The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that exemption on service tax is allowable in respect of GTA services if are used in the export of goods and allowed the exemption to HEG Ltd.
M/s. HEG Limited., challenged the Order-in-Appeal dated 31.07.2017 passed by the Commissioner (Appeals) whereby confirmed the demand for service tax of Rs.37,89,2921/- and Rs.16,82.9061/- for the period from April 2012 to March 2013 and April 2013 to September 2013 respectively along with interest under Section 75 of the Finance Act, 1994 and penalty under Section 77 and Section 78 of the Act. The Adjudicating Authority has restrained from the imposition of penalty under Section 76 of the Act.
The Appellant is engaged in the manufacture of graphite electrodes falling under Chapter Heading 85451100 of the Central Excise Tariff Act, 1985. The Appellant is registered both under Central Excise registration and service tax registration for providing/receiving various taxable services such as Business Auxiliary services, Banking & Financial Services, Cargo Handling service, Consulting Engineers services, Legal services and Renting of Immovable property services, Goods transport agency service etc.
The Appellant filed an application to avail exemption from service tax under Notification No. 18/2009 dated 07.07.2009 in respect of four services namely Banking & Financial Services, Goods Transport Agency service, Consulting Engineering service and Business Auxiliary services.
The Appellant claimed exemption from service tax under GTA service amounting to Rs. 37,89,292/-. The Appellant also filed EXP1s on 07.05.2014 in the office of the Assistant Commissioner, Central Excise & Service Tax, to avail exemption from service tax under Notification No. 31/2012-ST dated 20.06.2012 for GTA services received during the period April to September 2013.
A Show Cause Notice dated 23.01.2014 was issued for the period from April 2012 to March 2013 proposing a demand of Rs. 37,89,292/- under Section 73 of the Finance Act, 1994, interest at applicable rate under Section 75, penalty under Section-76, 77 & 78 of the Act.
An Order-in-Original was passed by the Joint Commissioner, Customs, Central Excise and Service Tax, Bhopal confirming the demand raised denying the exemption of Rs. 37,89,292/- and Rs. 16,82,906/-under Section 73 of the Finance Act, 1994, interest at applicable rate under Section 75, a penalty of Rs. 10,000/-under Section-77 and penalty of Rs. 37,89,292/- and Rs. 16,82,906/- under Section-78 of the Act.
On appeal, the Commissioner (Appeals) upheld the Order-in-Original and confirmed the demand for service tax of Rs. 54,72,198/- against the Appellant under GTA Service by denying the benefit of the exemption notifications to the Appellant.
It was submitted that the Appellant availed exemption from service tax on taxable services received by them under Notification No. 18/2009-ST dated 7.7.2009 and Notification No. 31/2012 dated 20.06.2012.
He further contended that the said Notifications grant exemption from service tax in respect of GTA services provided to an exporter for transport of goods by GTA in a goods carriage from any container freight station or inland container depot to the port or airport, as the case may, from where the goods are exported or services provided to an exporter aboutthe transport of the said goods by GTA in a goods carriage directly from their place of removal to an inland depot, a container freight station or port or airport. Therefore, effectively the said Notifications exempt service tax in respect of GTA services if are used in the export of goods.
It was viewed that the appellant was very prompt when filing the intimation for seeking the exemption under the said notifications, but did not show similar promptness while filing returns. It is also seen that while filing the returns, the appellant did not take due care to file the data/documents as required, despite having undertaken to file the same.
A two-member bench comprising Justice Dilip Gupta, President and Hemambika R Priya, (Technical) observed that the appellant has complied with the notification condition and set aside the demand of duty and interest upheld in the impugned order.
Further, it was held that the penalty under section 78 is imposed when there is a wilful intention to evade the payment of tax. The delay in filing the return for claiming the exemption cannot be termed as a wilful intention to evade payment of duty. The CESTAT set aside the penalties imposed under section 78 of the Act.
While allowing the appeal, the Tribunal upheld the penalty under section 77 is upheld for failure to file the returns in time.
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