Export-Linked GTA Exemption Cannot Be Denied for Delayed EXP-1/EXP-2 Forms When Substantive Conditions Are Met: CESTAT [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that exemption for export-related Goods Transport Agency (GTA) service cannot be denied only because EXP-1 and EXP-2 forms were filed late when the main conditions for export exemption were satisfied.

S.M. Niryat Pvt. Ltd., the appellant, was engaged in export business and used GTA services for transportation of export cargo. During scrutiny of records, the department alleged that the appellant short paid service tax under reverse charge on GTA services for different financial years.

The department issued show cause notices demanding service tax along with interest and penalties. According to the department, the appellant wrongly claimed exemption for export cargo transportation because EXP-1 and EXP-2 forms were either filed late or were defective. The department also disputed the calculation of transportation charges shown in the books of accounts.

Read More: Relief to JSW Steel: CESTAT Rules Revenue Cannot Deny Intereston EDD Refund Due to Pending Finalisation of Bills of Entry [Read Order]

The adjudicating authority confirmed major portion of the demand along with penalties. Aggrieved by the order, the appellant approached the CESTAT.

The appellant’s counsel argued that the transportation services were directly connected with export of goods and qualified for exemption under the notifications. It was argued that only procedural delay happened in filing EXP-1 and EXP-2 forms and substantive conditions for export exemption were fully satisfied.

The appellant further argued that the department adopted wrong figures without properly reconciling the balance sheet and transportation records. The appellant also argued that some amount of service tax was already paid and certain liabilities were covered under the Voluntary Compliance Encouragement Scheme (VCES), 2013. The appellant also sought benefit of statutory abatement wherever exemption was not available.

The revenue counsel argued that the exemption notifications required strict compliance of procedural conditions and the appellant failed to file EXP-1 and EXP-2 forms within prescribed time. The revenue further argued that proper supporting documents were not produced for several transportation transactions.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that exemption relating to export cargo transportation cannot be denied only because procedural declarations were filed late when the substantive conditions regarding export and transportation of goods were fulfilled.

The tribunal further observed that the authorities should properly verify transportation records and exemption documents instead of rejecting the claims mechanically on procedural grounds. The tribunal pointed out that reconciliation of balance sheet figures and taxable transportation charges was necessary before confirming the demand.

The tribunal explained that wherever documents relating to export cargo transportation were available, the appellant would be entitled to exemption benefit. In cases where exemption documents were not available or were defective, the appellant would still be entitled to statutory abatement available for GTA services.

The tribunal also observed that tax already paid under the VCES scheme should be adjusted against the liability of the appellant. The tribunal partly set aside the impugned order and remanded part of the matter to the adjudicating authority for fresh verification and recalculation.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates