2017 (7) TMI 725 - AT - Service Tax

GTA service - reverse charge mechanism - Held that - any person who avails GTA service including from individual truck operators when liable to pay service tax is eligible for the benefit of abatement as per N/N. 32/2004 - The appellant has also submitted a declaration that they have not availed the benefit of N/N. 12/2003. All these aspects have to be verified by the authorities below and for these reasons, the matter requires to be remanded Penalty u/s 76 and 78 - Held that - penalty u/s 76 as well as u/s 78 cannot be imposed simultaneously - In the present case, we do accept the contentions put forward by the counsel that during the relevant period, whether they were liable to pay on GTA service when services are rendered by individual truck owners was in confusion and there were decisions both in favour of the assessee and the department. Taking these facts into consideration, we find that the penalties imposed both under sections 76 and 78 is unwarranted - penalty set aside. Appeal allowed in part and part matter on remand.

Summary

Issues involved:
1. Liability to pay service tax under reverse charge mechanism for GTA service.
2. Benefit of abatement under Notification No. 32/2004.
3. Imposition of penalties under sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:
1. The appellants, engaged in the manufacture of polished granite monuments, slabs, and tiles, were registered with the Central Excise and Service Tax Departments. They failed to discharge service tax under the GTA service, leading to show cause notices and subsequent confirmation of demand by the original authority. The Commissioner (Appeals) upheld the demand but reduced penalties under sections 76 and 78. The appellant's main contention was the non-consideration of the abatement benefit under Notification No. 32/2004. The appellant argued that as they engaged individual truck owners for transport services, they were not availing CENVAT credit. They relied on a Board's Circular and a Tribunal decision to support their claim for abatement.

2. The appellant further argued that the confusion surrounding the payment of service tax under reverse charge mechanism for GTA service during the relevant period and the liability of abatement led to their failure to discharge service tax. They requested a waiver of penalties imposed under sections 76 and 78. The AR reiterated the findings of the impugned order. The Tribunal noted that the appellant provided a declaration stating non-availment of benefits under Notification 12/2003 and highlighted the eligibility for abatement when availing GTA service from individual truck owners based on a previous Tribunal decision.

3. The Tribunal found the penalties imposed under sections 76 and 78 unjustified, as they cannot be imposed simultaneously. Considering the confusion during the relevant period regarding the liability to pay service tax for GTA service provided by individual truck owners, the Tribunal deemed the penalties unwarranted. However, they upheld the penalty under section 77. Consequently, the Tribunal partly allowed the appeals by setting aside penalties under sections 76 and 78, remanding the matter to the adjudicating authority to verify the eligibility for abatement under Notification 32/2004, and directing compliance with the decision in SNI Industries.