Kent Chemicals Private Ltd Vs Commissioner (CESTAT Delhi)
The proven discharge of liability by the service provider, the same is opined to be a sufficient cause for the appellant to have a bonafide impression of him to no more be liable to pay the service tax even under reverse charge mechanism. The allegation as that of suppression and misrepresentation of the facts cannot be levelled against the appellant. Resultantly, the extended period of limitation could not be invoked by the Department, nor there arises any reason for imposition of penalty. Consequently, the order confirming demand of penalty amount is liable to be set aside. Above all, the SCN of 18.07.2007 proposing the demand for April 2012 to February, 2013 is barred by time. Seen from the above discussion, the order under challenge is hereby set aside.
FULL TEXT OF CESTAT DELHI ORDER
The present adjudication has arisen out of show cause notice No.4304 dated 18.07.2017 vide which the Department has alleged that the appellants have failed to pay the Service Tax amounting to Rs.1,17,478/- on the value of taxable services i.e. ‘Goods Transport Service’ being provided to the appellants during the period from April 2012 to February, 2013. It was alleged that in view of Rule 2 (1) (b) (v) of Service Tax Rules, 1994, the recipient of ‘Goods Transport Agency Service’ is liable to pay the Service Tax on the amount of freight paid by him under reverse charge mechanism. Since the appellant had not paid the same, that the recovery of the aforesaid amount alongwith the interest at the appropriate rate in accordance of Section 75 of the Finance Act read with Rule 14 of Cenvat Credit Rules, 2004 and that of Section 11AA of Central Excise Act, 1944 alongwith the penalties under Section 76, 77 and 78 of Finance Act 11AC of Central Excise Act and Rule 15 of CCR, 2004 were proposed. The entire demand was initially confirmed vide Order-in-Original No.142 dated 29.05.2015. The appeal thereof was rejected vide Order in Original No.32 dated 11.05.2018. Being aggrieved, the appellant is before this Tribunal.
2. I have heard Mr. Pulkit Kapoor, ld. Chartered Accountant for the appellant and Mr. P.R Gupta, ld. D.R. for the Department.
3. It is submitted on behalf of the appellant that the period involved herein is both pre as well as post negative list. The aforesaid provision and the applicability thereof is for the post negative list period and qua the pre negative list period, the appellant was not liable to discharge the Service Tax liability in view of the Circular No.341/18/2004 ARU dated 17.12.2004. In addition, it is submitted that the appellant was informed by the transporter that the impugned service tax liability stands discharged by the transporter as such the appellant/recipient of that service is not required to pay any amount of tax. The emphasis has been paid for the challans of the respective payments and also the certificates given by the transporter to the effect that the impugned tax liability stands discharged. In the given circumstances, there was no reason for the appellant to deposit the tax as demanded. It is alleged that the adjudicating authorities below have failed to appreciate the settled case law in this respect that when the tax already stands paid for GTA, irrespective by the transporter, the fact of payment is on record and thus subsequent demand will amount to double taxation. The order under challenge is accordingly prayed to be set aside, and appeal is prayed to be allowed.
4. Ld. DR while justifying the order under challenge has impressed upon para 7 thereof and also para 18 of Order-in-Original thereof submitting that the order is in due compliance of the mandatory statutory provisions. No infirmity can be alleged. The adjudicating authorities have relied upon the relevant case laws even of the Hon’ble Apex Court, while confirming the demand. Appeal accordingly, is prayed to be dismissed.
5. After hearing both the parties, I am of the opinion that the issue in the given circumstances is as to:
Whether the appellant is liable to pay Service Tax on the freight paid by him to a ‘Goods Transport Agency’ even when the said tax stands paid by the said transporter?
5.1 No doubt the provision as invoked in the show cause notice while proposing the said demand and has been considered by the authorities below while confirming the said demand i.e. Rule 2 (1) (V) (b) of Service Tax Rules, 1994 provides as follows
