2014 (8) TMI 822 - AT - Service Tax

Commission Agent Appeals Tax Demand, Court Rules on Penalties, Interest, and Incentive Taxability

M/s OSWAL CABLE PRODUCTS Versus CST, Delhi-I

The appellant, a Commission Agent, disputed a total demand of &8377; 41,17,287/- for various tax-related issues. The court upheld penalties and ... Taxability of incentive received for doing appreciable performance - Held that:- incentive received for appreciable performance cannot be held to be a value of the services provided and as such no tax can be levied on the same - Incentive is a receipt for appreciation of performance of services provided. How such forms part of taxable service remained unexplained. We are unable to find how the revenue shall succeed saying that incentive shall be brought to tax when such incentive whether shall be payable was not known to the respondent while providing service. Therefore, the dispute on that count is resolved against the revenue - Following decision of CCE, Chandigarh Vs. Facinate Advertising & Maarketing [2012 (8) TMI 286 - CESTAT, NEW DELHI] - Decided in favour of assessee. Levy of interest where Cenvat Credit has been reversed without utilization - Held that:- as the credit was reversed immediately without utilization, there would be no interest liability - Decision in the case of Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] followed - Decided in favor of assessee. Issues involved:1. Dispute regarding demand of Cenvat Credit and penalties.2. Contesting interest on Cenvat Credit.3. Service Tax short paid, penalties, and interest.4. Service Tax paid from wrongly availed CENVAT CREDIT, penalties, and interest.5. Service Tax short paid on GTA, penalties, and interest.6. Service tax on trade discount, penalties, and interest.7. Tax liability on incentive received for appreciable performance.Detailed Analysis:1. The appellant, a registered Commission Agent, was involved in a dispute regarding a total demand of &8377; 41,17,287/- for the period April 2007 to March 2010. The breakup of the demand included various components such as demand of Cenvat Credit, penalties, Service Tax short paid, penalties, and interest on different transactions. The appellant did not contest the reversal of Cenvat Credit of &8377; 30,12,319/-, which had already been reversed without utilization. The penalty had been set aside by lower authorities, and the interest was the only contested aspect. The judge referred to a Karnataka High Court decision and set aside the interest liability based on previous tribunal decisions.2. The appellant did not contest the Service Tax short paid amounting to &8377; 4,42,958/-, penalties, and interest related to this transaction. Therefore, this demand was confirmed against the appellant along with penalties and interest.3. Similarly, the appellant did not contest the Service Tax demand of &8377; 5,57,564/-, penalties, and interest associated with this transaction, leading to the confirmation of this demand.4. The Service Tax amount of &8377; 3,228/-, penalties, and interest related to the short payment on GTA were accepted by the appellant. Consequently, this demand was confirmed against the appellant.5. The appellant disputed a demand of &8377; 1,01,218/- related to an incentive received for appreciable performance, arguing that it should not be considered as a consideration for service and hence not taxable. The judge referenced a tribunal decision stating that incentives for appreciable performance should not be considered as part of the taxable service value. Following this decision, the judge set aside the confirmation of the demand, interest, and penalty related to this amount.6. The appeal was disposed of accordingly, with the judgment pronounced in open court on 5th March 2014.