2009 (1) TMI 73 - AT - Service Tax

Claim for relief under Not. No.32/2004-ST under which liability to tax under GTA service is abated up to 75% subject to, the condition that the GTA had not availed CENVAT credit on inputs and capital goods since appellants have produced documentary evidence to establish their entitlement of the disputed relief, matter remanded to original authority for fresh decision bonafide belief that tax was not due, penalty u/s 76 set aside but penalty u/s 77 is sustained for failure to file return

Summary

Issues:
1. Waiver of predeposit and stay of recovery of service tax, interest, and penalty imposed under Sections 76, 77 & 78 of the Act.
2. Eligibility for the benefit of Notification No.32/2004-ST regarding Goods Transport Agency (GTA) Service.
3. Imposition of penalties under Sections 76, 77 & 78 of the Act.
4. Verification of the certificates issued by GTAs regarding CENVAT credit.
5. Remand of the matter to the original authority for a fresh decision.

Analysis:
1. The application filed by M/s. Marudhamalai Murugan Industries (P) Ltd. sought waiver of predeposit and stay of recovery of service tax, interest, and penalty. The lower appellate authorities found that the applicants had not paid the due service tax under GTA Service for the period January 2005 to March 2006. The dispute centered around the abatement provided under Notification No.32/2004-ST, subject to conditions including non-availment of CENVAT credit by GTAs. The Commissioner (Appeals) did not accept the consignment notes provided by the assessee as fulfilling the exemption requirements.

2. The appellants claimed eligibility for the Notification benefit based on certificates from GTAs stating non-availment of CENVAT credit and non-registration as service providers. Both parties requested remand for verification. The Tribunal noted the documentary evidence presented by the appellants, including certificates from GTAs, and directed the original authority to verify the certificates' authenticity to determine the entitlement to the disputed relief.

3. Regarding penalties imposed under Sections 76, 77 & 78, the original authority upheld penalties totaling Rs.14,190. The appellants argued against the penalties, citing a bona fide belief in Notification eligibility and absence of willful misstatement or intent to evade tax. The Tribunal found that penalties were not warranted for the period January to March 2006 due to lack of fraudulent intent or suppression of facts. Penalty under Section 78 was deemed unsustainable, while the penalty under Section 77 for failure to file service tax return was upheld.

4. The Tribunal dismissed the stay application and remanded the matter to the original authority for a fresh decision. It emphasized the need to verify the GTAs' certificates regarding CENVAT credit and non-registration as service providers. The Tribunal invoked Section 80 of the Act to vacate the penalty under Section 76 due to the appellants' reasonable cause for non-payment of tax.

5. Ultimately, the Tribunal disposed of the appeal by vacating the penalty under Section 76, sustaining the penalty under Section 77, and remanding the matter for further verification and decision by the original authority. The stay application was also disposed of accordingly.