2024 (8) TMI 1332 - AT - Service Tax

Denial of abatement as per N/N. 32/2004-ST dated 03.12.2004 - benefit denied on the grounds that the invoices issued by the GTA operators did not carry an endorsement to the effect that CENVAT credit has not been availed - HELD THAT - It is found that the condition laid down in the N/N. 32/2004 is understandably for the GTA Service providers, who pay service tax themselves. It is not applicable to the appellant who pays the service tax on GTA Services received on Reverse Charge basis. Therefore, the Department is reading beyond the scope of the Notification. Hon ble Apex Court in the case of M/S. SANDUR MICRO CIRCUITS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELGAUM 2008 (8) TMI 3 - SUPREME COURT held that ' The issue relating to effectiveness of a Circular contrary to a Notification statutorily issued has been examined by this Court in several cases. A Circular cannot take away the effect of Notifications statutorily issued. In fact, in certain cases, it has been held that the Circular cannot whittle down the Exemption Notification and restrict the scope of the Exemption Notification or hit it down. In other words, it was held that by issuing a circular a new condition thereby restricting the scope of the exemption or restricting or whittling it down cannot be imposed. The principle is applicable to the instant cases also, though the controversy is of different nature.' The issue is no longer res integra being covered by a catena of judgments. Therefore, the impugned order cannot be sustained - the issue of limitation etc. not gone into as the appellants succeed squarely on merits. Appeal allowed.

Summary

Issues:
The appeal challenges Orders-in-Appeal dated 24.06.2014 regarding the denial of abatement on service tax for the period 01.01.2005 to 31.12.2007 due to lack of endorsement on invoices issued by Goods Transport Agency (GTA) operators.

Analysis:
The case involves M/s Liberty Shoes Ltd. availing GTA services for product transportation without paying service tax for 2005-2007, later depositing the tax with interest after being alerted by Revenue. The issue revolves around denying abatement due to missing endorsement on GTA operators' invoices regarding CENVAT credit. The appellants argue that the exemption condition under Notification No.32/2004 applies to GTA operators paying service tax, not recipients under Reverse Charge Mechanism. They rely on CBEC Circular No.137/154/2008-CX4 and precedents like Sandur Micro Circuits Ltd. The appellants contend that CENVAT credit cannot be denied for procedural lapses, citing relevant case laws.

The Tribunal notes that the Notification condition primarily concerns GTA service providers, not recipients under Reverse Charge Mechanism like the appellant. Referring to Sandur Micro Circuits Ltd., the Tribunal emphasizes that Circulars cannot override statutory Notifications, especially to impose new restrictions. It also highlights that procedural lapses, as in this case, should not bar substantial abatement benefits, supported by the Sandoz (P) Ltd. judgment. The Tribunal concludes that the issue is well-settled through various judgments, leading to allowing the appeals based on merit without delving into other aspects like limitation.

In summary, the Tribunal rules in favor of the appellants, allowing the appeals and granting consequential relief as per law. The decision rests on the understanding that the abatement denial due to missing endorsement on GTA operators' invoices was unjustified, given the Reverse Charge Mechanism application and the precedents supporting the appellants' position.