2010 (5) TMI 92 - AT - Service Tax

Penalty Business auxiliary service Held that Since whether the appellant was acting as a distributor or as a commission agent has to be decided on the basis of the nature of activities, agreement between the parties etc., this new ground taken before me cannot be decided. At the same time, it would be unfair to deny the benefit of exemption if the appellant is entitled to it. Therefore the matter is to be remanded to the Original Adjudicating Authority to verify whether the appellant is eligible for exemption under the notification claimed by them.

Summary

Issues:
1. Liability of service tax on the appellant for distributing products
2. Applicability of exemptions under Notification No.13/2003
3. Invocation of penalties under various sections of Finance Act, 1994
4. Remand of the matter to the Original Adjudicating Authority for fresh decision

Analysis:
1. The appellant was held liable for service tax on distributing products of M/s. Facsel Limited. The appellant argued for exemption as a commission agent until 09.09.04, reducing the liability to Rs.1.08 lakhs from Rs.3,08,881. The lack of knowledge and timely registration were cited as reasons for leniency, seeking waiver of penalties under Section 80 of the Finance Act, 1994.

2. The appellant's claim for exemption under Notification No.13/2003 was not raised earlier. The nature of activities and agreements with M/s. Facsel Limited need clarification to determine if the appellant qualifies as a distributor or commission agent. The Tribunal remanded the matter to the Original Adjudicating Authority to assess the appellant's eligibility for the claimed exemption, emphasizing fairness in decision-making.

3. The Department argued against leniency, highlighting the appellant's delayed payment despite registration before the deadline for penalty waiver. The Tribunal considered both sides' submissions but focused on the need for a thorough examination of the exemption claim before deciding on penalties under the Finance Act, 1994.

4. The Tribunal decided to remand the matter for a fresh decision by the Original Adjudicating Authority, keeping all issues open for review. The appellant was granted the opportunity to present their case again, ensuring a fair and comprehensive assessment of the liability, exemptions, and penalties involved in the service tax dispute.