2007 (10) TMI 229 - AT - Service Tax

Assessee availed Goods Transport Operator (GTO) service during the period 16-11-1997 to 1-6-1998 failure to file return and pay tax interest & penalty u/s 77 was paid but penalty u/s 76 is under challenge - As per the orders of SC in the case of Laghu Udyog Bharati v. UOI, the respondents were not liable to pay the tax or file returns - Commissioner is justified in vacating the penalty following the decision of the Tribunal in the case of L.H. Sugar Factories Ltd. v. CCE appeal dismissed

Summary

Issues:
Appeal against vacating penalty on respondents for non-compliance with legal formalities related to Goods Transport Operator (GTO) service availed during a specific period. Challenge to penalty imposition based on payment of service tax, interest, and penalty under different sections of the Finance Act, 1994. Interpretation of liability to pay service tax on GTO service under validation provisions in Finance Acts, 2001 and 2003. Dispute over reliance on Tribunal and Apex Court judgments in setting aside penalty and vacating the order-in-original.

Analysis:
1. The appeal filed by the revenue challenged the penalty imposed on the respondents for not complying with legal requirements regarding the GTO service availed. The Commissioner of Central Excise (Appeals) vacated the penalty based on the Tribunal's decision and an Apex Court judgment. The respondents had paid the service tax, interest, and a penalty under section 77 of the Finance Act, 1994. The Commissioner's decision was influenced by the Tribunal's ruling in a similar case, emphasizing the non-maintainability of show-cause notices under certain sections. The Apex Court upheld this decision, leading to the penalty being set aside.

2. In response to the revenue's appeal, arguments were made regarding the liability of GTO service users to pay service tax as per validation provisions in the Finance Acts of 2001 and 2003. The revenue contended that the Commissioner erred in relying on previous judgments and setting aside the original order. However, the respondents had already fulfilled their liabilities as per the original order, and the penalty was vacated. The representative of the respondents emphasized that the liabilities had been discharged, and the penalty should not be reinstated.

3. Upon reviewing the submissions from both parties, the Technical Member found that the penalty was vacated based on legal interpretations from previous cases. The Tribunal's decision in a specific case and the Apex Court's ruling supported the respondents' position that they were not liable to pay the demanded service tax and interest. The Technical Member concluded that the respondents' actions aligned with legal provisions and court interpretations, absolving them from any penalty under the statute. Consequently, the appeal filed by the revenue was dismissed, upholding the decision to vacate the penalty on the respondents.