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2018 (4) TMI 1325 - AT - Service TaxPenalty - GTA Service - appellant had not discharged the service tax under GTA service on the freight paid exceeding ₹ 750/- and not exceeding to ₹ 1500/- and had not disclosed the same in their ST-3 returns - suppression of taxable value - Held that - The said N/N. 34/2004 dated 03.12.2004 was indeed subject matter of litigation. The Notification exempted the taxable service provided by a goods transport agency to a customer, in relation to transport of goods by road in a goods carriage from the whole of service tax leviable under Section 66 of the Act - appellant were under a bonafide belief that an individual consignment was basis of the liability. In spite of instruction of the department, they were contesting the matter. No contumacious conduct with an intention to evade payment of duty has been established, the appellants were bonafidely litigating the issue - penalty is unwarranted. Demand of service tax with interest upheld - penalty set aside - appeal allowed in part.
Issues:
Non-payment of service tax under GTA service on freight exceeding ?750/- and not exceeding ?1500, suppression of taxable value, imposition of penalties under Section 77 & 78 of the Finance Act, 1994, interpretation of Notification No. 34/2004-ST dated 03.12.2004, bonafide belief of the appellant, imposition of penalty, applicability of the notification. Issue 1: Non-payment of service tax under GTA service on freight exceeding ?750/- and not exceeding ?1500, suppression of taxable value, imposition of penalties under Section 77 & 78 of the Finance Act, 1994. The appellant, engaged in sugar manufacturing, failed to discharge service tax under GTA service on freight exceeding ?750/- but not exceeding ?1500. After audit, it was discovered that the appellant had not disclosed this in their ST-3 returns. The range officer issued a show cause notice proposing to recover the service tax, interest, and penalties for suppression of taxable value. The original authority confirmed the demand, which was upheld by the Commissioner (Appeals). The appellant contested the penal action, claiming confusion in interpreting the exemption notification. The Tribunal considered the appellant's bonafide belief and lack of contumacious conduct, setting aside the penalty while upholding the demand for service tax and interest. Issue 2: Interpretation of Notification No. 34/2004-ST dated 03.12.2004, bonafide belief of the appellant, imposition of penalty. The appellant disputed the demand based on Notification No. 34/2004-ST which exempted service tax on consignments not exceeding ?1500. The appellant believed that the exemption applied if the charge of an individual consignment did not exceed ?750. Despite department instructions, the appellant contested the matter, relying on the complexity of the notification. Citing previous tribunal decisions, the appellant argued that no contumacious conduct was evident, leading to the penalty being deemed unwarranted and set aside while maintaining the service tax and interest demand. Issue 3: Applicability of Notification No. 34/2004-ST dated 03.12.2004. The Tribunal analyzed the Notification exempting service tax on consignments under certain thresholds. The appellant's interpretation of the notification regarding individual consignments and the gross amount charged was considered. The Tribunal acknowledged the confusion caused by the notification's language and the appellant's genuine attempt to comply. Ultimately, the Tribunal set aside the penalty, emphasizing the lack of intentional evasion and the appellant's legitimate interpretation of the notification. In conclusion, the Tribunal modified the impugned order by setting aside the penalty while upholding the demand for service tax and interest. The appeal was partially allowed, providing consequential relief to the appellant.
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