2016 (6) TMI 778 - AT - Service Tax

Demand of service tax - extended period of limitation - malafide intention - reverse charge - GTA services availed in the mining area for the purpose of transporting the mine product from the face of the mining area to the other areas - Held that - The fact that the said Circular stand issued by the Board, and is in nature of clarification, is indicative of the fact that during the relevant period there was confusion. Further we note that the assessee admittedly is a Public Sector Undertaking and cannot be attributed with any malafide to evade tax. Further the Revenue has also not referred to any evidence to show that the tax was not being paid by the assessee on account of any suppression, mis-statement, with an intent to evade payment of duty - Demand set aside - Decided against the revenue.

Summary

Issues:
1. Liability to pay service tax on GTA services for transportation of coal.
2. Validity of interest on delayed payment of service tax.
3. Applicability of limitation period on interest payment.

Analysis:
1. The respondent was engaged in coal extraction and had agreements with Goods Transport Agencies (GTA) for coal transportation. The issue was the liability to pay service tax on GTA services received on a reverse charge basis. The respondent paid service tax for the period 01/1/2005 to 31/1/2007. The original Adjudicating Authority confirmed the deposit amount and interest, leading to the respondent challenging the interest portion before the Commissioner (Appeals).

2. The Commissioner (Appeals) observed that the appellant had paid service tax under protest and contested the interest charged. Referring to a CBEC circular and the case law, the Commissioner held that the extended limitation period did not apply, and the demand raised on 25/6/2007 was time-barred. The Commissioner found no suppression or misstatement by the appellant, a Public Sector Undertaking, and deemed the payment for the time-barred demand as legally valid. Citing the Finance Act 1944 and case law, the Commissioner held interest as mandatory on delayed tax payment, payable only when tax itself is due.

3. The Revenue appealed the Commissioner's decision, arguing that interest should be payable on the time-barred demand. The Appellate Tribunal noted the reliance on the CBEC circular, the confusion during the relevant period, and the appellant's status as a Public Sector Undertaking. Finding no malafide intent to evade tax and no evidence of suppression, the Tribunal upheld the Commissioner's order. The Tribunal rejected the Revenue's appeal, emphasizing the lack of justifiable reasons to interfere with the decision based on the circumstances and legal provisions presented.