2016 (6) TMI 162 - AT - Service Tax

Demand of service tax - Period of limitation - Business Auxiliary Service and Business Support Service - Appellant received commission paid by banking and insurance companies, subvented commission to its customers and provided infrastructural support services for which having received some amount not discharged tax liability - Held that - the issue of discharge of service tax liability on the commission received from the financial institutions and the insurance companies by an automobile dealer is taxable is the law now settled by the larger bench in the case of Pagariya Auto Centre Vs CCE, Aurangabad 2014 (2) TMI 98 - CESTAT NEW DELHI (LB) . It is also found that the Hon ble High Court of Karnataka in the case of CCE, Bangalore Vs MTR Foods has held that once the audit of the records of the assessee takes place no objection is taken on a issue in dispute, the demand raised by invoking the extended period is unsustainable. Therefore, in view of the authoritative judicial pronouncement, the demand is barred by limitation. The impugned order is set aside. - Decided in favour of appellant

Summary

Issues:
1. Service tax liability for the period July 2003 to March 2007.
2. Taxability of commission received by the appellant.
3. Question of limitation regarding the demand of tax liability.
4. Adequacy of audit conducted by the Revenue authorities.

Analysis:
1. The appeal addressed the demand of service tax for the period July 2003 to March 2007 concerning alleged services provided by the appellant falling under Business Auxiliary Service and Business Support Service categories. The Revenue claimed that the appellant received commission from banking and insurance companies, subvented commission to customers, and provided infrastructural support services without discharging the tax liability.

2. The appellant argued that the issue was settled against them by a larger bench decision in a specific case. They contended that the question of limitation regarding the tax liability demand had not been appropriately considered by the lower authorities. The appellant believed in good faith that the tax liability did not apply to the commission received, as supported by previous cases and the larger bench decision. They highlighted that despite a detailed audit, no taxability concerns were raised, indicating the Revenue's awareness of the commission received.

3. The departmental representative reiterated the lower authorities' findings, emphasizing that the appellant had not disclosed the commission receipt, leading to a tax liability for an extended period. However, the Tribunal found that the issue of service tax liability on commission received by an automobile dealer was settled law by a larger bench. Upon reviewing the audit report, it was noted that despite an extensive audit, no queries were raised regarding the taxability of the commission, leading to the conclusion that the demand was time-barred.

4. Referring to a judgment by the Hon’ble High Court of Karnataka, the Tribunal held that if no objections were raised during an audit on a disputed issue, invoking the extended period for demand was unsustainable. Consequently, the Tribunal set aside the impugned order and allowed the appeal solely on the grounds of limitation, considering the authoritative judicial pronouncements and the specific facts of the case.