2019 (7) TMI 1180 - AT - Service Tax

Rectification of Mistake - short payment of service tax under the category of Clearing Forwarding Services and GTA Services - penalty - error apparent on the face of record or not - HELD THAT - The appellants have filed ST-3 returns for the disputed period and they have not given details of GTA service tax liability. It is explained in the statement of Shri V.K.Balasubramanian that they had not reflected the details of GTA, since service tax was paid by the service recipient as per law and they were under bonafide belief that they are not required to pay any service tax. Further from statement of Shri M. Venkatraman it is also established that though they were raising invoices, they could not pay up the service tax liability as there was delay in getting payments from their customers. The appellants have filed returns during the disputed period but had not made disclosure with regard to the GTA services. Whether this was a bonafide belief or not cannot be decided in an ROM application - there is apparent error on the face of record in the observations noted by the Tribunal that the appellants have not filed any returns. In these circumstances, the entire penalty imposed cannot sustain, as they had filed returns. C F services - Delay in payment - HELD THAT - The penalty imposed with regard to C F services requires to be set aside - The penalty in respect of GTA services is sustained. The penalty being composite penalty, the adjudicating authority is directed to quantify the penalty in respect of GTA services. ROM application allowed by way of remand.

Summary

Issues Involved:
Rectification of mistake in the Final Order regarding penalty imposed under Section 78 of the Finance Act, 1994 for alleged short payment of service tax under 'Clearing & Forwarding Services' and 'GTA Services'.

Analysis:

1. Rectification of Mistake in Final Order:
The appellant filed a ROM application seeking rectification of a mistake in the Final Order related to the penalty imposed under Section 78 of the Finance Act, 1994. The appellant had contested only the penalty during the appeal, stating that they had paid the entire service tax demand along with interest even before the issuance of the show cause notice. The Tribunal had observed that the appellant did not file statutory returns, leading to the penalty imposition. However, it was argued that the appellant did file ST-3 returns for the disputed period, as evidenced by the documents relied upon by the department. The appellant's representatives highlighted that the non-payment of service tax was due to delayed payments from clients, not intentional evasion. The Tribunal's error in holding that there was suppression of facts due to non-filing of returns was contested, leading to the ROM application.

2. Contention Regarding Non-Filing of Returns:
The department opposed the application, asserting that the appellants had indeed not filed returns during the disputed period, as mentioned in the show cause notice and supported by statements from the Manager (Accounts). The argument that ST-3 returns were filed, as indicated in the RUD of the SCN, was dismissed as a possible error. The department maintained that the appellants were guilty of suppression of facts to evade tax, which was upheld by the Tribunal. The opposition emphasized that there was no apparent error on the record, advocating for the dismissal of the ROM application.

3. Judicial Analysis and Decision:
Upon hearing both sides, the Tribunal analyzed the final order and the contentions presented. It was observed that the appellants had indeed filed ST-3 returns for the disputed period, contradicting the Tribunal's finding that no returns were filed. The lack of disclosure regarding GTA services in the returns was attributed to a bona fide belief that service tax was paid by the service recipient. The delay in service tax payment was linked to delayed client payments, as explained by the Director. The Tribunal concluded that the penalty imposed for 'Clearing & Forwarding Services' was unwarranted due to a mere delay in payment, thus setting it aside. However, the penalty for 'GTA Services' was sustained, and the adjudicating authority was directed to quantify it separately. The ROM application was allowed, and the final order was modified accordingly, highlighting the error in the Tribunal's observation about the non-filing of returns.

In summary, the judgment addressed the rectification of a mistake in the Final Order concerning penalties imposed for service tax non-compliance under 'Clearing & Forwarding Services' and 'GTA Services'. The analysis delved into the arguments presented by both parties, emphasizing the filing of ST-3 returns by the appellant and the Tribunal's erroneous finding on non-filing. The decision differentiated between the penalties, setting aside the penalty for 'Clearing & Forwarding Services' and sustaining it for 'GTA Services', with directions for separate quantification.