I. TRIBUNAL 7 Interface Communication Pvt. Ltd. vs. Commissioner of CGST [2021-TIOL-708-CESTAT-Mum] Date of order: 25th October, 2021
Without any allegation of fraud, suppression, wilful misstatement, collusion, suppression or contravention of facts with an intention to evade payment of tax, longer period of limitation cannot be invoked
FACTS
The assessee is in appeal against the order of the Commissioner (Appeals) wherein interest was confirmed on delayed payment of service tax through CENVAT Credit Account. Interest is proposed to be levied for the period from October, 2006 to September, 2010 and the notice was issued on 19th March, 2012, during which period the Department was only empowered to demand tax due for a period of one year unless there is allegation of fraud, misrepresentation, collusion, misstatement, suppression of fact or contravention of the provisions of the Finance Act, and is made with a proposal for penalty u/s 78 of the Finance Act, 1994.
HELD
The Tribunal primarily noted that there is no allegation of wilful withholding of payment of service tax on any of the grounds of suppression, fraud or contravention of provisions of the Act. There is no requirement to give a finding that u/s 75 of the Finance Act interest is a natural corollary and consequence for any default of payment of service tax within the stipulated time. On the contrary, the tax liability or its interest component can never be enforced and recovered from the assessee beyond the period from one year without any allegation of wilful non-payment on the ground of fraud, misstatement or collusion. The appeal was accordingly allowed.
8 M/s Terex India Pvt. Ltd. vs. The Commissioner of GST&CE [2021-TIOL-696-CESTAT-Mad] Date of order: 11th October, 2021
Payment of tax under reverse charge on pointing out by the audit officers cannot be considered as payment consequent to assessment / adjudication proceedings – Input tax credit / refund is allowed of the said tax payment
FACTS
On four dates, viz., 11th, 12th, 21st and 22nd December, 2012, the appellant had received services from its parent company in the USA. It appeared that the appellant is liable to pay service tax on the amount paid to the parent company under Reverse Charge Mechanism. It paid the service tax with interest and applied for a refund. The original authority rejected the refund claim holding that as per section 142(8)(a) of the CGST Act, 2017 credit is not admissible and therefore not eligible for refund
in cash.
HELD
The Tribunal noted that the Department has considered the said payment as consequent to assessment / adjudication proceedings and as recovery of arrears of tax not eligible for ITC / refund. However, as the said payment is made on pointing out by the audit officers, such payment does not fall under the category of arrears of tax by an assessment / adjudication proceeding. The claim is only for refund and not proceedings for assessment or adjudication. In this scenario, rejection of refund is unjustified and the impugned order is set aside.
9 Pradeep Deviah and Associates Pvt. Ltd. vs. Commissioner of Central Tax, Bengaluru East [2021-TIOL-653-CESTAT-Bang] Date of order: 22nd March, 2021
Once proportionate credit is reversed as per Rule 6(3A) of the CENVAT Credit Rules, 2004, reversal of credit at 6% / 7% cannot be enforced
FACTS
The appellant is engaged in rendering both taxable and exempt services. The sale of space in print media is considered as an exempt service by the Department and therefore reversal of credit is sought. At the time of audit itself, they reversed proportionate common credit attributable to both taxable and exempt services. However, an SCN was issued for reversal of credit at 6% / 7% of the exempted turnover. Accordingly, the present appeal is filed.
HELD
The Tribunal primarily noted that the activity of sale of space or time for advertisement in print media is specifically covered under the negative list in terms of section 66D of the Finance Act, 1994 and therefore the same cannot be said to be an exempted service and the provisions of Rule 6(3) are not applicable to an activity which is in the negative list. It was also noted that proportionate credit is already reversed as per Rule 6(3A) of CCR, 2004, therefore, it was not incumbent on the Department to issue a show cause notice demanding reversal of 6% / 7% of the exempted turnover. The appeal is accordingly allowed.
