2014 (8) TMI 510 - AT - Service Tax

Waiver of pre-deposit of Service Tax - GTA service - Abatement under Notification No. 32/2004-S.T., dated 3-12-2004 - Held that - Notification No. 32/2004-S.T. and No. 1/2006-S.T. grant abatement of 75% of taxable service. We find force in the contention of the applicant that the clarification issued by Board cannot override the provisions of the exemption notification. We also find that the declaration filed in terms of the aforesaid notification has not been disputed or challenged by the department. The notification does not stipulate any such condition namely that each consignment note should contain the relevant declaration. The circular cannot be mandatory and cannot be used for denying substantive rights. The similar view has been held by the Tribunal and High Courts in the cases cited (supra). In these circumstances the prima facie case is in favour of the applicant. Accordingly the requirement of pre-deposit is waived and recovery thereof is stayed during pendency of the appeal - Stay granted.

Summary

Issues:
Waiver of pre-deposit of Service Tax and penalty under Sections 76, 77, and 78 of Finance Act, 1994 based on availing abatement under Notification No. 32/2004-S.T. and the validity of the clarification issued by the Board.

Analysis:

1. Waiver of Pre-deposit and Abatement Claim:
The applicant sought waiver of pre-deposit of Service Tax and penalties under Sections 76, 77, and 78 of the Finance Act, 1994, amounting to Rs. 68,51,269 based on availing abatement under Notification No. 32/2004-S.T. The applicant contended that the abatement was claimed in accordance with a declaration filed as per the notification, which had not been disputed or challenged by the department. The Tribunal noted that the notification granted a 75% abatement of taxable service and found merit in the applicant's argument that the clarification issued by the Board could not override the provisions of the exemption notification. The Tribunal held that the circular could not impose mandatory conditions not specified in the notification and cited previous decisions supporting this view. Consequently, the Tribunal ruled in favor of the applicant, waiving the pre-deposit requirement and staying the recovery during the appeal process.

2. Legal Precedents and Interpretation:
In support of the applicant's case, reference was made to the Tribunal's decision in CST Ahmedabad v. Cadila Pharmaceuticals Ltd. and the decisions of the Hon'ble Patna High Court and Gujarat High Court in other relevant cases. These legal precedents were cited to argue that the Board's clarification could not override the rights granted under the exemption notification. The Tribunal concurred with this interpretation, emphasizing that the declaration filed by the applicant in line with the notification had not been challenged by the department, and no additional conditions were stipulated in the notification regarding the content of each consignment note. The Tribunal's decision aligned with the principles established in the cited cases, further supporting the applicant's position and justifying the waiver of pre-deposit and stay on recovery during the appeal.

3. Department's Position and Tribunal's Decision:
The department, represented by the learned Additional Commissioner, reiterated its findings in opposition to the applicant's claims. However, the Tribunal, after considering the arguments from both sides, found in favor of the applicant. The Tribunal's decision was based on the clear provisions of the exemption notification, the absence of any challenge to the applicant's filed declaration, and the legal precedent supporting the applicant's interpretation of the notification's requirements. As a result, the Tribunal granted the waiver of pre-deposit and stayed the recovery process, allowing the appeal to proceed without the financial burden on the applicant.

In conclusion, the judgment by the Appellate Tribunal CESTAT Kolkata ruled in favor of the applicant, granting the waiver of pre-deposit of Service Tax and penalties under Sections 76, 77, and 78 of the Finance Act, 1994, based on the abatement claimed under Notification No. 32/2004-S.T. The Tribunal's decision emphasized the importance of adhering to the provisions of the exemption notification and established legal principles, ultimately ensuring a fair outcome for the applicant during the appeal process.