2016 (5) TMI 611 - HC - Service Tax

Service tax liability - Transport of goods by road received by the appellant for the period in question - Refusal of 75% abatement under the notification dated 1st July, 2006 as claimed - Appellant contended that the said notification even though was withdrawn on 1st March, 2008 yet the benefit of 75% abatement was available for the period in question which has been disallowed on the ground that the transporters did not give any declaration or certificate for providing such services and in the absence of such evidence the abatement could not have been claimed. Held that - the applicability of abatement of 75% under the notification dated 1st March, 2006 which is in effect an exemption ought to have been considered in accordance with the instructions issued by the department itself on 27th July, 2005. What had to be seen by the Tribunal was substantial compliance, and if the statute had been followed sufficiently, then in that event the benefit claimed should not have been denied. In other words, it should not be an automatic or mechanical levy and consequently no penalty could have been imposed. Rejection of adjournment - Non-availibility of counsel - Tribunal proceeded without a proper opportunity of hearing - Held that - it is not the case of the department that the appellant had indulged into any excessive adjournment or was deliberately trying to delay the hearing of the appeal. This was necessary to be observed as the Tribunal is the last court of fact and a finding of fact has to be recorded on consideration of relevant material and not on irrelevant considerations or else it can be impeached as being perverse. Therefore, the appeal deserves to be allowed on account of the impugned judgment having been rendered in violation of principles of natural justice adversely affecting the appellant which is clearly raises a substantial question of law. - Appeal allowed by way of remand

Summary

Issues:
1. Upholding service tax liability on transport of goods by road.
2. Refusal of 75% abatement under a specific notification.
3. Denial of opportunity to address the Tribunal by refusing adjournment.
4. Applicability of abatement under the notification dated 1st March, 2006.
5. Imposition of penalty and violation of principles of natural justice.
6. Rejection of request for adjournment without valid reason.

Analysis:
1. The Excise Appeal challenged the order imposing service tax liability on the transport of goods by road received by the appellant. The Tribunal upheld the orders of the adjudicating authority, denying 75% abatement claimed by the appellant. The appellant raised concerns about the substantial denial of the opportunity to address the Tribunal by refusing adjournment.

2. The appellant argued that although the notification providing 75% abatement was withdrawn, the benefit should still apply for the period in question. The denial of abatement was based on the lack of declaration or certificate from transporters. The appellant contended that the nature of the declaration sought was unjustifiable as they had discharged their burden.

3. The Tribunal's finding was criticized for being based on irrelevant material, leading to a perverse decision. It was argued that the transport agencies not being registered dealers with the service tax department was overlooked. The imposition of penalty was deemed unjustified, along with the violation of principles of natural justice.

4. The High Court emphasized that the Tribunal should have considered the applicability of the 75% abatement under the notification dated 1st March, 2006, as an exemption. The Tribunal should have assessed substantial compliance and not mechanically denied the benefit claimed. It was highlighted that penalties should not have been imposed automatically.

5. The rejection of the request for adjournment without a valid reason was a crucial point of contention. The Court found that the Tribunal proceeded without giving a proper opportunity of hearing, which was essential for a fair decision-making process. The Tribunal's refusal of adjournment was deemed unjust, as there was no evidence of excessive adjournments by the appellant.

6. Ultimately, the Court allowed the appeal, setting aside the Tribunal's order dated 6th July, 2015. The matter was remitted back to the Tribunal for a fresh decision after ensuring a proper opportunity of hearing to the appellant. The importance of adhering to relevant rules, regulations, and evidence on record was highlighted for a fair adjudication process.