2012 (9) TMI 378 - AT - Service Tax

Service tax liability under Business Auxiliary Service - penalty u/s 76, 77, & 78 - assessee contested that no liability at all because no Business Auxiliary service was provided by the assessee - Held that - It can be fairly concluded from the activities carried out by the assessee that the assessee provided Business Auxiliary service in promoting market for its principal therefore, service tax element is confirmed. No scope to grant relief of penalty under Section 77 - Penalty u/s 76 is set aside by Commissioner (Appeals) - penalty under Section 78 is concerned, looking to the controversy involved penalty should be limited to 25% of service tax element payable by the assessee within 30 days of receipt of communication from adjudicating authority on re-computation.

Summary

Issues: Liability for Business Auxiliary Service, Penalty under Sections 76 & 78 of Finance Act, 1994

In this judgment by the Appellate Tribunal CESTAT, New Delhi, the issue of liability for Business Auxiliary Service and penalties under Sections 76 & 78 of the Finance Act, 1994 were considered. The Tribunal heard arguments from both sides and examined the activities of the assessee to determine if Business Auxiliary Service was provided. It was established that the assessee played a significant role in promoting the market for its principal, thus confirming the liability for Business Auxiliary Service. The Tribunal agreed with the learned Commissioner (Appeals) on this matter. The Tribunal also addressed the imposition of penalties under Sections 76, 77, & 78 of the Finance Act, 1994. While penalties under Sections 76 and 77 were confirmed, the penalty under Section 78 was limited to 25% of the service tax element, to be paid within 30 days of receipt of communication from the adjudicating authority after recomputation. The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal regarding the penalty.

Additionally, the Tribunal referenced a previous case but disagreed with the submission heavily relying on it, stating that the premises of that order were irrelevant to the current issue and suffered from jurisdictional issues. The judgment emphasized the confirmation of liability for Business Auxiliary Service, the imposition of penalties under the Finance Act, and the limitations set for penalty payment under Section 78. The decision provided clarity on the tax liability and penalties applicable in the case, ensuring proper calculation and communication of demands to the assessee.