2017 (5) TMI 564 - AT - Service Tax

Penalty u/s 78 - GTA services - demand on the ground that the appellants did not take registration and did not file returns during the relevant period, and thus, the appellants are guilty of suppression of facts - Held that - the appellants have paid the service tax along with interest on 29.06.2009 which is much before the issuance of the SCN. Therefore, the penalties imposed u/s 78 is unwarranted - penalties set aside - demand of tax and interest upheld - appeal allowed - decided partly in favor of assessee.

Summary

Issues:
1. Upholding demand and interest by Commissioner (Appeals)
2. Imposition of penalty under Section 78 of the Finance Act, 1994
3. Registration and filing of returns by the appellants
4. Payment of service tax under GTA services
5. Grounds for interference in demand and interest

Analysis:
1. The appeal was filed against the order passed by the Commissioner (Appeals) upholding the demand and interest. The appellants, engaged in trading Iron and Steel Bars, paid an amount towards service tax under GTA services after investigations were initiated. A Show Cause Notice was issued proposing recovery of service tax, interest, and penalties. The adjudicating authority confirmed the demand and interest, imposing penalties under Section 78 of the Finance Act, 1994. The appellant appealed against this decision.

2. The Department argued that the appellants did not register or file returns during the relevant period, paying the service tax only after investigations began. It was highlighted that one of the partners in the appellant firm was the Managing Director of another company registered under GTA services, discharging service tax. The Department contended that the appellants were aware of the law requiring payment of service tax under GTA services, accusing them of suppression of facts by not registering or filing returns.

3. The Tribunal noted that the appellants paid the service tax with interest before the Show Cause Notice was issued, rendering the penalties under Section 78 unwarranted. Despite the appellant's argument that the demand was time-barred, the records showed that details were furnished only after repeated Departmental letters and summons. The Tribunal observed that the Managing Director of another company, a partner in the appellant firm, was already paying service tax under GTA services. Consequently, the Tribunal found no grounds to interfere with the demand and interest, upholding them but setting aside the penalties imposed under Section 78.

4. In conclusion, the Tribunal partially allowed the appeal by modifying the impugned order to set aside the penalties. The appeal was allowed in terms of setting aside the penalties, with consequential reliefs, if any, granted.