Whether penalty to be imposed for short payment of Service Tax under GTA under bona fide belief of its non inclusion in gross value?

PJ/Case Law /2016-17/3306

Case:-ROHIT STEEL Versus COMMISSIONER OF SERVICE TAX CELL, HQRS., NAGPUR

Citation:-2016 (43) S.T.R. 403 (Tri. - Mumbai)

Brief facts:-This appeal is directed against Order-in-Appeal No. PVR/285/NGP/2013, dated 24-5-2013 passed by the Commissioner (Appeals) of Central Excise & Customs, Nagpur, wherein Ld. Commissioner (Appeals) upheld the demand of Rs. 3,21,351/- which was accepted by the appellant and paid along with interest. The appellant filed this appeal only for waiver of penalty imposed under Sections 76 & 78 of the Finance Act, 1994.

Appellant’s Contention:-Shri Madhao Vichore, ld. CA appearing on behalf of the appellant submits that appellant has admittedly paid the entire amount of Service Tax of Rs. 3,21,351/- out of which an amount of Rs. 1,68,366/- was paid on due date and declared in the ST3 returns and same was not part and parcel of show cause notice demand, only short paid amount was Rs. 1,52,985/- which was also paid on 15-6-2012 along with interest i.e. before the passing of Adjudication Order. He submits that the appellant is registered dealer of trading of steel items and recipient of transport service. They are paying service tax on reverse charge basis. They have been paying regular service tax on GTA, however due to non-inclusion of Miscellaneous Charges like Hamali, loading/unloading, carting and octroi etc. this short payment has occurred therefore there was no intension to evade service tax. The entire transaction recorded in the books of account and this discrepancy was pointed out by the audit party only from the verification of books of account of the appellant. In view of this fact appellant should not have been imposed penalty under Sections 76 and 78 as there was reasonable cause of non-payment of service tax.

Respondent’s Contention:-Shri S.L. Karoliya, ld. Asstt. Commissioner (AR)appearing on behalf of the Revenue reiterates the findings of the impugned order.

Reasoning of judgement:-The Tribunal carefully considered the submissions made by both the sides and perused the record.
The Tribunal foundthat in the present case, short payment of service tax is only of an amount of Rs. 1,52,985/- which was admittedly paid along with interest by the appellant before passing the Adjudication order. As per the submission of the appellant, the appellant was registered as dealer for passing of the Cenvat credit as well as registered under the service tax. They were paying service tax regularly and filing ST3 returns. Short payment has occurred due to the reason that the appellant under bona fide belief that Misc. Charges such as Hamali, loading/unloading, carting and octroi etc. are not includible in the gross value of the GTA and accordingly amount of such charges got escaped from payment of service tax. The Tribunal also found that the appellant have correctly recorded the entire transaction of transportation, Hamali, loading/unloading, carting and octroi etc. in their books of account and discrepancy was admittedly pointed out during audit of the appellant’s books of account. The appellant on pointing out short payment admittedly paid the service tax along with interest. In view of this fact, the Tribunal observed that appellant has been able to show reasonable cause for non-payment of service tax on due date. In the circumstances, the Tribunal is of the view that appellant has made out the case for waiver of penalty in terms of Section 80 of the Finance Act, 1994. The penalty under Sections 76 and 78 imposed by the Adjudicating authority and upheld by the first appellate authority are waived invoking Section 80 of the Finance Act. The short paid service tax was paid along with interest, the said payment is maintained. Appeal is allowed in above terms.

Decision:-Appeal allowed

Comment:-The gist of the case isthat in this case where appellant had made short payment of Service Tax under GTA by not including miscellaneous expenditures like Hamali, loading/unloading, carting and octroi under bona fide belief of their non-inclusion in gross value, there was no malafide intention. As the entire unpaid tax was paid by the appellant subsequently along with interest prior to issuance of adjudication order, penalty was waived in accordance with Section 80 of Finance Act, 1994.

Prepared by:- Praniti Lalwani

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PJ/Case Law /2016-17/3306

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