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2015 (4) TMI 287 - AT - Service TaxLevy of penalty - waiver of the penalties in terms of Section 80 of the Finance Act, 1994 - appellant is not contesting the demand of service tax which they have admittedly paid along with interest - sale of SIM Cards of BSNL - Receipt of commission - Held that - Following decision of G.R. Movers vs. CCE, Lucknow reported in 2013 (6) TMI 339 - CESTAT NEW DELHI , Daya Shankar Kailash Chand vs. CCE&ST, Lucknow reported in 2013 (6) TMI 340 - CESTAT NEW DELHI and CCE, Meerut vs. Virendra Electric Works reported in 2013 (6) TMI 317-CESTAT New Delhi - service in question itself is held as non-taxable. Therefore, the bona fide of the appellant stands proved. In the facts and circumstances of the case and other non-taxable nature of the service, Section 80 is clearly invokable. - invoking Section 80, the appellant is not liable for penalties under Sections 76, 77 and 78 of the Finance Act - Decided in favour of assessee.
Issues Involved:
1. Taxability of commission received from BSNL for sale of SIM cards under 'business auxiliary service'. 2. Legitimacy of penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994. 3. Applicability of Section 80 for waiver of penalties. Detailed Analysis: 1. Taxability of Commission Received from BSNL: The appellant, an authorized distributor of BSNL products, received a commission for selling BSNL SIM cards and recharge vouchers. The Revenue issued a show cause notice demanding service tax on this commission under the category of 'business auxiliary service'. The adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld this decision. However, the appellant cited several judgments (G.R. Movers, Daya Shankar Kailash Chand, and Virendra Electric Works) to argue that such commissions are not taxable. These judgments established that the essential nature of the transaction is not of sale but of providing service, and BSNL had already paid service tax on the full value of the SIM cards. Therefore, demanding tax again on the commission would amount to double taxation. The Tribunal concurred with these judgments, recognizing that the service in question is non-taxable. 2. Legitimacy of Penalties Imposed: Penalties were imposed under Sections 76, 77, and 78 of the Finance Act, 1994, along with the service tax demand. The appellant did not contest the service tax demand but sought waiver of the penalties, arguing that the service was non-taxable based on settled legal positions. The Tribunal noted that the bona fides of the appellant were proven, given that the service itself was held as non-taxable in various judgments. Thus, the imposition of penalties was not justified. 3. Applicability of Section 80 for Waiver of Penalties: The appellant invoked Section 80 of the Finance Act, 1994, which allows for waiver of penalties if the assessee proves that there was a reasonable cause for the failure. The Tribunal found that the non-taxable nature of the service and the appellant's bona fide belief, supported by judicial precedents, constituted a reasonable cause. Therefore, invoking Section 80, the Tribunal waived the penalties under Sections 76, 77, and 78. Conclusion: The Tribunal allowed the appeal, waiving the penalties under Sections 76, 77, and 78, while maintaining the confirmation of the service tax demand, as the appellant had not contested the demand itself. The judgment emphasized that the service of commission on the sale of BSNL SIM cards is non-taxable, and the appellant's bona fide belief in this non-taxability warranted the waiver of penalties.
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