The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that service tax should be levied on actual transportation charges not on provision made for transportation charges.
On scrutiny of service tax related documents for the period 2006- 07 to 2007-08, it was found that there was a variation of transportation charges for carriage inward and outward as per the value shown in their ST-3 Returns. Thereafter, it is alleged that the appellant has paid less service tax as there is a difference in transportation charges paid by the appellant corresponding to ST-3 Returns.
In view of this, a show-cause notice was issued to the appellant, M/s Jai Balaji Industries Limited, to demand service tax of Rs.72,75,885/-. By way of adjudication, the adjudicating authority dropped the demand of Rs.44,28,375/- but to confirm Rs.28,47,510/- along with interest and an equivalent amount of penalty was also imposed.
The Authorised Representative for the appellant, submitted that an amount of Rs.12,99,559/- was paid by the appellant by way of two challans, which were not considered by the adjudicating authority. Therefore, the said demand is required to be reduced from the total demand.
With regard to Rs.5,98,625, the contention of the counsel was that during the period, they made the provision for payment of freight as they did not receive actual invoices of transportation charges and after receiving the invoices from the transporter, they adjusted the amount where the provision is made for more amount and whereas they received less amount invoices. In those circumstances, the difference of provision and the actual amount is to be adjusted and if the same is adjusted, no service tax is payable by the appellant.
A Two-Member Bench comprising Ashok Jindal, Member (Judicial) and K.Anpazhakan, Member (Technical) observed that “The demand of Rs.5,98,625/-, has been confirmed on the basis of provision made by the appellant for transport expenses payable by the appellant. The appellant was not receiving the invoices of transportation charges from the transporter and later on the transporter sent the invoices of less amount on which the service tax is paid to them.”
“In those circumstances, the provision made by the appellant is adjusted at the end of the year and the said entry has been taken in the corresponding year. In those circumstances, we hold that the appellant is required to pay service tax on actual transportation charges not on the provision made for transportation charges. Therefore, the said demand is also not sustainable” the Bench noted.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
