2014 (6) TMI 729 - AT - Service Tax

Business Auxiliary Services - Marketing service for ICICI Bank - Invocation of extended period of limitation - appellant contended that as the service tax is comparatively new levy the appellant may not be aware of service tax Rule and Regulations , it cannot be said that these was intention on the part of the Appellant to evade the tax. Held that - plea of the appellant with regard to time barred rejected - In this case during the period of dispute the appellant were not filing any return and had not even taken any registration and hence in terms of the section 73(1)(a) as it stood during that period, longer limitation has been correctly invoked. Waiver of penalty - section 80 - Held that - Commissioner (Appeals) invoking Section 80 has already reduced the penalty under section 76 & 78 of ₹ 50,000/- each on the ground that as the service tax is comparatively new levy the appellant may not be aware of service tax Rule and Regulations - Since the Commissioner (Appeals) has given a finding that the Appellant may not be aware of service tax rules and regulation, his decision to retain even reduced penalty under section 76 and 78 being not compatible with this finding, is not correct. Therefore the penalty under section 76 & 78 is set aside. - Decided partly in favor of assessee.

Summary

Issues:
1. Service tax demand on Direct Marketing Agent of ICICI Bank for car loans
2. Imposition of penalty under sections 76, 77, and 78
3. Applicability of extended limitation period for recovery of service tax
4. Reduction of penalty under section 76 and 78 by Commissioner (Appeals)

Analysis:

1. The case involved a Direct Marketing Agent of ICICI Bank for marketing car loans, providing services covered under Business Auxiliary Services taxable under the Finance Act, 1994. The appellant did not have service tax registration or pay any tax, leading to a demand notice for service tax, interest, and penalties issued by the Departmental Officers. The Assistant Commissioner confirmed the service tax demand, and penalties under sections 76, 77, and 78 were imposed. The Commissioner (Appeals) upheld the service tax demand but reduced the penalties, leading to the appeal.

2. During the proceedings, the appellant did not appear, but written submissions were filed. The Departmental Representative defended the order, emphasizing that the service provided fell under Business Auxiliary Services and that the extended limitation period of five years for recovery of service tax was applicable due to the appellant's failure to register or pay taxes. The Department argued that the appellant's lack of intention to evade tax did not exempt them from the extended limitation period.

3. The Tribunal reviewed the submissions and arguments, noting that the appellant's service was indeed covered under Business Auxiliary Services and taxable since a specific date. The appellant claimed that the extended limitation period and penalties under section 78 should not apply, citing the Commissioner (Appeals)' observation that they might not have been aware of service tax rules. However, the Tribunal disagreed, citing the relevant section of the Finance Act in force during the dispute period, which did not require proof of fraud or intent for invoking the extended limitation period.

4. Regarding the penalty reduction by the Commissioner (Appeals) under sections 76 and 78, the Tribunal found it inconsistent with the finding that the appellant might not have been aware of service tax rules. As a result, the penalties under sections 76 and 78 were set aside, while upholding the service tax demand. The appeal was disposed of accordingly.