2018 (12) TMI 16 - AT - Service Tax

Transportation of the goods by road - Reverse Charge Mechanism - non-payment of service tax - eligibility for N/N. 34/2004-ST dated 03.12.2004 - Held that - The appellant is claiming the benefit of exemption Notification; it is for them to prove that the benefit of this notification is available to them. In case of any doubt the benefit of doubt will go to the Revenue. In this case the appellant has produced no proof to substantiate their claim that they are eligible for the exemption notification either before the Original Authority or before the First Appellate Authority or even in this appeal - appellant is not eligible for exemption notification - demand upheld - appeal dismissed - decided against appellant.

Summary

Issues:
1. Applicability of exemption Notification No. 34/2004-ST dated 03.12.2004.
2. Liability to pay service tax on transportation of goods under reverse charge mechanism.
3. Imposition of penalties under Sections 76 & 77 of the Act.

Issue 1: Applicability of exemption Notification No. 34/2004-ST dated 03.12.2004:
The appellant, a manufacturer of Starch and gluten, contested a show cause notice demanding service tax on transportation of goods by road under reverse charge mechanism. The appellant claimed eligibility for exemption under Notification No. 34/2004-ST, stating that the transport charges per consignment were less than Rs. 1500, thus arguing against tax liability and penalties. The Original Authority confirmed the demand, interest under Section 75, and imposed a penalty under Section 76. The First Appellate Authority upheld the decision, emphasizing that the appellant failed to provide evidence to support their claim for exemption. The appellant's lack of documentary evidence, failure to produce ledger accounts for payments made, and inability to substantiate their claim despite multiple stages of adjudication led to the rejection of the appeal. The Tribunal noted that the burden of proving eligibility for the exemption rested with the appellant, citing the rule that any doubt should favor the Revenue, as established in the case of M/s Dilip Kumar & Co. The Tribunal found no grounds to support the appellant's claim for exemption, concluding that the demand, interest, and penalties were correctly imposed.

Issue 2: Liability to pay service tax on transportation of goods under reverse charge mechanism:
The authorities discovered the appellant's failure to discharge service tax on the transportation of goods by road under reverse charge mechanism during a verification process. A show cause notice was issued, demanding service tax payment and proposing penalties under Sections 76 & 77 of the Act. The appellant argued for exemption under Notification No. 34/2004-ST, claiming that the transport charges per consignment were below the threshold amount. However, the authorities found that the appellant did not provide sufficient evidence to support their claim, leading to the confirmation of the demand, imposition of interest under Section 75, and penalties under Section 76 by the Original Authority. The First Appellate Authority upheld this decision, emphasizing the appellant's failure to produce valid documents or ledger accounts for payments made, ultimately resulting in the rejection of the appeal.

Issue 3: Imposition of penalties under Sections 76 & 77 of the Act:
The Original Authority confirmed the demand for service tax, imposed interest under Section 75, and levied a penalty under Section 76 on the appellant for failing to discharge service tax on the transportation of goods by road under reverse charge mechanism. The First Appellate Authority upheld this decision, highlighting the appellant's lack of documentary evidence and failure to substantiate their claim for exemption under Notification No. 34/2004-ST. The Tribunal affirmed the correctness of the penalties imposed, emphasizing the appellant's failure to provide proof of eligibility for the exemption at various stages of adjudication, leading to the rejection of the appeal.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT HYDERABAD highlights the issues surrounding the applicability of the exemption notification, liability for service tax on transportation of goods, and the imposition of penalties under relevant sections of the Act.