2018 (10) TMI 555 - AT - Service Tax

C&F agent services - amount received from the service recipient as reimbursement for the maintenance of generators, electricity, AMC and insurance apart from the commission for the services of C&F agent - extended period of limitation - penalty - Held that - From the grounds of appeal of M/s Uniware Distributors Pvt. Ltd. it can be seen that they have not challenged the demand on merit and, thus, it is not open to them to raise the said issue now. Extended period of limitation - penalty - Held that - Under Rule 6(8) of the Service Tax Rule 1994, the tax can be levied only on the amout of commission received for the services. The said sub-rule has clearly been interpreted by Hon ble High Court also in the case of Sangamitra Service Agency 2013 (7) TMI 862 - MADRAS HIGH COURT - the appellant had a bonafide reason to believe that the tax is payable only on the Commission received by them - Invocation of extended period and penalty not justified. Appeal allowed in part.

Issues:
1. Appeal filed by M/s Uniway Distributors and Revenue against Commissioner (A) order.
2. Confirmation of demand of Service tax, interest, and penalty under section 78 of the Finance Act.
3. Dropping of penalty under section 76 of the Finance Act, 1994.
4. Dismissal of Revenue's appeal due to being below the limit specified by CBIC.
5. Argument by M/s Uniway Distributors regarding taxable value and reimbursement.
6. Reference to Rule 6(8) of the Service Tax Rules.
7. Comparison with the case of Sangmitra Service Agency.
8. Interpretation of Rule 6(8) by the Hon'ble High Court.
9. Arguments based on various legal decisions.
10. Challenge on the invocation of extended period of limitation.
11. Analysis of the grounds of appeal by M/s Uniway Distributors.
12. Justification for not challenging the demand on merit.
13. Decision regarding tax levied on the amount of commission received for services.
14. Bonafide belief of appellant regarding tax payment.
15. Disposal of the appeal.

Analysis:

The judgment by the Appellate Tribunal CESTAT AHMEDABAD involved an appeal filed by M/s Uniway Distributors and Revenue against the order passed by the Commissioner (A), confirming the demand of Service tax, interest, and imposing penalty under section 78 of the Finance Act, while dropping the penalty under section 76 of the Finance Act, 1994. The Revenue involved in the case was ?8,69,305, leading to the dismissal of Revenue's appeal due to being below the limit specified by CBIC in the new litigation policy.

Regarding the argument presented by M/s Uniway Distributors, they contended that as a C&F agent for Amway, they received amounts for maintenance services in addition to the commission. Reference was made to Rule 6(8) of the Service Tax Rules, emphasizing that the taxable value for a C&F agent should be the gross value of remuneration or commission. The case of Sangmitra Service Agency was cited, where the Hon'ble High Court of Madras held that reimbursed amounts should not be included in the assessable value, as per Rule 8 of the Service Tax Rules, 1994.

The Tribunal analyzed the arguments and legal precedents cited, including decisions in other cases and the interpretation of Rule 6(8) by the Hon'ble High Court. It was noted that the appellant had a bonafide belief that tax was payable only on the commission received, leading to the conclusion that the invocation of the extended period and penalty imposition was unjustified. The appeal was partly allowed based on these considerations, and the case was disposed of accordingly.

In conclusion, the judgment provided a detailed analysis of the issues raised, focusing on the interpretation of relevant tax rules, legal precedents, and the appellant's belief regarding tax payment, ultimately resulting in the partial allowance of the appeal and the disposal of the case.

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