Demand order cannot travel beyond scope of show-cause notice; CESTAT

Our Blogs

Others (2)

Business Strategy (2)

Audit & Assurance (3)

Corporate, Legal & Secretarial (4)

Income Tax (29)

Goods & Service Tax (9)

View All

Demand order cannot travel beyond scope of show-cause notice; CESTAT

Syndicate Bank vs CCE - [2022] 137 taxmann.com 302 (Bangalore - CESTAT)

The appellant is engaged in providing banking and other financial services. A show-cause notice was issued to the appellant for wrongfully utilising the CENVAT credit in contravention of Rules 9(1) & 9(6) of CENVAT Credit Rules, 2004.

Rule 9(1) provides that the CENVAT credit shall be taken on the basis of certain documents such as invoices, etc., whereas Rule 9(6) states the requirement of maintaining proper records related to CENVAT credit.

The appellant in this regard has produced all the necessary documents to the department. The department has accepted the documents produced but has proceeded to deny the credit on the correlation between input service and output service (a new argument that was not alleged in the show cause notice).

In the appeal before the Tribunal, the appellant submitted the nexus of input services with the output services. It also argued that the authorities have gone beyond the show cause notice as the question of correlation was not raised by them.

After hearing both sides, the Tribunal has also noted that the impugned order travelled beyond the scope of show-cause notice. The show-cause notice was issued for disallowance of credit for contravening the provisions of Rule 9 of CENVAT Credit Rules, 2004, the learned commissioner proceeds to deny the credit on the correlation between input service and output service. The Tribunal held that the impugned order is not legally sustainable.

On merits also, the Tribunal held that there was nexus of input services with the output services and thus credit is also admissible.