Tribunal sets aside penalties, upholds Service Tax amount. Proceedings should conclude before Show Cause Notice.

The Tribunal allowed the Appellant's appeal, setting aside the penalties imposed under Section 77 and Section 78 for Service Tax demand but upheld the confirmed Service Tax amount. The Tribunal emphasized that proceedings should have concluded before the issuance of the Show Cause Notice. The Appellant's argument regarding the differing views on taxability of commission received was supported, leading to the decision to not apply the extended limitation period. The Tribunal's decision was in favor of the Appellant, granting consequential relief as per law.

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Issues:
Appeal against imposition of penalties under Section 77 and Section 78 for Service Tax demand confirmed in Order-in-Original.

Analysis:
The Appellant challenged the order of the Ld. Commissioner of CGST & Central Excise, where penalties of Rs.1,000 under Section 77 and Rs.12,23,525 under Section 78 were imposed. The Appellant dealt with Amway and Britt and was issued a Show Cause Notice for Service Tax demand of Rs.12,52,320 for the period 2006-07 to 2010-11. The Adjudicating authority confirmed a demand of Rs.12,23,525 and refrained from imposing any penalty under Section 80. The Department appealed for penalties, which were allowed. The Appellant contended that during the relevant period, there were differing views on the taxability of commission received from such companies, arguing that the extended limitation period should not apply. The Appellant's advocate referenced a Tribunal decision to support this argument. It was argued that the commission earned was related to goods sold by distributors and that Service Tax was already paid on a portion of the commission. The Appellant's position was supported by the Tribunal, which set aside the penalties imposed but did not interfere with the confirmed Service Tax amount.

In conclusion, the Tribunal held that the proceedings should have been concluded before the issuance of the Show Cause Notice. The penalties imposed were set aside, and the confirmed Service Tax amount in the Adjudication order was upheld. The Appellant's appeal was allowed with consequential relief as per law.

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