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of <h1>Appellant wins tax case, penalties deleted, show cause notice invalid.</h1> The Tribunal ruled in favor of the appellant on all issues, holding that they were not liable to pay service tax under Business Auxiliary Service before ... Business Auxiliary Service - Whether appellant is liable to pay penalty u/s 76 and 78 and whether the appellant, which is a proprietorship concern of Mr. Arvind Bansal, is liable to service tax under the classification of Business Auxiliary Service prior to the period 1st May, 2006? - Held that: - the appellant had made suo motu compliance and deposited the tax from the date the definition was amended with effect from 01/05/2006. We hold that no case of contumacious conduct or suppression of facts from the revenue is made out - appellant not liable to service tax for the period prior to 1st May 2006 - penalty also set aside. Whether the show cause notice dated 18.02.2008 is against the provisions of the Act and the Rules demanding tax under the head Business Auxiliary Service for the period 02/09/2006 to 10/05/2007 under the fact that the appellant had been making regular compliances in paying Service Tax under Business Auxiliary Service, as they were registered dealer? - Held that: - the appellant had paid the tax prior to issue of the show cause notice, the whole show cause notice is bad and not tenable under the provisions of Section 73 of the Finance Act. Appeal allowed - decided in favor of appellant. Issues:1. Liability to pay penalty under Sections 76 and 78 of the Finance Act.2. Liability to service tax under the classification of Business Auxiliary Service prior to May 1, 2006.3. Validity of show cause notice demanding tax under Business Auxiliary Service for a specific period.Analysis:Issue 1: Liability to pay penalty under Sections 76 and 78 of the Finance Act:The appeals were filed against an Order-in-Appeal passed by the Commissioner of Central Excise & Customs. The appellant, a proprietorship concern, was issued show cause notices for payment of Service Tax under Business Auxiliary Service. The appellant argued that prior to May 2006, they did not fall under the ambit of service tax as they believed they were not a commercial concern. They highlighted their compliance efforts post the amendment in the definition of 'Business Auxiliary Service.' The Tribunal noted the appellant's proactive compliance since 2006 and held that no suppression of facts was evident. Consequently, the Tribunal ruled that the appellant was not liable to service tax under Business Auxiliary Service before May 1, 2006, and deleted the penalties imposed under Sections 70, 76, and 78 of the Act.Issue 2: Liability to service tax under the classification of Business Auxiliary Service prior to May 1, 2006:The appellant contended that they were not liable to service tax under Business Auxiliary Service before May 1, 2006, due to the definition of 'commercial concern' at that time. They argued that they had voluntarily paid service tax post the amendment in the definition. The Tribunal acknowledged the appellant's compliance history and held that there was no contumacious conduct or suppression of facts. Consequently, the Tribunal ruled in favor of the appellant, stating that they were not liable to service tax under Business Auxiliary Service before May 1, 2006.Issue 3: Validity of show cause notice demanding tax under Business Auxiliary Service for a specific period:In a separate appeal, the issue was whether a show cause notice dated February 18, 2008, demanding tax under Business Auxiliary Service for a specific period was valid. The appellant had already paid the adjudicated tax before the notice was issued. The Tribunal found that the show cause notice was not tenable under the provisions of Section 73 of the Finance Act since the tax had been paid earlier. Consequently, the impugned order was set aside, and the appeals were allowed with consequential benefits.In conclusion, the Tribunal ruled in favor of the appellant on all issues, emphasizing their compliance efforts and the absence of any suppression of facts, leading to the deletion of penalties and the setting aside of the show cause notice due to prior tax payment.
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