2008 (3) TMI 78 - AT - Service Tax

Demand - business auxiliary service - Contention of appellants is that they are working as sub-agent of Shri Rajiv Sanghi who is service provider and has deposited the service tax on the total commission earned by him which includes the amount of commission received by the appellants - Commissioner has confirmed the demand without considering and verifying the assessee s contention that Shri Rajiv Sanghi has also given a certificate to them - matter is remanded to the adjudicating authority

Summary

Issues involved:
Appeal against adjudication order confirming demand and imposing penalty under Section 78 of the Finance Act for providing business auxiliary service without considering if service tax was already paid by the main agent.

Analysis:
The appellants filed an appeal against the adjudication order confirming a demand of Rs. 53,291 and imposing an equal penalty under Section 78 of the Finance Act for providing business auxiliary service. The appellants argued that they were working as sub-agents of a service provider, Shri Rajiv Sanghi, who had already paid the service tax on the total commission earned, including the commission received by the appellants. They contended that since Shri Rajiv Sanghi had paid the service tax and provided a certificate to that effect, they should not be required to deposit the tax again. However, the Commissioner confirmed the demand without considering this argument. The Revenue, on the other hand, argued that verification was needed to determine if the service tax on the business auxiliary service provided by the sub-agents had indeed been paid by the main agent, Shri Rajiv Sanghi.

The Tribunal noted that the appellants' main contention was that the service tax amount in question had already been paid by Shri Rajiv Sanghi, the main service provider, and that the appellants were only acting as sub-agents. The appellants had raised this issue before the adjudicating authority, but the impugned order did not address this point. Therefore, the Tribunal set aside the order confirming the demand and penalty and remanded the matter to the adjudicating authority for a fresh decision after verifying whether the service tax had been deposited by Shri Rajiv Sanghi. The Tribunal emphasized the need for a thorough verification of this fact and directed the adjudicating authority to provide the appellants with a reasonable opportunity for a personal hearing. The appeal was disposed of by way of remand, highlighting the importance of verifying the payment of service tax by the main agent before imposing any demand or penalty.

This judgment underscores the significance of proper verification and consideration of all relevant facts and contentions before confirming demands and imposing penalties under the Finance Act. It emphasizes the need for a fair and thorough assessment of whether service tax obligations have already been fulfilled by the main service provider, especially when sub-agents are involved in the provision of services. The remand order reflects the Tribunal's commitment to ensuring a just and informed decision-making process in matters concerning tax liabilities and penalties related to service provision.