2010 (10) TMI 462 - AT - Service Tax

Appellant's Service Tax Appeal Partially Successful; Liability Upheld, Penalty Set Aside

The appellant's challenge to the service tax demand was mostly unsuccessful, with the appeal being dismissed except for setting aside the penalty. The ... Waiver of pre-deposit - Business Auxiliary Service - Service rendered by the appellants in relation to the insurance scheme, extended warranty scheme and finance scheme - The service tax on the major portion of the commission received by the said companies having been already paid by those companies - No dispute about receipt of portion of the amount which was received by companies like MUL and MIBL and categorical statement that in relation to the portion of such amount received by those companies they had paid the required service tax whereas no service tax was paid by the appellants in respect of the portion received by them. Do not find any prima facie case having been made for the say of the impugned order - The appellants are required to deposit further amount of Rs. 5 lakhs - Waive the balance amount demanded under the impugned order including the interest and penalty Issues:1. Challenge to demand of service tax by the appellant.2. Applicability of service tax on Business Auxiliary Service.3. Dispute regarding tax liability prior to September 2004.4. Prima facie case for grant of stay of the impugned order.5. Interpretation of Section 65(19)(ii) of the Finance Act, 1994.6. Comparison with a previous Tribunal order.7. Requirement of further deposit by the appellant.Analysis:1. The appellant challenged the demand for service tax confirmed by the Joint Commissioner under Section 73(2) of the Finance Act, 1994. The appeal was dismissed, except for setting aside the penalty under Section 76. The appellant contended that they cannot be held liable for service tax as a major portion of the commission had already been taxed by other companies.2. The grievance of the appellant was regarding the levy of service tax under the category of 'Business Auxiliary Service' related to insurance, extended warranty, and finance schemes. The appellant argued that since the companies MIBL and MUL had already paid service tax on the commission they received, the appellant should not be liable. The appellant also highlighted the period of tax liability from July 2003 to March 2006.3. The dispute arose over the tax liability before September 2004. The appellant claimed that even if there was a liability post-September 2004, it would not exceed a certain amount. They had already made a deposit, supporting their plea for a stay on the impugned order without additional pre-deposit requirements.4. The Tribunal analyzed the impugned order and show-cause notice, confirming the tax liability under Section 65(19)(ii) of the Finance Act, 1994. It was noted that while other companies had paid service tax on their portion of the commission, the appellant had not. The Tribunal found no prima facie case for granting a stay on the impugned order.5. The Tribunal referred to a previous order involving Popular Vehicles and Services Ltd., where it was determined that no separate service was rendered warranting service tax. However, the Tribunal distinguished that case from the present matter, stating it would not be beneficial to the appellant's case.6. The appellant had already deposited a certain amount, which was acknowledged by the Tribunal. Considering the circumstances, the Tribunal directed the appellant to deposit a further sum within a specified period, waiving the remaining amount demanded, including interest and penalty, until the appeal's disposal.7. In conclusion, the Tribunal required the appellant to make an additional deposit, waived the balance amount, and set a compliance deadline.