2025 (1) TMI 1320 - AT - Service Tax

Recovery of service tax with interest and penalty - Insurance Commission - Finance Payouts - Incentive received from MUL - Handling Logistic Charges - Repairing reconditioning restoration service - Reimbursement of Expenses from MUL - Reverse Charge Mechanism on entire expenses appearing in the audited Profit Loss Account - violation of principles of natural justice - HELD THAT - In the case of M/S ANAND MOTERS AGENCIES LTD. VERSUS COMMISSIONER CENTRAL EXCISE SERVICE TAX LUCKNOW 2024 (12) TMI 1524 - CESTAT ALLAHABAD it is considered the Hon ble High Court in remanding the matter and the present appeal have to be considered in terms of the order passed in that appeal. Since demands in this response have been admitted and paid by the Appellant the Tribunal should have in the first stage itself confirmed the demand and appropriated the said demand against the confirmed demand which has not been done in the earlier round which we do now in the remand proceeding as per the directions of the Hon ble High Court. As the amount due have been paid even prior to the issuance of Show Cause Notice the penalties could not have been imposed in respect of these demands which are confirmed as per para 4.5. Thus it is not required to interfere with the earlier order to the extent of setting aside the entire penalties as on all other demand the earlier order of this Bench in these appeals setting aside the demand and penalties agreed upon. Conclusion - The amount due have been paid even prior to the issuance of Show Cause Notice the penalties could not have been imposed in respect of these demands. Appeal disposed off.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) erred in relying on a previous order dated 17.12.2015, which had not attained finality due to pending appeals.
The validity of the demand for service tax on various heads, including Insurance Commission, Finance Payouts, Incentives from Maruti Suzuki India Limited (MUL), Handling & Logistic Charges, Repairing services, Reimbursement of Expenses from MUL, and under the Reverse Charge Mechanism.
Whether the penalties imposed under various sections of the Finance Act, 1994, and the CGST Act, 2017, were justified given the circumstances of the case.

ISSUE-WISE DETAILED ANALYSIS

1. Reliance on Previous Tribunal Order

Legal Framework and Precedents: The Tribunal's reliance on its previous order dated 17.12.2015 was questioned due to the fact that the order was under appeal and had not attained finality.
Court's Interpretation and Reasoning: The High Court found that the Tribunal should not have relied on the previous order as it was pending reconsideration. The Tribunal was directed to decide the issue afresh in accordance with the law.
Conclusion: The Tribunal was instructed to reconsider the demands in light of the pending appeal and not rely on the previous order.

2. Service Tax Liability on Various Heads

Legal Framework and Precedents: The service tax liabilities were assessed under the Finance Act, 1994, and the CGST Act, 2017, concerning Business Auxiliary Services and other taxable services.
Court's Interpretation and Reasoning: The Tribunal acknowledged that certain liabilities were admitted and paid by the appellant. However, the Tribunal erred in setting aside demands that were already accepted and paid by the appellant.
Key Evidence and Findings: The appellant had submitted documents and challans evidencing payment of service tax liabilities, which were verified by a report dated 21.02.2019.
Application of Law to Facts: The Tribunal confirmed the demand for admitted liabilities and appropriated payments against these confirmed demands.
Conclusion: The Tribunal modified its previous order to confirm demands for admitted liabilities and appropriated the payments made by the appellant.

3. Imposition of Penalties

Legal Framework and Precedents: Penalties were imposed under Section 78 of the Finance Act, 1994, and other relevant provisions for non-payment of service tax.
Court's Interpretation and Reasoning: The Tribunal found that since the amounts due were paid before the issuance of the Show Cause Notice, penalties should not have been imposed.
Conclusion: The Tribunal upheld the setting aside of penalties in respect of demands that were confirmed and paid prior to the issuance of the Show Cause Notice.

SIGNIFICANT HOLDINGS

Core Principles Established: The Tribunal must not rely on previous orders that have not attained finality and must decide issues afresh when directed by a higher court.
Final Determinations on Each Issue: The Tribunal confirmed the service tax liabilities that were admitted and paid by the appellant and appropriated these payments. Penalties were set aside for demands paid before the issuance of the Show Cause Notice.
Verbatim Quotes of Crucial Legal Reasoning: "As we find that amount due have been paid even prior to the issuance of Show Cause Notice, the penalties could not have been imposed in respect of these demands which are confirmed by us."

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