2018 (7) TMI 1288 - AT - Service Tax

Penalty u/s 70 of the Finance Act, 1994 - non-quantification of actual interest under Section 75 of the Act - transport for goods services by road - reverse charge mechanism - Whether the service can be categorized under the head GTA Services or not? - Held that - This amount has been certified by the Chartered Accountant. Under such circumstances, the services rendered cannot be categorised as GTA service as has been held in the case of SOUTH EASTERN COAL FIELDS LTD. VERSUS C.C.E., RAIPUR 2016 (8) TMI 677 - CESTAT NEW DELHI - there is no liability on the part of the appellant for the payment of Service tax on this account under RCM - the interest goes alongwith the amount of tax payable in case any amount is still remained to be paid, appropriate interest shall be payable by the appellant as per the provisions of Section 75 of the Act. Penalty u/r 76 of FA - Held that - Section 76 and 78 are mutually exclusive - This is as per the amendment carried out under the 5th proviso of Section 78 through Finance Act, 2008 this has also been made applicable to the old cases also - penalty u/s 76 not warranted and is set aside. Payment of amount of Maintenance and Repair service - Held that - As far as the demand under this heading for services rendered by them is concerned, the appellant has not contested the demand confirmed and agreed to pay the same as they had been paying the service tax under this Head. Shifting charge will be treated under Cargo Handling Service - Held that - The Cargo Handling services does not come under the category of Reverse Charge Mechanism and therefore, the service tax required to be paid by the provider of the service nor the recipient thereof - In this case the appellant is not provider of the services and therefore the demand on this account is not sustainable and is set aside. Commission paid to the foreign agent - Held that - The contract was signed on 1/4/2006 and negotiation with the buyer was completed on 6/4/2006 as is evident from the copies of the contract - As held in the case of International Shipping Owners Association Vs. Union of India 2008 (12) TMI 41 - BOMBAY HIGH COURT , the service tax is not payable before 18/4/2006 i.e. the date of insertion of Section 66A in the Finance Act, 1994 - demand set aside. Appeal dismissed - decided against Revenue.

Summary

Issues involved:
1. Service tax demand for transport services, commission, and maintenance and repair services.
2. Applicability of penalty under Sections 70, 77, and 78 of the Finance Act, 1994.
3. Classification of services under Business Auxiliary Service and Cargo Handling Services.
4. Liability for service tax on overseas commission.
5. Interpretation of GTA services and Reverse Charge Mechanism.
6. Calculation of interest under Section 75 of the Act.
7. Imposition of penalty under Section 76 and Section 78 of the Act.

Detailed Analysis:

1. Service Tax Demand: The appellant was engaged in providing transport for goods services and commission from a foreign client, leading to a demand for service tax amounting to ?92,13,951 for the period 1/1/2005 to 30/9/2007. The issue revolved around the classification of services and non-disclosure of commission paid to foreign clients.

2. Penalty Applicability: The appellant appealed for confirming the service tax demand and penalty under Sections 77 and 78 of the Act. The contention was whether penalty should be imposed under Section 70 of the Finance Act, 1994, and the quantification of interest under Section 75 of the Act.

3. Classification of Services: The appellant failed to register for Business Auxiliary Service and Maintenance and repair service, leading to a demand under Transport of Goods by Road Service. The issue was whether the appellant's services fell under Cargo Handling Services and the applicability of Reverse Charge Mechanism.

4. Overseas Commission: The appellant argued that no service tax liability arose on the commission paid to foreign clients before the insertion of Section 66A. The issue was the liability for service tax on overseas commission prior to the insertion of relevant sections.

5. GTA Services: The appellant contended that certain payments made to truck operators did not fall under GTA services as the operators did not issue consignment notes. The issue was the classification of services under GTA and the liability for service tax under Reverse Charge Mechanism.

6. Interest Calculation: The calculation of interest under Section 75 of the Act was discussed, emphasizing the need for adjusting the already paid amount before determining the final tax liability.

7. Penalty Imposition: The adjudicating authority did not impose a penalty under Section 76 of the Act, citing mutual exclusivity with Section 78. The issue was whether the penalty should be levied under Section 76 or Section 78 of the Finance Act, 1994.

In conclusion, the appellate tribunal allowed the appellant's appeal based on various findings related to maintenance and repair services, shifting charges, overseas commission, and GTA services. The decision also addressed the calculation of interest and the imposition of penalties under Sections 76 and 78 of the Act, ultimately dismissing the appeal filed by the Department.