2015 (2) TMI 710 - AT - Service Tax

Tribunal overturns penalty under Finance Act, 1994, finding no intentional non-payment.

The Tribunal set aside the Commissioner (Appeals) order and restored the original decision, finding no merit in the penalty imposed under Section 78 of ... Service tax under GTA services - Notification No. 34/2004-S.T. dated 03.12.2004 - Goods sent by through Auto, Car, Taxi, etc. - Held that:- On going through the said orders of the authorities below, I find that the Assistant Commissioner has examined the entire facts and details and has also held that service tax demanded in the show-cause notice was deposited by the assessee, after availing the abatement of 75% in terms of Notification No. 34/2004-S.T dated 3.12.2004. As against the said order, the observations made by the appellate authority are cryptic and not arising out of the impugned order of the Assistant Commissioner. The Commissioner (Appeals) has not referred to any of the issues on merits and has simpliciter observed that the order of the Assistant Commissioner is not correct. As regards the penalty, I find merits in the findings of the original adjudicating authority that inasmuch as the most of the cases, the freight charges involved is less than ₹ 750/- (Rupees Seven hundred fifty only) and the goods were being transported through taxi, car, auto etc. and in most of the cases, transporters were themselves paying service tax, non-payment of service tax to a small amount cannot be held attributable to any malafide on the part of the appellant so as to invoke the penalty provisions.In view of above, I find no merits in the order of the Commissioner (Appeals). Decided in favour of appellant. Issues: Liability to service tax under GTA Services, applicability of Notification No. 34/2004-S.T., imposition of penalty under Section 78 of the Finance Act, 1994In the present appeal, the issue revolved around the liability of the appellant to pay service tax under GTA Services. The appellant argued that most freight charges were below the threshold of Rs. 750, exempting them from service tax. They also highlighted that certain modes of transportation, like Auto, Car, Taxi, did not attract service tax under GTA Services. The Assistant Commissioner, after examining the appellant's pleas and verifying statements, calculated the service tax liability to be around Rs. 21,046, which the appellant had already deposited. The Assistant Commissioner also noted that penalty under Rule 7C of Service Tax Rules, 2002 was not applicable due to sufficient reasons for not filing returns, citing a Tribunal decision for support.The matter was escalated to the Commissioner (Appeals) by the Revenue, who remanded the case back to the Assistant Commissioner. The Commissioner (Appeals) found the non-payment of service tax intentional during a specific period and imposed a penalty under Section 78 of the Finance Act, 1994. However, the appellate authority's observations were deemed cryptic and not aligned with the Assistant Commissioner's findings. The Tribunal noted that the Commissioner (Appeals) did not address the merits of the case and simply stated that the Assistant Commissioner's order was incorrect. Regarding the penalty, the Tribunal agreed with the original adjudicating authority that the low freight charges and the mode of transportation did not indicate malicious intent on the appellant's part to warrant penalty imposition.In conclusion, the Tribunal found no merit in the Commissioner (Appeals) order and set it aside, restoring the original adjudicating authority's decision. The appeal was allowed in favor of the appellant.