2011 (1) TMI 1486 - HC - Service Tax

Court affirms DSA's Service Tax exemption under Notification No.6/05-ST despite late claim.

Commissioner of Service Tax, Ahmedabad Versus M/s. Bacha Finlease

The High Court upheld the Tribunal's decision in favor of the Direct Selling Agent (DSA) of a registered bank, allowing exemption from Service Tax under ... - Issues:Challenge to order under Section 35G of Central Excise Act, 1944 regarding exemption from Service Tax under Notification No.6/05-ST for a Direct Selling Agent (DSA) promoting a registered/branded entity.Analysis:The appeal under Section 35G of the Central Excise Act, 1944, involved a challenge by the Commissioner of Service Tax against an order made by the Customs, Excise and Service Tax Appellate Tribunal. The main issue was whether the assessee, a Direct Selling Agent (DSA) of a registered bank, was entitled to exemption from payment of Service Tax under Notification No.6/05-ST dated 01.03.2005. The respondent-assessee was engaged in promoting the business of a registered bank and receiving commission/incentives. The Directorate General of Central Excise Intelligence initiated proceedings against the assessee, leading to a demand for service tax, interest, and penalties. The assessee appealed to the Commissioner (Appeals), who allowed the appeal. The revenue then appealed to the Tribunal, which upheld the decision of the Commissioner (Appeals).Before the Commissioner (Appeals), the assessee relied on Notification No.6/2005-Service Tax, which exempts taxable services of aggregate value not exceeding four lakh rupees in a financial year from service tax. The Commissioner (Appeals) noted that the aggregate value of services in this case was below the threshold and granted the exemption. However, the revenue contended before the Tribunal that since the plea regarding the notification was not raised before the original adjudicating authority, the Commissioner (Appeals) erred in extending the benefit of the notification. The Tribunal rejected this argument, stating that a claim under a notification can be raised for the first time at the appeal stage. The Tribunal emphasized that the availability of the notification is a legal plea that can be raised if otherwise applicable.The Tribunal's decision was based on the undisputed fact that the aggregate value of taxable services for the assessee was below the threshold specified in the notification. The Tribunal held that the failure to claim the benefit of the notification before the original adjudicating authority did not preclude the assessee from availing the exemption if entitled. The High Court concurred with the Tribunal's reasoning, emphasizing that no infirmity was found in the Tribunal's order. The High Court noted that the revenue did not present any evidence to suggest that the assessee was not entitled to the benefit of the notification. Additionally, the High Court highlighted that certain grounds raised by the revenue, such as the liability to pay service tax from the first amount, were not raised before the Tribunal or in the show cause notice, making them impermissible to raise for the first time before the Court.In conclusion, the High Court dismissed the appeal, stating that no question of law, let alone a substantial question of law, arose from the impugned order warranting interference. The judgment underscored the importance of raising relevant legal pleas at the appropriate stages of proceedings and upheld the Tribunal's decision regarding the entitlement of the assessee to the exemption under Notification No.6/05-ST.