Tribunal upholds service tax demand for transporter services but waives penalty due to genuine belief

The tribunal confirmed the demand for service tax against the appellant for utilizing transporter and commission agent services without payment under the reverse charge mechanism. The appellant was held liable to pay service tax along with interest. However, the penalty imposed under Sections 77 & 78 of the Act was set aside due to the appellant's genuine belief in claiming CENVAT credit, as recognized under Section 80 of the Finance Act, 1994.

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Issues:
- Confirmation of demand of service tax against the appellant
- Imposition of penalties under Section 77 & 78 of the Act

Analysis:
- The appellant, engaged in the export of granite stone, utilized transporter services and a commission agent's services without paying service tax under reverse charge mechanism. Proceedings were initiated for the period 01.01.2005 to 30.09.2008, leading to the confirmation of service tax demand and penalties under Section 77 & 78.
- The appellant contended that they believed no service tax was payable for transportation services and that the commission paid to the agent constituted an export of service. They argued that if they had paid under reverse charge, they could have claimed CENVAT credit, making the extended period inapplicable and the demands unsustainable.
- The respondent argued that service tax was indeed payable by the appellant for both GTA services and services provided by the foreign agent under reverse charge mechanism.
- The tribunal held that the appellant, as the service recipient, was liable to pay service tax on both services. Consequently, the appellant was deemed liable to pay service tax along with interest.
- Regarding penalties, the tribunal noted the appellant's genuine belief in claiming CENVAT credit for the service tax paid. Invoking Section 80 of the Finance Act, 1994, the penalty imposed was set aside, allowing the appellant to claim CENVAT credit.
- The appeal was disposed of with the above terms, emphasizing the appellant's liability to pay service tax but relieving them of the penalty due to their good faith belief in CENVAT credit eligibility.

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