Karnataka HC: Caste Slurs at Factory Dispatch Area Accessible to Workers Amount to Public View  ||  Delhi HC: Lawyer’s Inability to Understand Lower Court Order Cannot Justify Delay in Filing Appeal  ||  Delhi HC: POCSO Charges Stay Even If Minors Remain Unidentified In Child Sexual Exploitation Cases  ||  J&K&L HC: Mere Abuse or Mentioning Caste Name Does Not Constitute an Offence under SC/ST Act  ||  Tripura HC: Divorced Daughter Cannot Claim Family Pension if Divorce Happens After Parent’s Death  ||  SC: Candidate Missing Physical Test Gets No Second Chance; Compassion Has No Place in Public Jobs  ||  SC Grants Bail to Doctors as Were Not Provided in Writing, Citing 'Mihir Shah' Verdict  ||  Supreme Court: Dowry Harassment and Domestic Abuse Persist, Showing Patriarchy Still Prevails  ||  Supreme Court: Dowry Harassment and Domestic Abuse Persist, Showing Patriarchy Still Prevails  ||  Supreme Court: Pay Commission Benefits Cannot Be Denied By Imposing Extra Conditions    

Gujarat Insecticides Ltd. Vs. C.C.E. & S.T.-Vadodara-ii - (Customs, Excise and Service Tax Appellate Tribunal) (03 Sep 2021)

Credit on Outdoor Catering Service to the extent of contribution of services charges borne by the employee is not Cenvatable

MANU/CS/0068/2021

Goods and Services Tax

The issue involved in the present case is that whether the Appellant is liable to pay interest on the Cenvat credit availed on the contribution of service charges collected from employees in respect of Outdoor Catering Services and whether the Appellant is liable to penalty. The Appellant submits that, though the Appellant had availed the Cenvat credit under the bonafide belief but the same was not utilized and subsequently. He submits that, as per Rule 14 of Cenvat Credit Rules, 2004 the interest is chargeable when the credit has been taken or utilized or has been erroneously refunded.

The issue of availment of Cenvat credit on employees' contribution in respect of Outdoor Catering Services was debatable and the issue has been finally settled in the case of Ultra tech Cement Ltd by the Hon'ble Bombay High Court. Therefore, in this backdrop of the issue, the malafide intention cannot be attributed to the Appellant. Therefore, the penalty imposed by the Lower Authority is not sustainable hence, penalty is set aside.

As regard the levy of interest on availment of Cenvat credit, it has been settled that, the credit on Outdoor Catering Service to the extent of contribution of services charges borne by the employee is not Cenvatable. Therefore, the credit taken by the Appellant is wrongly taken credit. Therefore, in terms of Rule 14 of CCR, 2004, interest is chargeable. In the Rule, it is clearly provided that, whether the credit is taken or utilized the interest will be chargeable.

In the present case even if the credit was not utilized but taken wrongly therefore, the interest is chargeable from the date of taking credit till the date of reversal, if any made. However, the Rule 14 has been clearly interpreted by the Supreme Court and held that, since there is a word "OR" between credit taken and utilized and came to the conclusion that in both the situation the interest shall be chargeable and the "OR" cannot be read as" AND". In view of this Hon'ble Supreme Court judgment in the case of Ind Swift Laboratories Ltd., the issue is settled. The judgment of the Hon'ble Apex Court being binding on all the forums, in view of same, the appellant is liable to pay interest. Accordingly, the penalties imposed upon the appellants are set aside and demand of interest is maintained. Appeals are partly allowed.

Tags : DEMAND   INTEREST   LEGALITY  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved