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2018 (1) TMI 1051 - AT - Service TaxPenalty - non-payment of service tax - GTA Service - Reverse charge mechanism - appellant is a cooperative society, established with objective of assisting the farmers for selling their agricultural produce at the MSP fixed by the GovernmentHeld that - there was a bonafide belief for non-payment of Service Tax within the stipulated time, in view of the Circular No.89/7/2006-ST dated 18/12/2006 and Notification No.04/2010 dated 27/02/2010 regarding payment of Service Tax on GTA service under reverse charge mechanism - the benefit of Section 80 of the Act should be available to the appellant for non-imposition of penalties under Section 76,77 and 78 of the Act. This Tribunal in appellant own case M/s. Chhattisgarh State Co-Operative Marketing Federation Ltd. Versus Commissioner of Central Excise 2016 (11) TMI 788 - CESTAT NEW DELHI , has extended the benefit of Section 80 of the Act on the ground that the appellant being a statutory Government body, no malafide can be attributed to evade payment of Service Tax. Thus, non-payment of tax within the prescribed time frame was due to the bonaife belief that the same was not payable by the cooperative society. Appeal allowed - decided in favor of appellant.
Issues:
1. Appellant's liability to pay service tax on GTA service. 2. Imposition of penalties under Section 76, 77 & 78 of the Act. 3. Applicability of Section 80 of the Act for non-imposition of penalties. Issue 1: Appellant's liability to pay service tax on GTA service: The case involved a cooperative society assisting farmers in selling agricultural produce at Minimum Support Price (MSP). The society availed Goods Transport Agency (GTA) services during 2007-08 to 2011-12 but did not pay service tax on these services. The Service Tax Department initiated proceedings, demanding service tax under Section 73 and Section 73 A (4) of the Finance Act, 1994, along with penalties under Section 76, 77 & 78 of the Act. The appellant argued that it did not pay the tax due to a genuine belief that it was not required to do so, citing Notification No. 04/2010 and the absence of explicit mention of service tax on transportation in Government orders fixing MSP. The Tribunal found in favor of the appellant, extending the benefit of Section 80 of the Act due to the bona fide belief that the service tax was not payable. Issue 2: Imposition of penalties under Section 76, 77 & 78 of the Act: The appellant contested the imposition of penalties, claiming that the non-payment of service tax within the stipulated time was due to a genuine belief that they were not liable to pay. The Tribunal, considering the circular No. 89/7/2006-ST and Notification No. 04/2010, held that the appellant, being a statutory Government body assisting farmers, had a bona fide belief that they were not liable to pay service tax. Referring to previous Tribunal decisions, the Tribunal found that no malafide intention could be attributed to the appellant's actions, justifying the invocation of Section 80 to set aside the penalties imposed under Section 76, 77 & 78 of the Act. Issue 3: Applicability of Section 80 of the Act for non-imposition of penalties: The Tribunal, after considering submissions from both sides, found that the challenge in the appeal was solely related to penalties. It noted that activities performed by Sovereign/Public Authorities under statutory obligations were not considered taxable services, as clarified in circulars and notifications. The Tribunal highlighted that being a statutory Government body assisting farmers, the appellant had a genuine belief that they were not liable to pay service tax. Referring to precedents, the Tribunal emphasized that penalties imposed on the appellant were set aside due to the absence of malafide intent and the appellant's genuine belief regarding their tax liability. In conclusion, the Tribunal found no merit in the impugned order imposing penalties on the appellant and allowed the appeal in favor of the appellant, setting aside the penalties under Section 76, 77 & 78 of the Act.
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