PRAGJYOTI SYNTEX LTD. Vs. CCE

JUDGEMENT

(1.) THE appellants are a spinning unit and manufacture of spun acrylic yarn. They have taken a Central Excise Registration. Service Tax on services provided by goods transport agency was introduced with effect from 1.1.2005 and as per the provisions of Rule 2(1)(d)(v) of Service Tax Rules, 1994 read with -ST dated 31.12.2004 in case of service of goods transport agency service received by a manufacturer, the tax liability is on the manufacturer. The appellants were receiving goods transport service but they did not pay the Service Tax for the period from January 2005 to November 2005 which was paid only on 8.12.2005. The Service Tax for the period December 2005 to Feb. 2006, was paid on 31.3.2006. The department subsequently issued a show -cause notice for imposition of penalty on the appellant under Section 76 of the Finance Act 1994 for delay in payment of Service Tax by the due date. The Assistant Commissioner vide order -in -original dated 28.2.07 holding that the appellants have failed to deposit the Service Tax by its due dates and thereby contravened the provisions of Rule 6 of Service Tax Rules 1994 imposed penalty of Rs. 100 per day under Section 76 ibid. for the period of delay. The appellant filed appeal and the Commissioner (Appeals) dismissed the appeal.

(2.) HEARD both sides. The appellant Shri R.K. Goenka, Managing Director of the appellant company when appeared in person, pleaded that delay in payment of Service Tax was due to their ignorance as the Service Tax on GTA service had been reduced with effect from 1.1.05 and they were not aware that in case of this service, the tax liability is on the manufacturer availing the service and that as soon as they came to know that they are liable to pay Service Tax on the GTA service received by them, they took Service Tax registration and paid the Service Tax for the period up to November 2005 on 8.12.2005 along with interest and subsequently the tax for the period up to February 2006 on 31st March, 2006 along with interest. He pleaded that their unit is a sick unit and in spite of this they have paid the Service Tax and reason for delay its initial payment of Service Tax was their ignorance of the law. He, therefore, pleaded that this is fit case for invoking Section 80 of the Finance Act for waiving the penalty.

(3.) I have carefully considered the submissions from both sides and have perused the record. The Service Tax on GTA was reduced from 1.1.05 and as per the provisions of the notification issued in this regard in case of GTA service received by a manufacturer, the tax liability was on the manufacturer not on the Goods Transport Agency. It is also seen that the appellant paid the Service Tax on their own and it is not that the department first pointed out the non -payment and then they paid the Service Tax. From the conduct of the appellant, I am of the view that their plea that delay in payment of Service Tax was on account of their ignorance of the law, is acceptable. I, therefore, of the view that in this case Section 80 of Finance Act should have been invoked for waiving the penalty. Ordered accordingly. The impugned order, therefore, is set aside and the appeal is allowed with consequential relief.