TaxTMI 
TaxTMI 
2026 (4) TMI 663
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.... ii. I confirm the demand of appropriate interest on the demand confirmed under Sl.No.(i) above and order for recovery of the same in terms of Section 50 of the CGST Act, 2017, read with similar provision of the TNGST Act, 2017 and made applicable to IGST vide Section 20 of the IGST Act, 2017. iii. I impose penalty on the taxpayer for an amount of Rs. 22,65,05,082/- (Rupees Twenty-two Crore sixty-five lakh five thousand and eighty two only) on the demand confirmed under Sl.No.(i) above in terms of Section 74(9) of the CGST Act, 2017, r/w Section 122(2)(b) of the CGST Act, 2017 along with similar provision of the TNGST Act, 2017 and made applicable to IGST vide Section 20 of the IGST Act, 2017. iv. I confirm the demand of Rs. 6,05,40,252/- (IGST Rs. 6,05,40,252/-) (Rupees Six Crore five lakh forty thousand two hundred and fifty two only) as discussed in Para 7 above in terms of Section 74(9) of the CGST Act, 2017 r/w similar provision of the TNGST Act, 2017 made applicable to IGST vide Section 20 of the IGST Act, 2017. v. I confirm the demand of appropriate interest on the demand confirmed under Sl.No.(iv) above and order for recovery of the same in term....
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....n against the petitioner was that during the period from July 2017 to January 2018 (up to 25.01.2018), the petitioner made a supply of services viz. Freight and Leasing / Renting of the Vessels with Crew Members by classifying the services under HSN 996602 and paid 18% GST without availing ITC as per Serial No.10(ii) of Notification No.11/2017-CGST (Rate) dated 28.06.2017. 5. However, by amendment to the above notification with effect from 25.01.2018, the petitioner started discharging tax at 5% for renting vessels as per Serial No.10, Column 3 to the above notification for the "Time charter of vessels for transport of goods". Thus, it was stated that the petitioner continued to avail input tax credit wrongly and was, therefore, not eligible to avail the benefit of the above Serial No.10(ii) of Notification No.11/2017- CGST (Rate) dated 28.06.2017. 6. By the impugned order, it has been concluded that the petitioner will be liable to tax in terms of Serial No.10(iii) to the above Notification at 18%. 7. The discussion in the impugned order leading to the aforesaid conclusion is as under:- 7. DISCUSSION AND FINDINGS 7.1 I have carefully gone through the ent....
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....nd tankers) used in supplying the service h has not been taken [ Please refer to Explanation no iv] " * Explanation no iv states "Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that, -(a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken;" The above explanation clearly demonstrates that the GST rate is 5 % only when the condition regarding non-availment of ITC on goods (other than on ships, vessels including bulk carriers and tankers) used exclusively in supplying such service, is met. However, in the instant case, the taxpayer has claimed credit on various goods such as Purchase of Lubrication Oil, Generators, Cargo gear wires & other wires and various other components used in supplying the service, therefore, they have violated the core condition laid down in the entry 9 (ii) and explanation (iv) of Notification No. 11/2017- CGST ( Rate), issued on June 28, 2017. Since the taxpayer is not eligible to avail Input Tax Credit while paying GST @5%, the ser....
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....ment on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. Section 59: Self-assessment. - Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39. In continuation to the matter discussed above, I have noticed that the taxpayer had contravened the conditions of the Notification 11/2017 - CT(Rate) dated 28.06.2017 and legal provision of Section 9 and 59 of the CGST Act, 2017/TNGST Act 2017.Accordingly, I find that the taxpayer is liable to pay differential GST @13% in terms of Section 74 (9) of the CGST Act, 2017/ TNGST Act 2017 along with appropriate interest in terms of Section 50 of the CGST Act, 2017 made applicable to IGST vide Section 7% of the IGST Act, 2017. 7.3.2 Issue No. 2: Short payment of GST on Renting of Vessels due to Wrong adoption of GST Rate (Paid @ 5% instead of 18%): Amount Involved GST Rs. 6,05,40,252/- (IGST Rs. 6,05,40,252/-) with applicable Interest and penalty under Section 74 of CGST/TNGST Act 2017 * It has been alleged in the impugned SCN that the ta....
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.... Furthermore, since the notification explicitly states that Input Tax Credit can only be claimed on ship, vessels Including bulk carriers and tankers, and this provision does not extend to goods associated with them. As the goods in question do not fall under the defined categories (ships, vessels, bulk carriers and tankers), therefore I find the taxpayer's claim that ITC taken on goods forming part of the ship as eligible, not valid. * In addition, the taxpayer has contended that GST at 18% was charged on time charters before January 25, 2018, making ITC valid for that period. Additionally, GST at 18% was charged on transactions with UltraTech Cements Limited from January 2021 to December 2022 due to their insistence, qualifying those for ITC. In this regard, I would like to reiterate that period for which the taxpayer had paid GST @18 % had been excluded from the quantification in the impugned SCN itself, as also indicated in Para 17 of the impugned Show Cause Notice. Consequently, the contention of the taxpayer is not valid. * Furthermore, in response to the reliance placed on the Advance Ruling, I would like to quote the ruling given on the issue "the rate....
