Bona fide belief and no suppression of facts defeated service tax penalties on GTA freight, while demand remained unchanged.

Penalties for non-payment of service tax on GTA freight were held unsustainable where the assessee had a bona fide belief based on Notification No. 34/2004-ST, the freight transactions were duly recorded in the books, and tax was paid when the exemption limit was exceeded. On these facts, the Tribunal found no suppression of facts with intent to evade tax, so the penal provisions were not attracted. The service tax demand itself was left undisturbed, but the penalties were set aside.

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Issues: Whether the penalties imposed for non-payment of service tax on GTA freight were sustainable when the assessee claimed bona fide belief based on Notification No. 34/2004-ST and no suppression of facts was established.

Analysis: The assessee had not discharged service tax on freight amounts within the exemption limit, but the records showed that the transactions were duly reflected in the books of account. The Tribunal accepted that the assessee had acted under a mistaken interpretation of the notification and had been paying tax where freight exceeded the stated limit. In these circumstances, the conduct did not justify a finding of suppression of facts with intent to evade tax, and the penal provisions were not attracted.

Conclusion: The penalties were set aside. The demand of service tax was left undisturbed.

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