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Issues involved: Interpretation of Notification No. 32/2004-S.T. dated 3-12-2004 regarding service tax on freight charges and fulfillment of conditions by GTA.
Summary: The Appellate Tribunal CESTAT NEW DELHI heard a case where the appellant, a manufacturer of transformers, switchgear, and parts, availed the services of Goods Transport Agency (GTA) and claimed the benefit of Notification No. 32/2004-S.T. dated 3-12-2004 for paying service tax on freight charges. A show cause notice was issued alleging non-compliance with conditions of the notification, leading to a demand of Rs. 1,31,73,173/- as service tax along with penalties under section 78 of the Finance Act. The appellant argued that the exemption notification's conditions should be fulfilled by the GTAs, not personally by them. They provided evidence of endorsements in bills/invoices or certificates from GTAs to support their claim. The Department contended that the responsibility to prove fulfillment of conditions lies with the appellant, citing instructions dated 27th July 2005 and 21-8-2008. The Tribunal noted that the benefit of the notification is subject to the GTA not availing Cenvat credit on inputs or capital goods. No evidence was found that GTAs had availed such credit, only a doubt was raised. The Tribunal criticized the lack of verification by the Department and remanded the matter for necessary verification and consideration of the Board's clarification dated 21-8-2008. The impugned order was set aside, and the appeal was allowed by way of remand, with the stay petition also disposed of.
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