2015 (8) TMI 67 - AT - Service Tax

Commissioner rejected appeal as no new grounds can be raised - Penalty u/s 76, 77 & 78 - Held that - Grounds raised by the appellant in appeal filed before the Ld. Commissioner (A) are legal in nature and same can be raised at any point of time. Therefore, the ld Commissioner (A) is required to answer the issue raised by the appellant on merits which Ld. Commissioner has failed to do so. In these circumstances, we do not find any merits with the impugned order. Same is set aside and matter is remanded back to the Ld, Commissioner (A) to decide the issues raised by the appellant - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Incorrect application of Section 65(68) of the Finance Act 1994
2. Failure to consider Service Tax Rules, 1994
3. Justification of the extended period of limitation
4. Imposition of penalties under sections 76, 77, and 78 of the Finance Act 1994
5. Non-compliance with Rule 5 of the Central Excise Appeals Rules 2001

Analysis:

1. The appellant contested the adjudication order based on the incorrect application of Section 65(68) of the Finance Act 1994 by the Assistant Commissioner. The appellant argued that the definition of "Goods Transport Agency" was erroneously applied instead of "manpower recruitment or supply agency" as per the correct clause. The discrepancy in interpretation led to the imposition of taxes on M/s Mahaveer Transport, which the appellant challenged before the Commissioner (A).

2. Another ground of challenge by the appellant was the failure of the Assistant Commissioner to consider the Service Tax Rules, 1994 while levying taxes on M/s Mahaveer Transport. The appellant highlighted Rule 2(1)(d) of the Service Tax Rules, 1994, which specifies the liability for paying service tax in the case of services provided by a goods transport agency. The appellant argued that as per the reverse charge mechanism, the liability falls on the person paying freight, which in this case was M/s Anand Construction.

3. The appellant questioned the justification for the extended period of limitation invoked by the Assistant Commissioner. The appellant argued that mere allegations of non-disclosure of services were insufficient to warrant the extended period of five years for tax assessment. Citing the Supreme Court case of Pushpam Pharmaceuticals Company v Collector of C.Ex Bombay, the appellant emphasized that "suppression" must be deliberate and cannot be based on mere omissions.

4. Regarding the imposition of penalties under sections 76, 77, and 78 of the Finance Act 1994, the appellant contended that penalties should not apply when there is a genuine belief of non-liability for service tax. The appellant argued that since the service tax was payable by the consignor or consignee of goods, the penalty should be waived due to a bona fide belief in non-liability.

5. The final issue raised was the non-compliance with Rule 5 of the Central Excise Appeals Rules 2001 by the appellant. The Commissioner (A) dismissed the appeal on the grounds of procedural non-compliance, stating that new grounds cannot be raised without following the prescribed procedure. However, the Tribunal found that the legal grounds raised by the appellant were substantial and should have been addressed on their merits. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the Commissioner (A) for a proper decision on the legal issues raised by the appellant.