ITC Limited Vs Commissioner of GST and Central Excise (CESTAT Chennai)
The CESTAT Chennai heard an appeal filed by the appellant against the Order-in-Appeal upholding the confirmation of service tax demand, interest and penalty arising from alleged short payment of service tax under the category of “Transport of Goods by Road.” The dispute originated from a CERA audit which compared the taxable value declared in the appellant’s ST-3 Returns with the figures reflected in the Trial Balance for the financial year 2008-09. On finding that the Trial Balance reflected a higher value than the ST-3 Returns, the Department issued a show cause notice demanding differential service tax of Rs.12,39,137/- along with interest and penalty by invoking the extended period under Section 73(1) of the Finance Act, 1994. The adjudicating authority confirmed the demand, interest under Section 75, and equivalent penalty under Section 78, and the Commissioner (Appeals) upheld the order.
The appellant contended that the Trial Balance and ST-3 Returns were prepared under different accounting methods, resulting in differences that required reconciliation before alleging short payment. It submitted that service tax on GTA services was correctly discharged under the Reverse Charge Mechanism on the basis of actual payments in accordance with Rule 6 of the Service Tax Rules. According to the appellant, the demand had been confirmed merely by comparing ST-3 Returns with the Trial Balance and presuming that all debit entries represented taxable GTA payments. The appellant also relied upon a reconciliation statement and a Chartered Accountant’s certificate certifying that no short payment of service tax had occurred. It further argued that the Department bore the burden of establishing that the differential amount represented consideration for taxable services, that the extended period of limitation was not invocable, and that the issue was revenue neutral since any service tax paid would have been available as CENVAT credit.
