2008 (10) TMI 83 - AT - Service Tax

Goods transport service received during 1997-98 dispute regarding liability of recipient started in 1997-98, enactment which gave retrospective effect came into effect only in 2003 after further amendments and was upheld by the Supreme Court in Gujarat Ambuja Cements Ltd. s case - Having regard to the circumstances and also considering the fact that the appellant has paid tax beore SCN, penalty is set aside - as liability of interest is statutory in nature, assessee is liable for the same

Summary

Issues:
Payment of service tax on goods transport service for the periods in the years 1997 and 1998, liability of interest, and levy of penalty.

Analysis:

1. Payment of Service Tax and Liability of Interest:
The appellant contended that they had paid the full service tax before the show-cause notice was issued, citing the decision in Gujarat Ambuja Cements Ltd. v. Union of India, which upheld the constitutional validity of retrospective liability of service tax. However, the Revenue argued that the appellant paid the service tax only after the AG's audit highlighted the non-payment, relying on various decisions supporting the levy of penalty. The Tribunal considered both arguments and held that there was no dispute about the liability of service tax. The liability of interest was deemed statutory, and the judgments cited by the appellant were overruled by the Hon'ble Punjab & Haryana High Court. Consequently, the Tribunal upheld the liability of interest on the appellant.

2. Levy of Penalty:
Regarding the penalty, the Tribunal noted that the dispute originated in 1997-98, with the retrospective liability enacted in 2003 and upheld by the Supreme Court in Gujarat Ambuja Cements Ltd.'s case. Despite the payment of service tax before the show-cause notice, the Tribunal decided to take a lenient view on penalty. Considering the circumstances and the proactive payment of service tax by the appellant, the Tribunal set aside the penalty by applying the provisions of section 80 of the Finance Act, 1994. Thus, the penalty was waived in favor of the appellant.

3. Final Decision:
In conclusion, the Tribunal upheld the liability of interest and service tax on the appellant. The appeal was disposed of with the decision to waive the penalty under section 80 of the Finance Act, 1994. This comprehensive analysis highlights the key legal aspects and decisions made by the Tribunal in the judgment concerning the payment of service tax, liability of interest, and the levy of penalty.