2018 (8) TMI 561 - AT - Service Tax

Business Auxiliary Services - commission/incentive/remuneration etc. - Held that - As regard the taxability of the services, the same has been settled against the appellant by the Larger Bench in case of Pagariya Auto Centre 2014 (2) TMI 98 - CESTAT NEW DELHI (LB) - demand upheld. Time Limitation - Held that - The appellant have neither registered themselves nor filed any ST-3 return. In such a situation department was absolutely unaware about the activity of the appellant. Therefore, there is a clear suppression of fact - the demand was rightly confirmed for the extended period. Penalty u/s 76 and 78 of FA - Held that - The penalty under Section 76 and 78 cannot be imposed simultaneously - reliance placed in the case of Raval Trading Co. 2016 (2) TMI 172 - GUJARAT HIGH COURT - penalty u/s 76 set aside - penalty u/s 78 upheld. Appeal allowed in part.

Summary

Issues:
1. Taxability of commission received by appellant from financial companies under Business Auxiliary Service.
2. Applicability of demand raised for the period July 2003 to December 2005.
3. Imposition of penalties under Section 76 and 78 simultaneously.

Analysis:

Taxability of Commission:
The case involved the appellant facilitating financial companies to place their counters in their auto mobile showroom, receiving commission in return. The department argued that this commission is taxable under Business Auxiliary Service. The appellant contended that their service falls under Business Support Service, not Business Auxiliary Service. The appellant cited conflicting decisions but relied on the Pagariya Auto Centre case to support their argument. The tribunal found in favor of the department, stating that the taxability issue had been settled against the appellant by the Larger Bench in the Pagariya Auto Centre case, making the demand on merit sustainable.

Applicability of Demand Period:
The appellant argued that the demand for the period July 2003 to December 2005, based on a Show Cause Notice from 2007, was time-barred due to lack of malafide intention. The appellant also sought to set aside penalties under Section 76 and 78, invoking Section 80, claiming genuine doubt regarding Service Tax payment. However, the tribunal rejected these arguments, noting that the appellant's failure to register or file ST-3 returns led to a clear suppression of facts. Consequently, the tribunal upheld the demand for the extended period.

Imposition of Penalties:
Regarding the penalties imposed under Section 76 and 78, the tribunal referred to the Raval Trading Co. case from the Gujarat High Court, stating that penalties under both sections cannot be imposed simultaneously. As a result, the penalty under Section 76 was set aside, while the penalty under Section 78 was upheld. The impugned order was modified accordingly, and the appeal was partly allowed based on this decision.

This judgment highlights the importance of proper registration, timely tax payments, and the impact of precedents on taxability issues in service-related cases.