2008 (6) TMI 46 - AT - Service Tax

Revenue proceeded against appellants on the ground that services of selling/marketing of Sim Cards and collecting telephone service bills amount to Business Auxiliary Services which is taxable - Service Tax has already been paid and an excess amount of Rs. 28,006 has also been paid liabiulity discharged within one month of receipt of OIO - plea of bona fide belief in view of Extra ordinary Tax payer friendly scheme , penalty u/s 76 & 77 is waived but interest cannot be waived

Summary

Issues:
- Taxability of services rendered by the appellant under "Business Auxiliary Services"
- Applicability of penalties under various sections of the Finance Act
- Invocation of longer period for show cause notice
- Request for waiver of penalties based on the appellant's actions and circumstances

Analysis:
1. Taxability of Services: The case involved the appellant selling/marketing Sim Cards and collecting telephone service bills, which the revenue deemed as taxable "Business Auxiliary Services." The original Authority confirmed a demand for Service Tax, interest, and penalties. The Commissioner (Appeals) upheld the decision. The appellant argued they were exempt under a Notification and had a bona fide belief that their activities were not taxable.

2. Penalties under the Finance Act: The appellant sought relief from penalties citing no mala fide intentions and prompt payment of the demanded amount. The appellant highlighted the Amnesty Scheme in effect during the relevant period, where payment of service tax and interest would exempt from penalties. The appellant referenced various case laws supporting their plea for penalty waiver.

3. Invocation of Longer Period: The appellant contended that the show cause notice was issued beyond the relevant dates as per section 73, with no intention to evade tax payment. They argued against the invocation of a longer period for the notice.

4. Waiver of Penalties: The Tribunal found that the Commissioner (Appeals) had not adequately examined the appellant's arguments. Considering the appellant's prompt payment of the tax liability and a friendly scheme for tax compliance, the Tribunal decided to set aside penalties under sections 76 and 77 of the Finance Act. The penalty under section 78 was reduced, and the excess amount paid by the appellant was to be adjusted against the dues, ultimately allowing the appeal by modifying the impugned order accordingly.