Penalty cannot be imposed if there is difficulty in understanding the notification by common man

PJ/Case Laws/2012-13/1172

Case:M/S. Bestilo Packaging Pvt. Ltd. V/s. Commissioner of Customs Excise, Chandigarh-II

Citation:2012 (25) S.T.R. 440 (Tri.-Del.)

Issue: Penalty cannot be imposed if there is difficulty in understanding the notification by common man

Brief Facts:The riders in the notification no. 34/2004-S.T. for exemption from service tax of GTA service viz. (i) gross amount charged against consignments transported in goods carriers does not exceed Rs. 1500, (ii) gross amount charged on individual consignment transported in goods carrier does not exceed Rs. 750. It was difficult to understand by a common man. The assessee pleaded that in his view individual consignment was the basis for service tax liability. Therefore, there was confusion in understanding the notification. There was no contumacious conduct by the appellant. There is no independent examination of the behavior of the assessee and therefore, order cannot be based on the audit observations which were the basis of issue of show cause notice.

Appellant’s Contention: The appellant submits that the riders provided in the notification no. 34/2004-S.T., dated 3-12-2004 in the matter of levy of service tax relating to GTA service were in confusion. While one rider is that if the gross amount charged against consignments transported in goods carrier does not exceed Rs. 1500 then there is a liability under the Finance Act, 1994 and other rider is if the gross amount charged against individual consignment does not exceed Rs. 750 then there shall be liability. The appellant has bonafide belief that service tax liability was on the basis of individual consignment and because of that the Audit viewed that there is short payment of tax. Further, the appellant submits that he has not made suppression of the records related to consignments and thus, the facts does not warrant levy of penalty under section 76 and 78 of the Finance Act, 1994.

Respondent’s Contention:The respondent submits that the penalty is imposable under section 78 of the Finance Act.

Reasoning of Judgment: There is no independent examination of the behavior of the appellant and the Audit observations were only the basis of the issue of the show cause notice, therefore, it should not be legitimate to impose penalty on the appellant. Although the riders in the said notification are independent in nature but difficult to understand by the common man. Also, the contumacious behavior was not constructed by the appellant so the appellant were not asked to suffer penalty. All these observations require the appeal should be allowed.

Decision: The appeal and stay application are allowed.

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PJ/Case Laws/2012-13/1172

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