2014 (8) TMI 1102 - AT - Service Tax

Taxability - commission - agreement with service providers for providing services during the guarantee period - service providers were sharing a percentage of amounts received by them with the appellant - Held that - by naming the persons for providing aftersales service and facilitating them to do business with their customers, it can be said that appellants have promoted the business of aftersales service providers. Therefore, prima facie, we find that appellants do not have a strong case on merits. Therefore, the impugned order requiring them to deposit 75% of the duty payable was reasonable - appeal dismissed - decided against appellant.

Summary

Issues: Service tax liability on commission received, dismissal of appeal for non-payment of service tax, promotion of business of service providers by appellants.

Service Tax Liability on Commission Received:
The appellant, registered for providing various services, was found to have entered into agreements with service providers to share a percentage of amounts received during the guarantee period. The authorities initiated proceedings, culminating in the confirmation of a service tax demand of Rs. 4,01,790 with interest, along with an equal penalty. The Tribunal found that the appellants were promoting the business of service providers by facilitating them to do business with their customers. Despite no representation by the appellants, the Tribunal considered the impugned order reasonable, requiring them to deposit 75% of the duty payable. The Tribunal granted the appellant another opportunity to comply with the deposit order and present their case, emphasizing that failure to comply would lead to the rejection of the appeal.

Dismissal of Appeal for Non-Payment of Service Tax:
The appeal before the Commissioner (A) was dismissed as the appellant did not pay 75% of the service tax required for the appeal hearing. Despite the absence of the appellant during multiple listing dates, the Tribunal decided not to reject the appeal immediately. Instead, the appellant was given a final chance to make the deposit as per the Commissioner (A)'s orders and report compliance within eight weeks. The Tribunal warned that failure to make the deposit would result in the rejection of the appeal without further opportunities.

Promotion of Business of Service Providers by Appellants:
The appellants, engaged in manufacturing items used in coal mines, identified service providers for aftersales services and facilitated them to share a percentage of amounts received with the appellants. The Tribunal noted that by promoting these service providers and facilitating their business with customers, the appellants were indirectly promoting the aftersales service business. While acknowledging the lack of representation by the appellants, the Tribunal found that they did not have a strong case on merits. Despite this, the Tribunal granted the appellants an opportunity to comply with the deposit requirement and present their case before the Commissioner (A) for a decision on the merits of the appeal.