Appeal partially allowed, remanded for service tax verification. Penalties under Sections 77 & 78 set aside.

The Tribunal partly allowed the appeal, remanding the matter for verification of the balance amount of service tax payment. Penalties under Sections 77 and 78 were set aside due to the absence of misstatement or suppression of facts.

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Issues:
Demand of service tax under the category of 'Service Provided by the Goods Transport Agency', imposition of penalties under Sections 76, 77 & 78 of the Finance Act, 1994, waiver of penalty under Section 76 by the ld. Commissioner (Appeals), submission of evidence regarding payment of balance amount by the appellant, verification of payment of service tax for the balance amount, setting aside of penalties under Sections 77 and 78.

Analysis:
The appellant, a manufacturer of rubberized coir mattresses and cushions, received a Show Cause Notice demanding Service Tax of Rs. 2,43,151/- for the period January, 2005 to February, 2006 under the category of 'Service Provided by the Goods Transport Agency', along with interest and penalties under Sections 76, 77 & 78 of the Finance Act, 1994. The Adjudicating Authority confirmed the demand and penalties, which was upheld by the ld. Commissioner (Appeals) except for the penalty under Section 76. The appellant appealed before the Tribunal seeking relief.

The appellant contended that they had paid the service tax to the transporters who had already collected it and provided evidence of payment amounting to Rs. 1,28,318/- out of the total liability. They argued that the Show Cause Notice issued after a lapse of three and a half years was time-barred. The Department reiterated the lower authorities' orders, stating that evidence of payment of the balance amount was not submitted by the appellant.

Upon examination, the Tribunal noted that the appellant was registered with the Service Tax Authorities since March, 2006 and had been submitting ST-3 returns. Considering the period of dispute from January, 2005 to February, 2006, the Tribunal acknowledged the controversies surrounding service tax liability during that time. The Tribunal found that the appellant had evidence of payment for a portion of the liability and decided to remand the matter to the Adjudicating Authority for verification of the remaining amount. Since the service provider and receiver were under the same jurisdiction, the Tribunal deemed it appropriate for further verification. Not finding any intent to evade payment, the Tribunal set aside the penalties imposed under Sections 77 and 78.

In conclusion, the Tribunal partly allowed the appeal, directing the matter to be remanded for verification of the balance amount of service tax payment, while setting aside the penalties under Sections 77 and 78 due to the absence of misstatement or suppression of facts.

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