2015 (2) TMI 565 - AT - Service Tax

Reverse charge liability under GTA Service - Penalty u/s 77 & 78 - Held that - The judgments cited by the Ld. Consultant are not applicable to the facts of this case. The first judgement of Prince Thermal India Pvt. Ltd. (2010 (7) TMI 248 - CESTAT, MUMBAI) concerned a small tax payer. Judgements in the case of Ruhit Shukla & Associated (2007 (3) TMI 164 - CESTAT, KOLKATA) and Singh Industries Ltd. (2009 (7) TMI 513 - CESTAT, AHMEDABAD) related to initial periods when the levy had just been introduced. Therefore, in these cases a lenient view was taken. However, I do agree with the Ld. Consultant that because cenvat credit of duty paid, in any case have been available to them, their mala fide intention is not established. In this view of the matter the appeal is allowed to the extent that penalty under Section 78 is waived. However, penalty under Section 77 is payable - Appeal disposed of.

Summary

Issues:
- Appeal against penalty imposed under Section 78 of the Finance Act, 1994.

Analysis:
1. Background: The appellant, a sugar factory, availed services of Goods Transport Agency (GTA) and was liable to pay service tax under reverse charge mechanism from 1.1.2005. The appellant did not pay service tax for the period 2006-07 to 2008-09.

2. Penalty Imposition: The penalty was imposed under Section 78 of the Finance Act, 1994, by the adjudicating authority, which was upheld by the Commissioner (Appeals) in Order-in-Appeal No. AGS(99)102/2010 dated 76/2010.

3. Arguments: The appellant's consultant pleaded that the levy was new to them, and since they paid the tax before the order-in-original, a lenient view should be taken. The consultant relied on judgments like Prince Thermal India Pvt. Ltd. Vs. Commissioner of C. Ex., Nagpur 2013 (30) STR 394 (Tri.-Mumbai) to support their case.

4. Counter Arguments: The Departmental Representative reiterated the findings of the Commissioner (Appeals) and emphasized the tax was payable under the law.

5. Judgment: The Tribunal considered the contentions and found that the judgments cited by the consultant were not applicable to the case. While acknowledging that the appellant could avail cenvat credit of duty paid, the Tribunal concluded that their mala fide intention was not established. As a result, the penalty under Section 78 was waived, but the penalty under Section 77 was upheld. The appeal was allowed in part, disposing of the matter accordingly.

This judgment highlights the importance of considering the specific circumstances of each case when determining penalties under the Finance Act, 1994. It also underscores the significance of establishing mala fide intentions and the availability of cenvat credit in such matters.