2013 (11) TMI 1009 - HC - Service Tax

CESTAT dismissed the appeal on account of failure to fulfill its direction to the Appellant to deposit the entire amount of service tax - extended period of limitation - Held that - Once the Commissioner (Appeals) has come to a finding that for the relevant period, there was genuine cause for confusion regarding the correct legal position and also scope for doubt about the service tax liability on GTA as the Commercial concern for nonimposition of penalty then the same cause is also to be factored in to conclude that extended period of limitation cannot be invoked. Even if the finding that there was sufficient cause for nonpayment of service tax was rendered in the context of Section 80 of the Act (as it stood at the relevant time). Accordingly, the order dated 3 July 2013 and the order dated 14 May 2013 of the Tribunal directing predeposit of Rs.10,04,928/are set aside. Further, the Tribunal is directed to hear the appellant s appeal from order dated 17 October 2012 of Commissioner (Appeals) on merits without insisting any predeposit.

Issues:
1. Predeposit of service tax for hearing the appeal.
2. Liability to pay service tax on Goods Transport Agency (GTA) services.
3. Imposition of penalty under Section 78 of the Act.
4. Invocation of extended period of limitation.
5. Applicability of Section 80 of the Act.
6. Interpretation of the term "Commercial concern" in the context of GTA services.
7. Dispute resolution regarding predeposit of service tax.

Predeposit of Service Tax for Hearing the Appeal:
The appellant challenged the Tribunal's order directing predeposit of the entire service tax amount for hearing the appeal. The Court acknowledged the request for final disposal at the admission stage. The Tribunal's order dated 3 July 2013 was set aside, and the sustainability of the order dated 14 May 2013 was considered for further evaluation.

Liability to Pay Service Tax on GTA Services:
The appellant, a Sugar Factory, received GTA services during a specific period, making it liable for service tax payment. The revenue issued a show cause notice demanding service tax and penalty, which was confirmed by the Additional Commissioner. The Commissioner (Appeals) upheld the service tax but deleted the penalty, citing genuine confusion and reasonable cause for nonpayment of service tax before 1.5.2006.

Imposition of Penalty under Section 78 of the Act:
The penalty under Section 78 was initially imposed but later deleted by the Commissioner (Appeals) based on the appellant's genuine confusion regarding the legal position on service tax liability for GTA services during the relevant period. The Tribunal did not challenge the deletion of the penalty.

Invocation of Extended Period of Limitation:
The conditions for invoking the extended period of limitation and imposing penalties under Section 78 were found to be identical. The Commissioner's finding of genuine confusion and doubt about service tax liability led to the conclusion that the extended period of limitation could not be invoked.

Applicability of Section 80 of the Act:
The application of Section 80 of the Act, regarding penalty imposition, was considered in light of the appellant's genuine confusion and reasonable cause for nonpayment of service tax. The revenue's acceptance of the penalty deletion further supported the appellant's position.

Interpretation of the Term "Commercial Concern" in the Context of GTA Services:
The appellant's argument regarding individual truck owners providing services not falling under the definition of GTA during the relevant period was supported by Tribunal precedents. The revenue did not contest this position, strengthening the appellant's case.

Dispute Resolution Regarding Predeposit of Service Tax:
Ultimately, the Court set aside the Tribunal's orders directing predeposit of the service tax amount and instructed the Tribunal to hear the appeal on merits without requiring any predeposit. The appeal was disposed of accordingly, with no specific order as to costs.

---

← Previous Next →