2012 (7) TMI 809 - AT - Service Tax

Penalty non-payment of service tax appellant provided the services of helping the financee/bankers in financing the vehicle purchasers and they were getting a commission - they are not challenging the service tax liability having discharged the service tax liability and also interest thereof Held that - Provisions of section 80 invoked as there is a substantial justification for non-discharge of service tax liability on a bona fide belief in favor of assessee

Summary

Issues: Service tax liability on business auxiliary services, imposition of penalties under sections 77 & 78

Analysis:
1. The appeals arose from an Order-in-Appeal regarding service tax liability on the assessee for providing business auxiliary services during a specific period. The appellant assisted in financing vehicle purchasers and received commissions. The primary contention was the imposition of penalties under sections 77 & 78. Both parties presented their arguments before the Tribunal.

2. The main issue revolved around the bona fide belief of the assessee during the relevant period. The Tribunal considered the nature of services provided and the appellant's belief regarding the applicability of service tax on those services. The Tribunal noted that there was a dispute initially, which was later settled against the assessee. The Tribunal found that the appellant might have genuinely believed that the services were not liable to service tax under the business auxiliary services category.

3. In light of the above considerations, the Tribunal invoked the provisions of section 80 of the Finance Act, 1994. It was determined that there was substantial justification for the non-discharge of service tax liability based on a bona fide belief held by the appellant. As a result, the appeals filed by the appellant were allowed to the extent of penalties imposed, while the appeals filed by the Revenue for non-imposition of penalties were rejected.

4. The Tribunal concluded by disposing of all four appeals based on the analysis provided. The decision was in favor of the appellant, acknowledging the bona fide belief held by the assessee regarding the service tax liability on the business auxiliary services provided.