2009 (11) TMI 237 - AT - Service Tax

Transport of goods by road services- Notification No. 32/2004-ST, dated 3.12.2004- The appellants engaged transporters and incurred freight and paid service tax under GTA service in terms of section 68(2) of the Act during the period from April, 2003 to March, 2007. The appellants paid service tax availing benefit of Notification No. 32/2004-ST, dated 3-12-2004 which provided for abatement of service tax relatable to 75 per cent of the taxable value. The lower authority found that the appellants had not satisfied the conditions of the Notification to qualify for the abatement availed. Held that- As the appellants had filed a declaration to the effect that they had not availed the Cenvat credit though not in consignment notes consignment-wise, the appellants cannot be denied the benefit of notification for a technical lapse. I also find that the Tribunal in its decision in the case of CCE v. Unimark Remedies Ltd. 2009 -TMI - 34416 - CESTAT, AHMEDABAD had allowed the exemption benefit extended under the subject notification in similar circumstances holding that a substantive benefit could not be denied for assessee s failure to comply with the procedural condition and that there was substantial compliance with the requirement of the notification. In view of this position, the appeal is allowed. The stay application also gets disposed of.

Summary

Issues:
Waiver of pre-deposit and stay of recovery of service tax, inadmissible benefit of exemption under GTA service, penalty under section 76 of the Finance Act, 1994.

Waiver of Pre-deposit and Stay of Recovery of Service Tax:
The case involved an application by M/s. Sri Venkata Balaji Jute (P.) Ltd. seeking waiver of pre-deposit and stay of recovery of Rs. 61,781 along with interest. The appellants had availed the benefit of exemption of service tax under the category Goods Transport Agency (GTA) but were found to have not satisfied the conditions of the Notification, leading to the demand for recovery. The lower authority found that the appellants had not qualified for the abatement availed under Notification No. 32/2004-ST. However, it was argued that a technical lapse in declaration should not deny the benefit of the notification. The Tribunal referred to a previous decision where a substantive benefit was allowed despite procedural lapses, leading to the allowance of the appeal and disposal of the stay application.

Penalty under Section 76 of the Finance Act, 1994:
Apart from the waiver of pre-deposit and stay of recovery of service tax, the appellants were also facing a penalty of Rs. 5,000 under section 76 of the Finance Act, 1994. The Tribunal's decision to allow the appeal based on the substantive benefit provided under the notification also resulted in the disposal of the penalty imposed on the appellants. The Tribunal emphasized that a procedural lapse in declaration should not lead to the denial of a substantive benefit, aligning with the stance taken in a previous case where compliance with procedural conditions was found to be substantially met, leading to the allowance of the exemption benefit. The disposal of the appeal consequently led to the disposal of the penalty imposed on the appellants under section 76 of the Finance Act, 1994.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Bangalore addressed the issues of waiver of pre-deposit and stay of recovery of service tax, inadmissible benefit of exemption under GTA service, and penalty under section 76 of the Finance Act, 1994. The Tribunal allowed the appeal filed by M/s. Sri Venkata Balaji Jute (P.) Ltd. based on the finding that a technical lapse in declaration should not deny the appellants the benefit of the notification. The decision was supported by a previous case where substantive benefits were granted despite procedural lapses, leading to the disposal of both the recovery of service tax and the penalty imposed on the appellants.