2012 (5) TMI 349 - AT - Service Tax

Service Tax on the commission received in distribution of pre-paid SIM, Re-charge coupons, Top-up card and other vouchers under various schemes as an authorized distributor - held that - as soon as it was pointed out to the assessee that the Service Tax is required to be paid, the assessee discharged the same with interest and also filed ST-3 returns with late fees. - the request for treatment of the amount received as cum-tax amount is allowed and the assessee is entitled to consequent relief, if any. - penalty under Section 76, 77 and 78 of Finance Act, 1994 cannot be sustained.

Summary

Issues Involved: Liability of the appellant to Service Tax on commission received in distribution of pre-paid SIM, Re-charge coupons, Top-up card, and other vouchers as an authorized distributor for M/s Vodafone Essar Gujarat Limited. Applicability of penalties under Sections 76, 77, and 78 of Finance Act, 1994. Benefit of Notification No.6/200-ST, dt.1.3.2005. Waiver of penalties invoking Section 73(3) of Finance Act, 1994. Benefit of cum-duty price under Section 76(2) of Finance Act, 1994.

Analysis:

1. The issue in this case pertains to the liability of the appellant regarding Service Tax on commissions received for distributing various products as an authorized distributor. The appellant had not paid Service Tax for a specific period, leading to a demand notice from the Service Tax authority. The appellant subsequently paid the due amount along with interest and filed the necessary returns. A Show Cause Notice was issued proposing penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The Order-in-Appeal reduced the Service Tax demand but upheld penalties. Both the Revenue and the assessee appealed.

2. The Revenue appealed against the setting aside of the penalty under Section 76 and the appellant sought waiver of penalties under Section 73(3) of the Finance Act, 1994, and the benefit of cum-duty price under Section 76(2) of the same Act.

3. During the proceedings, the appellant did not appear, but written submissions were made. The Section 73(3) of the Finance Act, 1994, allows the person chargeable with Service Tax to pay the amount based on their own ascertainment before a notice is served. The appellant's actions were deemed to fall under this section. The Tribunal's decisions in other cases were cited to support the argument that penalties should not be imposed if the Service Tax liability is discharged with interest and late fees.

4. The Tribunal found that the penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994, could not be sustained based on the provisions of Section 73(3) and the cited decisions. Therefore, the penalties were set aside. Additionally, the appellant's request to treat the amount received as cum-tax amount was accepted, entitling the appellant to relief on this basis.

5. Consequently, the Tribunal rejected the Revenue's appeal and allowed the appellant's appeal to the extent indicated, emphasizing that penalties under Sections 76, 77, and 78 of the Finance Act, 1994, were not sustainable in this case.

This detailed analysis covers the issues of Service Tax liability, penalties under specific sections of the Finance Act, benefit entitlements, and the Tribunal's decision based on legal provisions and precedents.