2019 (4) TMI 182 - AT - Service Tax

Classification of services - appellants have received extra amount from the customers over and above the hiring charges shown in the agreement entered by them with the vehicle owners - GTA Services or BAS? - time limitation - Held that - The customers to whom the appellant has provided GTA services has no knowledge whether the appellant is rendering service of transport of goods by using their own vehicles or by using the vehicles hired from other vehicle owners. This being the case, the allegation of the department that the extra amount collected is for procurement of services for their customers / client is factually incorrect. It is discussed in detail by the Commissioner that the appellants have discharged the service tax on this extra amount by including under it GTA service. They have availed 75% abatement which is legally available for the said category of service. That amount that has been collected by them for transportation of goods of their clients / customers has been thus subject to levy of service tax under GTA service. Thus the department cannot argue that the said amount has to fall under BAS and the appellant have to discharge service tax under BAS - there is no element that would attract the activity or the amount collected by the appellant in relation to hiring of vehicles or transportation of goods to be falling under BAS. Time Limitation - Held that - There are no ingredients to establish suppression of facts with intent to evade payment of service tax. On such score, the allegation of suppression of facts with intent to evade payment of service tax cannot sustain. The appellant succeeds on the ground of limitation also. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Classification of margin money under Business Auxiliary Service (BAS)
- Invocation of extended period for demand
- Imposition of penalty under sections 76 and 78 of the Finance Act, 1994

Classification of margin money under Business Auxiliary Service (BAS):
The case involved a dispute regarding the classification of margin money received by the appellant for providing Goods Transport Agency (GTA) services. The department contended that the margin money should be classified under BAS instead of GTA. The appellant argued that the margin money was already included in the taxable value for discharging service tax under GTA services. The appellant maintained that they were providing transportation services to customers using vehicles hired from third parties, and the customers were not aware of the vehicle ownership. The Tribunal analyzed the definition of BAS under section 65(19) and concluded that the extra amount collected by the appellant for transportation services did not fall under BAS. The Tribunal held that the department's argument was factually incorrect as the customers were unaware of the vehicle ownership, and the amount collected had already been subject to service tax under GTA services.

Invocation of extended period for demand:
The department had issued Show Cause Notices to the appellant for demand related to the margin money under BAS after a significant period from the relevant assessment period. The appellant contested the invocation of the extended period, arguing that they had disclosed all relevant details in their returns and had paid service tax under GTA services after availing abatement. The Tribunal found in favor of the appellant, stating that there was no suppression of facts with the intent to evade payment of service tax. The Tribunal held that the demand for the extended period was time-barred, and the appellant succeeded on the ground of limitation.

Imposition of penalty under sections 76 and 78 of the Finance Act, 1994:
The adjudicating authority had imposed penalties under sections 76 and 78 of the Finance Act, 1994, on the appellant. The appellant argued that they had a genuine belief that the services fell under GTA, and therefore, the penalties were unwarranted. The appellant also cited relevant legal precedents to support their argument. The Tribunal considered the appellant's contentions and held that the penalties imposed were against the provisions of law. The Tribunal set aside the penalties imposed under sections 76 and 78, providing relief to the appellant.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential relief. The judgment clarified the classification of margin money, addressed the invocation of the extended period for demand, and ruled on the imposition of penalties under sections 76 and 78 of the Finance Act, 1994 in favor of the appellant.