2017 (1) TMI 498 - AT - Service Tax

Business Auxiliary services - amounts paid by customers for registration of vehicles - evasion of tax - Held that - The payment is effected by customers of vehicles who is purportedly the recipient of service; if that be so, the adjudicating authority should have pin-pointed the particular description in section 65 (19) of Finance Act, 1994 that matches the service rendered to car purchasers when registering vehicles of customers. The motor vehicle department is assigned a statutory obligation to issue registrations; such statutory activities are not, even remotely, describable as service rendered which the appellant is required to promote or as service of the department procured for the customers. This aspect has not been examined by the adjudicating authority - the composition and quantum of duty liability needs to be reconsidered - appeal allowed by way of remand.

Summary

Issues:
1. Tax liability on commercial vehicles post introduction of 'negative list'
2. Discharge of duty liability post introduction of tax leviability
3. Tax on commission received from insurance companies and receipts from customers
4. Liability for 'business auxiliary service' tax
5. Tax under 'reverse charge' for utilization of 'security services' and 'goods transport agency service'
6. Rejection of declaration under Voluntary Compliance Encouragement Scheme, 2013
7. Interest on unpaid tax and penalties under section 77 and 78 of Finance Act, 1994
8. Exemption eligibility under notification no. 33/2012-ST
9. Alleged evasion of tax in 'business auxiliary services' category
10. Reconsideration of duty liability composition and quantum

Analysis:

1. The case involved the tax liability of M/s Omkar Vehicles Pvt Ltd, an authorized dealer, for commercial vehicles post the introduction of the 'negative list.' Despite the tax leviability from July 1, 2012, duty liability was not discharged, including tax on commission from insurance companies and receipts from customers.

2. The original authority held that the declaration under the Voluntary Compliance Encouragement Scheme, 2013 was suppressed and hence liable for rejection. A tax demand was computed, along with interest and penalties under the Finance Act, 1994. The appellant challenged this order.

3. The appellant claimed exemption under a specific notification but was denied by the adjudicating Commissioner. The contention was that without the allegation in the show cause notice, the authority is not empowered to render a finding, raising the need for consideration on this aspect.

4. The appellant was alleged to have evaded tax in the 'business auxiliary services' category related to amounts paid by customers for vehicle registration. The adjudicating authority was expected to pinpoint the specific description matching the service rendered to customers, which was not examined, leading to a need for reconsideration of duty liability.

5. Consequently, the judgment set aside the impugned order and remanded the matter back to the original authority for a fresh decision based on the grounds raised in the show cause notice, emphasizing the importance of a detailed examination of the tax liabilities and exemptions claimed by the appellant.