2019 (2) TMI 482 - AT - Service Tax

Appellant found liable for service tax on Business Auxiliary services, penalties waived

Maithri Advisors and Planners Pvt. Ltd. Versus Commissioner of Central Excise, Customs and Service Tax, Hyderabad-II

The Tribunal held that the services provided by the appellant to M/s GE Countrywide Consumer Financial Services fell under Business Auxiliary services as ... Business Auxiliary services - N/N. 25/2004-ST dated 10.09.2004 - Held that:- The appellant herein has rendered service of documentation and other related work to promote the services rendered by their client namely M/s GE Countrywide which would fall under the definition of “Business Auxiliary services” under Section 65(19) of the Finance Act, 1994. The services rendered by them fall under the head of Business Auxiliary services during the relevant period and were liable to be service tax. There is nothing in the Notification No. 25/2004-ST dated 10.09.2004 to show that this was to have retrospective effect. It is a well settled principle of law that in statute every provision should be taken to have only perspective effect unless there is a specific indication or otherwise - the appellant is clearly liable to service tax under the head of Business Auxiliary Service for the services rendered by them during the relevant period. Penalty - Held that:- The appellant could have held a bonafide belief though wrongly that they were not covered under the service tax and hence in exercise of the demand confirmed under the Section 80 the penalty is set aside. The appeal is disposed of by upholding the tax with interest and setting aside the penalties - appeal dismissed - decided against appellant. Issues:1. Whether the services provided by the appellant fall under the category of Business Auxiliary service as per Section 65(19) of the Finance Act, 1994.2. Whether the appellant is liable to pay service tax, interest, and penalties for the services rendered to M/s GE Countrywide Consumer Financial Services.Analysis:Issue 1: The appellant provided services to M/s GE Countrywide Consumer Financial Services, and the Department contended that these services fell under Business Auxiliary services as per Section 65(19) of the Finance Act, 1994. The appellant argued that they were not dealing with customers directly but with potential customers, and therefore, were not providing customer services. They also claimed exemption under Notification No. 25/2004-ST dated 10.09.2004, which was extended to services rendered prior to the notification date in a relevant case. However, the Tribunal found that the appellant's services did fall under Business Auxiliary services and were liable for service tax, as there was no indication of retrospective effect in the notification.Issue 2: The Tribunal upheld that the appellant was liable to pay service tax for the services provided during the relevant period. While the penalties were set aside considering the appellant's genuine belief of not being covered under service tax, the demand and interest were upheld. The Tribunal emphasized that statutory provisions should have prospective effect unless explicitly stated otherwise, and since there was no indication of retrospective application in the exemption notification, the appellant was liable for the tax and interest. The Tribunal concluded the appeal by upholding the tax with interest and setting aside the penalties, based on the arguments and records presented by both parties during the proceedings.