.)]
(f) Commr. of C. Ex. Bangalore-III Vs. Bharat Heavy Electricals Ltd [2010 (257) ELT 369 (Kar.)] - 2010-TIOL-437-HC-KAR-CX

Respondent’s Contention:-Shri. H.M. Dixit, Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.

Reasoning Of Judgment:- The Show cause notice was issued only for demand of interest under Section 11AB and imposition penalty under Section 11AC for the reason that the appellant had availed 100% Cenvat credit on receipt of the Capital goods instead of 50% as provided under Rule 4(2)(a) and (b). It was found that statutory provision for interest and penalty are provided under Section 11AB and 11AC which reads as under:

Section 11 AB. Interest delayed payment of duty:-
Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay the duty as determined under sub-section (2), or has paid the duty under sub-section (2B), of section 11A, shall, in addition to the duty, be liable to pay interest at such rate not below [ten per cent.] and not exceeding thirty six per cent per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section (2B), of section 11A till the date of payment of such duty:

Section 11AC. Penalty for short-levy or non-levy of duty in certain cases
The amount of penalty for non-levy or short-levy or non-payment or short payment or erroneous refund shall be as follows:-
(a) where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of fraud or collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made there under with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (10) of section 11A shall also be liable to pay a penalty equal to the duty so determined;

Section 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. –
Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,-
The Central Excise Officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
The person chargeable with duty may, before service of notice under clause (a), pay on the basis of-
(i) his own ascertainment of such duty; or
(ii) the duty ascertained by the Central Excise Officer, the amount of duty along with interest payable thereon under section 11AA .
The person who has paid the duty under clause (b) of sub-section (1), shall inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that sub-section in respect of the duty so paid or any penalty livable under the provisions of this Act or the rules made there under.

Decision:-Appeal allowed.

Comment:- The gist of the case is that under provisions of Section 11AB and Section 11AC the penalty and interest can be demanded only if the duty was determined under Section 11A(2) & Show cause notice was issued  under section 11A(1). If these two conditions are not satisfied, neither the interest is payable nor the penalty is imposable. In the instant case, the show cause notice was issued only for demand of interest under Section 11AB and imposition penalty under Section 11AC for the reason that the appellant had availed 100% Cenvat credit on receipt of the Capital goods instead of 50% as provided under Rule 4(2)(a) and (b). Since there was no duty determined in terms of section 11A(2), the said condition is not satisfied, accordingly, neither the interest is payable u/s 11AB nor the penalty is imposable under section 11AC.
 
Prepared By: - Alakh Bhandari

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