2022 (4) TMI 136 - AT - Service Tax

Waiver of penalties under Sections 76, 77 and 78 of Finance Act, 1994, which are relating to the period 2005 - Refund of the tax wrongly paid - period of dispute is 01-01-2006 to 28-02-2007 - HELD THAT - Admittedly, the assessee appellant has only engaged the services of individual truck owners for transporting the iron ore and ore burden from its mine head up to the port and hence he would become the recipient of GTA service. A perusal of paragraph 13 of the Order-in-Original referred to by the learned AR when read conjointly with Rule 4B ibid, it is found that the explanation given to consignment note matches with the contents extracted at paragraph 13 of the Order-in-Original. Definition under Section 65(50b) would also refer to issuing of consignment note, by whatever name called and hence if for convenience, the assessee has termed as pay slips , that by itself would not result in any other thing other than a consignment note. Secondly, even the definition of GTA as per Section 65(50b) would mean any person, including individuals and hence we are not in agreement with the contentions of the learned advocate in this regard. Insofar as the other contentions of the learned advocate that the work order was in a nature of composite contract for both removal and transportation of iron ore and ore burden at specified rates and hence the same would qualify, as understood by the assessee, as cargo handling service. This contention cannot also be accepted. It is found from the decisions relied upon by the learned advocate that penalties under Sections 76, 77 and 78 are not automatic and are governed by Section 80 ibid. The adjudicating authority has elaborately discussed and appreciated the bona fide belief entertained by the assessee that they were not liable to pay service tax since the trucks used for transportation were owned by the transporter himself. In any case, the adjudicating authority has exercised his discretion by dropping penalties being satisfied that the assessee had made sufficient case for invoking Section 80 ibid. Revenue has not found any mala fide insofar as the plea which provided the assessee in not paying service tax in time and hence we have to conclude that the assessee has proved reasonable cause for its failure which has been duly accepted by the adjudicating authority. Both the appeals are dismissed.

Summary

Issues:
1. Denial of refund of tax wrongly paid by the assessee.
2. Challenge to dropping of penalties under Sections 76, 77, and 78 of Finance Act, 1994 by the Revenue.

Analysis:

Issue 1: Denial of refund of tax wrongly paid by the assessee
The assessee, engaged in iron ore extraction, processing, and export, challenged the denial of refund for tax wrongly paid during the period of 01-01-2006 to 28-02-2007. The advocate for the assessee argued that the amount paid was under protest, relying on legal precedents like Mafatlal Industries Vs. UOI. The advocate contended that the services provided by individual truck owners for transportation were not covered under Goods Transport Agency (GTA) and hence not taxable. The advocate also highlighted that the denial of refund was incorrect, and the assessee was entitled to interest under Section 11BB. The Tribunal, after considering the arguments and documents, upheld the findings of the lower authorities, concluding that the assessee was liable to be taxed as the recipient of GTA service. The Tribunal rejected the appeal filed by the assessee, emphasizing that the services provided by individual truck owners constituted transportation services falling under GTA.

Issue 2: Challenge to dropping of penalties under Sections 76, 77, and 78 by the Revenue
The Revenue challenged the dropping of penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The adjudicating authority had dropped the penalties after considering the bona fide belief of the assessee that they were not liable to pay service tax due to the ownership of trucks by the transporter. The authority exercised discretion under Section 80 of the Act, concluding that the assessee had a reasonable cause for the failure to pay the service tax on time. The Tribunal, after reviewing the case, found no mala fide intent on the part of the assessee and upheld the dropping of penalties. The Tribunal dismissed the appeal filed by the Revenue, stating that the assessee had provided sufficient grounds for invoking Section 80 and proved a reasonable cause for the delay in payment.

In conclusion, both appeals were dismissed by the Tribunal on 31/03/2022, maintaining the denial of refund to the assessee and upholding the dropping of penalties by the Revenue.