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....conclusively held that the taxpayer is liable to pay the tax totalling Rs.28,70,45,334/-, being short payment of GST on fright as well as renting of vessels due to wrong adoption of GST Rate. * This GST amount attracts interest in terms of Section 50 of CGST Act, 2017, which reads as below: - (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council: Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash le....
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....al of the exempted final product. If this debit entry is permissible to be made, credit entry for the duties paid on the inputs utlised in manufacture of the final exempted product will stand deleted in the accounts of the assessee. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. In other other words, the claim for exemption of duty on the disputed goods cannot be denied on the plead that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods." 9. The learned counsel for the petitioner submitted that this view has been reiterated in several cases, not only by the Tribunal but also by various High Courts across the country. Reference is made to the decision of the Division Bench of Allahabad High Court in Hello Minerals Water (P) Ltd., Vs. Union of India, 2004(174)ELT422 (ALL) wherein the reference was made to the decision of the Larger Bench of the Tribunal in Franco Italian Company Pvt Vs.CCE 2000 (120)E.L.T.792. 10. The learned counsel for the petitioner submits that the aforesaid decision had recently a....
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....10(ii) to the Notification No.11/2017-CGST (Rate) dated 28.06.2017 as amended by Notification No.01/2018-CGST (Rate) dated 25.04.2018 with effect from 25.01.2018 during the period in dispute. 17. Thus, the impugned order has been passed whereby the benefit under the said Serial Nos to the above Notification No.11/2017-CGST (Rate) dated 28.06.2017 as amended by Notification No.01/2018-CGST (Rate) dated 25.04.2018 with effect from 25.01.2018, has been denied. Instead, tax at 9% under Serial No.9(v) and 10(iii) has been imposed on the petitioner. 18. By virtue of Section 20 of IGST Act, 2017, the provisions of the CGST Act apply mutatis mutandis, insofar as may be, in relation to integrated tax as they apply in relation to Central tax as if they were enacted under the IGST Act. In other words, there is an incorporation of the provisions of the CGST Act into the IGST Act, 2017. 19. The decision of the Hon'ble Supreme Court in Chandrapur Magnet Wires Pvt Ltd., Vs. CCE Nagpur 1996(81) ELT 3(SC) which was cited by the learned counsel for the petitioner applies only to a situation where the Input Tax Credit was wrongly availed and was reversed before removal of the final product. ....
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....ng bulk carriers and tankers) used in supplying the service has not been taken [Please refer to Explanation no.(iv)] (v) Goods transport services other than (i), (ii), (iii) and (iv) above. 9 10 Heading 9966 (Rental services of transport vehicles) (ii) Time charter of vessels for transport of goods. 2.5 Provided that credit of input tax charged on goods (other than on ships, vessels including bulk carriers and tankers) has not been taken [Please refer to Explanation no.(iv)]. (iii) Rental services of transport vehicles with or without operators, other than (i) and (ii) above. 25. Explanation (iv) to the above Notification which is relevant is extracted hereunder:- Explanation (iv):- "(iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that:- (a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken: and (b) credit of input tax charged on goods o....
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.... with effect from such date as may be specified in such notification. 15(5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed. Explanation.-For the purposes of this Act,-- (a) persons shall be deemed to be "related persons" if-- (i) such persons are officers or directors of one another's businesses; (ii) such persons are legally recognised partners in business; (iii) such persons are employer and employee; (iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members of the same family; (b) the term "person" also includes legal persons; (c) persons who are associated in the bu....
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....is not only a rate ratification, but also exemption notification. 31. Ideally, the Show Cause Notice issued to the petitioner should have called upon the petitioner to show cause as to why the Input Tax Credit that was wrongly availed by the petitioner contrary to condition in Column (5) should not be denied together with interest and penalty applying the ratio of the Hon'ble Supreme Court in Unichem Laboratories Vs. Commissioner of Central Excise, (2002) 7 SCC 145. In Paragraph No.12, the Hon'ble Supreme Court held as under:- "12. For the aforementioned reasons, we are of the view that denial of benefit of the notification to the appellant was unfair. There can be no doubt that the authorities functioning under the Act must, as are in duty bound, to protect the interest of the Revenue by levying and collecting the duty in accordance with law - no less and also no more. It is no part of their duty to deprive an assessee of the benefit available to him in law with a view to augment the quantum of duty for the benefit of the Revenue. They must act reasonably and fairly." 32. Following the ratio of the Hon'ble Supreme Court in Unichem Laboratories referred to su....