2019 (2) TMI 1102 – CESTAT ALLAHABAD – TMI – Transfer of credit – amalgamation – non-compliance with Rule 10 of the Cenvat Credit Rules – information regarding surrender of registration with Chennai and Mumbai not provided – case of Revenue is also that Transfer could not take place before reversing the credit in the accounts of Chennai and Mumbai entities – Held that:- The show cause notice proposed to deny credit on the ground that no prior permission stands taken by the appellant. However, the said issue stands accepted by the Adjudicating Authority and as such it was not open to the Revenue to deny the credit on further allegations – The legal issue that Adjudicating Authority cannot go beyond the show cause notice is well settled by catena of judgments.
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Otherwise also, the credit was transferred from Chennai and Mumbai after intimating the Service Tax Authorities, under the orders of the Hon’ble High Court and as such cannot be questioned by the Revenue. The scheme of amalg
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ed, Delhi (registered with Service Tax in Noida). All the three companies had a common holding company which decided to amalgamate these companies. The scheme of amalgamation was presented and obtained the approval of three Hon ble High Courts, namely, High Court of Madras, Bombay High Court and Delhi High Court in respect of each of these entities respectively. 2. The following features of the scheme are noteworthy;- (a) All assets (including tax benefits) and liabilities of the Chennai and Mumbai companies would stand transferred and be succeeded by Techip KT India Limited. (b) The scheme would take into effect (i.e. the effective date) after all the formalities regarding the scheme are completed. These formalities were completed and sheme effective on 21.04.2014. (c) With the coming into effect of the scheme the transferee entity, namely, Technip KT India Limited would be known as Technip India Limited. 3. In terms of the orders of the Hon ble High Courts sanctioning the amalgamatio
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ant for surrender of registration with Chennai and Mumbai Service Tax Authorities which were also duly surrendered. 5. Thereafter, an audit was undertaken by the Service Tax Department Noida dated 01.04.2016, in which it was accepted by the Department that credit was available with the entities registered in Chennai and Mumbai. There was no dispute on the quantum or correctness of the credit. However, in this audit memo it was pointed that no permission had been taken by the appellant from the Chennai and Mumbai Service Tax Authorities and accordingly the approval of credit was registered by the Department. 6. These audit proceedings resulted in show cause notice which was issued the very next day that i.e. on 02.04.2016. In the show cause notice the following allegations were made against the appellant:- (i) That the appellant had not complied with the condition under Rule 10 of the Cenvat Credit Rules. (ii) No information was provided regarding surrender of registration with Chennai
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quired by the appellant for transfer of credit in terms of Rule 10 of the Cenvat Credit Rules. Nonetheless, the Impugned Order has been passed for the following reasons; (i) Learned Commissioner has proceeded to hold that the appellants were required to intimate the Department prior to the transfer and the failure on the part of the appellant to intimate prior to the transfer leads to violation of Rule 10(3) of the Cenvat Credit Rules. (ii) Further, it has been pointed out in the impugned order that the appellant has not reversed Cenvat Credit prior to the transfer with the Chennai and Mumbai Authorities. (iii) The amendment in the centralized registration took place only on 08.10.2014 and therefore for the purpose of Service Tax all the three entities continued to exist till such date; meaning thereby that credit could not be transferred prior to 08.10.2014. (iv) In respect of the contention of the Appellant that there is no requirement for satisfaction of the officers in respect of c
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na of judgments. Reference can be made to the Hon ble Allahabad High Court s decision in the case of Sarika Jain vs. Commissioner of Income Tax (2018) 407 ITR 254 (All.) wherein it was held in that Appellate Authority cannot confirm the demand on the basis which was not the foundation of the Department s case in the show cause notice. As such we are of the view that impugned orders are liable to be set aside on thus ground alone. 10. Otherwise also we note that the credit was transferred from Chennai and Mumbai after intimating the Service Tax Authorities, under the orders of the Hon ble High Court and as such cannot be questioned by the Revenue. The scheme of amalgamation has clearly provided that all the assets of the Transferor Companies would be available to the Transferee Company. Inasmuch as the transfer of the unutilized credit has been done under the approval of the Hon ble High Court as per the scheme sanctioned by the High Courts, the denial of the same is neither justified n
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