2013 (9) TMI 1074 - HC - Service Tax

Wether Govt. exempts the taxable service provided by a goods transport agency to a customer, in relation to transport of goods by road in a goods carriage, from so much of the service tax leviable thereon under Section 66 of the said Act, as is in excess of the service tax calculated on a value which is equivalent to twenty five per cent. of the gross amount charged from the customer by such goods transport agency for providing the said taxable service.

Summary

Issues:
Appeal against the Final Order passed by the Customs, Excise and Service Tax Appellate Tribunal regarding Service Tax on Goods Transport Agency services availed by manufacturers of granite monuments.

Detailed Analysis:

1. Issue of Abatement Claim by Assessees:
The respondents, manufacturers of cut and polished granite monuments, availed Goods Transport Agency services for procuring raw materials and transporting finished goods. They claimed abatement on 75% of the freight amount paid, resulting in a show cause notice from the Department. The Department contended that as a 100% Export Oriented Unit, the assessees were not entitled to the abatement claimed, leading to a demand for recovery of Service Tax on the ineligible abatement.

2. Contention of Assessees and Adjudication:
The assessees argued that they were eligible for exemption under Notification No. 32/2004-S.T. as the Goods Transport Agencies did not avail credit of duty paid on inputs. Despite providing a reply to the show cause notice, the Assessing Officer confirmed the demand. The First Appellate Authority upheld the decision, stating that the assessees failed to submit declarations from transporters regarding Cenvat credit.

3. Appeal to Customs, Excise and Service Tax Appellate Tribunal:
The assessees appealed to the Tribunal, which allowed the appeals solely on the ground that the demand was confirmed based on a new ground not mentioned in the show cause notice. The Tribunal did not delve into the merits of the matter but focused on procedural discrepancies.

4. High Court Judgement:
The High Court noted that the Tribunal's decision was not justified as the assessees had understood and responded to the show cause notice appropriately. The Court held that the Tribunal should have considered the merits of the case instead of solely relying on procedural grounds. Consequently, the High Court set aside the Tribunal's order and remitted the matter back for fresh consideration without expressing any opinion on the merits.

5. Conclusion:
The High Court disposed of the appeals with directions for reconsideration by the Tribunal, emphasizing the need for a thorough examination of the case on its merits. The Court clarified that no opinion was expressed on the substantive issues, and no costs were awarded in the proceedings.

This detailed analysis highlights the procedural and substantive aspects of the case, focusing on the abatement claim, statutory exemptions, procedural irregularities, and the High Court's directive for a fresh consideration of the matter by the Tribunal.