2015 (6) TMI 440 - AT - Service Tax

Business Auxiliary Service - Commission received from banks and insurance companies - Waiver of penalty on ground of no mens rea - Held that - Commissioner (Appeals) has given a clear finding based on documentary evidence that the commission received by the appellants from banks and insurance companies was in relation to marketing of their product. The appellants have not given any evidence to the contrary. The service rendered in relation to marketing of the products of banks and insurance companies is expressly covered under the category of Business Auxiliary Service as seen from the definition thereof given in Section 65(19) of Finance Act, 1994 which includes service in relations to promotion or marketing of service. Further this issue is covered in favour of Revenue in the CESTAT Larger Bench decision in the case of M/s. Pagariya Auto Center 2014 (2) TMI 98 - CESTAT NEW DELHI (LB) . - Decided against the assessee. Waiver of penalty - Commissioner (Appeals) has categorically observed that there was no mens rea or intention on the part of the appellants to evade Service Tax which they had paid along with interest even before the issue of Show Cause Notice. It is pertinent to mention that the impugned order cannot be overruled merely because some other equivalent authority may have come to a different conclusion with regard to extending the benefit of Section 80 in the given circumstances. To set aside the impugned order, Revenue has to show that the said order is illegal, perverse or unreasonable with regard to extending the said benefit in the given circumstances. The Revenue has evidently failed to do so. - Decided against the revenue.

Summary

Issues:
Service Tax liability on commission received by the appellants from banks and insurance companies under Business Auxiliary Service; applicability of extended period due to wilful mis-statement/suppression of facts; benefit of cum-tax; imposition of penalties under various sections of Finance Act, 1994; mens rea for evasion of Service Tax; applicability of Section 80 for penalties under Sections 76 and 78.

Analysis:

The case involved an appeal by M/s. Atma Ram Auto Enterprises against the confirmation of Service Tax demand on commission received from banks and insurance companies. The original adjudicating authority upheld the demand, but the appellate authority found that only the commission from banks and insurance companies was liable to Service Tax under Business Auxiliary Service. The Commissioner (Appeals) confirmed the demand of Service Tax but granted the cum-tax benefit to the appellants. The appellants contended that the commission was not classifiable under Business Auxiliary Service as they had only provided table space to the representatives of banks and insurance companies.

The Tribunal considered the evidence and found that the commission received was indeed in relation to marketing of the products, which falls under Business Auxiliary Service as defined in the Finance Act, 1994. The Tribunal referred to a previous decision where a similar issue was decided in favor of Revenue. Therefore, the Tribunal held that the appellants' appeal was not sustainable.

Regarding the Revenue's appeal, the Commissioner (Appeals) noted the absence of mens rea on the part of the appellants to evade Service Tax, as they had paid the tax before the Show Cause Notice was issued. The Tribunal emphasized that the benefit of Section 80 could not be considered illegal or unreasonable in the absence of mens rea. The Revenue's argument that mens rea is not required for penalty under Section 76 was considered, but the Tribunal found no grounds to overrule the Commissioner (Appeals)' decision. Consequently, the Revenue's appeal was also rejected.

In conclusion, the Tribunal dismissed the appellants' appeal and rejected the Revenue's appeal, affirming the decisions made by the Commissioner (Appeals) regarding the Service Tax demand and penalties under the Finance Act, 1994.