2016 (9) TMI 187 - AT - Service Tax

Imposition of penalty section 76 of the Finance Act 1994 - Business auxiliary services - section 65(105)(zzb) of Finance Act 1994 extended period of limitation Held that - marketing of financial products by automobile dealers is taxable as business auxiliary service . The assessee is not in dispute over that. The records indicate that tax was being paid by assessee at least after investigation commenced. The activities of the assessee are not new tax liability was being discharged by the assessee and the varying categorisation of taxable service did not impact the rate of tax. From the facts on record it would appear that the extended period was invoked not for recovery of non-levied tax but merely to impose penalties under section 76 and 78 of Finance Act 1994. The finding of the first appellate authority that demand is barred by limitation is therefore legal and proper. Refund claim - classification - support service of business or commerce Held that - The appeal relating to refund claim has not brought out any evidence that tax has been paid in excess of dues. Setting aside of the order of adjudicating authority on ground of limitation does not entitle the assessee to refund appeal disposed off decided against appellant.

Summary

Issues:
1. Tax liability on commission received by the assessee for providing business auxiliary services.
2. Refund claim rejection by the authorities.

Analysis:

Issue 1: Tax liability on commission received for business auxiliary services
The case involved an appeal by both the Revenue and the assessee against two different appellate orders related to tax levied on commission received by the assessee for providing business auxiliary services. The dispute centered around the taxability of a commission received by the assessee between October 2006 and March 2009. The appellate authority upheld the taxability under section 65(105)(zzb) of the Finance Act, 1994 but allowed the appeal of the assessee due to the limitation of time as per the decision in Nizam Sugar Factory v. Collector of Central Excise. The Revenue appealed against the dropping of the penalty under section 76 of the Finance Act, 1994. The Tribunal clarified the scheme of appeal under the Finance Act, emphasizing the jurisdiction of different authorities and the limitations of altering orders. The Revenue's appeal was dismissed, and the original order was restored.

Issue 2: Refund claim rejection
The second appeal by the assessee challenged the rejection of their refund claim for tax and interest paid on commission received from finance companies for providing support services of business or commerce. The refund application was based on the denial of categorization as a provider of support services, leading to the claim that the tax paid should be returned. The authorities rejected the refund claim, stating that the tax paid under one category did not entitle the assessee to a refund when it had not been paid under another head. The Tribunal noted that the demand for tax for the period from July 2003 to March 2009 was set aside on the ground of limitation. The Tribunal found that the tax liability was being discharged by the assessee, and the extended period was invoked for penalties, not for recovery of non-levied tax. The appeal related to the refund claim was dismissed as there was no evidence of excess tax payment.

In conclusion, both appeals were dismissed by the Tribunal, upholding the tax liability on commission received for business auxiliary services and rejecting the refund claim based on the limitations of time and lack of evidence of excess tax payment.