Reliance Cellulose Products Ltd Vs Commissioner of Central Tax (CESTAT Hyderabad)
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal considered an appeal against an order of the Commissioner (Appeals) that had partly allowed and partly upheld a Service Tax demand arising from non-payment of tax on Goods Transport Agency (GTA) services under the Reverse Charge Mechanism (RCM). The dispute related to the period when the appellant had admittedly not discharged Service Tax at the relevant time. Upon being pointed out, the appellant paid the tax, while claiming abatement and adjustment of excess Service Tax paid through ST-3 returns.
The Department issued a show cause notice even after part payment. On adjudication, abatement was allowed to the extent supported by documents and denied where documents were not produced, resulting in confirmation of a demand of ₹5,57,717 along with interest and an equivalent penalty. On appeal, the Commissioner (Appeals) also allowed adjustment of excess Service Tax paid, thereby settling the Service Tax liability along with interest. Consequently, the tax demand stood fully discharged.
Before the Tribunal, the appellant limited the challenge to the imposition of penalty and did not contest the demand on merits. It was argued that the failure to pay Service Tax under RCM was due to a bona fide belief, and that issues relating to abatement and adjustment were largely resolved in their favour. The appellant submitted that the non-payment was not intentional, there was no intent to evade tax, and the circumstances justified waiver of penalty under Section 78 by invoking Section 80 of the Finance Act, 1994.
