2018 (9) TMI 1278 - AT - Service Tax

Penalty - Business Auxiliary Service - commission/incentives received from institutions in respect of loans given to the buyers of the motor vehicles - Held that - The Tribunal in the case of Roshan Motors Ltd. v. Commissioner of Central Excise, Meerut 2008 (11) TMI 55 - CESTAT, NEW DELHI , while upholding the demand on identical activities has set aside the penalties imposed upon the assessee by observing that the issue was a bona fide issue of interpretation of question of law and no suppression or misstatement or mala fide can be attributed to the assessee - Penalty set aside. Demand of ₹ 1,29,460/- confirmed against the appellant by comparing the ST-3 figures with the figures available in the balance sheet - Held that - It is well settled that such comparison of ST-3 figures with balance sheets figures cannot lead to confirmation of any demand of duty in the absence of any evidence to establish that such income, as reflected in the balance sheet was on account of the services rendered by the assessee - there is no justification for the demand. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Challenge to penalty imposed on the appellant for service tax demand.
2. Confirmation of demand based on comparison of ST-3 figures with balance sheet figures.

Analysis:

Issue 1: Challenge to penalty imposed on the appellant for service tax demand
The appellant, a dealer of Maruti brand motor vehicles, faced a service tax demand for receiving commissions from financial institutions operating from their premises. The Revenue treated the commissions as consideration for providing 'business auxiliary services,' leading to a demand of ?2,24,120 along with an equivalent penalty. The appellant did not contest the demand but challenged the penalty. The advocate argued that during the relevant period, the issue was unclear, with conflicting decisions. Citing the case of Roshan Motors Ltd. v. Commissioner of Central Excise, Meerut, where penalties were set aside due to a bona fide interpretation issue, the Tribunal upheld the demand but set aside the penalties, ruling that no mala fide intent was present on the part of the appellant.

Issue 2: Confirmation of demand based on comparison of ST-3 figures with balance sheet figures
Apart from the above demand, an additional demand of ?1,29,460 was confirmed against the appellant by comparing ST-3 figures with balance sheet figures. However, the Revenue failed to provide evidence supporting their allegation that the amounts in the balance sheet were for services rendered by the appellant. The Tribunal emphasized that mere comparison of figures without evidence cannot justify confirming a duty demand. Consequently, the demand of ?1,29,460 was set aside, along with the associated penalties. The appeal was disposed of accordingly, with the penalties imposed on the appellant being overturned.

This judgment highlights the importance of distinguishing between service tax demands and penalties, emphasizing the need for evidence to substantiate claims made by the Revenue. It underscores the significance of bona fide interpretation issues in tax matters and the Tribunal's role in ensuring fair treatment of taxpayers based on legal precedents.