2010 (6) TMI 254 - AT - Service Tax

Security Agency Service - The assessees challenge the service tax demand of ₹ 12,67,930 and penalty of ₹ 1,74,000 imposed under section 76 and ₹ 1,000 imposed under section 77 of the Act. The demand consists of two parts - (i) demand of ₹ 9,88,261 on commission paid to depot managers by the assessees who are manufacturers of cotton yarn and (ii) brokerage paid to selling agents i.e., yarn brokers. Held that - in the light of the decision of Larsen & Toubro Ltd. v. CCE 2006 (6) TMI 3 - CESTAT NEW DELHI, demand on brokerage paid to yarn brokers was to be set aside. But demand on commission paid to depot managers was being upheld, as liability in that respect was conceded by assessee, penalties imposed u/s 76 and 77 were to be upheld.

Summary

The Appellate Tribunal CESTAT, Chennai upheld a service tax demand of Rs. 12,67,930 and penalties imposed under sections 76 and 77 of the Finance Act, 1994. The demand was for commission paid to depot managers and brokerage paid to yarn brokers by manufacturers of cotton yarn. The demand on commission was upheld, while the demand on brokerage was set aside based on a previous Tribunal decision. Penalties were upheld due to the upheld demand. The appeal was partly allowed by setting aside the demand of Rs. 3,45,154.