Tribunal overturns penalty for service tax on overseas commission.

The Tribunal set aside the penalty imposed by the Commissioner (Appeals) on an appellant engaged in the manufacture of hand tools for paying service tax on commission to an overseas agent. The Tribunal found no justification for the penalty and allowed the appeal with consequential relief. The issue of service tax liability before the introduction of section 66A in the Finance Act remained unresolved due to procedural reasons.

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Issues:
Liability of service tax on services received from overseas commission agent, imposition of penalty by the Commissioner (Appeals).

Analysis:
- The appellant, engaged in the manufacture of hand tools, exported consignments and paid commission to an overseas commission agent. The original authority held that service tax was payable on the commission paid during a specific period. The appellant paid the service tax but contested the imposition of interest and penalty.
- The Commissioner (Appeals) set aside the interest but upheld the penalty of Rs.10,000. The appellant, through their Advocate, argued that no service tax was liable to be paid for the period before the introduction of section 66A in the Finance Act on 18.4.2006.
- The Tribunal noted that the issue of liability to service tax was not raised before the Commissioner (Appeals) and therefore could not be decided in the present appeal. However, considering the Advocate's submission, the Tribunal found no justification for the imposition of the penalty.
- Consequently, the Tribunal set aside the penalty imposed by the Commissioner (Appeals) and allowed the appeal with consequential relief as per law. The appellant succeeded in challenging the penalty but the issue of service tax liability remained unresolved due to procedural reasons.

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