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TMI Blog2014 (11) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... egard in the Impugned Order, as was essential - yet the liability has been invoked and confirmed against them, in abstentia, as it were thus (non-discussion of material defence submission). Such casual non-consideration made would fail, as is obvious. It is against the salutary principles of natural justice also (‘right to effective representation’). The law in this regard is clear and well settled. It cannot be done. It goes to the root of the issue involve. By applying the decisions in the cases of CCE v. N.M. Nagpal (P.) Ltd. [2006 (5) TMI 49 - SUPREME COURT] and Alpic India v. CCE [2006 (3) TMI 681 - CESTAT, MUMBAI], the impugned order fails entirely, without prejudice and the liability after 30-6-2012 is dropped with respect to commission earned by the appellant as per Notfn. No. 25/2012-S.T., dated 20-6-2012. Tenability of interest and penalties imposed - Held that:- as there exists no duty liability on appellant in terms of the Impugned Order, its attendant consequences follow as a matter of course. No interest under Section 75 of the FA would be payable by them as ordered therein. Also, no penalties would be imposable on them, similarly. By relying on the decision of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to also as the Appellant , for brevity), against the Order-in-Original Sl. No. 13/2014/MYS/ST/ADC passed and issued on 12-5-2014 under file C. No. V/ST/15/113/2012 Adjn (hereinafter referred to also as the Impugned Order , for brevity), by the Additional Commissioner of Central Excise, Mysore Commissionerate, Mysore-570011 (hereinafter referred to also as the Lower Authority , for brevity). 2. The facts of the case, in brief, are as follows. The appellant (or also they , used for convenience) are a non-banking Financial Company registered with the Reserve Bank of India, Bangalore, providing Banking and Other Financial Services (hereinafter referred to as BOFS , for brevity), which is leviable with Service Tax (hereinafter referred to also as the ST , for brevity), with effect from 16-7-2001 by virtue of Notification No. 4/2001-S.T., dated 9-7-2001. On gathering information and examination of the activities of them (Appellant) that their activities like Bill Discounting, Asset Management, Fund Management, Advisory and other auxiliary financial services amongst others are classifiable under the category of BOFS, they were summoned by the Superintendent of Service Tax, ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scount charges from the demand for the period from 2007-08 to 2010-11 and thereby the liability on the part of appellant in respect of ST would be well below the threshold limit. However, for the Financial Year 2011-12 has held that the appellant have crossed the exemption limit and has confirmed an amount of ₹ 5,431/- (including cesses), interest thereon besides imposing penalties under Sections 77(1)(a), 77(2) and 78 but has refrained from imposing penalty under Section 76. As regards to Second SCN, the Lower Authority has applied the same findings for the discounting charges and also relied on the negative list subsequent to 1-7-2012, the service of discounting bills is covered under negative list. However, the Lower Authority has confirmed an amount of ₹ 1,22,495/- (including cesses) and interest thereon, besides imposing penalty of ₹ 10,000/- under Section 77(2) and also demanded Late fee of ₹ 20,000/- for non-filing of ST-3 returns. Being aggrieved by the Impugned Order, they have filed this Appeal (ST-4 dated 8-7-2014). 3. The Grounds of Appeal, urged in brief, are as follows. That - (1) the Impugned Order is illegal, improper and not in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived on mutual fund units. (9) They have further ascertained that there was no intention to evade payment of duty nor was any suppression on their part and mere non-payment cannot be equated with a mala fide intent and moreover major portion of the demand has been dropped by the Lower Authority in the Impugned Order and bona fide of the appellant are established beyond iota of doubt. (10) They urged that recent amendment in Section 73(2A) of FA, i.e., if the demand for the extended period fails, the demand should be sustained for the normal period (18 months) and the provision has come into effect from 10-5-2013 and cannot be applied retrospectively. They have cited Supreme Court case law in support of their contention. (11) The Superintendent of Central Excise, ST Range, Shimoga vide letter dated 10-8-2012 had stated that the commission received by them from mutual fund units are taxable under BOFS and also under Business Auxiliary Service and the Department itself was not sure about the taxability and hence extended period not invokable. (12) No interest and penalties would be payable from them as the principal amount is not taxable and have cited case laws in