2018 (10) TMI 550 - AT - Service Tax

Reverse Charge Mechanism - GTA Service - freight incurred in connection with transport of goods - benefit of abatement of 75% of the value of the freight charges as provided under N/N. 32/2004 also denied - Revenue unable to justify the demand in SCN and also unable to produce relevant records - Held that - On a specific query raised from the Bench, both sides are unable to show from the show-cause notice as to how the figures have been worked out by the Revenue in the show-cause notice in paragraph No. 7 as reproduced hereinabove - The random extract which is produced before us of the ledger accounts do not indicate that the amounts which were shown as selling expenses are not only freight charges, leave alone the figures as reported by the appellant in the audited balance-sheet are totally different from the figures on which demands have been raised. Revenue has not been able to justify the demand in the show-cause notice itself and despite the request of the appellant to give them the documents to defend their case, Revenue was unable to produce other relied upon documents even before us. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Incorrect service tax liability on freight charges.
2. Denial of benefit of abatement of 75% of freight charges under Notification No. 32/2004-ST.

Analysis:
1. The appellant, a recipient of GTA services, was issued a show-cause notice alleging incorrect discharge of service tax liability on freight charges. The notice also sought to deny the appellant the benefit of abatement under Notification No. 32/2004. The appellant contended that the figures in the notice did not accurately represent the freight charges paid. The appellant produced audited balance-sheets for the relevant years, showing different figures for loading, transportation, and other selling expenses compared to those in the notice. The appellant argued that they had discharged the service tax liability on the gross amounts incurred towards freight, supported by a certificate issued by the Superintendent. The appellant claimed they were not a goods transport agency and had used individual truck owners, not GTAs. The lower authorities had confirmed a service tax liability based on figures from the balance-sheets, which the appellant disputed.

2. The Commissioner argued that the appellant should pay service tax on GTA services and failed to provide evidence of using individual truck owners without consignment notes. The Commissioner also contended that the conditions for availing the abatement of 75% of freight charges under Notification No. 32/2004 were not met. After considering the submissions, the Tribunal found merit in the appellant's contentions. The demand for service tax liability was based on figures from the balance-sheets, which the appellant demonstrated to be inaccurate. The Tribunal noted discrepancies between the figures in the balance-sheets and those used by the Revenue for the demand. The Revenue failed to justify the demand or produce relevant documents, while the appellant provided balance-sheets showing different figures for expenses, including freight charges. Consequently, the Tribunal held the impugned order unsustainable and set it aside, allowing the appeal in favor of the appellant.