PER K. ANPAZHAKAN :
The present appeal was filed by the Appellant against the impugned order dated 28.02.2012, passed by the Commissioner (Appeals), wherein the demand of service tax of Rs.98,160/-along with interest and penalty confirmed in the Order-in-Original dated 27.07.2010 was upheld. Aggrieved against the impugned order, the Appellant filed the present appeal.
2. The facts of the case are that the Audit officers of Central Excise and Service Tax Commissionerate, Dibrugarh visited the office of the Appellant from 04.06.2009 to 06.06.2009. During the course of the audit, it was found that the Appellant incurred some expenses on inward freight and shown the same as expenses in their Balance Sheet under 'freight expenses', but did not discharge service tax on the same for the period April 2005 to July 2007.
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Accordingly, a Show Cause Notice dated 12.03.2010 was issued to the Appellant demanding service tax of Rs.94,360/- along with interest of Rs.41,910 and penalty. The said Notice was adjudicated by the Assistant Commissioner vide Order-in-Original dated 27.07.2010, wherein the duty demanded in the Notice was confirmed along with interest. A penalty of Rs.1,92,620/- was also imposed under Section 78 of the Finance Act, 1994. On appeal, the Commissioner (Appeals) upheld the demand of service tax along with interest, but reduced the penalty under Section 78 to 98,160/-. The present appeal has been filed against this impugned order.
3. In their submissions, the Appellant stated that they are an unregistered Partnership Firm, availing Goods Transport Agency Service ( GTA in short) for inward as well as outward transportation of goods. As per Section 68(2) of the Finance Act, 1994, as amended read with Rule 2(1)(d)(v) of the Service Tax Rules, 1994, the service receiver is liable to pay service tax in relation to the taxable service rendered by a Goods Transport Agency, under reverse charge, if it is a body corporate or Partnership Firm registered by or under any law. Notification 36/2004, listing out the category of persons liable to pay service tax for GTA service under reverse charde, did not envisage reverse charge payment by an unregistered Partnership Firm. An unregistered Partnership Firm was also made liable to pay service tax for GTA service under reverse charge, only under Notification 30/2012. Accordingly, they contended that during the material period, they were not liable to pay service tax for the GTA service received by them, under reverse charge. Accordingly, they prayed for setting aside the demands confirmed in the impugned order.
4. The Ld. A.R reiterated the findings in the impugned order.
5. None appeared from the Appellant's side for the hearing held on 06.09.2023. As the issue is on a narrow campus, which can be decided based
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on the written submissions made by the Appellant the appeal has been taken up for decision based the documents available on record.
6. We observe that the issue to be decided in the present appeal is whether the Appellant, an unregistered Partnership Firm, was liable to pay service tax for GTA service received by them, under reverse charge, during the period April 2005 to July 2007?.
7. In the Order-in-Original dated 27.07.2010, the adjudicating authority has confirmed the demand by making the following observations:
In the present case, I find, from the deed of partnership that both Shri. Suresh Kumar Agarwal and Sri. Ratanlal Agarwal entered into a deed of partnership not as members of a Hindu undivided family for carrying on family business but for sharing profits of a business carried on by them for the Firm M/s Bharat Ispat. In regard to Registration of the Firm, I find on reading of the Indian Partnership Act 1932 that a Partnership Firm may make an application for registration of their firm. In the instant case, M/s Bharat Ispat, though they were required to take registration under the Indian Partnership Act, 1932, did not take registration deliberately and hence by virtue of their firm fulfilling the status of a Partnership Firm irrespective of whether they have taken registration or not under the Indian Partnership Act, 1932 would fall within the purview of category (g) of sub-clause (v) in clause (d) in sub- rule (1) of rule 2 of the Service Tax Rules, 1994.
8. We observe that the above findings of the Assistant Commissioner were upheld by the Commissioner (Appeals) in the impugned order. We find that both the Lower Authorities have gone beyond the scope of Notification 36/2004 , which specifies the categories of persons who are liable pay service tax on GTA service under reverse charge. The said Notification envisages that a body corporate or Partnership Firm registered by or under any law, as one of the persons who are liable to pay service tax for GTA serve under reverse charge. An unregistered Partnership Firm was not made liable to pay service tax for GTA service under reverse charge under the Notification 36/2004. This position was changed only under Notification 30/2012, whereby 'Any Partnership Firm whether registered or not under any law' was made liable to
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pay service tax under reverse charge. Thus, we hold that during the material period, the Appellant were not liable to pay service tax for the GTA service received by them under reverse charge. We observe that the findings of the lower authorities that the Appellant has deliberately not registered their Firm to evade payment of service tax under GTA service is a far-fetched imagination, not supported by any evidence. Accordingly, we hold that the demand of service tax along with interest confirmed in the impugned order is not sustainable. Since the demand of service tax is not sustainable, the question of imposition of penalty does not arise. Thus, the impugned order is liable to be set aside and accordingly we do the same.
9. In view of the above discussion, we allow the appeal filed by the Appellant. (Dictated and pronounced in the open Court)
Sd/-
(Ashok Jindal) Member (Judicial) Sd/-
(K. Anpazhakan) Member (Technical)
Tushar
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