Calcutta HC Confirms KMC Can Revise Property Valuation to Levy Tax In ?11.24 Crore Dispute  ||  Bom HC Cancels Bail of Accused Supplying Fake Medicines, Says it Weakens Public Trust in Healthcare  ||  MP HC: Oral, Anal Sex Between Married Couples Not Punishable under Section 377 IPC  ||  SC Says Respect For Higher Court Orders a Basic Principle, Rebukes Authority For Revisiting Order  ||  SC: Merits of Foreign Arbitral Awards Cannot be Re-Examined During Enforcement Proceedings  ||  SC: Failure to Sign Charge Sheet Doesn’t Invalidate Trial if Charges Were Properly Read to Accused  ||  Delhi HC: Bipolar Disorder Alone Does Not Qualify as Medical Disability Without Benchmark Criteria  ||  Kerala HC: Excommunicating Knanaya Catholics For Marrying Outside the Community is Unconstitutional  ||  Kerala HC: Temporary Use of Religious Land For Public Infrastructure is Not a ‘Transfer’ under Law  ||  P&H HC: Habeas Plea in Child Custody Case Not Maintainable if Child is With Natural Guardian and Safe    

Maini Precision Products Ltd. Vs. Commissioner of Central Tax - (Customs, Excise and Service Tax Appellate Tribunal) (12 Jul 2021)

Substantive right cannot be denied merely on procedural irregularity

MANU/CB/0051/2021

Excise

The present appeal is directed against the impugned order passed by the Commissioner of Central Tax (Appeals) whereby the Commissioner has rejected the appeal of the Appellant and confirmed the demand of Rs. 16,40,610 under Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A(4) of Central Excise Act, 1944 and also imposed penalty under Rule 15(3) of CCR, 2004 read with Section 11AC(1)(a) of Central Excise Act, 1944.

The issue of revenue neutrality has been considered by the various Courts and it has been held that, non-distribution of credit is condonable as procedural lapse, especially in situation which is revenue neutral. Further, in the case of Doshion Ltd. v. CCE, Ahmedabad wherein it has been held that, procedural irregularity in the case of ISD distribution is a revenue neutral situation and there is no loss to the Revenue.

Once the Department has not disputed the eligibility or entitlement of credit then, the failure of the Appellant to distribute the same and transition to GST after coming into force of GST is only a procedural lapse and it will not affect the substantive right of the Appellant because the failure to comply with the provisions of ISD are at best may be termed as procedural irregularity and it has been consistently held by various Courts that substantive right cannot be denied merely on procedural irregularity.

Similarly, the extended period of limitation invoked by the Department is not sustainable in the present case because the Appellant has not concealed any information from the Department and all the documents were provided by the appellant to the Audit Party and on the basis of Audit Report, the SCN was issued. Further, the entire demand in the present case resulted into revenue neutral.

Further, pre-requisite of revenue neutrality is that, there is no extra benefit to the assessee and no loss is caused to the Revenue and these two pre-requisites are fulfilled in the present case because even if the disputed credit was distributed to the units at a pro-rata basis, net effect of such transaction would have been NIL and in the present case, the SCN was issued to the Appellant after the introduction of GST that at which point the issue has become revenue neutral because the Appellant has taken one registration. The impugned order is not sustainable in law because in the present case, the entire situation is revenue neutral and therefore the demand is not sustainable and is set aside. Appeal allowed.

Tags : DEMAND   CONFIRMATION   VALIDITY  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved