Part-109-One Pager Snapshot to cases in Service Tax regime on invoking extended period-(Section 73 of Finance Act, 1994 which was similar to Section 73/74 of CGST Act, 2017)-Part-IV

-Availing of ITC cannot be termed as illegal when Tax was paid under RCM on services which were exempted from tax
-When relevant facts are in the knowledge of the authorities, when the first SCN was issued, the subsequent SCN cannot allege suppression of facts.
-Extended period not invokable when the relevant entry itself is subject matter of litigation at various Judicial Forums
-Initial burden is on department to prove that the situations visualised by the proviso existed. However, once it is discharged, burden shifts upon assessee
-When entire dispute is revenue neutral, there could be no intention to evade payment of duty

S.No

Case Subject

Case

Held

1

Availing of ITC cannot
be termed as illegal
when Tax was paid
under RCM on
services which were
exempted from tax

Petro Carbon &
Chemicals (P.) Ltd.
v. Commissioner of
CGST & CX, Haldia
[2021] 130
taxmann.com 252
(Kolkata - CESTAT)

The issue involved was whether appellant was entitled to Cenvat credit of Service Tax under Reverse Charge on services when as per lower authorities
the said services were exempted from levy of Service Tax.
The Tribunal observed that it was an admitted fact that the Appellant was not liable to pay Service Tax under RCM on the transportation of goods by
vessel services. However, the tax was paid and accordingly the Appellant had availed Cenvat credit of the same. Tribunal relied upon the judgement in
the matter of CCE & ST v. Tamil Nadu Petro Products Ltd. [C.M.A. No. 2939 of 2008, dated 4-9-2015, wherein it was held that If, upon a misconception
of the legal position, the assessee had paid the tax that he was not liable to pay and such assessee also happens to be an assessee entitled to certain
credits such as Cenvat credit, the availing of the said benefit cannot be termed as illegal. Tribunal by following the aforesaid judgement held that the
Appellant assessee cannot be asked to reverse the Cenvat credit availed on tax paid under Reverse Charge basis when the payment is not disputed.
Further, the Revenue was not able to prove beyond reasonable doubt, presence of fraud, collusion, wilful misstatement or suppression of facts on the
part of the appellant assessee. Therefore, imposition of penalty under section 11AC of the Act was held to be unwarranted.

2

When relevant facts
are in the knowledge
of the authorities,
when the first SCN
was issued, the
subsequent SCN
cannot allege
suppression of facts

Petro Carbon &
Chemicals (P.) Ltd.
v. Commissioner of
CGST & CX, Haldia
[2021] 130
taxmann.com 252
(Kolkata - CESTAT)

Appellant's unit was audited by the department during Jan 2009. Thereafter, two SCN vide SCN No.39/2007 dt. 05.03.2007 and SCN No. 143/2007,
dt. 23.08.2007 were issued for the period July, 2003 to March 2006 and April, 2006 to March, 2007. Proposed demands were confirmed by adjudicating
authority and same were duly paid. Thereafter, liability was worked out for April 2008 to December 2008 and that was also discharged. Thereafter,
although entire service tax demand from April, 2008 to December 2008 along with applicable interest was paid, appellant were issued SCN on 28.3.2011
invoking extended period. Department contended that under self-assessment scheme, it was onus of the tax payer to discharge liability without any flaw
and it is the responsibility to discharge tax and not take shelter under the same though blaming the department based on some procedural irregularities.
The Tribunal observed that this was a repetitive SCN and Supreme Court held in the case of Nizam Sugar Factory v. Collector of Central Excise 2006
(197) ELT 465, when relevant facts are in the knowledge of the authorities, when the first SCN was issued, the subsequent SCN cannot allege
suppression of facts. The ratio appeared to be applicable to the appellant's case. The penalty under Section 78 could be imposed only when there was
fraud or collusion or wilful misstatement or suppression of facts. In the instant case when tax along with interest stood paid, the need for imposition of
penalty was unsustainable. The appellant succeeded in so far as imposition of penalty under Section 78.

