2019 (1) TMI 1745 - AT - Service Tax

GTA Service - reverse charge mechanism - whether appellant is required to pay service tax for receipt of services from Container Corporation of India Ltd when admittedly the tax amount has been charged and paid on the invoices issued by the said service provider? - HELD THAT - The service provider is a Govt of India Undertaking and the genuineness of the documents issued by it cannot be doubted. Even though the appellant was required to pay service tax under reverse charge they cannot be saddled with further demand on account of procedural lapse when admittedly tax has been duly paid to the service provider - the appellant cannot be made liable to pay service tax on this count and hence the demand of service tax of Rs. 4, 69, 461/- interest and penalty thereon under the category of GTA service are set aside. Imposition of penalty of Rs. 85, 227/- for service tax paid in audit proceedings before the issuance of SCN - HELD THAT - The said amount of tax was ascertained in the audit consequent to computation error which was never disputed by the appellant. The short paid tax was made good with interest well before the issuance of Show Cause Notice - penalty set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax under Goods Transport Agency (GTA) services.
2. Imposition of penalty under Section 78 of the Finance Act, 1994.
3. Dispute over payment of service tax for services received from Container Corporation of India Ltd.
4. Imposition of penalty for service tax paid in audit proceedings.

Analysis:
1. The appellant, a jute goods manufacturer registered for service tax under reverse charge mechanism, filed an appeal against a demand of service tax amounting to Rs. 4,69,461 under GTA services for January 2012 to January 2014, along with interest and penalty. The appellant contested the demand related to services provided by Container Corporation of India Limited, where service tax was already charged and paid by the appellant. The Ld. Commissioner (Appeals) upheld the demand citing the liability on the recipient as per Notification no. 30/2012-ST. The appellant disputed this, leading to the current appeal. The main issue was whether the appellant was liable to pay service tax when the service provider had already charged and received the tax. The Tribunal, citing precedents, ruled in favor of the appellant, setting aside the demand of service tax, interest, and penalty under GTA services.

2. The second issue pertained to the penalty of Rs. 85,227 imposed for service tax paid during audit proceedings before the Show Cause Notice was issued. The appellant argued that the tax shortfall was due to a computation error, which was rectified with interest before the issuance of the notice. Relying on legal decisions, the Tribunal overturned the penalty, stating that the appellant had rectified the error promptly upon discovery. Consequently, the penalty was set aside, and the appeal was allowed with any consequential benefits.

3. The appellant's advocate contended that the payment of service tax by Container Corporation of India Limited was not in dispute, as the invoices were authentic. The service provider being a government undertaking, the authenticity of the invoices was unquestionable. The appellant argued against double taxation and emphasized that the tax was duly paid to the service provider, thus challenging the demand for additional tax. The Tribunal agreed with the appellant, emphasizing that the appellant should not be burdened with further tax liability when the tax had already been paid to the service provider. Citing relevant legal precedents, the Tribunal ruled in favor of the appellant, setting aside the demand for service tax under GTA services.

4. The imposition of penalty for the service tax paid during audit proceedings was disputed by the appellant. The appellant had rectified the computation error promptly, and the tax shortfall was corrected with interest before the Show Cause Notice was issued. Relying on legal precedents and considering the appellant's timely rectification, the Tribunal set aside the penalty, granting relief to the appellant. The appeal was allowed, providing the appellant with consequential benefits, if any.