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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 LAW/13-14/2072

Whether Tribunal has power to extend the benefit of reducing the penalty to 25%?
Case:- COMMR. OF C. EX. AHMEDABAD-III Versus RATNAMANI METALS AND TUBES LTD.

Citation:-2013 (296) E. L. T. 327 (Guj.)

Brief Facts:-The assessee has engaged in the manufacture of MS Tubes & pipes, availed the benefit of Cenvat credit on the inputs/capital goods used for manufacture and clearance of dutiable and exempted finished goods. A show cause notice was issued for recovery of wrongly availed Cenvat credit amount of Rs. 41,84,290/- under Rule 12 of the Cenvat Credit Rules, 2002 read with proviso to Section 11A(1) of the Central Excise Act, 1944 and Rule 13 of the Cenvat Credit Rules, 2002 read with Section 11AC of the Central Excise Act, 1944.
Order-in-Original confirmed the amount of demand and imposed penalty. Aggrieved by such Order-in-Original dated 23rd March 2006, the assessee approached the Commissioner, Central Excise (Appeals) which also rejected the appeal on 19th September 2006.
When CESTAT was approached, it decided the appeal on 31st May 2012. It held against the respondent on merit by holding that it cannot claim the benefit of Rule 6 by debiting the amount equal to 8% of the value of the exempted goods as also cannot avail the CENVAT credit on the HR coils received by them which were to be exclusively used for manufacturing pipes by claiming exemption under Notification No. 6/2006-C.E.
The Tribunal, however, while concurring with the findings of the first appellate authority on limitation, on imposition of penalty, directed the res­pondent to pay the differential duty within thirty days from the date of its order with interest and in that event, gave an option of paying penalty equivalent to 25% of the amount of duty liable, confirmed and upheld by the Tribunal, follow­ing the decision of this Court in case of M/s. Akash Fashion Limited [2009 (239) E.L.T. 439 (Guj.)]. Aggrieved by the said order of the Tribunal extending the benefit of reduced penalty, the revenue is in appeal before the High Court on the following substantial question of law:-
1.    Whether CESTAT is right in holding that the benefit of re­duced penalty to the extent of 75% of the duty liability is available to the assessee as per the provisions of Section 11AC of the Central Excise Act, 1944, when the duty, interest and the penalty to the extent of 25% of the amount of the duty was not paid within 30 days of the order of the adjudicating authority?
2.    Whether CESTAT can award such option to the assessee when Section 11AC of the Central Excise Act, 1944 is clear and provides no such scope for the Tribunal?
 
Reasoning of Judgment:We have heard learned advocate Ms. Manisha L. Shah for the De­partment. She vehemently submitted that such leniency granted in payment of penalty was acting contrary to the very object of the law and therefore, she fur­ther urged this Court to quash and set aside the order of the Tribunal permitting payment; as directed in the order impugned. She also further urged that the deci­sion of this Court has not been rightly construed by the Tribunal and at the ap­pellate stage, such an offer of reduction of penalty could not have been made.
It is required to be noted that at no stage, either in the Order-in­-Original or in the order of Commissioner (Appeals), the respondent has been given the benefit of payment of reduced penalty. Instead of giving inde­pendent reasons on the issue, it would be appropriate to refer to the decision of this Court rendered in case of Commissioner of Central Excise & Customs, Surat-I v. M/s. Krishnaram Dyeing & Finishing Works [OJMC No. 11/2013 : 24-1-2013] deal­ing with identical question of law, after discussing various case laws, concluded thus -
"As can be noted from the decisions mentioned hereinabove, this Court has followed a consistent view that the assessee is required to be giv­en the option by the adjudicating authority where he is asked to pay a duty demand with interest and 25% of penalty within 30 days from the date of adjudication of the order and in such case, he would be liable to pay only 25% of the penalty. Whenever such option had not been given, the remand had been made to the concerned authorities. And period of 30 days is being considered, if in case option is not given earlier, from the date of availing such option.”
In the present case also, the remand had been made to the Tribunal and in the order of remand, it was also directed to consider the provision of section 11 AC and the Tribunal had specifically noted that none of the two authorities below had availed any option to the assessee to pay duty de­mand with interest and penalty of 25% of the duty within 30 days from the date of adjudication, and therefore, the Tribunal in its order impugned maintained that the case of the assessee is squarely covered by the explana­tion to Section 11AC. The Tribunal also noted that the duty determined un­der Section 11AC (2) was subsequent to the year 2000 and, therefore, the case would be covered by the explanation to Section 11AC of the Central Excise Act.
When no option was given by any of the adjudicating authorities after determination for payment of duty, interest and penalty of 25% of the duty, what all Tribunal had done, pursuant to the direction in remand order, was to avail option to the respondent and this was in consonance with the ratio laid down by the Court time and again.
This Tax Appeal, for the aforementioned reasons, stands dismissed.
 
Decision:-Appeal dismissed.

Comment:- The crux of this case is that when the assessee has not been given the option of payment of duty along with interest and 25% penalty within a period of 30 days from the date of passing of the adjudication order, such benefit may be extended by the Tribunal while remanding the matter to the adjudicating authority. This view is also confirmed by the decision given by the Gujarat High Court in the case of M/s. Krishnaram Dyeing & Finishing Works.  
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