3

Extended period not
invokable when the
relevant entry itself is
subject matter of
litigation at various
Judicial Forums

Krishi Upaj Mandi
Samiti v.
Commissioner of
Central Excise &
Service Tax [2017]
84 taxmann.com 160
(New Delhi -
CESTAT)

The issue involved was regarding levy of tax on letting out of land and shops to traders and collection of allotment fee/lease amount for such land/shop.
The Tribunal held that tax entry "renting of immovable property service" itself was subject matter of serious litigation in various judicial forum. In fact,
the Hon'ble Delhi High Court in the case of Home Solutions (India) Retail Ltd. v. Union of India [2011] 13 taxmann.com 188/33 STT 95 held that the
activity of the rent per se cannot be subjected to service tax levy, whereas the activities in relation to renting are liable to service tax. The decision of
the Delhi High Court led to legislative changes including retrospective amendment of the concerned legal provisions in the Finance Act, 1994. In fact,
for non-payment of service tax under this tax entry, special provision was made under Section 80(2) to waive the penalties. Considering the background
and the status of the appellant as a Government Organisation, it was held that ingredients for invoking demand for extended period were not present.

4

Initial burden is on
department to prove
that the situations
visualised by the
proviso existed.
However, once it is
discharged, burden
shifts upon assessee

ICRA Ltd. v.
Commissioner of
Central Excise,
Chennai [2017] 79
taxmann.com 148
(Chennai - CESTAT

Tribunal observed that the proviso to Section 73(1) extended the period of limitation from six months to five years, therefore it had to be construed
strictly. The initial burden was on the department to prove that the situations visualised by the proviso existed. But once the department was able to
bring on record material to show that the appellant was guilty of any of those situations which are visualised by the section, the burden shifted and then
applicability of the proviso had to be construed liberally. When the law requires an intention to evade payment of duty then it is not mere failure to pay
duty. It must be something more. That is, the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The word
'evade' in the context means defeating the provision of law of paying duty. It is made more stringent by use of the word 'intent'. In other words the
assessee must deliberately avoid payment of duty which is payable in accordance with law. Thus, where there was scope for doubt whether case for
duty was made out or not the proviso to Section 11-A of the Act would not be attracted.

5

When entire dispute
is revenue neutral,
there could be no
intention to evade
payment of duty

Reliance Industries
Ltd. v.
Commissioner of
Central Excise &
Service Tax LTU,
Mumbai [2016] 72
taxmann.com 6
(Mumbai - CESTAT)

Tribunal observed that entire dispute being revenue neutral, there could be no intention to evade payment of duty and consequently extended period
of limitation was per se not invokable. In case where credit is available to an assessee itself it cannot be said that there is any intention to evade payment
of duty, which is a pre-requisite for invoking the extending period of limitation. In the instant case, if any tax was payable, it could have been available
immediately to Appellant, thereby rendering entire dispute revenue neutral. Thus, invocation of extended period of limitation was clearly not justified.
Cases Referred-Reliance Industries Ltd. v. CCE & C 2009 (244) ELT 254 (Tri. - Ahd.), CCE & C v. Indeos ABS Ltd. 2010 (254) ELT 628 (Guj.), Mafatlal
Industries Ltd. v. CCE 2009 taxmann.com 493 (Ahd. - CESTAT); affirmed by the Apex Court by dismissing the Civil Appeal reported in 2010 (255) ELT
A77 (SC), Nirlon Ltd. v. CCE [2015] 58 taxmann.com 28/51 GST 177 (SC

Part-46-One Pager Snapshot to the Latest Cases

-Summary SCN in DRC-01 and Summary Order in DRC-07 are invalid in absence of detailed SCN and order respectively
-Revocation of Cancelled Registration and Entitlement to Lodge claim for ITC for the intervening period
-Invoking Provisions of Section 129 and then switching to Section 130 without providing release of goods under Section 129.
-Delay in disbursement of refund
-Opportunity of being heard not provided

S.No

Section

Case Subject

Case

Held

1

Section
73

Summary SCN in
DRC-01 and
Summary Order in
DRC-07 are invalid
in absence of
detailed SCN and
order respectively

Shree Ram
Agrotech v. State
of Jharkhand
[2023] 152
taxmann.com 82
(Jharkhand)

