2016 (12) TMI 1466 - AT - Service Tax

Imposition of penalty u/s 77 and 78 of the FA, 199 - GTA services - failure to discharge tax - Held that - the appellants have taken a credit of the Service Tax voluntarily paid by them on the Goods Transport Agency services. It is a revenue neutral situation. There is no specific evidence produced by revenue to allege suppression or the mis-representation on part of the appellant as apparently they have nothing to gain by avoiding or by evading this duty. In view of the above, penalty under Section 78 cannot be upheld - However, the appellant had not disclosed the value of transportation in their ST-3 returns and when the same was pointed out by the Revenue, they paid voluntarily. In view of the above, the penalty imposed under Section 77 is upheld - appeal allowed - decided partly in favor of appellant.

Summary

Issues: Failure to pay Service Tax on Goods Transport Agency services, Challenge to penalty under Sections 77 and 78 of the Finance Act, 1994

Analysis:
1. The appellant, M/s Shryas Intermediates Ltd., faced a show-cause notice for not paying Service Tax on Goods Transport Agency services during specific periods for different units. The appellant paid the duty and interest but contested the penalty under Sections 77 and 78 of the Finance Act, 1994.

2. The appellant's counsel argued that there was no intention to evade duty as they had a revenue-neutral situation by availing credit for the Service Tax paid on the services. A report from the jurisdictional officer confirmed this credit utilization, supporting the argument against imposing penalty under Section 78.

3. The Revenue argued that the appellant did not file necessary returns or pay Service Tax for the services, indicating a suppression of facts, justifying the imposition of penalty under Section 78.

4. The judge observed that the appellant had voluntarily taken credit for the Service Tax paid on the services, confirmed by the jurisdictional officer, leading to a revenue-neutral scenario. Lack of evidence of suppression or misrepresentation by the appellant supported the decision against upholding penalty under Section 78. However, the appellant's failure to disclose transportation value in their returns led to upholding the penalty under Section 77.

5. Ultimately, the appeals were disposed of with the decision not to uphold the penalty under Section 78 due to the revenue-neutral situation but to maintain the penalty under Section 77 for the appellant's non-disclosure in their returns.

End of Analysis