M/S Sree Krishna Roadways vs. The Union Of INDIA And 2 Ors

Held

The Court held that Notification No. 30/2012-S.T. dated 20th June, 2012, categorically provides a 100% exemption from service tax for services provided by a goods transport agency in respect of transportation of goods by road, where the freight is payable by specified entities. The Court also noted Notification No. 26/2012-S.T. which deals with the Reverse Charge Mechanism, implying the tax is payable by the recipient. The Court found that the impugned order lacked any finding as to why these notifications were not applicable to the petitioner. The Court observed that the assessing authority incorrectly held the services were not covered by the negative list or the mega exemption notification without providing reasons. The Court concluded that the ex-parte finding, which ignored the relevant notifications and was not disputed by the department, could not be sustained. The non-appearance of the petitioner did not negate the benefits accrued under the notifications. Therefore, the Court set aside the impugned order and remanded the matter back to the respondent authorities for a de novo hearing, directing the petitioner to appear on 3rd March, 2023, and granting adequate opportunity to be heard and furnish documents.

Facts

The petitioner, M/s Sree Krishna Roadways, a proprietorship concern represented by its proprietor Shri Goutam Banik, is engaged in the business of transport services. The petitioner filed a writ petition challenging an order dated 10.02.2022 passed by the Additional Commissioner of Central Goods and Service Tax, Guwahati. This order demanded Rs. 87,26,208/- as service tax and an equal amount as penalty under Section 78 of the Finance Act, 1994, along with a further penalty of Rs. 10,000/- under Section 77(1). The petitioner claims that its services as a goods transport agency are fully exempted from service tax under Notification No. 30/2012-S.T. dated 20th June, 2012, and that service tax liability, if any, arises under the Reverse Charge Mechanism (RCM) payable by the recipient. The petitioner further contended that the show cause notice was never served, leading to an ex-parte order.

Key Issues

1. Whether the services provided by the petitioner as a goods transport agency are exempted from service tax under Notification No. 30/2012-S.T. dated 20th June, 2012, and consequently, whether the demand for service tax and penalty is legally sustainable? (Question of law turning on Notification No. 30/2012-S.T. and Section 68 of the Finance Act, 1994). Petitioner's arguments: The petitioner argued that Notification No. 30/2012-S.T. grants a 100% exemption for services rendered by a goods transport agency in respect of transportation of goods by road. Therefore, no service tax is payable by the petitioner, and consequently, no penalty can be imposed. The petitioner also contended that the impugned order failed to consider this exemption and incorrectly held that the services were neither covered by the negative list nor the mega exemption notification. Furthermore, the petitioner argued that the show cause notice was not served, rendering the ex-parte order invalid. Revenue's arguments: The revenue, through its learned standing counsel, submitted that the impugned order was passed due to the petitioner's non-appearance and failure to furnish required documents, despite notice being served. The department stated that the burden of tax was on the recipients, and details were not provided by the petitioner. The revenue did not dispute the legal position of the notifications cited by the petitioner.