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TMI Blog2008 (2) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... and Forwarding Agent Service' as defined under Section 65 of the Act as any person who is engaged providing any service, either directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent? (ii) Whether the penalty is imposable when the party deposits the service tax before the issue of the show cause notice after department has caught them for non-payment of service tax? 2. The respondent-assessee is providing the services of consignment agents as defined under Section 65(23) of the Finance Act, 1944 as amended (hereinafter referred to as the 'Act'). It was found that the respondent is not registered with the Department as required under Section 69 of the Act and has also not paid service tax as required under Section 66 of the Act. It is alleged that the respondent received commission of Rs. 45,79,411/- for the period from August, 1999 to February, 2001 and Rs. 32,28,379/- for the period from March, 2001 to November, 2001. As such, the respondent was issued two show cause notices for the recovery of the service tax amounting to Rs. 2,28,971/- and Rs. 1,61,419/- respectively alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in preceding paras), our bona fide intention is bolstered from the fact that of immediate knowledge of the fact that Service Tax was to be paid by us, was deposited the entire amount of Service Tax due, well before the issue of Show Cause Notice. It is a settled legal proposition by now that when the tax amount is deposited before the issue of show cause notice, the imposition of penalty is not warranted. In this connection the noticee beg leave to refer to a whole catena of judgment which have ordained in unequivocal terms that when the duty is deposited prior to the issue of show cause notice, the imposition of penalty notice is not warranted 1. E.I.D. Parry (I) Ltd. anr, v. CCE, Mumbai , 2003 (156) E.L.T.753 (Tribunal) = 2003 (58) R.L.T. 63 2. E.I.D. Parry ( India ) Ltd. v. CCE, Jaipur , 2003 (157) E.L.T. 193 (Tribunal) = 2003 (57) R.L.T. 805 3. Dhampur Sugar Mills Ltd., 1990 (46) E.L.T. 400 4. R.G. Graphics v. CCE, Mumbai, 2001 (138) E.L.T. 61 5. Arun Prestressed Concrete Products Pvt. Ltd. v. CCE, Bangalore , 2002 (150) E.L.T 542 (Tribunal) = 2002 (51) R.L.T. 949 6. O.K. Steels, (CBE) Ltd. v. CCS, Coimbatore , 2002 (53 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of Orissa , 1997 S.T.C. (XXV) 211 (S.C) has ordained Penalty will not be imposable merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Thus there are to be certain guiding, factors for invoking penalty action going by the ratio of the citation referred above. Considering the facts of our case, no case at all is made out for taking penalty action. 3. The Assistant Commissioner vide Order-in-Original dated 31-10-2003 confirmed the demand of aforesaid Service Tax amount along with interest and penalties for the amount equivalent to the Service Tax of Rs. 2,28,971/- and Rs.1,61,419/-. 4. Being aggrieved against the said order, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee dealer/commission agent of M/s. IPCL can not come within the purview of C F operation. The assessee has entered into two agreement with M/s. IPCL, namely (i) Del Credre Agent Agreement and (ii) Distributor Agreement. Both the said agreements are complimentary and therefore, the assessee is liable to pay service tax on the services rendered by him as commission agent of M/s. IPCL under both the agreements. Counsel for the appellant has placed reliance on the language of Section 65(23) of the Finance Act, 1994 which defines the 'Clearing and Forwarding Agent' as under :- Clearing the Forwarding Agent means any person who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations in any manner to any other person and includes a consignment agent. 7. On the basis of the above provisions of the Act it has been argued that the use of the words either directly or indirectly , connected with clearing and forwarding operations in any manner is indicative of the fact that the scope of the services to be provided by the clearing and forwarding agent is all encompassing in that. It covers not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 inter alia provides for payment of service tax by a person other than the person providing taxable service. In respect of services rendered by clearing and forwarding agent, the service tax was made payable by the person engaging such agent. The Hon'ble Supreme Court in the case of Laghu Udyog Bharati v. Union India , 2006 (2) S.T.R. 276 (S.C.) =1999 (112) E.L.T 365 (S.C.) has held aid provision ultra vires. It has been decided now, to do away with above method of service tax by an alternate person other than the person providing the taxable services in respect of clearing and forwarding agent. 10. It is further the contention of the respondent that the assessee came to know about its liability to pay service tax after the decision of the Hon'ble Apex Court in the case of Laghu Udyog Bharati (supra) and the respondent assessee voluntarily deposited service tax of Rs. 2,28,971/- for the period from August, 1999 to February, 2001 and Rs.1,61,419/- for the period from March, 2001 to November, 2001 i.e. before issuance of show cause notice and respondent has deposited the service tax on the entire commission received from M/s. IPCL under the bona f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y information technology service and any activity that amounts to manufacture within the meaning of clause (f) of Section 2 of the Central Excise Act, 1944. Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, (a) commission agent means any person who acts on behalf of another person and causes sale or purchase of goods, provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - (i) deals with the goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or service; or (iii) guarantees for collection or payment for such goods or services, or (iv) undertakes any activities relating to such sale or purchase of such goods or services; (b) information technology service means any service in relation to designing, developing or maintaining of computer software, or computerized data processing or system networking, or any other service primarily in relation to operation to computer system . 11. In support of their contention, the respondent has further placed reliance upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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