2015 (2) TMI 800 - AT - Service Tax

Benefit of small scale exemption under Notification No. 6/2005-ST - Services under brand name of others - Services provided under Business Auxiliary Service - Penalty imposed u/s 76, 77 & 78 - - option to pay 25% of the mandatory equal penalty - Held that - It is a fact that the appellant had rendered Business Auxiliary Service to IOC and therefore it is not correct to say that they had rendered service in the brand name of IOC. Accordingly their contention that they are eligible for SSI benefit is sustainable. Levy of penalty - simultaneous penalties under Section 76 and 78 - Held that - The High Court has held that no simultaneous penalties under Section 76 and 78 may not be justified even if those penalties were legally not mutually exclusive, in the cases of CCE Vs. First Flight Curios Ltd. 2011 (1) TMI 52 - High Court of Punjab and Haryana , in case of CCE, Chandigarh-I Vs. M/s. Cooltech Corporation 2010 (12) TMI 78 - PUNJAB AND HARYANA HIGH COURT and also in case of CCE, Vs, Pannu Property Dealers, Ludhiana 2010 (7) TMI 255 - PUNJAB AND HARYANA HIGH COURT - There is also force in the appellants contention that neither in the Order-in-Original nor in the Order-in-Appeal option had been given to them to pay 25% of the mandatory equal penalty if the adjudicated liability of service tax and interest along with 25% of the mandatory equal penalty are deposit within 30 days and that such option should be given to them now. - Matter remanded back - Decided conditionally in favour of assessee.

Summary

Issues:
1. Liability to pay service tax on commission received by a company-owned company-operated (coco) IOC outlet operator.
2. Eligibility for small scale benefit under Notification No. 6/2005-ST.
3. Imposition of penalties under Section 76, 77 & 78 of Finance Act 1994.
4. Applicability of simultaneous penalties under Section 76 and 78.
5. Option to pay 25% of the mandatory equal penalty.

Analysis:

1. The appellant, a coco IOC outlet operator, received commission for managing the outlet, falling under Business Auxiliary Service, leading to a service tax liability of Rs. 2,61,211 for the period 2005-2006 to 30.09.2008. Failure to register, file returns, or pay tax resulted in penalties under Section 76, 77 & 78. The denial of small scale benefit due to service provision in IOC's brand name was upheld by the Commissioner (Appeals).

2. The appellant contended eligibility for small scale benefit under Notification No. 6/2005-ST, asserting service provision not in IOC's brand name. Citing judgments from Punjab & Haryana High Court, the appellant argued against simultaneous penalties under Section 76 and 78. They also requested the option to pay 25% of the mandatory equal penalty, which was not provided earlier.

3. The Tribunal acknowledged the appellant's Business Auxiliary Service to IOC and deemed them eligible for the SSI benefit. Referring to precedents from Punjab & Haryana High Court, the Tribunal recognized the appellant's right to the 25% penalty payment option, citing a case from the Hon'ble Ahmedabad Gujarat High Court for precedent.

4. Consequently, the Tribunal waived the pre-deposit, set aside the previous order, and remanded the case for de-novo adjudication. The original authority was directed to consider small scale benefit eligibility, reevaluate the penalty under Section 76 after Section 78, and allow the 25% penalty payment option within 30 days of the new adjudication order, ensuring the appellant's right to a fair hearing.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations, and the Tribunal's decision, ensuring a comprehensive understanding of the case.