2019 (10) TMI 819 - AT - Service Tax

Negative list services or exempt services - appellant was providing services to one M/s Gati Ltd. who are courier service provider - scope of service - HELD THAT - Admittedly period involved in the present appeal is covered by the negative list regime having been introduced on 01/07/2012. The appellant has not been able to show that services provided by them to M/s Gati Ltd. fall either under the negative list or were exempted in terms of the Mega Notification No.25/2012. As such, we find ourselves in agreement with the findings of the lower authorities. The lower authorities while confirming the demand have not extended the benefit of small scale exemption provided by Notification No.33/2012-ST. As such, for the said purpose, we deem it fit to set aside the impugned order and remand the matter to Original Adjudicating Authority for re-quantification of demand, if any, after allowing threshold exemption as available to the assessee in terms of the said Notification No.33/2012-ST. Penalty - HELD THAT - The appellant being a small scale delivery boy may be entertaining a belief that the services provided by him are not taxable. Further, the said services were not taxable for the earlier period and as such appellant may not be aware of the introduction of the new regime of negative list era - In the absence of any positive evidence showing any mala fide on the part of the assessee, the penalty imposed upon him is not justified and the same is accordingly set aside. Appeal allowed in part and part matter on remand.

Issues:
1. Confirmation of service tax and penalty against the appellant for the period January 2013 to March 2014.
2. Determination of whether the services provided by the appellant to M/s Gati Ltd. fall under the negative list or are exempted.
3. Consideration of small scale exemption benefit under Notification No.33/2012-ST.
4. Assessment of penalty on the appellant.
5. Liberty for the appellant to contest a part of the demand on the point of limitation.

Analysis:
1. The judgment confirms the service tax liability of approximately ?89,216 against the appellant, along with an equivalent penalty, for the period from January 2013 to March 2014. The confirmation was based on a show cause notice issued on 07/08/2014.

2. The appellant was providing services to M/s Gati Ltd., a courier service provider, involving collecting shipments from M/s Gati Ltd. and delivering them to consigners. The lower authorities deemed this activity as falling within the definition of 'service' under Section 65B(44) of the Act. It was noted that the activity was not covered under the negative list or any exemption notification. The Tribunal rejected the appellant's argument regarding exemption under an older notification.

3. The period under consideration was during the negative list regime introduced on 01/07/2012. The appellant failed to demonstrate that the services provided to M/s Gati Ltd. were exempted under the negative list or Mega Notification No.25/2012. The Tribunal agreed with the lower authorities' findings but remanded the matter for re-quantification of demand, directing the consideration of the small scale exemption under Notification No.33/2012-ST.

4. Regarding the penalty, the Tribunal considered the appellant's status as a small-scale delivery person who might not have been aware of the tax implications. Given the lack of evidence of any malafide intent, the penalty was set aside. The appellant was granted the liberty to challenge a portion of the demand based on the limitation.

5. The judgment concluded by disposing of the appeal in the above manner, providing relief to the appellant on the penalty and allowing the challenge on the point of limitation.

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