Commissioner Of Central Excise vs Usl Shinrai Automobiles Ltd

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.ST/56/10 & ST/76/10

(Arising out of Order-in-Original No.17/STC/BR/09-10 dated 13/11/2009 passed by Commissioner of Service Tax, Mumbai)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.R. Chandrasekharan, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Commissioner of Central Excise, Mumbai Appellant Vs. USL Shinrai Automobiles Ltd., Respondent

USL Shinrai Automobiles Ltd., Appellant

Vs.

Commissioner of Central Excise, Respondent Mumbai

Appearance:

Shri.B.S.Meena, Addl. Comm. (AR) for Revenue Shri.Nikhil Rungta, Advocate for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.R.Chandrasekharan, Member (Technical) Date of Hearing : 29/01/2015 Date of Decision : /02/2015

ORDER NO

Per: M.V. Ravindran

1. These two appeals are disposed of by a common order as Revenue and appellant/assessee both are in appeal against the same impugned order.

2. The relevant facts that arise for consideration are the appellant/assessee is a dealer of motor vehicles and was facilitating customers to avail loan for purchase of vehicles from the reputed banks/financial institutions and was getting an amount as commission/incentive of the total amounts of loan disbursed from the said banks/financial institutions. Revenue authorities are of the view that the appellant/assessee is required to discharge the service tax liability on this amount under the category of Business Auxiliary Services with effect from 01/07/2003. Show-cause notices were issued to the appellant/assessee. Appellant/assessee contested the issue on merits as well as on limitations. The adjudicating authority did not agree the contentions raised and confirmed the demands with interest and imposed penalties. In the interim period, appellant had discharged the service tax liability for the entire period. Revenue is in appeal against the impugned order on the ground that the penalty imposed by the adjudicating authority under Section 76 of the Finance Act, 1994 is incorrect while the assessee/appellant is contesting the issue on merits.

3. Learned Counsel appearing on behalf of the appellant/assessee takes us through the records. It is his submission that the service tax liability fastened upon the appellant is incorrect inasmuch as the CBE&C in their Circular dated 06/11/2006 has specifically stated that there were doubts as to taxability of the amounts received as commission from financial institutions. He would submit at the most the Revenue can claim the service tax liability from the date on which CBEC clarified service which are rendered by the appellant. He would also submit that he is raising an important question of law as to tax liability which has been worked out by the lower authorities is on the entire amounts of the commission received by the appellant while the said amount needs to be considered as cum tax amount. He would submit that since the issue involved in this case is prior to the period of CBE&C Circular dated 06/11/2006, penalties which have been imposed by the adjudicating authority be set aside.

4. Learned DR on the other hand would submit that appellant has not contested the taxability or the tax paid, before the adjudicating authority and has discharged the entire service tax liability. He draws our attention to the findings recorded by the adjudicating authority. It is his submission that appellant had not intimated the department regarding the activities undertaken by them as to receipt of commission from the banks/financial institutions. He would submit that the activities very clearly fall under the category of business auxiliary services inasmuch as the appellant is promoting the business of banks/financial institutions. As regards the appeal filed by the Revenue, it is his submission that the adjudicating authority has imposed penalty of Rs.100/- per day under Section 76 of the Finance Act, 1994 while the said section specifically provides for imposition of penalty of Rs.200/- per day or 2% per month whichever is higher.

5. We have considered the submissions made by both the sides and perused the records.

6. On perusal of the records, we find that the appellant/assessee did not contest the issue on merits before the adjudicating authority. Before the adjudicating authority; only contest the appellant made was that no penalty be imposed on them in view of the full payment of tax and also due to financial difficulties; we agree with the learned DR that the appellant having not contested the issue on merits before the adjudicating authority, cannot do so before us. To that extent the impugned order, upholding the tax liability is correct and needs no interference. Consequently, the interest liability also arises on the appellant.

7. We find strong force in the contention raised by the learned Counsel for the appellant/assessee that the amounts which have been received by them from financial institutions/banks as commission are lump sum amounts and the said amounts, can be considered as cum tax amount and the service tax liability needs to be reworked. On mere perusal of the invoices which were raised by the appellant vis-`-vis the agreement entered into, we find that the said claim of the appellant is correct and needs to be considered as cum tax amount; upholding the service tax liability has having been conceded before the adjudicating authority, we direct the lower authorities to rework out the service tax liability and the interest thereof holding the amounts received by the appellant as cum-tax amount. After appropriation of the amount tax as may arise worked out as indicated herein above, balance amount if any be appropriated towards interest liability.

8. As regards the penalties imposed, we find that the entire issue of service tax liability under the BAS was disputed and there were many views expressed in favour of the assessee as also the Revenue. We find that CBE&C vide Circular No.87/05/2006-ST dated 06/11/2006 has clarified that the amounts received as commission from the financial institutions/banks would be taxable under BAS. The said board circular specifically states that there were certain doubts in the mind of the field formation and hence, reference was made. We are of the considered view that if the field formation or the tax collectors were themselves in doubt and clarification has to be issued by the Board and the period involved in this case being prior to 06/11/2006, the appellant has made out a case for invoking the provisions of Section 80 of the Finance Act, 1994; accordingly, we invoke the provisions of Section 80 and set aside the penalties imposed on the appellant. We dispose of the appeal as indicated herein above.

(Pronounced in Court on ..)

(P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial)

pj

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