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

Held

The Court held that the petitioner's services as a goods transport agency were prima facie exempted from service tax under Notification No. 30/2012-S.T. dated June 20, 2012, and Notification No. 26/2012-S.T. dated June 20, 2012, which provide for the payment of service tax under the Reverse Charge Mechanism (RCM) by the recipient of the services. The Court noted that the impugned order failed to address the applicability of these notifications and incorrectly stated that the petitioner's services were neither covered by the negative list nor the mega exemption notification. The Court found that the ex-parte finding, ignoring these notifications which were not disputed by the department, could not be accepted. The non-appearance of the petitioner did not negate the benefits accrued under these notifications. Consequently, the impugned order was set aside, and the matter was remanded for a de novo hearing. The petitioner was directed to appear before the respondent authorities on March 3, 2023, for a fresh hearing, with an opportunity to present documents and be heard. The respondent authorities were directed to pass a speaking order after the hearing.

Facts

The petitioner, M/s Sree Krishna Roadways, a proprietorship concern, filed a writ petition challenging an ex-parte order dated November 12, 2021, issued by the Additional Commissioner of Central Goods and Service Tax, Guwahati. The order demanded Rs. 69,56,916/- as service tax, an equal amount as penalty under Section 78 of the Finance Act, 1994, and Rs. 10,000/- as penalty under Section 77(2) of the same Act. The petitioner claimed that its services as a goods transport agency were exempted from service tax under Notification No. 30/2012-S.T. dated June 20, 2012, and that service tax liability, if any, would arise under the Reverse Charge Mechanism (RCM) in the hands of the recipient. The petitioner also contended that the show cause notice was never served, leading to the 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 June 20, 2012, and whether the impugned order correctly considered this exemption, turning on Section 68 of the Finance Act, 1994, and the said notification. Petitioner's arguments: The petitioner argued that its services are fully exempted under Notification No. 30/2012-S.T. and that the impugned order failed to consider this exemption. They also contended that the order was passed ex-parte without proper service of the show cause notice, rendering the proceedings without basis and jurisdiction. Revenue's arguments: The revenue, through its standing counsel, submitted that the ex-parte order was passed due to the petitioner's non-appearance and failure to furnish required documents despite notice. They stated that the department had no alternative but to pass the order as the burden of tax was on the recipients and details were not provided by the petitioner.