2011 (2) TMI 715 - AT - Service Tax

Penalty - GTA - Demand confirmed against the respondents for the reasons that they were liable to pay service tax on G.T.A. only by cash or from PLA and not from Cenvat credit account for the period from April, 2006 to September, 2006 - Respondents submitted that although they were not liable to pay service tax prior to 1.3.2008 from their PLA or cash but they have paid - Hence, when there is no liability penalty is not imposable .

Summary

Issues:
Appeal against dropping of penalty by lower appellate authority, liability to pay service tax from cash or PLA, penalty imposition, liability prior to 1.3.2008, contesting penalty imposition.

Analysis:
The judgment involves an appeal by the Revenue against the dropping of penalty by the lower appellate authority. The core issue pertains to the demand confirmed against the respondents for their liability to pay service tax on G.T.A. only by cash or from PLA, not from Cenvat credit account for the period from April 2006 to September 2006. The respondents, while contesting the service tax liability, ultimately paid the demanded tax. The lower appellate authority dropped the penalty imposed by the adjudicating authority, citing that no demand was payable for the period before 1.3.2008.

The Revenue argued that since the respondents admitted their service tax liability and the obligation to pay such tax in cash or PLA, they should be penalized, and the penalty imposed by the adjudicating authority should be upheld. Conversely, the respondents' advocate contended that even though there was no obligation to pay service tax from their PLA or cash before 1.3.2008, they still paid the tax, thus no penalty should be levied on them.

Upon hearing both sides, the Tribunal examined the submissions and determined that there was no liability for the respondents to pay service tax from PLA or cash during the relevant period. The Tribunal referred to previous cases such as CCE Chandigarh vs. Nahar Industrial Enterprises Ltd and CCE Bangalore vs. Shri Tubes and Sheets Pvt. Ltd. to support their decision. Consequently, the Tribunal concluded that when there is no liability, a penalty is not applicable. Additionally, the Tribunal noted that a penalty of Rs. 20,000 had been imposed on the respondents in the adjudication order, but considering the lack of merit in the Revenue's case and the small amount involved, the appeal was rejected.

In summary, the judgment upholds the lower appellate authority's decision to drop the penalty, emphasizing that no liability existed for the respondents to pay service tax from PLA or cash during the relevant period. The Tribunal's decision was supported by legal precedents and considerations of the small amount involved, leading to the rejection of the Revenue's appeal.