2019 (8) TMI 760 - AT - Service Tax

Demand of Penalty - Default in payment of Service tax - cum-duty benefit - Business Auxiliary Service - period January 2013 to March 2014 - HELD THAT - Admittedly the appellant has not discharged the service tax liability from January 2013 to March 2014 and has agreed to pay the same along with interest. Further, the appellant paid the service tax liability of ₹ 5,12,045/- for the period January 2013 to March 2014 as demanded in the show-cause notice but has not paid the interest - Further, the appellant is not charging the service tax from the ICICI Bank. He does not raise any bill on ICICI but get commission as per the agreement and service tax is not charged over and above the commission which means that the commission given by the ICICI Bank is inclusive of service tax. Cum-duty benefit - HELD THAT - Since the appellant is not charging the service tax separately and whatever commission is received, the Department has computed the service tax liability on the same which is to be considered as cum-duty and the appellant is entitled to the benefit of cum-duty and the entire demand is to be recomputed by giving the benefit of cum-duty to the appellant. Since the benefit of cum-duty has not been given, therefore the case remanded back to the original authority to pass a De novo order and quantify the demand of service tax after giving the benefit of cum-duty and excess amount if any paid will be adjusted against interest which the appellant is liable to pay for the delay in payment of service tax. Since the appellant was aware of his service tax liability because for the earlier period he has opted for VCES Scheme and paid the service tax. Therefore, intentionally he did not pay the service tax and therefore he is not entitled to get the benefit under Section 80. The amount of penalty will also be recomputed after giving the cum-duty benefit to the appellant. Appeal allowed by way of remand.

Summary

Issues:
- Appeal against rejection of service tax liability
- Benefit of Section 80 of the Finance Act
- Cum-duty benefit for commission received from ICICI Bank
- Recomputation of service tax liability and penalty

Analysis:
The appeal was filed against the rejection of service tax liability for providing taxable services under "Business Auxiliary Service." The appellant, due to financial constraints, failed to pay the service tax amounting to ?5,12,045 for January 2013 to March 2014. The appellant argued for the benefit of Section 80 of the Finance Act, citing a reasonable cause for the failure to pay the tax. Additionally, the appellant claimed that the commission received from ICICI Bank was cum-tax, and service tax was not separately charged. The appellant requested a recomputation of the service tax liability, with the excess amount to be adjusted against interest.

The Assistant Commissioner contended that the appellant had defaulted in paying service tax for earlier periods and had collected but not paid the service tax. Relying on legal precedents, the AR argued that the appellant was not entitled to the benefit under Section 80 of the Finance Act. After hearing both parties and examining the records, the Tribunal found that the appellant had not discharged the service tax liability for the specified period but had agreed to pay it along with interest. The Tribunal noted that the appellant did not charge service tax separately from ICICI Bank and that the commission received was inclusive of service tax. Consequently, the Tribunal directed a recomputation of the service tax demand, considering the cum-duty benefit for the commission. The case was remanded to the original authority for a De novo order to quantify the service tax demand, with any excess amount paid to be adjusted against interest. The appellant was deemed ineligible for the benefit under Section 80 due to intentional non-payment of service tax despite awareness of the liability. The penalty amount was also to be recalculated after considering the cum-duty benefit for the appellant. The appeal was disposed of accordingly.