2017 (9) TMI 892 - AT - Service Tax

Business Support Services - recovery of expenses such as RTO charges fuel pooja material while selling vehicle to the customers - Held that - This issue has been settled in various tribunal judgment that this activity is not liable to service tax - demand of service tax on Business Support Service is set aside. Penalty u/s 78 - Held that - majority of amount is related to Business Auxiliary Service. As per the submission of the appellant they have been paying service tax regularly the said amount is also incorporated in this proceedings for which no show cause notice was supposed to be issued - no malafide intension is proved therefore penalty under Section 78 imposed by the lower authority is set aside. Interest - Held that - where there is delay in payment from the due date interest shall be chargeable on such delayed payment. Appeal allowed - decided partly in favor of appellant.

Summary

Issues involved:
Service tax liability on Business Auxiliary Service, Authorized Service Station Service, and Business Support Service; Validity of show cause notice; Penalty under Section 78.

Service tax liability on Business Auxiliary Service and Authorized Service Station Service:
The appellant was registered with the Service Tax Department for providing Business Auxiliary Service and paying service tax on commissions received from Banking and Insurance Services. The show cause notice proposed service tax on Business Auxiliary Service, Authorized Service Station Service, and Business Support Service. The Commissioner(Appeals) rejected the appeal upholding the Order-in-Original. The appellant did not contest the service tax liability on Business Auxiliary Service and Authorized Service Station Service, and the demand on these services was upheld, with the payment already made being appropriated against the same.

Service tax liability on Business Support Service:
The issue revolved around the recovery of expenses from customers for RTO registration charges, fuel, pooja material, etc., under the head of Business Support Service. The appellant argued that this activity was not liable to service tax based on a precedent set in a tribunal judgment involving a similar issue. The tribunal found that the definition of Business Support Services did not cover the services rendered by the appellant, and the first appellate authority's findings were incorrect. Citing a previous tribunal judgment, the bench ruled in favor of the appellant/assessee, setting aside the demand for service tax on Business Support Service.

Validity of show cause notice and Penalty under Section 78:
The appellant contended that a significant amount was regularly paid, for which no show cause notice was issued, making the notice illegal and incorrect to that extent. The penalty under Section 78 was related to Business Auxiliary Service, and since the appellant had been paying service tax regularly, no malafide intention was proved. The penalty under Section 78 was set aside, but interest would be chargeable on delayed payments. The impugned orders were set aside, and the appeals were allowed with consequential relief. The tribunal modified the impugned order accordingly, partially allowing the appeal.

This detailed analysis of the judgment showcases the issues involved, the arguments presented by both parties, the tribunal's reasoning, and the final decision on each issue, providing a comprehensive overview of the legal aspects and implications of the case.