2009 (7) TMI 195 - AT - Service Tax

Penalty - contention of the learned Advocate is that the activity of the appellant rendering the services to the banks/financial institutions on commission basis in relation to the services provided by such financial institutions, was under doubt in the entire trade as to whether they are covered by Business Auxiliary Service or not. appellant submits that in view of the general doubt prevailing in the industry at the relevant time, the benefit of provision of Section 80 should have been extended to them. - Inasmuch as I find that Commissioner (Appeals) has already remanded the matter for re-quantification of duty amount against the appellant by extending the benefit of Notification No. 25/2004-ST., dated 10-9-04, the penalty issue can be decided afresh by adjudicating authority in de nova proceedings. Accordingly, I set aside that part of the impugned order vide which he has held that penalty is imposable upon the appellant under Section 78

Issues:
1. Applicability of penalty under Section 78 of Finance Act, 1994 in a case involving Business Auxiliary Service.
2. Benefit of Notification No. 25/2004-ST in re-quantifying duty amount.
3. Interpretation of Tribunal's decision in M/s. Car World Autoline v. CCE Cochin.

Analysis:

Issue 1: Applicability of penalty under Section 78
The Appellate Tribunal noted that the Commissioner remanded the case to re-quantify the demand against the appellants, including the penalty under Section 78. The appellant's grievance was primarily related to the penalty. The Tribunal considered the appellant's argument that the activity of providing services to banks/financial institutions on a commission basis was under doubt regarding its classification under Business Auxiliary Service. The appellant had already deposited the entire service tax before a clarifying circular was issued, indicating the service fell under Business Auxiliary Service. The Tribunal acknowledged the general doubt prevailing in the industry at the time and the appellant's reliance on Section 80 provisions. The Tribunal decided to set aside the penalty imposition under Section 78, allowing the appellants to contest it in de novo proceedings before the adjudicating authority.

Issue 2: Benefit of Notification No. 25/2004-ST
The Tribunal observed that the Commissioner had remanded the matter to re-quantify the duty amount against the appellants by extending the benefit of Notification No. 25/2004-ST. This notification was crucial in determining the duty amount owed by the appellants. The Tribunal directed that the penalty issue could be decided afresh by the adjudicating authority in the new proceedings. The appellants were granted the opportunity to contest the penalty imposition in the ongoing de novo proceedings.

Issue 3: Interpretation of Tribunal's decision in M/s. Car World Autoline case
The Tribunal referred to a previous decision in the case of M/s. Car World Autoline v. CCE Cochin, where a similar issue was addressed. The Tribunal recognized the relevance of this precedent in considering the penalty imposition and the applicability of relevant provisions. The Tribunal's decision in the present case was influenced by the principles established in the M/s. Car World Autoline case, ensuring consistency in the interpretation and application of tax laws.

In conclusion, the Appellate Tribunal's judgment addressed the issues of penalty imposition under Section 78, the application of Notification No. 25/2004-ST, and the interpretation of relevant precedents. The Tribunal provided the appellants with the opportunity to contest the penalty in de novo proceedings while ensuring the correct quantification of duty amount in accordance with the applicable notifications and legal provisions.

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