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2016 (3) TMI 308 - AT - Service TaxImposition of Service tax under Business Auxiliary Service - Amount retained on fees charged for RTO registration - Held that - by following the decision of the Tribunal in case of Wonder Cars Pvt. Ltd. Vs. Commissioner of Central Excise, Pune-I 2016 (1) TMI 738 - CESTAT MUMBAI the amount collected as extra charges for RTO registration is not covered under support services of business and commerce . Therefore, service tax cannot be imposed. Imposition of penalty - Held that as the appellant had discharged his Service tax liability and interest thereon, Section 80 of the Finance Act, 1994 is invoked penalties cannot be imposed. - Decided in favour of assessee.
Issues: Service Tax liability on commission from financial institutions and differential amount on RTO registration fees.
The case involved an appeal against an Order-in-Original passed by the Commissioner of Central Excise, Mumbai-II. The appellant had not discharged Service Tax liability on commission received from financial institutions and on the differential amount retained from RTO registration fees. The show-cause notice was contested on merits and limitation grounds. The adjudicating authority confirmed the demand with interest and penalties. Regarding the commission from financial institutions, the appellant did not dispute the tax liability, which was covered by a Larger Bench decision favoring the Revenue. The tax liability was upheld with interest. However, concerning the amount retained from RTO fees, the Tribunal analyzed the definition of Business Auxiliary Service pre and post 10.09.2004. It was concluded that assisting customers with RTO registration did not fall under Business Auxiliary Service. The demand on the RTO registration fees was deemed unsustainable, setting aside the impugned order. Furthermore, penalties were set aside invoking Section 80 of the Finance Act, 1994, as the issue of tax liability from financial institutions was unsettled with conflicting decisions. Since the appellant had paid the tax and interest, penalties were waived. The Service Tax liability on RTO registration fees was set aside, and penalties were revoked. The appeal was disposed of accordingly, and the cross objection filed by the Revenue was also addressed.
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