2015 (10) TMI 360 - AT - Service Tax

Business Auxiliary Service - Arrangement of loans from various banks to customers - Receipt of commission - Invocation of extended period of limitation - Held that - extended period is not invokable in the present case. We find that the Show Cause Notice in this case was issued on 22.06.2006 and the period of demand is 01.07.2003 to 31.03.2005 and thus the entire period is beyond the normal period of one year. In these circumstances, when the extended period is not invocable, and the entire service tax was paid before the issuance of Show Cause Notice, the appellant is entitled to the benefit of Section 73(3) of the Finance Act in terms of which even the Show Cause Notice was not required to be issued in which case the question of imposing penalty would simply not arise. - impugned order unsustainable - Decision in the case of South City Motors Ltd.(2011 (11) TMI 408 - CESTAT, NEW DELHI) followed - Decided in favour of assessee.

Summary

Issues:
Appeal against penalties under Sections 75A, 76, and 78 of the Finance Act, 1994 imposed in relation to service tax demand. Applicability of extended period for raising demand. Benefit of Section 73(3) of the Finance Act.

Analysis:
The appeal was filed against an Order-in-Revision imposing penalties under Sections 75A, 76, and 78 of the Finance Act, 1994, related to a service tax demand confirmed in an Order-in-Original. The primary adjudicating authority did not impose penalties as the appellant had paid the entire service tax liability and interest before the Show Cause Notice was issued, relying on Section 80 of the Act. The appellant provided Business Auxiliary Service (BAS) by arranging loans for customers, receiving commission from banks in return.

The appellant argued that the service tax and interest were paid before the Show Cause Notice, there was confusion regarding the coverage of commission under BAS during the relevant period, and there was no wilful misstatement or suppression of facts, making the extended period inapplicable. Reference was made to a CESTAT judgment in a similar case.

Considering the appellant's contentions, the Tribunal referred to a previous case where it was observed that in situations involving interpretation of taxing entries without mala fide intent, the extended period for raising demands cannot be invoked. In this case, the Show Cause Notice was issued after the normal one-year period, making the extended period inapplicable. As the entire service tax was paid before the notice, the appellant was entitled to the benefit of Section 73(3) of the Finance Act, eliminating the need for a Show Cause Notice and consequently, the imposition of penalties.

Based on the analysis, the Tribunal found the impugned order unsustainable, setting it aside and allowing the appeal.