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Issues:
Service tax liability on commission paid to dealers for services resembling clearing and forwarding agents. Analysis: The case involved a dispute related to service tax concerning a manufacturer of excisable goods who paid commission to dealers for procuring orders and processing them. The issue revolved around whether the commission paid to the dealers was taxable as services provided by clearing and forwarding agents. The Tribunal referred to a previous decision and held that the services rendered were akin to those of clearing and forwarding agents, making the appellant liable to pay service tax. The liability to pay tax shifted to the service receiver as per Service Tax Rules. The appellant argued that the services provided by the dealers were more in the nature of an incentive payment or commission to commission agents. However, the Tribunal found that the services provided by the dealers were similar to those of clearing and forwarding agents, irrespective of the nomenclature used. The Tribunal emphasized that the character of the service rendered was crucial, not the terminology. The commission paid was deemed a taxable service, not a commission or discount as claimed by the appellant. Regarding penalties and interest imposed for non-payment of tax, the Tribunal noted that the tax amount was deposited under protest before the amendments in 2000 and 2003. The amendments aimed to rectify inconsistencies and make service receivers liable for paying service tax. Citing a Supreme Court ruling, the Tribunal set aside penalties and interest, stating that such liabilities would arise only if dues were not paid within a specified period from the court order. As the tax was paid before this period, penalties and interest were overturned. In conclusion, the appeal was partly allowed, affirming the service tax liability on the commission paid to the dealers. However, penalties and interest imposed by the lower authority were set aside based on the Supreme Court ruling and the timing of tax payment.
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