1. After examining the records and hearing both sides, I note that the lower authorities have demanded a total amount of over Rs. 8.7 lakhs towards service tax (under the category of GTA Service) and education cess for the period January 2005 to March 2006. They have also demanded interest on tax under Section 75 of the Finance Act 1994 and have imposed penalties on the assessee under Sections 76 to 78 of the Act.
An amount of Rs. 2,51,794/- has already been paid by the party towards the demand of tax. It appears, this payment is on 25% of the taxable value of the service in terms of Notification No. 32/2004-ST dated 3.12.2004. The authorities have denied the benefit of the Notification to the party on the ground that this benefit cannot be claimed by a service recipient and, that too, without the service provider's consignment note containing declaration as required in the CBEC's Circular No. B1/6/05-TRU dated 27.7.2005. The Consultant for the appellant submits that what was exempted under Notification No.32/2004-ST ibid was part of service tax to the extent of 75%. It is submitted that the Notification did not refer to any "person liable to pay service tax" as defined under Rule 2(1)(d)(v) of the Service Tax Rules, 1994. These arguments are based on the provisions of Section 93 of the Finance Act, whereunder the above Notification was issued. I have also examined these provisions. The Consultant has a point. The exemption provided in Notification No. 32/2004-ST issued under Section 93(1) of the Finance Act, 1994 is expressly in relation to service tax and not in relation to the person liable to pay it. It would prima facie mean that this exemption is available to whoever pays the tax.
The appellants, being service recipient, can claim this benefit provided they satisfy the conditions laid down under the above Notification. Neither of the lower authorities has a case that they did not satisfy any of these conditions. If that be the case, the appellants have prima facie case against the demand of service tax and imposition of penalties.
2. In the result, there will be waiver of predeposit and stay of recovery in respect of the tax, interest and penalties.