2011 (1) TMI 110 - AT - Service Tax

Commission to the overseas commission agent - service tax under the category of business auxiliary service as recipient of service from the foreign service provider - original authority in addition confirming the demand of duty ordered recovery of interest and also imposed penalty - Commissioner (Appeals) has set aside the interest but upheld the penalty - for the purpose of contesting the penalty, he submits that in respect of services received from the Foreign Service provider no service tax liable paid by the recipient for the period prior to 18.4.2006 when the section 66A was introduced in the Finance Act - Liability to service tax cannot be decided by the Tribunal as the matter was not agitated before the Commissioner (Appeals) - no justification for imposition of penalty - order of the Commissioner (Appeals) imposing penalty is therefore is set aside and the appeal is allowed

Summary

Issues:
Liability of service tax on services received from overseas commission agent, imposition of penalty by the Commissioner (Appeals).

Analysis:
- The appellant, engaged in the manufacture of hand tools, exported consignments and paid commission to an overseas commission agent. The original authority held that service tax was payable on the commission paid during a specific period. The appellant paid the service tax but contested the imposition of interest and penalty.
- The Commissioner (Appeals) set aside the interest but upheld the penalty of Rs.10,000. The appellant, through their Advocate, argued that no service tax was liable to be paid for the period before the introduction of section 66A in the Finance Act on 18.4.2006.
- The Tribunal noted that the issue of liability to service tax was not raised before the Commissioner (Appeals) and therefore could not be decided in the present appeal. However, considering the Advocate's submission, the Tribunal found no justification for the imposition of the penalty.
- Consequently, the Tribunal set aside the penalty imposed by the Commissioner (Appeals) and allowed the appeal with consequential relief as per law. The appellant succeeded in challenging the penalty but the issue of service tax liability remained unresolved due to procedural reasons.