2014 (10) TMI 247 - AT - Service Tax

Business Auxiliary Service - Suppression of facts - Interest and penalties under Sections 76, 77 and 78 - Extended period of limitation - Held that - Scope of the activity covered under the agreement entered into by the appellants with the ICICI HFL clearly stated that they were appointed for marketing of and sourcing customers, for ICICI HFL s products . This does not leave any scope for any ambiguity/confusion as regards its coverage under the Business Auxiliary Service which specifically includes such promotion and marketing in its definition. Similarly they could not have been any confusion regarding the appellants being a commercial concern as they were clearly engaged in commercial activity. In these circumstances, when there was no ambiguity or confusion, the contention of bonafide belief advanced by the appellants is totally hollow and untenable. The appellants have not given any basis/ground for entertaining such belief. They have not shown as to how such a belief on their part could arise. Merely uttering the words bonafide belief is not enough for its quasi judicial acceptance. The appellants have to show the basis/grounds for entertaining such belief. As is evident, the appellants have not given even a semblance of any basis/ground based on which such a bonafide belief could arise on their part - Decided against assessee.

Summary

Issues:
1. Appeal against Order-in-Appeal upholding Order-in-Original demanding service tax, interest, and penalties.
2. Applicability of Business Auxiliary Service to a proprietary concern acting as a sourcing agent.
3. Bonafide belief defense regarding service tax liability.

Analysis:
1. The appeal was filed against the Order-in-Appeal upholding the Order-in-Original, which confirmed the demand of service tax, interest, and penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The extended period was invoked due to wilful misstatement/suppression of facts.

2. The appellants, a proprietary concern, were providing services as a sourcing agent for a company and were covered under Business Auxiliary Service liable to service tax. The agreement clearly stated their role in marketing and sourcing customers for the company's products, leaving no ambiguity about their coverage under the Business Auxiliary Service. The contention that they were not a commercial concern was dismissed as they were engaged in commercial activity. The appellants' argument of being under a bonafide belief that they were not providing the service was deemed hollow and untenable as they failed to provide any basis or grounds for such belief. The absence of any justification for their belief rendered it invalid, and the appellants could not demonstrate how such a belief could have been formed.

3. The tribunal found that the appellants failed to demonstrate any infirmity in the findings of the Order-in-Original and the Order-in-Appeal. The lack of ambiguity or confusion regarding their service tax liability and commercial status led to the rejection of their appeal. The tribunal upheld the impugned order, concluding that the appellants had not shown any grounds to support their purported bonafide belief, and therefore, the appeal was rejected.