2011 (2) TMI 470 - AT - Service Tax

Demand - Goods Transport Agency (GTA) services - Rule 2(1)(d)(v) - in the initial stages there were disputes relating to as to who shall pay the service tax on GTA services - On the officers pointing out that as recipient of the GTA services who are paying the freight for such services, they were liable to pay the service tax, they have proved their bona fide by paying service tax along with interest promptly - Penalties u/s 77 and 78 waived.

Summary

Issues:
Appeal against order of Commissioner (Appeals) regarding service tax on Goods Transport Agency (GTA) services.

Analysis:
The appellants, dealers of steel products, purchased iron scrap locally and imported them, availing the services of lorry transporters for transportation and paying freight. They registered as a service provider under GTA services. After paying service tax and interest upon department's pointing out, a show-cause notice was issued alleging non-payment of service tax as recipients and non-filing of returns. The original authority confirmed the demand, imposing penalties under Sections 76, 77, and 78. The Commissioner (Appeals) set aside the penalty under Section 76 but sustained penalties under Sections 77 and 78.

The advocate argued that service tax on GTA services could be paid by various parties depending on who paid the freight, and the appellants were not clear about their obligation as recipients. The department should not have issued the show-cause notice as they promptly paid the service tax upon clarification. The DR supported the Commissioner (Appeals)'s findings.

The Tribunal noted that service tax on GTA services was introduced in 2005, allowing various entities to pay the tax. Due to initial disputes on the tax liability, the appellants' belief that they were not required to pay service tax was considered bona fide. Upon clarification by the officers, they promptly paid the tax and interest, showing no deliberate intention to evade tax. Therefore, the appellants were granted the benefit of Section 80 of the Finance Act, 1994.

In the final decision, the Tribunal upheld the demand of service tax and interest as uncontested, set aside the penalties under Sections 77 and 78 imposed by the Commissioner (Appeals), and entitled the appellants to consequential relief as per law.