2016 (11) TMI 281 - AT - Service Tax

GTA service - whether transportation subsidy received from the Government of Maharashtra can treated as part of the gross value of the GTA service? - reliance placed on the decision of Commissioner of Central Excise, Bangalore Vs. Mazagon Dock Ltd. 2005 (7) TMI 105 - SUPREME COURT OF INDIA - Held that - The Hon ble Supreme Court held that the subsidy which is given by the Government is not paid by the buyer of the goods. Similarly, in the case of service the subsidy of transportation given by the Government is not paid by the service provider. The gross amount of the service can only be taken the value which is paid payable by the service recipient. In the present case also, the subsidy given by the government, since not a part of the amount paid by the service recipient to the service provider, the subsidy cannot be included in the gross value of service. Therefore, the ratio of the Hon ble Supreme Court judgment is directly applicable to the present case. The subsidy amount will not attract service tax. The adjudicating authority is directed to re-quantify the service tax liability by reducing the amount of subsidy. Waiver of penalty - the appellant has shown reasonable cause for non payment of service tax. Therefore, they are entitled for the waiver of penalties imposed under Section 76 & 78 invoking Section 80 of the Finance Act, 1994. - the Penalties under Section 76 & 78 are waived - late fee imposed by the Ld. Commissioner for an amount of ₹ 2,000/- is upheld - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Demand of Service Tax under GTA service
2. Imposition of penalties under Sections 70, 77, 76 & 78
3. Applicability of transportation subsidy on service tax liability
4. Arithmetical error in tax liability calculation
5. Waiver of penalties under Section 76 & 78 invoking Section 80 of the Finance Act, 1994

Analysis:
1. The appeal challenged the demand of Service Tax under GTA service, along with the confirmation of interest and penalties under Sections 70, 77, 76 & 78. The Commissioner (Appeals) upheld the demand of Service Tax, maintained penalties under Sections 76 & 78, but reduced the late fee and set aside the penalty under Section 77. The appellant disputed the quantification of demand, citing a transportation subsidy received from the Government. The appellant relied on various judgments to support their case.

2. The appellant argued that the tax liability arose due to an arithmetical error, indicating no intention to evade service tax. The Assistant Commissioner for the Revenue reiterated the findings of the impugned order. The Tribunal considered the submissions and referred to the Hon'ble Supreme Court judgment in the case of Mazagon Dock Ltd., stating that a subsidy from the Government should not be included in the gross value of service for taxation purposes. The Tribunal disagreed with the Commissioner (Appeals) and directed the re-quantification of service tax liability by excluding the subsidy amount.

3. The Tribunal held that the appellant had reasonable cause for non-payment of service tax due to the arithmetical error and promptly paid the tax upon identification of the mistake. Consequently, the Tribunal waived the penalties under Sections 76 & 78 invoking Section 80 of the Finance Act, 1994. The late fee imposed by the Commissioner was upheld, and the appeal was partly allowed based on the findings regarding the subsidy and arithmetical error in tax calculation.

This detailed analysis of the judgment highlights the key issues raised in the appeal, the arguments presented by both parties, and the Tribunal's decision based on legal principles and precedents cited during the proceedings.