2015 (4) TMI 364 - AT - Service Tax

Tribunal sets aside service tax demand for GTA transport on allegedly removed goods, questions validity of show cause notice

The Tribunal set aside the demand for service tax on GTA outward transport for alleged clandestinely removed goods, finding it unsustainable and lacking ... Demand of service tax - GTA outward transport service - Reverse Charge mechanism - clandestine removal of excess quantity of finished goods - Held that:- for the very same period and, for the same goods, the audit has raised objection on the presumption that they could have not discharged the GTA service tax on the excess quantity of goods cleared without payment of duty on the finished goods. It is surprising to see that the DGCEI had investigated the case and issued the show cause notice and demanded duty and the same has been settled by the Order of the Hon'ble Settlement Commission. The present show cause notice has been issued on the same goods covered under the above show cause notice on the presumption that the appellants have not discharged the service tax. No documents, or any work sheet on how the service tax amount on GTA outward transportation has been arrived was submitted by the Department nor it was brought in the show cause notice or in the impugned order. - demand of service tax on GTA outward on the alleged clandestinely removed goods is not sustainable and devoid of merits. The impugned order is liable to be set aside on merits - Decided in favour of assessee. Issues:Demand of service tax on GTA outward transport service under reverse charge.Analysis:The case involved a dispute regarding the demand of service tax on GTA outward transport service under reverse charge. The Department issued a show cause notice demanding service tax on the alleged clandestine removal of finished goods. The adjudicating authority confirmed the demand, which was upheld by the Commissioner (Appeals), leading to the present appeal.The appellant, a manufacturer of chewing tobacco, argued that a previous show cause notice by DGCEI for clandestine removal of goods had been settled by the Hon'ble Settlement Commission. They contended that the subsequent show cause notice for service tax lacked basis and details, with no evidence provided on how the service tax amount was quantified. The appellant also highlighted that for certain periods, no GTA outward charges were incurred as transportation was arranged by the buyer from the factory gate.On the contrary, the Department argued that the demand was calculated on an average basis and cited a Supreme Court judgment to support their position. However, the Tribunal noted that the previous settlement of the excise duty demand by the Settlement Commission for the same goods and period raised questions about the validity of the current show cause notice for service tax.The Tribunal found that the demand for service tax on GTA outward transport for allegedly clandestinely removed goods was unsustainable and lacked merit. It emphasized that the previous settlement of the offence case by the Settlement Commission should prevent the Department from issuing a new show cause notice on different grounds for the same goods and period. Therefore, the impugned order was set aside, and the appeal was allowed. The Tribunal also disposed of the stay application in the matter.