The petitioner contended Respondents had not issued detailed SCN and only summary was issued in DRC-01 and order issued was also
in DRC-07 without detailed order being issued.
The High Court observed that no SCN in terms of Section 73 (1) of the JGST Act, 2017 was served upon the Petitioner and reliance of the
Respondents on the alleged Summary show cause in Form GST DRC-01, dated 20.12.2018, was also of not much avail. Also, it was
observed that when no detailed adjudication order, as required under Section 73 (9) of JGST Act, 2017, had been passed or issued, the
Petitioner was not liable to pay impugned demand only on the basis of the said Form DRC-07. It was also observed that appellate authority
should have decided the case on merit and should have given its finding on the grounds of Appeal that DRC-07 has been issued without
issuing any no show cause notice in terms of Section 73 (1) of the JGST Act, 2017 and also without any adjudication order

2

Section
29 and
Section
30 and
Section
16

Revocation of
Cancelled
Registration and
Entitlement to Lodge
claim for ITC for the
intervening period

R.k. Jewelers v.
Union of India
[2023] 152
taxmann.com 81
(Rajasthan)

The High Court was of the opinion that petitioner firm is covered within the notification dated 31.03.2023 and can move an application
before the competent authority with a prayer for restoration of its GST registration subject to fulfilment of the conditions mentioned in the
said notification, therefore writ petition was disposed of with liberty to the petitioner-firm to file application for restoration of its GST
registration before the competent authority. It was also made clear that when the competent authority would consider the issue of revocation
of cancellation of petitioner firm GST registration under the notification dated 31.03.2023, the petitioner-firm, shall be entitled to lodge its
claim for availment of Input Tax Credit in respect of the period from the cancellation of the registration till the registration is restored

3

Section
129 and
Section
130

Invoking Provisions
of Section 129 and
then switching to
Section 130 without
providing release of
goods under Section
129.

Sharda Batteries
and Metals v.
Deputy
Commissioner of
State Tax [2023]
152 taxmann.com
80 (Gujarat)

Petitioner contended that exercise of powers under Section 129 and thereafter switching over to Section 130 and passing order thereunder
without availing the petitioner the benefits of release of the goods under Section 129, could be said to be without jurisdiction. It was also
submitted that Special Civil Application No.8353 of 2022 and other matters have been entertained by this court involving the same point
and interim relief of release of the goods and conveyance has also been granted on condition.
The High Court directed by way of interim relief that goods of the petitioner as well as vehicle bearing registration No. TS-12-UC 2787, be
released subject to conditions being fulfilled and petition be listed with Special Civil Application No.8353 of 2022

4

Section
54

Delay in
disbursement of
refund

KA Prevulcanised
Latex (P.) Ltd. v.
Government of
Tamil Nadu [2023]
152 taxmann.com
79 (Madras)

The petitioner had applied for refund and had not received refund of 90% of the CGST and IGST. The first respondent had provisionally
sanctioned the refund vide its provisional refund and Final orders too had been passed.
The High Court observed that the respondent had sanctioned refund both by virtue of the provisional refund orders and the final orders
sanctioning the refund and they had not only failed to respond to the request of the petitioner, but even before the Court, they were not able
to give any reason as to why refund was not made despite orders of the first respondent. These amounts are rightfully due to the petitioner.
Therefore, writ petition was allowed and second respondent was directed to refund the amount due to petitioner.

5

Section
74

Opportunity of being
heard not provided

TK Elevator India
(P.) Ltd. v.
Assistant
Commissioner
(GST) [2023] 152
taxmann.com 78
(Delhi)

Notice dated 05.11.2020, pointing out certain discrepancies, was issued under Section 61 of the CGST Act. The petitioner responded to
the said notice on 05.12.2020, setting out the explanation for the alleged discrepancies. The petitioner also prayed that in case the
proceedings initiated pursuant to the notice dated 05.11.2020 were not dropped, the petitioner might be afforded an opportunity of personal
hearing before the final decision was taken. The petitioner's request for personal hearing was rejected and the impugned order was passed
under Section 74 of the CGST Act.
The High Court observed that a plain reading of the order indicated that there was neither any discussion nor any reference to the notice
dated 05.11.2020 or the petitioner's reply to the said notice. The said order is an unreasoned order. The said order was also vitiated as
having been passed without following the principles of natural justice as no opportunity for hearing was afforded to the petitioner. In view
of the above, the petition was allowed and impugned order dated 21.06.2021 was set aside