2017 (10) TMI 557 - AT - Service Tax

GTA Service - reverse charge mechanism - assessee had purchased salt, coal and lime from various places and paid transportation charges - Held that - the entire adjudication needs to be revisited to confirm or otherwise the veracity of the submissions and contentions of the appellant. That would be in the interests of justice - on the aspect of calculation of service tax liability, we remand the matter back to the adjujdicating authority for denovo consideration. Penalty - Held that - there has been no allegation of separation, fraud, misstatement of facts on the part of the assessee with an intention to evade discharge of service tax liability - penalty set aside. Appeal allowed in part and part matter on remand.

Issues involved:
1. Confirmation of tax liability on Goods Transport Agency (GTA) services for the period from January 2005 to October 2006.
2. Imposition of penalties under various provisions of law.
3. Dispute regarding penalty amount under Section 76 for the period up to 17.4.2006.

Detailed Analysis:
1. The appeals arose from an impugned order confirming tax liability on GTA services for the mentioned period. The assessee, engaged in manufacturing, had procured raw materials and paid transportation charges. The department alleged non-payment of service tax on GTA services and issued a Show Cause Notice demanding tax, interest, and penalties. The Commissioner's order confirmed the tax liability and imposed penalties under different sections of the Finance Act, 1994.

2. The assessee contended that the tax liability was discharged for freight on salt, coal, and lime. They argued that certain elements of transportation were part of the sale price, and the liability was discharged under specific rules and notifications. The total tax liability for salt, coal, and lime was detailed, along with the payments made by the assessee and vendors. The nature of contracts for coal and lime procurement was highlighted to shift the service tax liability to the service providers.

3. The department supported the tax liability and penalties imposed, emphasizing that the liability emerged post-audit. The arguments centered on the transportation charges paid by the assessee and the subsequent tax liability on GTA services. The department sought higher penalties under Section 76 based on the prevailing provisions.

4. After considering both sides, the Tribunal remanded the matter for a fresh adjudication on the calculation of service tax liability. The Tribunal acknowledged the need to reassess the submissions and contentions of the appellant for a just decision. Regarding penalties, the Tribunal found no evidence of intentional evasion by the assessee. It concluded that penalties under Section 76 and 78 were excessive and set them aside, while upholding the penalty under Section 77. The department's appeal seeking higher penalties was dismissed based on lack of merit.

5. In the final disposition, the Tribunal set aside penalties under Sections 76 and 78 but upheld the penalty under Section 77. The Tribunal's decision was based on the lack of intentional evasion and the disputed tax liability aspects raised by the assessee. The appeals were disposed of accordingly, with the department's appeal being dismissed.

This detailed analysis covers the issues of tax liability confirmation, penalty imposition, and the reassessment of penalties under different sections of the Finance Act, 1994, as addressed in the judgment by the Appellate Tribunal CESTAT CHENNAI.

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