2020 (4) TMI 201 - AT - Service Tax

Non-payment of Service tax - GTA Service - reverse charge mechanism - export of services or not - invocation of extended period of limitation for the period 01.01.2005 to 30.09.2008 - demand alongwith interest and penalties - HELD THAT - The provisions of law are very clear that on both the services, the appellant being service recipient is liable to pay service tax. Therefore, on merits it is held that appellant is liable to pay service tax along with interest in question. Penalties - HELD THAT - The appellant was under bonafide belief that whatever service tax they will pay, they are entitled to take CENVAT credit. Therefore, by invoking Section 80 of the Finance Act, 1994 the penalty imposed on the appellant is set aside. Appeal disposed off.

Summary

Issues:
- Confirmation of demand of service tax against the appellant
- Imposition of penalties under Section 77 & 78 of the Act

Analysis:
- The appellant, engaged in the export of granite stone, utilized transporter services and a commission agent's services without paying service tax under reverse charge mechanism. Proceedings were initiated for the period 01.01.2005 to 30.09.2008, leading to the confirmation of service tax demand and penalties under Section 77 & 78.
- The appellant contended that they believed no service tax was payable for transportation services and that the commission paid to the agent constituted an export of service. They argued that if they had paid under reverse charge, they could have claimed CENVAT credit, making the extended period inapplicable and the demands unsustainable.
- The respondent argued that service tax was indeed payable by the appellant for both GTA services and services provided by the foreign agent under reverse charge mechanism.
- The tribunal held that the appellant, as the service recipient, was liable to pay service tax on both services. Consequently, the appellant was deemed liable to pay service tax along with interest.
- Regarding penalties, the tribunal noted the appellant's genuine belief in claiming CENVAT credit for the service tax paid. Invoking Section 80 of the Finance Act, 1994, the penalty imposed was set aside, allowing the appellant to claim CENVAT credit.
- The appeal was disposed of with the above terms, emphasizing the appellant's liability to pay service tax but relieving them of the penalty due to their good faith belief in CENVAT credit eligibility.