2011 (9) TMI 247 - AT - Service Tax

Notification No. 34/2004-ST dated 3.12.2004 - levy of service tax relating to GTA service - appellant was under a bonafide belief that individual consignment was basis for liability of the appellant - confusion in the understanding of notification - no suppression of facts and there was only a bonafide construction of the riders of Notification - Held that it can be construed that a common man may find it difficult to understand riders described by that notification. Although the riders are independent in nature, but very difficult to understand by a common man - Therefore, dispensing with pre-deposit appeal is also allowed - no penalty imposed and both stay as well as appeal is allowed.

Summary

Issues:
1. Interpretation of Notification No. 34/2004-ST regarding levy of service tax for GTA service.
2. Confusion regarding the riders provided in the notification.
3. Bonafide belief of the appellant in understanding the notification.
4. Allegation of short payment of service tax by the Audit.
5. Absence of suppression of facts by the appellant.
6. Imposition of penalty under Section 76 and 78 of the Finance Act, 1994.
7. Independent finding about the behavior of the appellant by the Appellate Authority.
8. Legal infirmity in the appellate order due to failure to examine the issue independently.
9. Difficulty in understanding the riders described in the notification by a common man.
10. Lack of contumacious conduct of the appellant discovered by the department.

Analysis:

1. The appellant argued that there was confusion in understanding the riders provided by Notification No. 34/2004-ST related to the levy of service tax for GTA service. The appellant believed that the liability was based on the gross amount charged on individual consignments, not exceeding Rs. 750/-, leading to a bonafide interpretation issue. The appellant, to avoid conflict, paid the service tax amount highlighted by the Audit, emphasizing the absence of any intention to suppress facts.

2. The Departmental Representative contended that a penalty should be imposed under Section 78 of the Finance Act, 1994, for the alleged non-compliance.

3. The Tribunal, after hearing both sides and examining the records, noted that the Appellate Authority did not provide an independent finding on the appellant's behavior. The Tribunal highlighted that the Audit observation was the sole basis for issuing the show cause notice, indicating a legal flaw in the appellate order due to the lack of independent examination.

4. The Tribunal further observed that the riders in Notification No. 34/2004 were complex and could be challenging for a common man to comprehend. Additionally, the department did not find any contumacious conduct by the appellant, leading to the conclusion that imposing a penalty would be unjustified.

5. Consequently, the Tribunal ruled in favor of the appellant, stating that the circumstances did not warrant the imposition of penalties under Section 76 and 78 of the Finance Act, 1994. The Tribunal allowed the appeal, dispensed with the pre-deposit requirement, and granted relief to the appellant by approving both the stay application and the appeal.