2011 (9) TMI 418 - AT - Service Tax

Waiver of penalty u/s 76 and 78 of Finance Act 1994 assessee engaged in activity of arranging finances/loans for their car customers from various banks and financial institutions - services falling under the category of business auxiliary services - Held that - The issue involved is of interpretation of the taxing entry and no mala fide or element of suppression or mis-statement can be attributed to the assessee hence imposition of penalties are set aside. See Roshan Motors Ltd. vs. CCE Meerut (2008 - TMI - 31834 - CESTAT New Delhi)

Summary

Issues:
Confirmation of service tax demand, imposition of penalty under sections 78 and 76 of the Finance Act, 1994, interpretation of law regarding providing business auxiliary services by arranging finances/loans for car customers.

Analysis:

1. Confirmation of Service Tax Demand and Imposition of Penalty:
The Appellate Tribunal confirmed a service tax demand of Rs.9,81,443 against the appellants, along with a penalty under section 78 of the Finance Act, 1994, equal to the confirmed amount. Additionally, a penalty of Rs.100 per day was imposed under section 76 of the same Act. The Tribunal found that the appellants' activity of arranging finances/loans for car customers from various banks, for which they received commissions, fell under the category of business auxiliary services, justifying the demand and penalties.

2. Interpretation of Law on Business Auxiliary Services:
The Tribunal considered the issue of whether arranging vehicle loans for customers constituted business auxiliary services. The JCDR for the Revenue did not dispute the demand, citing precedents such as the cases of CCE vs. R.S.Financial Services and CCE vs. Chambal Motors. The appellants argued that the issue involved a bona fide interpretation of the law, referencing the Tribunal's decision in the case of Roshan Motors Ltd. vs. CCE, Meerut. In the Roshan Motors Ltd. case, the Tribunal held that no penalty should be imposed in cases involving interpretation of the taxing entry without mala fide intent or elements of suppression or misstatement.

3. Setting Aside of Penalties:
Based on the precedent set by the Roshan Motors Ltd. case, the Tribunal concluded that since the issue at hand was a matter of interpreting the taxing entry without any mala fide intent or suppression, the penalties imposed under sections 76, 77, and 87 were set aside. The Tribunal emphasized that the absence of mala fide intent or suppression by the assessee justified the decision to not impose penalties in this case.

4. Disposition of the Appeal:
In light of the above analysis, the Tribunal disposed of the appeal by setting aside the imposition of penalties upon the appellants, following the decision in the Roshan Motors Ltd. case. The judgment highlighted that the issue primarily revolved around the interpretation of the law regarding business auxiliary services without any indication of mala fide intent or suppression on the part of the appellants.

This comprehensive analysis of the judgment outlines the key issues, legal interpretations, precedents, and the ultimate decision rendered by the Appellate Tribunal CESTAT, New Delhi.