Appeal Partially Allowed: Penalties Set Aside, Service Tax Liability Recalculation Ordered Due to Reasonable Cause.

The Tribunal partially allowed the appeal, setting aside penalties under Sections 77 and 78 of the Finance Act, 1994, due to reasonable cause for non-payment of Service Tax. The matter was remanded to the Adjudicating Authority to recalculate the Service Tax liability, considering payments made to individual truck owners without consignment notes.

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Issues:
1. Failure to pay Service Tax under the category of "Transport of Goods by Road Service" for the period 2005-06 to 2009-10.
2. Failure to get registration with the Service Tax Department and submit periodical ST-3 returns.
3. Demand of Rs. 3,00,175/- along with interest and penalties under Sections 77 and 78 of the Finance Act, 1994.

Analysis:
1. The appellant was issued a Show Cause Notice for not paying Service Tax under the category of "Transport of Goods by Road Service" for the period 2005-06 to 2009-10, along with failure to register with the Service Tax Department and submit ST-3 returns. The Ld. Commissioner (Appeals) upheld the Adjudication Order, leading to the appeal before the Tribunal.

2. The appellant, a service recipient under the Reverse Charge Mechanism, argued that they had paid Service Tax after obtaining registration in 2009. They contended that payments were made to individual truck owners, not transport agencies, and that they had availed a 75% abatement on the Gross Amount paid. Citing Ministry of Finance press releases, the appellant argued that the tax incidence falls on the transport booking agency, not the truck owners.

3. The Tribunal found that the appellant had paid Service Tax based on their calculation and was entitled to a 75% abatement. Citing precedents like Lakshminarayana Mining Co. and Shanti Fortune (I) Pvt. Ltd., the Tribunal held that no tax liability arises when services are received from individual truck owners. The issue was deemed settled by the decision in SREE KANYACOMBINES v. COMMISSIONER OF C. EX., VISAKHAPATNAM-II, where penalties under Sections 77 and 78 of the Finance Act, 1994 were set aside due to reasonable cause for non-payment of Service Tax.

4. Consequently, the Tribunal partly allowed the appeal, setting aside penalties under Sections 77 and 78 and remanding the matter to the Adjudicating Authority to recalculate the Service Tax liability considering payments made to truck owners who did not issue consignment notes. The judgment was pronounced on 08/01/2020.

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