2008 (12) TMI 152 - AT - Service Tax

Waiver of penalty under section 80 - The Service Tax on GTA was reduced (sic) from 1-1-2005 and as per the provisions of the notification issued in this regard in case of GTA service received by a manufacturer the tax liability was on the manufacturer not on the Goods Transport Agency. It is also seen that the appellant paid the Service Tax on their own and it is not that the department first pointed out the non-payment and then they paid the Service Tax - the delay in payment of Service Tax was on account of their ignorance of the law is acceptable. Penalty waived invoking the provisions of section 80.

Summary

Issues:
1. Delay in payment of Service Tax by a spinning unit for services provided by a goods transport agency.
2. Imposition of penalty under section 76 of the Finance Act, 1994 for the delay in payment of Service Tax.

Analysis:
1. The case involved a spinning unit manufacturing spun acrylic yarn that did not pay Service Tax for services provided by a goods transport agency from January 2005 to November 2005. The unit paid the tax on 8-12-2005 for the period up to November 2005 and on 31-3-2006 for the period up to February 2006. The Assistant Commissioner imposed a penalty under section 76 of the Finance Act, 1994 for the delay in payment, which was upheld by the Commissioner (Appeals).

2. The appellant argued that the delay in payment was due to their ignorance of the law, as they were not aware of the tax liability on manufacturers availing goods transport agency services. They contended that they paid the tax as soon as they became aware of their liability, despite being a sick unit. The appellant requested the invocation of section 80 of the Finance Act to waive the penalty.

3. The Departmental Representative supported the penalty imposition, citing multiple instances of delay in payment of Service Tax.

4. The Technical Member noted that the tax liability for goods transport agency services was on the manufacturer, not the agency, effective from 1-1-2005. The appellant paid the tax voluntarily without being prompted by the department. Considering the appellant's ignorance of the law as the reason for the delay, the Technical Member found it acceptable. Consequently, the Technical Member invoked section 80 of the Finance Act to waive the penalty, setting aside the impugned order and allowing the appeal with consequential relief.