2013 (4) TMI 555 - AT - Service Tax

Payment of service tax on outward GTA services from cenvat credit account - the appeal as directed by the assessee is only against imposition of penalty u/s 76 and confirmation of demand of interest u/s 75 - Held that - Considering the case of Topland Exports (2012 (11) TMI 739 - CESTAT, AHMEDABAD) there being no intention to run away from the service tax liability and having deposited the same through the cenvat account, the appellant has not retained any part of the government dues with him with intention to evade the same. Accordingly, the interest liability as confirmed by the lower authorities does not arise at all. As regards penalties imposed under the provisions of Section 76 the said provisions will not apply at all as the appellant had discharged the service tax liability through the cenvat account the penalties imposed by the lower authorities are not warranted and are liable to be set aside. In favour of assessee.

Summary

Issues involved:
Imposition of penalty under Section 76 of the Finance Act, 1994 and confirmation of demand of interest under Section 75 of the Finance Act, 1994.

Analysis:

1. Imposition of Penalty under Section 76:
The appellant, a manufacturer of cables, utilized cenvat credit to discharge service tax liability on Goods Transport Agency (GTA) services during April 2009 to December 2009. The appellant had paid the service tax through the cenvat account, indicating compliance with their tax obligations. The Tribunal found that the provisions of Section 76, which were invoked for imposing the penalty, were not applicable in this case. The Tribunal referred to a previous judgment and concluded that since the appellant had paid the service tax through the cenvat account and rectified any procedural irregularity voluntarily, the penalties imposed were unwarranted. Therefore, the penalties under Section 76 were set aside.

2. Confirmation of Demand of Interest under Section 75:
Regarding the demand of interest under Section 75, the Tribunal noted that the appellant had not retained any government dues with the intention to evade payment. The appellant had deposited the service tax through the cenvat account, demonstrating their commitment to fulfilling their tax liability. The Tribunal emphasized that the interest liability did not arise as the appellant had rectified any procedural irregularity by voluntarily reversing the cenvat credit and making the necessary cash payment. Citing a similar case, the Tribunal held that the interest liability on the appellant should be set aside. Consequently, the interest liability on the amounts in question was nullified.

3. Overall Decision:
In conclusion, the Tribunal rejected the appellant's claim to use cenvat credit for discharging service tax liability on GTA services. The appellant was directed to pay the service tax liability by debit in PLA/TR-6 challan. However, the Tribunal allowed the appeal against the imposition of interest and penalties. The Tribunal found that the appellant had valid reasons for non-imposition of penalties and for setting aside the demand for interest. Consequently, the impugned order challenging the penalties and interest was set aside, and the appeal was allowed.

This comprehensive analysis highlights the Tribunal's reasoning behind nullifying the penalties and interest demand while upholding the decision on the utilization of cenvat credit for tax liability.