2024 (4) TMI 1262 - AT - Service Tax

Liability of the appellant to pay service tax under the category of GTA services - demand of service tax on 100% of the value of taxable service since the appellant did not submit the declaration on the consignment note required for availing the exemption as provided under the N/Ns. 32/2004-ST dated 03.12.2004 and 1/2006-ST dated 01.03.2006 - Extended period of limitation - Penalty u/s 76 and 78 of FA - HELD THAT - The issue has already been decided by the Tribunal in the case of Commissioner of C.Ex. Rajkot Vs Sunhill Ceramics Pvt. Ltd. 2007 (12) TMI 24 - CESTAT AHMEDABAD wherein it has been held that service tax cannot be demanded on 100% of the value - the Appellant is eligible for 75% abatement and hence the demand of service tax on 100% of the freight charges as demanded in the impugned order is not sustainable. Extended period of limitation - HELD THAT - The Department has taken the freight charges available in the Balance Sheet for the years 2005-06 and 2006-07 and service tax account register for the year 2007-08 to demand service tax. Thus it is evident that the appellant has not suppressed any information from the Department. They have been registered with the Service Tax Department and paying service tax under the category of GTA for the period 01.01.2005 to 31.03.2005. Thus there is no suppression of fact with intention to evade payment of service tax established in this case. Therefore the extended period cannot be invoked to demand service tax in this case. Penalty u/s 76 and 78 of FA - HELD THAT - No penalty imposable on the appellant under sections 76 and 78 of the Finance Act 1994. Conclusion - i) The Appellant is eligible for 75% abatement and hence the demand of service tax on 100% of the freight charges as demanded in the impugned order is not sustainable. ii) There is no suppression of fact with intention to evade payment of service tax established in this case. Therefore the extended period cannot be invoked to demand service tax in this case. iii) No penalty imposable on the appellant under sections 76 and 78 of the Finance Act 1994. Appeal disposed off.

2007 (12) TMI 24 - AT

2025 (4) TMI 1327 - AT

The core legal questions considered in this appeal are:

1. Whether the appellant is liable to pay service tax on 100% of the freight charges incurred for transportation services under the category of Goods Transport Agency (GTA) services, or whether they are entitled to the 75% abatement as provided under relevant notifications.

2. Whether the extended period of limitation for demanding service tax can be invoked by the Department in this case, given the appellant's registration and partial payment of service tax during the relevant period.

3. Whether penalties under Sections 76, 77, and 78 of the Finance Act, 1994 are justified in the facts of this case.

Issue-wise Detailed Analysis

Issue 1: Liability to pay service tax on 100% of freight charges versus entitlement to 75% abatement under GTA services

The relevant legal framework includes Notification No. 32/2004-ST dated 03.12.2004 and Notification No. 1/2006-ST dated 01.03.2006, which provide for a 75% abatement on the value of taxable service in respect of GTA services, effectively taxing only 25% of the freight charges. The appellant had paid service tax on 25% of the taxable value for the period 01.01.2005 to 31.03.2005 but did not pay service tax for the period 01.04.2005 to 31.03.2008, contending that no GTA services were engaged.

The Department issued a Show Cause Notice demanding service tax on 100% of the freight charges for the period 01.04.2005 to 31.03.2008, on the ground that the appellant failed to submit the requisite declaration on the consignment note to avail the abatement. The adjudicating authority and Commissioner (Appeals) upheld this demand.

The Court relied heavily on the Tribunal's decision in Commissioner of C.Ex., Rajkot Vs Sunhill Ceramics Pvt. Ltd., which clarified that service tax cannot be demanded on 100% of the freight charges when the abatement provisions apply. The Tribunal in that case emphasized that the taxable service is that of the Goods Transport Agency, and the abatement is available to the consignee or consignor who pays the freight charges, provided conditions are met. It further held that the appellant, being the deemed provider of GTA service under Section 68(2), is entitled to the 75% abatement and that denial of this benefit on the ground of non-submission of declarations was not sustainable.

Applying this precedent, the Court concluded that the appellant is eligible for the 75% abatement on freight charges and the demand of service tax on 100% of the freight charges is unsustainable.

Issue 2: Invocation of extended period of limitation for demand of service tax

The Department invoked the extended period of limitation to demand service tax for the period 01.04.2005 to 31.03.2008, issuing the Show Cause Notice on 25.06.2008. The appellant contended that since they were registered with the service tax department and paid service tax for the period 01.01.2005 to 31.03.2005, and did not conceal any information, the extended period could not be invoked.

The Court examined the evidence, including the appellant's registration status, payment records, and the Department's use of freight charges from the appellant's Balance Sheet and service tax account register to compute the demand. It found no suppression of facts or intention to evade tax by the appellant.

Accordingly, the Court held that the extended period of limitation was not invocable as there was no concealment or fraud, and the demand must be restricted to the normal period of limitation. This reasoning led to setting aside the demand confirmed by invoking the extended period.

Issue 3: Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994

The penalties under these sections relate to failure to pay service tax and suppression of facts. Given the Court's finding that there was no suppression of information and that the appellant had been registered and partially compliant, penalties under Sections 76 and 78 were set aside.

However, the penalty under Section 77, which relates to failure to pay service tax within the prescribed time, was upheld, since the appellant admittedly did not pay service tax for the disputed period within the due time.

Significant Holdings

"We hold that the Appellant is eligible for 75% abatement and hence the demand of service tax on 100% of the freight charges, as demanded in the impugned order, is not sustainable."

"We find merit in the argument of the appellant... there is no suppression of fact with intention to evade payment of service tax established in this case. Therefore, we hold that extended period cannot be invoked to demand service tax in this case."

"The penalty imposed on the appellant under Sections 76 and 78 of the Finance Act, 1994 is set aside and the penalty imposed under Section 77 is upheld."

The Court established the core principle that where the appellant is registered and has not suppressed information, the extended period of limitation for service tax demand cannot be invoked. It also reaffirmed the entitlement to the 75% abatement under the GTA service notifications, even if the appellant did not submit the consignment note declarations, relying on authoritative precedent.

In conclusion, the appellant's liability is confirmed only for service tax on 25% of the freight charges within the normal limitation period, and penalties for suppression are disallowed, while penalty for delayed payment is maintained.

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