The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand under the category of transport of goods by road service on the grounds of limitation.
Punjab State Grains Procurement Corporation Ltd, the appellant assessee registered with Service Tax in the category of “Transport of Goods by Road Services” and had incurred expenditure on account of amounts, paid to Rice millers, which included payment towards transportation, from the premises of millers to the godowns of Food Corporation of India (FCI).
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the service tax demand amounting to Rs.5,37,036/- along with interest and penalty.
Sudhir Malhotra and G.S. Dhillon, the counsels for the assessee contended that the assessee is a Corporation under the Government of Punjab and has been procuring paddy from the farmers and supplying the same to FCI after getting the same milled by various millers and the services are not provided by goods transport operators, the obligation to pay service tax does not arise.
Raman Mittal, the counsel for the department contended that the assessee are aware of their obligation to pay the applicable service tax and had registered themselves for payment of service tax under Goods Transport Service under Reverse Charge Mechanism.
The Bench observed that no investigation appeared to have been done to verify the authenticity or otherwise of such documents by the department and the assessee being a Government Corporation cannot be alleged to have suppressed material fact with intent to evade payment of tax.
The two-member bench comprising S S Garg (Judicial) and Anjani Kumar (Technical) held that the extended period cannot be invoked and quashed the service tax demand imposed against the assessee while allowing the appeal filed by the assessee.
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