2021 (8) TMI 293 - AT - Service Tax

Levy of penalty - Non-discharge of tax liability - business auxiliary service - the appellant an authorized dealer and service centre for motor vehicles had provided space for insurance companies to solicit customers of insurance contracts on the vehicles sold by them - HELD THAT - The decision in M/S PAGARIYA AUTO CENTER VERSUS CCE AURANGABAD 2014 (2) TMI 98 - CESTAT NEW DELHI (LB) followed in the several decisions of the Tribunal has clearly determined in general the taxability of receipts from insurance companies operating at the premises of motor vehicle dealers. The exclusion enunciated in the decision of the Larger Bench is the latitude afforded should an assessee be able to establish that only table space was provided. On a perusal of the impugned order as well as that of the original authority and the grounds of appeal we find no justification proffered for in support of the claim of the appellant that the exclusion applies to them. Therefore taxability of the receipts in the hands of the appellant is no longer in dispute. In the light of section 73(4) of Finance Act 1994 which is the sole ground for denying recourse to section 73(3) of Finance Act 1994 it is clear that the appellant herein has discharged tax liability in the manner contemplated by section 73(3) of Finance Act 1994 upon intimation by the jurisdictional central excise officers. Consequently in accordance with Explanation 2 therein the assessee is not liable to any penalty under Finance Act 1944. The appeal is therefore allowed to the limited extent of setting aside the penalties imposed by the original authority and upheld in the impugned order. Appeal allowed in part.

Summary

Issues: Non-discharge of tax liability for business auxiliary service, applicability of taxability under the Finance Act, 1994, distinction between provision of 'table space' and actual service, justification for exclusion, discharge of tax liability, imposition of penalties.

In this judgment by the Appellate Tribunal CESTAT Mumbai, the issue revolved around the non-discharge of tax liability amounting to ?17,46,066 for providing 'business auxiliary service' between April 2007 and January 2012. The original authority had confirmed this tax liability under the proviso to section 73(1) of the Finance Act, 1994, along with interest and penalties under sections 75, 76, 77, and 78 of the same Act. The appellant, a dealer and service center for motor vehicles, had provided space for insurance companies to solicit customers for insurance contracts on vehicles sold by them.

The Learned Authorised Representative argued that the taxability issue in this appeal had been settled by previous Tribunal decisions in similar cases. These decisions included Addis Marketing v. Commissioner of Central Excise, Mumbai, City Honda v. Commissioner of Central Excise, Bangalore, Arpanna Automotive Pvt Ltd v. Commissioner of Customs, and Hyundai Motor India Ltd v. Commissioner of Central Excise, Chennai. These cases relied on the decision of the Larger Bench of the Tribunal in Pagariaya Auto Centre v. Commissioner of Central Excise, Aurangabad, which clarified the taxability of receipts from insurance companies operating at motor vehicle dealers' premises.

The Tribunal found that the decision in Pagariaya Auto Centre, followed by other Tribunal decisions, had established the taxability of receipts from insurance companies at motor vehicle dealerships. The distinction between merely providing 'table space' and actually rendering a service was crucial. The Tribunal noted that the appellant failed to justify their claim that the exclusion applied to them, thereby confirming the taxability of the receipts.

Regarding the discharge of tax liability, it was observed that the appellant had already paid the tax liability and interest before the issuance of the show cause notice. As per section 73(4) of the Finance Act, 1994, the appellant had discharged the tax liability as per the intimation by central excise officers, thus exempting them from penalties under Explanation 2 of the Act. Consequently, the penalties imposed by the original authority were set aside, and the appeal was allowed to that extent.

In conclusion, the Tribunal upheld the tax liability for the business auxiliary service provided by the appellant, clarified the distinction between 'table space' provision and actual service, and exempted the appellant from penalties due to the timely discharge of tax liability as per the provisions of the Finance Act, 1994.