2013 (9) TMI 468 - AT - Service Tax

GTA service - Assesse were engaged in the manufacture and export of textile made-up articles - relying upon Amman Steel Corporation Vs. CCE, Trichy - 2011 (22) STR 563 (Tri. - Chennai) - Held that - Recipient of the GTA service who were paying the freight for such service tax - they were liable to pay the service tax - they had proved their bona fide by paying service tax along with interest promptly were dealers of scrap had to be extended the benefit of provisions of Section 80 - in view of multiplicity of persons out of whom one of them was required to pay service tax, the claim of the assesse that they were in the bona fide belief that they were not required to pay service tax and there was no deliberate intention the demand of tax along with interest was upheld the penalties were set aside after invoking Section 80 Decided in favor of assesse.

Summary

Issues Involved:
Non-payment of service tax on GTA service, imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994, ignorance of law as a defense, applicability of Section 80 of the Finance Act, 1994, dispute regarding payment of service tax on GTA service, benefit of Section 80 in case of bona fide belief.

Analysis:
The case involves the non-payment of service tax on GTA service by the appellants engaged in the manufacture and export of textile made-up articles. Central Excise Officers detected the non-payment during a visit in 2008. The appellant paid the tax amount along with interest but faced penalties under Sections 76, 77, and 78. The Commissioner (Appeals) modified the penalty under Section 78 to 25% of the service tax amount if paid within one month from the order date.

The appellant claimed ignorance of law regarding the liability to pay service tax on GTA service due to the impression that exporting goods exempted them from such tax. The appellant referred to the Annual Supplement to Foreign Trade Policy 2004 - 09 to support their argument. The AR countered, stating ignorance of law is not a valid defense and highlighted the appellant's failure to reply to the show-cause notice.

Upon review, the Tribunal found that the dispute centered on non-payment of service tax on GTA service for a specific period. Citing a previous case, the Tribunal acknowledged the initial confusion regarding the party liable to pay the service tax on GTA services. The Tribunal concluded that the appellants acted in good faith and promptly paid the tax upon clarification, thus deserving the benefit of Section 80 of the Finance Act, 1994.

The Tribunal considered the exemption from service tax on exports as per the Annual Supplement to Foreign Trade Policy 2004 - 09. It distinguished the present case from a previous case cited by the AR and emphasized that the applicability of Section 80 should be based on individual case facts. Ultimately, the Tribunal set aside the penalties under Sections 76, 77, and 78 by invoking Section 80, while upholding the demand for tax along with interest. The appeal was disposed of accordingly.