2011 (9) TMI 789 - AT - Service Tax

Demand of alleged short payment of service tax amounting to Rs. 51,766/- along with interest and also for imposition of penalty under Sections 77 & 78 of the Finance Act, 1994 - Notification No. 32/04-S.T., dated 3-12-2004 - The benefit of Notification No. 32/2004-S.T. is available subject to the condition that no cenvat credit in respect of the inputs or capital goods used by the Goods Transport Agency has been availed by them - Held that appellant would not be entitled for the benefit of exemption under Notification No. 32/2004-S.T. and hence, the duty demand has been correctly confirmed against them along with interest and as such, there is no infirmity in the Commissioner (Appeals) s findings upholding the duty demand along with interest - Appeal is disposed of

Summary

Issues:

1. Eligibility for exemption under Notification No. 32/04-S.T. regarding service tax on GTA services.
2. Imposition of penalty under Sections 77 & 78 of the Finance Act, 1994.

Eligibility for Exemption under Notification No. 32/04-S.T.:

The case involved manufacturers of corrugated boxes who availed GTA services and paid service tax under an exemption notification. The department contended that the exemption was subject to the condition that the Goods Transport Agency (GTA) had not taken cenvat credit on inputs or capital goods used for providing services, which was not certified on the consignment notes. A show cause notice was issued for alleged short payment of service tax. The Dy. Commissioner confirmed the demand and imposed penalties. On appeal, the Commissioner upheld the demand and penalty under Section 78 but set aside the penalty under Section 77. The Tribunal noted that the exemption required no cenvat credit on inputs or capital goods by the GTA, which was not certified on the consignment notes. Therefore, the appellants were not entitled to the exemption. However, the Tribunal found no intention to evade tax and set aside the penalty under Section 78, as the appellants had cenvat credit available for the tax on GTA services.

Imposition of Penalty under Sections 77 & 78:

The Tribunal considered the arguments of the ld. SDR and the appeal filed by the appellant. It reiterated that the exemption under Notification No. 32/04-S.T. required no cenvat credit on inputs or capital goods by the GTA, which was not certified. The Tribunal upheld the duty demand and interest but found merit in the appellant's plea that there was no intention to evade tax by wrongly availing the exemption. The Tribunal concluded that the penalty under Section 78 was not justified as there was no willful or intentional short payment of service tax. Therefore, the penalty under Section 78 was set aside while upholding the service tax demand and interest. The appeal and stay application were disposed of accordingly.

This detailed analysis of the judgment highlights the issues of eligibility for exemption under Notification No. 32/04-S.T. and the imposition of penalties under Sections 77 & 78 of the Finance Act, 1994, providing a comprehensive understanding of the Tribunal's decision in the case.