10 Uttaranchal Cable Network vs. CCE&ST [2021] 132 taxmann.com 95 (New Delhi–CESTAT) Date of order: 13th October, 2021
The unutilised CENVAT credit as on 30th June, 2017 not carried forward into GST regime by filing TRAN-1 is permitted to be adjusted against the pre-GST demands as there is no bar in section 142 on the same
FACTS
The appellant was registered in the service tax regime for providing cable operator services; however, it did not carry forward the CENVAT credit balance as on 30th June, 2017 in the GST regime. A show cause notice was issued to the appellant for the pre-GST period u/s 73(1) of the Finance Act, 1994. The appellant did not contest the demand on merits but offered that the amount of CENVAT credit lying in its favour (credit) as on 30th June, 2017 may be allowed to be adjusted against the demand payable since it was not carried forward to GST in Form TRAN-01. The Adjudicating Authority disallowed such adjustment on the ground that credit account cannot be adjusted because CENVAT Credit Rules, 2004 are no longer applicable and that section 140 of the CGST Act read with Rule 117 of the CGST Rules specifically provides the procedure for carry-forward of CENVAT credit. If the appellant did not follow the same, the unutilised amount cannot be permitted to be adjusted. Aggrieved by this, the appellant filed the appeal.
HELD
The Tribunal held that there is no bar or disability u/s 140(1) read with section 142 of the CGST Act, 2017 on an assessee for claiming adjustment of the tax demand from the unutilised CENVAT credit (lying to the credit as on 30th June, 2017) which has not been carried forward to the GST regime and allowed the appeal directing the Adjudicating Authority to grant adjustment of the unutilised amount against the demand payable by the assessee.
11 Atul Ltd. vs. CCE&ST [2021] 132 taxmann.com 165 (Ahm-CESTAT) Date of order: 9th November, 2021]
The assessee is entitled to refund of Education Cess and Higher Education Cess lying unutilised as on 30th June, 2017 as the said cess is ‘cenvatable’ in terms of Notification No. 12/2015 dated 30th April, 2015 and section 142 of the CGST Act provides a refund for the same
FACTS
The assessee claimed refund of Education Cess and Higher Secondary Education Cess as was in the balance as on 28th February, 2015 and carried forward till 30th June, 2017 by an application dated 5th February, 2018. The said refund was rejected on the grounds that once the amount stands lapsed, the question of its refund even under the provisions of the CGST Act does not arise.
HELD
The Tribunal noted that these cesses were leviable up to 28th April, 2015. However, with effect from 1st March, 2015, EC and SHEC paid on imports of capital goods received in the factory of the manufacturer of the final product on or after 1st March, 2015 were permitted to be utilised for payment of duty of excise leviable. Similarly, by Notification No. 12/2015 dated 30th April, 2015 the assessee was permitted to utilise the credit of EC and SHEC for payment of duty of excise for such inputs or capital goods received after 1st March, 2015. It also noted that the said refund in question would not have been allowed to be claimed in TRAN-1 for want of any column in the requisite form to carry forward the balance of such cess and the Department in its verification report also stated the same. The Tribunal also observed that the refund is claimed in time and there is no unjust enrichment. It held that EC and SHEC were ‘cenvatable’, the credit whereof was allowed even for such inputs and capital goods which were received by the manufacturer even after 1st March, 2015. The appellant had accumulated credit of EC and SHES which could not be utilised till 30th June, 2017. The unutilised amount is the assessee’s money and accordingly has to be refunded to it.
Referring to the decision of the Supreme Court in the case of Eicher Motors Ltd. vs. Union of India, 1999 taxmann.com 1769 (SC) it was held that right to credit becomes vested and duly crystallised in favour of the assessee the moment input goods / services are received and by virtue of assessee paying the duty thereon by reimbursing the said amount to the supplier of the goods. The Tribunal set aside the order of the Adjudicating Authority on the ground that he has made a wrong interpretation of Notification No. 12/2015 that such EC and SHEC could not be utilised for payment of excise duty despite the specific permission for the same in the said Notification and the subsequent amendment in CENVAT Credit Rules in 2015 permitting the utilisation of credit on cess. The Tribunal further noted that with effect from 1st July, 2017 with the introduction of GST, the utilisation of the said credit became impossible. However, in terms of section 142 of the said new Act, the amount is made refundable to the appellant in cash. Accordingly, the appeal was allowed.
