2024 (8) TMI 603 - AT - Service Tax

Recovery of service tax with interest and penalty - services received from abroad before and after 18.04.2006 - GTA Service - penalty under Section 78 of the Finance Act, 1994 read with Sec. 76 of the said Act - malafide intent or not - invocation of extended period of limitation - HELD THAT - Admittedly, Commissioner (Appeals) have in the impugned order come to conclusion that the issue involved in the matter is more in nature of interpretation of law and there are conflicting decision of this Tribunal on the issue involve. Therefore, no malafide can be attributed to the appellant that being so, there are no merits in the demand made by invoking the extended period of limitation, as it has been found in series of decisions this Tribunal and various High Courts where in respect of interpretation of law there are conflicting decisions, extended period of limitation cannot be invoked. Impugned order remanding the matter to the Original Authority after setting aside the demand made to the extent it was prior to the period 18.04.2006 relying upon the decision of Hon ble High Court of Bombay in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA 2008 (12) TMI 41 - BOMBAY HIGH COURT and decision of Hon ble Delhi High Court in the case of UNITECH LTD. VERSUS CST, DELHI 2009 (5) TMI 56 - DELHI HIGH COURT as the matter has been remanded back for re-quantification to the Original Authority, the Adjudicating Authority is directed to re-quantify the demand. Appeal is disposed of upholding the remand order for re-quantification of demand.

Summary

Issues:
1. Liability of service tax on services received from abroad before and after 18.04.2006.
2. Demand of service tax under GTA Service category.
3. Imposition of penalty under Section 78 of the Finance Act, 1994.

Analysis:

Issue 1: Liability of service tax on services received from abroad before and after 18.04.2006
The main issue in this appeal was whether the appellant, as a recipient of services from abroad, was liable to pay service tax. The Commissioner (Appeals) referred to the judgment of the Hon'ble High Court of Bombay in the case of Indian National Shipowners Association v/s UOI, 2009, which struck down Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. The Commissioner held that service tax liability on services received from abroad would arise only from 18.04.2006, after the enactment of Section 66A of the Finance Act, 1994. The Commissioner set aside the demand of service tax before 18.04.2006 and confirmed the demand from that date onwards, in line with the legal provisions and judgments cited.

Issue 2: Demand of service tax under GTA Service category
Regarding a specific demand of service tax under the GTA Service category, the appellants admitted the liability and had paid the amount along with interest. The Commissioner confirmed this demand based on Rule 2(1)(d)(v) (a) of the Service Tax Rules, 1994. The payment was subject to verification by lower authorities, and the demand was appropriately confirmed.

Issue 3: Imposition of penalty under Section 78 of the Finance Act, 1994
The imposition of a penalty of Rs. 24,73,524 under Section 78 of the Finance Act, 1994, was considered by the Commissioner. The issue involved interpretation of law with conflicting decisions by the Hon'ble CESTAT. As there was no malafide on the part of the appellants, the penalty was set aside under Section 80 of the Finance Act, 1994. The Commissioner found that the penalty was not warranted in this case, considering the legal complexities and conflicting decisions.

The Tribunal, in its final decision, upheld the remand order for re-quantification of the demand, considering the conflicting interpretations of the law. The matter was directed to the Adjudicating Authority for re-quantification within three months. The Tribunal emphasized the importance of resolving the matter promptly due to its age. The appeal was disposed of with these directions, maintaining the legal principles and judgments cited during the proceedings.