2009 (7) TMI 516 - AT - Service Tax

Business Auxiliary Services- The appellants are primarily engaged in the business of sale and purchase of old vehicles. In the present case the appellant have not disputed that the said services are covered under Business Auxiliary Services , they have also earned income on account of sale and purchase of old vehicle which is not liable to service tax. Held that-set-aside the Impugned order and remanded the matter to the original adjudicating authority.

Summary

Issues:
Service tax liability on sale and purchase of old vehicles, classification under 'Business Auxiliary Service', imposition of penalties, applicability of section 80 of Finance Act, 1994.

Analysis:

1. Service Tax Liability on Sale and Purchase of Old Vehicles:
The appellants were engaged in the sale and purchase of old vehicles and also acted as direct selling agents for certain banks, earning commissions. A service tax liability of Rs. 2,25,941 was confirmed against them for the period 1-7-2003 to 31-3-2006, considering the services as falling under 'Business Auxiliary Service'. The appellants did not dispute the classification but argued that income from the sale and purchase of old vehicles was not liable to service tax. However, their plea was rejected due to lack of sufficient evidence, as they failed to produce bills supporting their claim, only providing copies of sales tax documents.

2. Imposition of Penalties:
Penalties were imposed on the appellants in accordance with various provisions of the Finance Act, 1994. The appellants contended that they were not aware of the new levy and requested the benefit of section 80 of the Finance Act, 1994. The authorities did not grant this benefit, leading to the appeal challenging the penalties imposed. The Tribunal acknowledged the appellants' submission regarding lack of awareness and directed the original adjudicating authority to verify whether the income was genuinely derived from the sale and purchase of old vehicles. The appellants were given the opportunity to present additional evidence to support their claim, and the authorities were instructed to consider granting the benefit of section 80 for penalty imposition.

3. Applicability of Section 80 of Finance Act, 1994:
The Tribunal remanded the matter to the original adjudicating authority for a detailed examination of the factual position regarding the appellants' income sources. The authority was instructed to assess whether the appellants qualified for the benefit of section 80 of the Finance Act, 1994 in relation to the penalties imposed. By setting aside the impugned order, the Tribunal provided the appellants with the opportunity to substantiate their claims and potentially benefit from the provisions of the Act.

In conclusion, the appeal was disposed of with the decision to remand the matter for further verification and consideration, emphasizing the importance of providing concrete evidence and evaluating the applicability of relevant provisions to determine the service tax liability and penalties in this case.