2010 (1) TMI 21 - HC - Service Tax

Levy of penalty u/s 76 and 78 waiver of penalty u/s 80 - Service Tax on Agent assessee arranging the loan for the purchase of vehicle as a marketing agent from I.C.I.C.I. Bank and received commission from I.C.I.C.I. Bank Delay in payment of service tax with interest - Having regard to the facts and circumstances as recorded and the findings that the service tax was introduced for the first time in July 2003. By the Boards Circular dated 06.11.2006, it has been clarified that the service tax leviable on a marketing agent of I.C.I.C.I. Bank for providing service to authorize customers for purchasing vehicles on loan and further that the assessee has partly paid the amount alongwith the interest in the month of December 2004 and there was no mala fide on the part of the appellant and further the balance amount has been paid partly before the show cause notice and partly before the adjudication order - We are of the view that Tribunal has rightly held that this is a fit case to invoke Section 80 of the Act

Summary

Issues:
1. Service Tax liability on commission received by the opposite party.
2. Imposition of penalty under Section 78 of the Finance Act, 1994.
3. Applicability of Section 80 of the Finance Act, 1984 for penalty waiver.

Detailed Analysis:
1. The main issue in this case was the service tax liability on the commission received by the opposite party from a bank for arranging loans for vehicle purchases. The Central Excise Authority contended that the opposite party was liable to pay service tax under the Business Auxiliary Service for the period from July 2003 to November 2004. The Tribunal clarified that the opposite party was engaged in providing services to customers purchasing vehicles on loan and receiving commission, which was subject to service tax. The Tribunal noted that there was no mala fide intent on the part of the opposite party, and the tax was voluntarily paid in December 2004. The dispute related to a new levy, and the Tribunal set aside the penalty imposed under Section 78 of the Finance Act, 1994, while upholding the demand of duty.

2. The second issue revolved around the imposition of penalty under Section 78 of the Finance Act, 1994. The Tribunal, after considering the facts and circumstances, found that there was no mala fide intent on the part of the opposite party. The Tribunal invoked Section 80 of the Act, stating that the opposite party had paid the tax voluntarily before the show cause notice and the adjudication order. The Tribunal concluded that the penalty imposed on the opposite party should be set aside, as there was no reasonable cause to justify it.

3. The third issue involved the applicability of Section 80 of the Finance Act, 1984 for penalty waiver. The appellant's counsel argued that the penalty could only be waived if a reasonable cause was proven, which, according to him, was not established in this case. However, the Court disagreed with this argument, stating that the opposite party had paid the tax voluntarily, and there was no mala fide intent. The Court upheld the Tribunal's decision to invoke Section 80 of the Act, emphasizing that there was no error in the order that warranted interference.

In conclusion, the High Court dismissed the appeal, affirming the Tribunal's decision to set aside the penalty while upholding the demand of duty, based on the circumstances surrounding the case and the provisions of the Finance Acts involved.