2013 (6) TMI 108 - AT - Service Tax

Commission for selling the products of AIE - demand of service tax along with interest and penalties under Section 76,77 and 78 - assessee is engaged in buying & selling of products of M/s Amway India Enterprises Pvt. Ltd. (AIE) through a chain of distributors on monthly turn over basis - Held that - As appellant did not obtain service tax registration and also did not file any service tax return and there by the information regarding the taxable amount received and information of the commission was not declared to the department. Commissioner (Appeal) s findings that appellant deliberately evaded the service tax on such commission received from AIE is sustainable. Appellant contention that since tax along with interest has been paid there was no need of issuance of Show Cause Notice is not acceptable as in such cases Show Cause Notice can be issued as held in case of British Airways Plc. Vs. Commissioner of Service Tax, New Delhi (2012 (7) TMI 670 - CESTAT, NEW DELHI). Contention that no penalty can be imposed u/s 76 and 78 simultaneously also not acceptable as it is found that Section 76 and 78 prior to amendment of Section 78 with effect from 16.05.2008 operated in different fields and penalty is imposable under both the Sections even if offence committed is in course of same transaction as held in case of British Airways Plc. (Supra). As the appellant has not paid the 25% of the tax amount as penalty within 30 days of the receipt of the Adjudication order the appellant is not liable for any concession in penalty. Against assessee.

Summary

Issues:
- Imposition of service tax, interest, and penalties on the appellant for commission received
- Challenge to the imposition of penalties under Sections 76, 77, and 78 of the Finance Act
- Dispute regarding the need for a Show Cause Notice and penalty imposition despite payment of tax and interest

Analysis:
1. The case involves M/s Jai Singh & Neelam Singh Chauhan, who were engaged in buying and selling products of M/s Amway India Enterprises Pvt. Ltd. The Department found that the appellants received commission for selling AIE products and issued a Show Cause Notice demanding service tax, interest, and penalties under Sections 76, 77, and 78 of the Finance Act. The original authority confirmed the Notice, imposing penalties, which were upheld by the Commissioner (Appeals).

2. The appellant contended that since they had already paid the service tax and interest before the Show Cause Notice, there was no need for its issuance. They challenged the imposition of penalties only. The Revenue argued that the penalty equal to 25% of the tax amount was not paid along with tax and interest, justifying their stance.

3. The Tribunal noted that the appellant did not dispute the service tax and interest levy but challenged the penalties under Sections 76, 77, and 78. Despite the tax and interest being paid before the original authority's order, the appellant's failure to obtain service tax registration or file returns led to the deliberate evasion of service tax on the commission received from AIE, as per the Commissioner (Appeal)'s findings.

4. Regarding the appellant's argument that no Show Cause Notice was needed due to prior tax payment, the Tribunal referenced a case involving British Airways Plc. to assert that such notices can be issued. Additionally, the Tribunal clarified that penalties under Sections 76 and 78 could be imposed simultaneously, especially if the 25% tax amount penalty was not paid within 30 days of the Adjudication order receipt. Consequently, the Tribunal upheld the Order in Appeal, rejecting the appellant's challenge.

In conclusion, the judgment affirmed the imposition of penalties under the Finance Act sections despite the payment of service tax and interest before the Show Cause Notice, emphasizing the significance of complying with tax regulations and penalty provisions.