2013 (1) TMI 321 - AT - Service Tax

Goods Transport Agency Services (GTA) - demand & penalty confirmed - Held that - As amount of service tax involved in this case is only Rs.4503/- which had already been paid by the appellants even though the same were discharged earlier by the respective transporter and bills to them also mentioned in their reply to the show-cause notice. As it is not in dispute that the appellant had discharged the same along with interest on being pointed by the Department and filed necessary ST 3 Returns after taking registration there is no material produced by the Revenue in support of imposition of penalty under Section 78 - this is a fit case for invoking Section 80 - in favour of assessee.

Issues:
1. Liability for service tax payment on consigner or consignee.
2. Imposition of penalties under various provisions of the Finance Act, 1994.
3. Applicability of Section 73(2) and Section 80 of the Finance Act, 1994.

Issue 1: Liability for service tax payment on consigner or consignee
The appellants, manufacturers of excisable goods, availed services of a Goods Transport Agency (GTA) for transporting their goods. The Department's Audit Team objected that the liability to discharge service tax rests on the consigner or consignee. The appellants had paid the service tax amount of Rs.4039/-, even though the respective GTA had already paid and recovered the amount from the appellants. The Department issued a show-cause notice proposing recovery of the amount and penalties under the Finance Act, 1994. The Adjudicating Authority confirmed the demand, imposed penalties, and the appellants appealed. The Commissioner (Appeals) rejected the appellants' appeal and enhanced the penalty.

Issue 2: Imposition of penalties under various provisions of the Finance Act, 1994
The Adjudicating Authority confirmed the demand, imposed penalties of Rs.5,000/- for delay in filing returns, Rs.5,000/- for delay in registration under Section 77, and Rs.4039/- under Section 78 of the Finance Act, 1994. The Commissioner (Appeals) rejected the appellants' appeal but allowed the Revenue's appeal, increasing the penalty from Rs.5,000/- to Rs.1,56,200/-. The Tribunal found that the amount of service tax involved was only Rs.4503/-, already paid by the appellants. The Tribunal noted that the Revenue failed to produce material supporting the penalty under Section 78. The appellants argued that the Department should not have issued a notice as the service tax was already paid, citing Section 73(2) of the Finance Act, 1994. The Tribunal held that Section 80 of the Finance Act, 1994 should have been considered, and set aside the Order-in-Appeal, allowing the appellants' appeals.

Issue 3: Applicability of Section 73(2) and Section 80 of the Finance Act, 1994
The Tribunal found that the service tax amount of Rs.4039/- was already paid by the transporter, as evidenced by relevant documents. The appellants argued that Section 73(2) should have precluded the Department from issuing a notice. The Tribunal agreed and invoked Section 80 of the Finance Act, 1994, which the Commissioner (Appeals) had failed to consider. Consequently, the Tribunal set aside the Order-in-Appeal, allowing the appellants' appeals.

This judgment highlights the importance of correctly attributing service tax liability, the necessity of supporting penalties with relevant evidence, and the applicability of specific sections of the Finance Act, 1994 in tax disputes.

← Previous Next →