2013 (4) TMI 319 - AT - Service Tax

Business auxiliary Service under Section 65(105) (zzb) of chapter V of the Finance Act, 1994 - Audit conducted Appellant had not obtained the Registration under the category of Business Auxiliary Service and also failed to file periodical half yearly returns. For the period 1.4.04 to 30.9.04 they have filed NIL returns belatedly whereas they had received the commission during the said period. Accordingly, demand of duty along with interest & penalties arise. Held that On perusal of the records and the certificate produced by the appellant of their chartered accountant tribunal confirm the said demand of service tax liability and proportionate education cess on the same for material period. Appellant is also directed to pay interest on the said amount. On perusal of the records, I find that the appellant has pre-deposited an amount of Rs.1 lakh. Lower authorities are directed to work out the exact amount of service tax liability, interest thereof and adjust the amount from the pre-deposit already made by the appellant. As regards the penalty imposed by the first appellate authority in non- filing of return under Section 77, I uphold the same. As regards the penalty imposed under Section 78 by the appellate authority, I find that during the material period, appellant could have entertained a bonafide belief that up to 10.9.04 they are eligible for benefit of Notification No.13/03-ST. - Penalty waived.

Summary

Issues:
Service tax liability on the appellant for the period 1.7.03 to 31.3.05.

Analysis:
The appellant, engaged in providing services related to the sale of goods, received commission from various companies. The services fell under "Business Auxiliary Service" taxable from 1.7.03. The appellant failed to obtain registration and file returns as required. A show cause notice was issued for recovery of service tax, interest, and penalties. The Adjudicating Authority confirmed the demand, leading to an appeal.

The first appellate authority granted relief for the period 1.7.03 to 9.7.04 under a notification, dropping demands and penalties. For the remaining period, demands, interest, and penalties were upheld. The appellant argued for a reduced service tax liability for a specific period, supported by a chartered accountant's certificate.

The Tribunal found no dispute regarding the appellant's role as a commission agent. Relief was granted for the earlier period, and for the subsequent period, the appellant had already paid the service tax. For an interim period, the Tribunal accepted the chartered accountant's certification of commission received, determining a reduced service tax liability and directing payment with interest.

Regarding penalties, the Tribunal upheld the penalty for non-filing of returns but set aside the penalty under another section due to a genuine belief held by the appellant. The Tribunal directed the authorities to adjust the pre-deposited amount towards the service tax liability. The appeal was disposed of accordingly, with penalties modified based on the circumstances and legal provisions.