2019 (1) TMI 779 - AT - Service Tax

Non-payment of service tax - freight charges paid to the transporters during the period from 2007-08 and onwards - freight is being paid by their Head office at Howrah, Kolkata - Held that - All freight charges for transportation of goods from Kolkata to Jaipur by road have been paid by the Head Office of the Company at Kolkata - In view thereof since the freight of the transportation is paid by the Kolkata office naturally in view of the provisions contained in Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994, the service tax payable on the amount of freight can be paid by the Head Office of the company situated at Kolkata, else it shall amount to double taxation. There is no evidence of centralized registration being produced by the appellant. Also, the documents tendered are insufficient to prove that Kolkata office has discharged the liability of Jaipur office as has also been observed by the adjudicating authorities below. The Chartered Accountant s Certificate shows much higher an amount of freight charges for Kolkata office only then the amount shown by the appellant qua freight charge of Kolkata as well as Jaipur office. Penalty - Held that - The appellants certainly, cannot be alleged of committing an act of non payment of service tax by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or the Rules made thereunder, with intent to evade payment of Service Tax - the appellant were not liable to be imposed with any penalty under any of the provisions contained in the Finance Act, 1994. CENVAT Credit - Held that - Once there is no proof of payment of service tax by appellant question of entitlement of cenvat credit does not arise at all. Thus, the appellant could not have proved that the liability towards GTA has been discharged. Hence, appellant is held liable to discharge the said liability though the same stands already paid with interest. Hence, the Order is set aside to the extent of confirming penalty - appeal allowed in part.

Summary

Issues:
1. Liability of service tax on transportation charges from Kolkata to Jaipur.
2. Applicability of circular regarding double taxation.
3. Time-barred demand for service tax.
4. Evidence of centralized registration.
5. Imposition of penalty for non-payment of service tax.
6. Availing cenvat credit without proof of service tax payment.

Analysis:
1. The case involved a dispute regarding the liability of service tax on transportation charges from Kolkata to Jaipur. The appellant argued that since the freight charges were paid by the Head Office in Kolkata, the service tax liability had been discharged centrally. However, the absence of evidence of centralized registration raised doubts about this claim. The tribunal observed discrepancies in the documents provided and upheld the demand for service tax.

2. The appellant relied on a circular to support their argument against double taxation. The tribunal acknowledged the circular's relevance but emphasized the lack of conclusive evidence to prove that the liability had been discharged by the Head Office. The case law cited by the appellant was considered, but the tribunal found no infirmity in the lower authority's decision.

3. The appellant contended that the demand for service tax for the period up to September 2009 was time-barred. However, the tribunal rejected this argument, stating that the demand was not illegal or untenable, especially considering the lack of conclusive evidence regarding the discharge of service tax liability.

4. The issue of evidence of centralized registration was crucial in determining the liability of the appellant. Despite the appellant's claims, the tribunal found the documents provided insufficient to prove that the Kolkata office had discharged the liability of the Jaipur office. This lack of evidence played a significant role in upholding the demand for service tax.

5. Regarding the imposition of a penalty for non-payment of service tax, the tribunal noted that the appellants had already deposited the demanded service tax along with interest before the issuance of the show-cause notice. Citing relevant case laws, the tribunal concluded that the appellants could not be penalized for non-payment, as there was no intent to evade payment.

6. The tribunal also addressed the issue of availing cenvat credit without proof of service tax payment. Given the lack of evidence of service tax payment by the appellant, the tribunal held that the question of entitlement to cenvat credit did not arise. The order was set aside to the extent of confirming the penalty, and the appeal was partly allowed.