2014 (7) TMI 1083 - AT - Service Tax

Tribunal grants appeal, overturns discharge of Service Tax liability for Goods Transport Agency services.

The Tribunal allowed the appeal, overturning the incorrect discharge of Service Tax liability by the appellant under Goods Transport Agency services. The ... Goods Transport Agency Service - abatement of 75% of the gross amount charged from the customer under Notification No. 32/2004-S.T., dated 3-12-2004 - denial of abatement claim based on ‘general declarations’ given by the GTA - discharge of the Service Tax liability on an amount of 25% of the freight paid - department did not verify the declarations - Held that:- service recipient who discharges the Service Tax liability under Goods Transport Agency services, is eligible to claim abatement of 75% of the amount of freight paid by him - assessee is engaged in manufacture of P&P medicaments and is also engaged in providing taxable service under the category of ‘Technical Inspection & Certification Service’ and in the capacity of service receiver, the respondents was liable to pay the service tax on ‘Goods Transport Service’. Tribunal considered the Notification No. 32/2004-S.T., dated 3-12-2004 which provided for abatement of 75% of the gross amount charged from the customer for the purpose of calculating the liability of service tax subject to the condition that the no CENVAT Credit had been availed and benefit of Notification No. 12/2003-S.T., dated 20-6-2003 also had not been availed - requirements prescribed by the Board’s Circular was not mandatory and it was working out modality for implementing provisions of law for denial of substantive rights, use of the same cannot be made - Following decision of COMMR. OF SERVICE TAX, AHMEDABAD Versus CADILA PHARMACEUTICALS LTD. [2013 (1) TMI 353 - GUJARAT HIGH COURT] - Decided in favour of assessee. Issues:- Incorrect discharge of Service Tax liability under Goods Transport Agency services- Eligibility to claim abatement of 75% of the amount of freight paid- Verification of declarations filed by the appellant- Interpretation of Circular for availing benefit of exemption notification- Conditions imposed by Circular for availing exemption being mandatory- Determination of fulfillment of conditions for service tax liability- Filing of general declaration instead of consignment-wise declaration- Eligibility to claim benefit of exemption based on substantial compliance with Notification- Dismissal of appeal based on previous Tribunal decisionsAnalysis:Issue 1: Incorrect discharge of Service Tax liability under Goods Transport Agency servicesThe appellant incorrectly discharged the Service Tax liability under the category of Goods Transport Agency services only on 25% of the freight paid. The Tribunal, in a previous round of litigation, remanded the matter back to the adjudicating authority for reconsideration based on the Tribunal's ratio. The High Court of Gujarat had held that the service recipient is eligible to claim abatement of 75% of the amount of freight paid, which the appellant relied upon.Issue 2: Eligibility to claim abatement of 75% of the amount of freight paidThe High Court of Gujarat's judgment established that the service recipient discharging the Service Tax liability under Goods Transport Agency services can claim abatement of 75% of the amount of freight paid. This legal position was crucial in determining the correct discharge of Service Tax liability by the appellant.Issue 3: Verification of declarations filed by the appellantThe Departmental Representative requested verification of declarations filed by the appellant to ensure compliance with Notification No.1/2006. However, the Tribunal noted that all declarations were submitted as before, and the adjudicating authority did not seek any further verification. The Tribunal held that the issue had been settled by the High Court, and the request for remand was not accepted.Issue 4: Interpretation of Circular for availing benefit of exemption notificationThe Tribunal clarified that the requirements prescribed by the Circular for availing exemption were not mandatory. It emphasized that the Circular's conditions could not be used to deny substantive rights to the appellant. The Tribunal upheld the Commissioner's order, stating that the appellant had paid the service tax as per the reverse charge mechanism, and the Circular's requirements were not stipulated in the notification.Issue 5: Filing of general declaration instead of consignment-wise declarationIn a similar case, the Tribunal dismissed the revenue's appeal regarding the filing of general declarations instead of consignment-wise declarations by the assessee. The Tribunal concurred with the Commissioner (Appeals) and upheld the previous decision, emphasizing that the issues were questions of fact without substantial legal questions.In conclusion, the Tribunal set aside the impugned order and allowed the appeal based on the consistent legal position established by previous judgments in favor of the assessee. The judgments highlighted the correct discharge of Service Tax liability, eligibility for abatement, interpretation of Circulars, and compliance with exemption notifications, providing clarity on these legal issues.