S.S. Garg ORDER
S.S. Garg, Member (J)
1. The present appeal has been filed by the Revenue against the impugned order dated 28.8.2009 passed by the Commissioner whereby the Commissioner has dropped the penalty under Section 76, 77 and 78, as the assessee has paid the service tax liability along with interest.
2. Briefly the facts of the present case are that the respondent is registered partnership firm engaged in the business of mining activities and transporting iron ore to their customers by road in a goods carriage and incurred freight charges. On gathering intelligence, the officers of the Central Excise (Preventive), Bellary Division, visited the business premises of M/s. Zeenath on 21.1.2006. On verification of records, they noticed that M/s. Zeenath were incurring the freight charges for transportation of iron ore to their customers through trucks and had availed the services of GTA for the same. In terms of Notification No. 36/2004-ST, dated 31.12.2004 read with Rule 2(1)(d)(v) of the Service Tax Rules, 1994, the consignor or consignee who is one of the specified person and pays freight, is required to take registration and pay service tax on transport of goods by road-in a goods carriage (GTA) services availed, in terms of Section 68(2) of the Finance Act, 1994. The officers had noticed that M/s. Zeenath neither applied for registration for the payment of service tax in terms of Section 69 of the Finance Act, 1994 nor paid the service tax on the value of freight charges incurred by them during the period from 01.01.2005 to 31.12.2005. Therefore, the officers observed that M/s. Zeenath appeared to have contravened the provisions of the Finance Act, 1994 and rules made thereunder. After investigation, a show-cause notice dated 15.2.2007 was issued by the Commissioner of Central Excise, Belgaum demanding service tax of Rs. 1,56,21,327/- under the category of GTA Service. After following due process of law, the Commissioner adjudicated the show-cause notice vide Order-in-Original dated 28.8.2009, whereby the Commissioner has held that respondent was liable to pay service tax under GTA Service on transportation charges incurred by them during the period January 2005 to December 2005 as per Notification No. 35/2004-ST dated 3.1.2004 read with Section 68(2) of the Finance Act, 1994 and the respondent was entitled to abatement to the extent of 75% on the gross freight incurred by him and that the actual service tax payable by the respondent after abatement of 75% was Rs. 39,83,436/-. The respondent paid the said service tax of Rs. 39,83,436/- and interest of Rs. 2,31,368/- and the same was appropriated by the Commissioner. Further, the Commissioner, relying upon the Boards Circular No. 341/18/2004 : MANU/DSTX/0049/2004 dated 17.12.2004, waived penalties invoking Section 80 of the Finance Act, 1994.
3. Heard both the parties and perused the records.
4. The learned AR submitted that the impugned order is not sustainable in law. He further submitted that once the extended period is invoked alleging suppression of facts with intend to evade payment of service tax then the Commissioner does not have the power to waive penalties since the instruction of the Board in Circular dated 17.12.2004 excluded cases involving fraud, collusion, suppression of facts or willful mis-statement or contravention of the provisions of service tax with intend to evade payment of service tax.
5. On the other hand, the learned counsel for the respondent defended the impugned order and submitted that service tax on GTA was a new levy and it is one of the first services where barring few categories, the onus to pay service tax shifted to the receiver of service. He also submitted that the period involved in the present case is January 2005 to December 2005 during that period, the levy was newly introduced and respondent was not aware of his liability to pay service tax as receiver of service. On being proceeded against by the Department and coming to know of their liability to pay service tax as receiver of service, the respondent paid the same along with interest before the issuance of show-cause notice. He further submitted that while issuing the show-cause notice, the department has demanded service tax on the gross freight charges without extending the benefit of abatement to the extent of 75% as per Notification No 32/2004-ST : MANU/DSTX/0046/2004 dated 3.12.2004 which only demonstrates that even the department was not aware of the statutory provisions. He further submitted that the respondent had accounted relevant transactions in their books and non-payment of service tax on the transportation charges was a bona fide mistake as the levy was newly introduced. He also submitted that as per Section 73(3) of the Act, the proceedings ought to have been concluded and no show-cause notice should have been issued but the same was issued on 15.2.2007 after the expiry of more than one year when the entire dues had already been paid. He further submitted that Commissioner after knowing that the respondents are entitled to abatement, passed the order appropriating the amount paid but dropped the penalties relying upon the Board Circular, which is reproduced herein below:
In case of omission in payment of service tax or procedural lapses by persons liable to pay service tax on the goods transport by road, committed before 31st December 2005, the consequences should be limited to recovery of tax with interest payable thereon. No penalty should be imposed on such defaulters unless the default is on account of deliberate fraud, collusion, suppression of facts or willful mis-statement or contraventions of the provisions of service tax with intent to evade payment of service tax.
5.1 In support of his submission, he relied upon the following decisions:
* Sujala Pipes Ltd. vs. Commissioner: MANU/CB/0265/2014 : 2015 (40) STR 606
* CST, Bangalore vs. Motor World: MANU/KA/2705/2011 : 2012 (27) STR 225 (Kar.)
* S-Mac Security Services Pvt. Ltd. vs. CST : MANU/CB/0076/2016 : 2016 (45) STR 209 (Tri.-Bang.)
* Ganesh Tours & Travels: MANU/CB/0269/2009 : 2010 (18) STR 171 (Tri.-Bang.)
* CCE vs. Adecco Flexione Workforce Solutions Ltd.: MANU/KA/2372/2011 : 2012 (26) STR 3 (Kar.)
* Gupta Metallics & Power Ltd. vs. Commissioner: MANU/CM/0506/2016 : 2016 (44) STR 681 (Tri.-Mumbai)
* Gujarat State Road Transport Corpn. Vs. Commissioner: MANU/CS/0104/2016 : 2017 (49) STR 176 (Tri.-Ahmd.)
6. After considering the submissions of both the parties and perusal of the material on record as well as the judgments relied upon by the respondent, I find that in this case, the Commissioner in the facts and circumstances of the case has rightly given the benefit of Section 80 and has not imposed penalties under Section 76, 77 & 78 because the respondent had paid the service tax along with interest before issue of show-cause notice. Further, I also find that levy was newly introduced during the relevant period involved in the present case and even the department was not aware of the statutory provisions and hence, the department has demanded the entire amount in the show-cause notice without giving the benefit of abatement as provided under Notification. Further, the Division Bench of this Tribunal in the case of S-Mac Security Services Pvt. Ltd. cited supra by relying upon the decision of Karnataka High Court in the case of Motor World cited supra has upheld the benefit under Section 80 where the service tax along with interest is paid before issue of show-cause notice. Therefore, by relying upon the decisions cited supra, I am of the view that there is no infirmity in the impugned order and the same is upheld by dismissing the appeal of the Revenue.
(Order is pronounced in Open Court on 07/06/2017.)
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