2023 (12) TMI 679 - AT - Service Tax

Non-payment of service tax - reverse charge mechanism - While quantifying the demand, the abatement available has not been considered - revenue neutrality - HELD THAT - The Tribunal in the case of ARANI AGRO OIL INDUSTRIES LTD. VERSUS COMMR. OF C. EX., VISAKHAPATNAM 2011 (1) TMI 715 - CESTAT, BANGALORE has gone into this issue and has held the benefit is denied for the reason that declaration of GTA as regards not availing the Cenvat credit was not available on each consignment note. We find that there is no such condition in the notification. Notification benefit should be allowed also for the period after issue of Circular based on the consolidated declaration obtained from GTA. The Circular of CBEC cannot prescribe a condition not present in the Notification. In the circumstances, we find that the impugned order is not in accordance with law. Therefore, as per the ratio of this case law, the Appellant would be eligible for abatement of 75% of the total freight value. Accordingly, as contended by the Appellant, the total Service Tax payable would amount to Rs. 26,43,025/- after considering this abatement. There is no dispute that the Appellant has paid Rs. 20,39,182/- along with interest of Rs. 15,79,196/-. When the issue is that of Revenue neutrality, in such cases, the question of suppression does not arise and it is held that on this count the balance demand amount of Rs. 6,03,843/- is liable to be set aside. The appellant is eligible for 75% abatement while the demand is quantified - Service Tax of Rs. 20,26,194/- along with interest of Rs. 15,29,196/- is not being disputed by the appellant and hence the same is being taken as their part discharge of the net Service Tax liability of Rs. 26,43,025 - For the balance amount of Rs. 6,03,843/- we allow the Appeal in view of the Revenue Neutrality - interest and penalty confirmed in the OIO are set aside. Appeal disposed off.

Summary

Issues:
The issues involved in the judgment are the non-payment of Service Tax on Reverse Charge Basis by the Appellant for the period 2005-2006 and 2006-2007, the contention regarding the abatement of 75% while quantifying the demand, and the question of Revenue Neutrality in relation to the demand amount.

Non-Payment of Service Tax on Reverse Charge Basis:
The Appellant utilized the services of GTA during the relevant period and was found to have not paid the Service Tax on Reverse Charge Basis. The Adjudicating Authority demanded a sum of Rs. 1,08,20,414/- as Service Tax. The Appellant contended that they should have been given the benefit of 75% abatement while quantifying the demand. They provided a Re-conciliation statement showing a lower amount due, along with evidence of Service Tax payments made and certificates from transporters regarding non-availment of Cenvat Credit. The Tribunal considered relevant case laws and held that the Appellant was eligible for the abatement, reducing the total Service Tax payable to Rs. 26,43,025/-. The Appellant had already paid a significant portion of this amount along with interest, which was not disputed.

Abatement of 75% and Revenue Neutrality:
The Tribunal referred to case laws emphasizing that the Appellant was entitled to the abatement of 75% and that the issue of Revenue Neutrality was crucial. It was noted that the Appellant had paid the Service Tax on the excess amount and was entitled to Cenvat Credit, making the entire exercise revenue neutral. Consequently, the Tribunal allowed the Appeal, setting aside the balance demand amount of Rs. 6,03,843/- due to Revenue Neutrality. The interest and penalty confirmed in the Original Order were also set aside.

Conclusion:
In conclusion, the Tribunal held that the Appellant was eligible for the abatement of 75% while quantifying the demand and that the Appellant's partial payment of Service Tax along with interest was accepted as part discharge of the net liability. The Appeal was allowed for the balance amount due to Revenue Neutrality, and the interest and penalty imposed were set aside.