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2017 (11) TMI 616 - AT - Service TaxBusiness auxiliary service - Since, the appellant did not register with the Department and did not pay the Service Tax on the commission amount received from the service receiver M/s. LIC Housing Finance Ltd., the Department proceeded against the appellant for confirmation of the Service Tax demand - Held that - the Service Tax demands raised by the Department are not entirely barred by limitation of time. Some of the demand is within the normal period prescribed under Section 73 ibid. Since, the demands within the normal period has not been quantified by the authorities below, the matter should go back to the original authority for quantification of the Service Tax demand within the normal period, which should be paid by the appellant. Penalty - Held that - the appellants had no intention to defraud the Government revenue, the penalties cannot be imposed on the appellant. Accordingly, this is a fit case for invocation of Section 80 ibid. Thus, the penalties imposed against the appellant are set aside. Appeal allowed by way of remand.
Issues:
1. Service Tax liability on direct sales agent/associates. 2. Bar on time limitation for tax demand. 3. Small scale exemption eligibility. 4. Imposition of penalties. Analysis: Issue 1: Service Tax liability on direct sales agent/associates The case involved direct sales agents/associates (DSI) of a company and whether their activities fell under the taxable category of business auxiliary service. The Department conducted an enquiry and concluded that the appellants were liable to pay Service Tax on the commission received from the service receiver. The appellant argued that the Service Tax attributable to the taxable service was already deposited by the service recipient into the Government Exchequer, leading to double taxation if demanded from the appellant. The Tribunal found that the appropriate Service Tax liability was discharged by the service recipient, making it a case of revenue neutrality. Therefore, the extended period of limitation could not be invoked for confirming the Service Tax demand. However, some demands within the normal period were not quantified, leading to a remand for quantification of the Service Tax demand within the normal period. Issue 2: Bar on time limitation for tax demand The Tribunal noted that while the extended period of limitation could not be invoked due to revenue neutrality, demands within the normal period had not been quantified. As a result, the matter was remanded to the original authority for quantification of the Service Tax demand within the normal period, which the appellant was directed to pay. Issue 3: Small scale exemption eligibility The appellant claimed entitlement to the small scale exemption under Notification No.6/2005 dated 1st March, 2005. However, the Tribunal did not provide a specific ruling on this issue in the judgment. Issue 4: Imposition of penalties The appellant argued against the imposition of penalties, stating no intention to defraud the Government revenue. The Tribunal agreed and set aside the penalties, invoking Section 80 of the Finance Act, 1994, as the appellants had no fraudulent intent. In conclusion, the Tribunal remanded the matter for quantification of Service Tax demand within the normal period, set aside the penalties imposed on the appellant, and disposed of the appeal accordingly.
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