2017 (12) TMI 16 - AT - Service Tax

Business Auxiliary Service - Revenue held a view that the appellants are facilitating the business of Insurance Companies/Financial Institutions to canvass their services by using the appellant s premises - liability of service tax - Held that - the earlier arrangement of receiving part of the consideration from M/s. MUL was later changed and the appellants started receiving consideration directly from the companies. In any case, in the absence of justification recorded in the impugned order for upholding the invocation of extended period, we find no justification for the same. While already paid tax dues are not contested by the appellants, we find they are right in contesting the penalty and also the invocation of extended period. Appeal allowed in part.

Summary

Issues:
1. Liability of the appellants to pay service tax on consideration received from Insurance Companies/Financial Institutions.
2. Imposition of penalty under section 78 of the Finance Act, 1994.
3. Invocation of extended period for proceedings.

Analysis:
Issue 1: Liability of the appellants to pay service tax on consideration received from Insurance Companies/Financial Institutions
The dispute in the case revolved around the liability of the appellants to pay service tax on consideration received directly from Insurance Companies/Financial Institutions or through M/s. Maruti Udyog Ltd. The Revenue argued that the appellants facilitated the business of these entities by allowing them to use their premises. The proceedings resulted in the confirmation of a service tax demand covering a specific period, and a penalty was imposed under section 78 of the Finance Act, 1994.

Issue 2: Imposition of penalty under section 78
The appellants contested the imposition of the penalty and the invocation of the extended period for proceedings. They argued that they were registered with the department and had started paying service tax for the disputed income from a certain date. They claimed that the non-payment of service tax earlier was due to an ambiguity regarding their liability. The Revenue, however, opposed the appeal, stating that the tax liability was not in dispute and that the appellants should have discharged the service tax when receiving consideration for taxable services.

Issue 3: Invocation of extended period for proceedings
The Tribunal analyzed whether the Revenue's action of invoking the extended period was justified. It was noted that the impugned order did not provide sufficient justification for including the extended period of demand. The Tribunal found that the observations made in the order were not a sound reasoning for invoking the extended period. The case laws relied upon by the Revenue were distinguished from the present case based on facts. Ultimately, the Tribunal set aside the impugned order concerning the penalty under section 78 and the demand beyond the normal period, as the appellants had already paid the tax dues, and there was no justification for the invocation of the extended period.

In conclusion, the appeal was partly allowed, with the Tribunal ruling in favor of the appellants regarding the penalty and the extended period for proceedings.