support. (13) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave carefully considered the case record. The facts involved are clear, apparent from the record - but are disputed. Moreover, their consideration and interpretation differs basically and substantially, between the rival parties to the dispute, as also the applicability of the legal provisions in this regard. For the sake of brevity and to avoid prolixity, the details of the case are not again recorded here. The short issues which arise for determination in this case, having a bearing on the outcome of the Impugned Order are, whether - (1) the Impugned Order has gone beyond scope of both the SCNs (First SCN and the Second SCN); (2) the demand is tenable; (3) the interest and penalties imposed on them are tenable; (4) the commission received by distributors of mutual fund company are in the nature of commission chargeable to ST under BAS or BOFS; and, (5) they (Appellant) are eligible for refund of the ST amount and interest paid thereon; or otherwise. 8.1 I take up the first issue required for determination at (1) above - whether or not the Impugned Order has gone beyond the scope of both the SCNs (First SCN and the Second SCN) or otherwise, is taken up. The Lower Authority ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Order beyond the scope of show cause notice - Issue of duty demand raised by Commissioner (Appeals) on clandestine clearance of Brass Ash not subject matter of show cause notice or adjudication proceedings before lower Court which concerned only with denial of Cenvat credit - Confirming demand on a different ground not permissible without issue of separate show cause notice to appellant - Order bad in law and needs to be set aside - Sections 35C and 11A of Central Excise Act, 1944. [1999 (106) E.L.T. 12 (S.C.); 2001 (128) E.L.T. 18 (S.C.) and 2011 (266) E.L.T. 444 (Bom.) relied on]. [paras 7, 8]. (Emphasized). The ratio of the above cases referred squarely applies to the instant case in principle. 9.1 The next issue required for determination at (2) above - whether or not the demand is tenable, is taken up. On perusal of their records, it was observed that the major portion of the demand relates to Discounting charges and a small portion of which relates to commission earned on sale of Mutual funds and service charges. The Lower Authority after due consideration of the reply filed by the appellant and citing the Notfn. No. 29/2004-S.T., dated 22-9-2004 had dropped the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity involved in the sale and purchase of units of mutual fund schemes would fall under clauses (ii) (iv) of Section 65(19). The said clauses refer to services . The mutual fund units being goods as per the definition under Section 65(50) of the Finance Act, 1994 read with Section 2(7) of the Sale of Goods Act, 1930, would fall under clause (i) of Section 65(19), namely, promotion or marketing or sale of goods. But as the Business Auxiliary Service provided by a commission agent by way of sale and purchase of goods stands exempted under Notification No. 13/2003-S.T., the conclusion is irresistible that the respondent were not liable to pay any Service Tax for service rendered as commission agent in connection with sale and purchase of units of mutual fund schemes during the relevant period. However, I find on examination of the record that there is not a semblance of consideration, discussion and finding, with material evidence in support, recorded by the Lower Authority in this regard in the Impugned Order, as was essential - yet the liability has been invoked and confirmed against them, in abstentia, as it were thus (non-discussion of material defence submission) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Power Co. Ltd. v. CCE [1998 (99) E.L.T. 200 (S.C.)] wherein it has been held that - Appeal - Reference to High Court/Supreme Court - New ground - Tribunal has jurisdiction to examine a question of law which arises from facts as found by authorities below and having a bearing on tax liability of assessee even though said question not raised before lower authorities nor in appeal memorandum before Tribunal but sought to be added later as an additional ground by a separate letter - Sections 35A, 35C and 35G of Central Excise Act, 1944 - Sections 128A, 129B and 130 of Customs Act, 1962 - Rule 10 of CEGAT (Procedure) Rules, 1982. [paras 2, 8] Appeal - Order - Appellate Authority has all the powers which original authority may have in deciding the question before it subject to statutory restrictions or limitations, if any - Sections 35A and 35C of Central Excise Act, 1944 - Sections 128A and I29B of Customs Act, 1962. They have cited the correct case law in this regard. Even though, they have not taken up this issue before the Lower Authority, this being question of law, nothing bars them from raising the issue during Personal hearing. 11.2 On perusal of the Impugned Order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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