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TMI Blog2019 (1) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... idered - the matter requires to be remanded to original authority to cause necessary verification. Penalty u/s 78 - Held that:- Penalty imposed under Section 78 is an overkill and requires to be set aside. Appeal allowed in part and part matter on remand. - Application No.ST/Misc/41103/2017, Appeal No.ST/587/2011 - FINAL ORDER No. 43175/2018 - Dated:- 13-12-2018 - Shri Madhu Mohan Damodhar, Member (Technical) And Shri P. Dinesha, Member (Judicial) Shri S. Murugappan, Advocate For the Appellant Shri B. Balamurugan, AC (AR) For the Respondent ORDER Per Shri Madhu Mohan Damodhar The facts of the case are that pursuant to audit conducted by the department, it emerged that appellants during the period Janua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the person who conducts the management training programme as an Active Distributor. (ii) As per the agreement the proceeds from the initial franchise fee paid by the new distributor is to be divided between the appellants (master distributor) and the USA company (producer) in the ratio of 40:60 i.e. 40% to master distributor and 60% to the producer. Apart from the above, the distributors are required to pay 35.5% of their gross revenue as royalty which is to be shared between the producer and master distributor as per the percentages mentioned in the agreement. (iii) The original authority has treated the amounts shared with the USA producer as payment of royalty and has demanded service tax which was affirmed by the Commissioner ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. He drew attention to para 5.4 and 5.5 of the impugned order where Commissioner (Appeals) has analysed the agreement between the appellant (Franchisee) and M/s. Crest Com International Limited, USA. (Franchisor). The appellant had not produced any evidence that the service tax collected had been paid to the department and further onus is on the appellant to substantiate any contention that the royalty paid by them to foreign service provider had also suffered service tax and the same had been paid to the department. 4.1 Heard both sides. On going through the facts on record, we find that in the reply dt. 18.06.2009 to the SCN, the facts of which has been summarized in para-6 of the order of the original authority where the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the interests of justice, we therefore are of the opinion that the matter requires to be remanded to original authority to cause necessary verification on this aspect, namely, whether the payouts made to Crest Com International Ltd., U.S.A. did indeed suffer service tax earlier. Needless to say, appellants should be given suitable opportunity to present their case including production of submission of additional evidence, if any. 4.3 Coming to penalty, taking into account the facts on record as also the genesis of the dispute, we find that penalty imposed under Section 78 is an overkill and requires to be set aside which we hereby do. The appeal is therefore partly allowed and partly remanded on above terms. 4.4 The MA filed by Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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