2018 (2) TMI 1178 - AT - Service Tax

GTA Service - the appellant had transported Debris by deploying their own trippers and trucks where Debries were loaded - main contention of the appellant is that debries is not a goods and it has no value, so liability of tax does not arise - Held that - it appears that debries is not value less item as appellant has got substantial amount by dumping the debries. Had there not been any debries, there was no question of transportation - It is evident that when the appellant has earned a substantial consideration by dumping debries through trippers and trucks i.e own transportation, then the tax is leviable, may be as unregistered dealer - liability of service tax sustained. Penalty - Held that - the appellant was under bonafide belief that Service Tax is not leviable - also interpretation of issue involved - penalty not warranted. Appeal allowed in part.

Issues Involved:
Service Tax on transportation of "Debris" - Valuation of "Debris" - Applicability of Goods Transport Agency Services - Interpretation of law regarding the value of "Debris" - Liability for Service Tax - Imposition of penalty - Bonafide belief of the appellant.

Analysis:

1. Service Tax on transportation of "Debris":
The appellant was engaged in the manufacture of Sponge Iron and Ingots and had transported "Debris" using their own vehicles, for which they received a substantial amount. The Department demanded Service Tax under the category of Goods Transport Agency Services. The appellant contended that "Debris" is not a good and has no value. However, the Tribunal noted that the appellant received payment for dumping the "Debris," indicating its value. The Tribunal found that the appellant earned a significant consideration through this activity, making the tax leviable.

2. Valuation of "Debris":
The appellant argued that "Debris" is a valueless item, but the Tribunal observed that the appellant received a substantial amount for transporting and dumping the "Debris," suggesting its inherent value. The Tribunal concluded that the appellant's earnings from this activity indicated that the "Debris" indeed had value, justifying the imposition of Service Tax.

3. Applicability of Goods Transport Agency Services:
The appellant contended that the "Debris" transportation did not fall under Goods Transport Agency Services. However, the Tribunal found that the substantial consideration earned by the appellant for transporting the "Debris" through their vehicles qualified as a taxable service, even if the appellant was an unregistered dealer.

4. Interpretation of law regarding the value of "Debris":
The appellant argued that "Debris" should not be considered a good with value. The Tribunal noted that the appellant failed to provide any legal precedent supporting this argument. The Tribunal emphasized that the appellant's substantial earnings from the activity indicated the value of the "Debris," justifying the tax liability.

5. Liability for Service Tax:
Considering the facts and circumstances of the case, the Tribunal upheld the levy of Service Tax on the transportation of "Debris" by the appellant. The Tribunal reasoned that the appellant's significant earnings from this activity demonstrated the taxable nature of the service provided.

6. Imposition of penalty - Bonafide belief of the appellant:
While sustaining the Service Tax liability, the Tribunal considered the appellant's bonafide belief that Service Tax was not applicable. The Tribunal noted that this was the first instance where the appellant claimed the "Debris" had no value, indicating a need for interpreting the law. As a result, the Tribunal canceled the penalty, recognizing the appellant's genuine belief in the interpretation of the law.

In conclusion, the Tribunal partly allowed the appeal, upholding the Service Tax liability on the transportation of "Debris" by the appellant but canceling the penalty due to the appellant's bonafide belief regarding the interpretation of the law.

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