2009 (4) TMI 374 - AT - Service Tax

Penalty- Assessee, an authorized service station, paid service tax belatedly on commission received by it for arranging loans for individuals as direct marketing agent of a bank Adjudicating authority imposed penalties under section 76 and 78. However, Commissioner (Appeals) reduced penalty imposed u/s 76 and 78. Held that- there was confusion as to levy of tax on Authorized Service Station receiving commission from Financial Institution for arranging loan, imposition of penalty under section 78 was sufficient to meet ends of justice and, therefore there was no reason to interfere with order of Commissioner (Appeals).

Summary

Issues:
- Appeal against setting aside penalty under section 76 of the Finance Act, 1994 by the Commissioner (Appeals).

Analysis:
1. The appeal was filed by the Revenue against the Order of the Commissioner (Appeals) where the penalty under section 76 of the Finance Act, 1994 was set aside. The Respondent, registered as an "Authorised Service Station," was also acting as a Direct Marketing Agent of a bank, arranging loans for individuals. They paid service tax partly on the Commission received for loan arrangements. The Original Authority confirmed a tax demand of Rs. 78,979, appropriated Rs. 22,955, and imposed penalties under sections 76, 78, and 77 of the Act. The Commissioner (Appeals) reduced the penalty under section 78 from Rs. 56,024 to Rs. 15,441 and set aside the penalty under section 76.

2. Upon reviewing the case, it was noted that the Revenue did not contest the reduction of penalty under section 78. There was a confusion regarding the tax levy on Authorised Service Stations receiving commissions from financial institutions for loan arrangements. The Respondent did not dispute the tax demand. The Judicial Member found that the imposition of penalty under section 78 was adequate to serve the interests of justice. Consequently, there was no justification to interfere with the Commissioner (Appeals) order. Therefore, the appeal filed by the Revenue was dismissed, and the cross-objection was disposed of.