2020 (1) TMI 428 - AT - Service Tax

Transport of Goods by Road Service - reverse charge mechanism - period 2005-06 to 2009- 10 - failure to make payment of service tax as well as to take registration - demand alongwith interest and penalty - HELD THAT - The appellant assessee is not disputing its liability for payment of Service Tax and have in fact paid the Service Tax on the basis of their calculation - Since the appellant is a service recipient and discharging the Service Tax liability under the Reverse Charge Mechanism , they are entitled to abatement of 75% under Notification No.32/2004-ST dt. 03/12/2004 as amended by Notification No. 01/2006-ST. The issue is squarely is covered in the decision in the case of M/S. SREE KANYA COMBINES VERSUS CCE, VISAKHAPATNAM-II 2016 (8) TMI 848 - CESTAT HYDERABAD where it was held that The service tax on renting of immovable property was not paid as the issue was contentious an there were decisions in favour of assessee also. Thus, present is a fit case for invoking the provision of Section 80 and accordingly, the penalty imposed under Section 77 and 78 of the Finance Act, 1994 are set aside. The matter is remanded to the Adjudicating Authority for the limited purpose of calculating the Service Tax liability after considering that some payments were made to new Truck owners who have not issued any consignment notes. There is no liability of Service Tax in such transactions - appeal allowed in part by way of remand.

Summary

Issues:
1. Failure to pay Service Tax under the category of "Transport of Goods by Road Service" for the period 2005-06 to 2009-10.
2. Failure to get registration with the Service Tax Department and submit periodical ST-3 returns.
3. Demand of ?3,00,175/- along with interest and penalties under Sections 77 and 78 of the Finance Act, 1994.

Analysis:
1. The appellant was issued a Show Cause Notice for not paying Service Tax under the category of "Transport of Goods by Road Service" for the period 2005-06 to 2009-10, along with failure to register with the Service Tax Department and submit ST-3 returns. The Ld. Commissioner (Appeals) upheld the Adjudication Order, leading to the appeal before the Tribunal.

2. The appellant, a service recipient under the Reverse Charge Mechanism, argued that they had paid Service Tax after obtaining registration in 2009. They contended that payments were made to individual truck owners, not transport agencies, and that they had availed a 75% abatement on the Gross Amount paid. Citing Ministry of Finance press releases, the appellant argued that the tax incidence falls on the transport booking agency, not the truck owners.

3. The Tribunal found that the appellant had paid Service Tax based on their calculation and was entitled to a 75% abatement. Citing precedents like Lakshminarayana Mining Co. and Shanti Fortune (I) Pvt. Ltd., the Tribunal held that no tax liability arises when services are received from individual truck owners. The issue was deemed settled by the decision in SREE KANYACOMBINES v. COMMISSIONER OF C. EX., VISAKHAPATNAM-II, where penalties under Sections 77 and 78 of the Finance Act, 1994 were set aside due to reasonable cause for non-payment of Service Tax.

4. Consequently, the Tribunal partly allowed the appeal, setting aside penalties under Sections 77 and 78 and remanding the matter to the Adjudicating Authority to recalculate the Service Tax liability considering payments made to truck owners who did not issue consignment notes. The judgment was pronounced on 08/01/2020.