TaxTMI 
TaxTMI 
2008 (2) TMI 37
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....se notice after department has caught them for non-payment of service tax?" 2. The respondent-assessee is providing the services of consignment agents as defined under Section 65(23) of the Finance Act, 1944 as amended (hereinafter referred to as the 'Act'). It was found that the respondent is not registered with the Department as required under Section 69 of the Act and has also not paid service tax as required under Section 66 of the Act. It is alleged that the respondent received commission of Rs. 45,79,411/- for the period from August, 1999 to February, 2001 and Rs. 32,28,379/- for the period from March, 2001 to November, 2001. As such, the respondent was issued two show cause notices for the recovery of the service tax amounting to Rs. 2,28,971/- and Rs. 1,61,419/- respectively along with interest and imposition of penalty under Sections 76 and 77 of the Act. The assessee-respondent submitted reply dated 22-10-2003 as under: "They are consignment agents of Indian Petro Chemicals Corporation Ltd. (A Govt. of India Undertaking). M/s. IPCL Ltd. had been charging Service Tax from us and they were deducting the same from out commissions received from them. However, w.....
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.... this connection the noticee beg leave to refer to a whole catena of judgment which have ordained in unequivocal terms that when the duty is deposited prior to the issue of show cause notice, the imposition of penalty notice is not warranted 1. E.I.D. Parry (I) Ltd. & anr, v. CCE, Mumbai, 2003 (156) E.L.T.753 (Tribunal) = 2003 (58) R.L.T. 63 2. E.I.D. Parry (India) Ltd. v. CCE, Jaipur, 2003 (157) E.L.T. 193 (Tribunal) = 2003 (57) R.L.T. 805 3. Dhampur Sugar Mills Ltd., 1990 (46) E.L.T. 400 4. R.G. Graphics v. CCE, Mumbai, 2001 (138) E.L.T. 61 5. Arun Prestressed Concrete Products Pvt. Ltd. v. CCE, Bangalore, 2002 (150) E.L.T 542 (Tribunal) = 2002 (51) R.L.T. 949 6. O.K. Steels, (CBE) Ltd. v. CCS, Coimbatore, 2002 (53) R.L.T.1065. 7. Rashtriya Ispat Nigam Ltd. v. CCE, Visakhapatnam = 2003 (161) E.L.T. 285 (Tribunal) = 2003 (54) R.L.T. 317 7. That from the facts referred to supra it is amply clearly borne out that the whole matter is of an innocuous technical lapse with no mala fide involved. We were under the bona fide belief that the Service Tax was to be deducted and deposited by our principal M/s. IPCL Ltd. who had been doing the same since 1997. Further o....
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....t or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. "Thus there are to be certain guiding, factors for invoking penalty action going by the ratio of the citation referred above. Considering the facts of our case, no case at all is made out for taking penalty action." 3. The Assistant Commissioner vide Order-in-Original dated 31-10-2003 confirmed the demand of aforesaid Service Tax amount along with interest and penalties for the amount equivalent to the Service Tax of Rs. 2,28,971/- and Rs.1,61,419/-. 4. Being aggrieved against the said order, the assessee filed an appeal before the Commissioner (Appeals) wherein the assessee contested that the amount deposited by it was in excess of the amount payable by it. It was also submitted that the assessee was acting as commission agent of M/s. IPCL and also as consignment agent and was receiving commission as C & F agent (Consignment Agent) and commission as commission agent and service tax was leviable only on the commission received as C & F agents and not the commission received as commission agents. The Commissioner (Appeals) vide his order dated ....
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....earing and Forwarding Agent' as under :- "Clearing the Forwarding Agent means any person who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations in any manner to any other person and includes a consignment agent." 7. On the basis of the above provisions of the Act it has been argued that the use of the words "either directly or indirectly, connected with clearing and forwarding operations in any manner" is indicative of the fact that the scope of the services to be provided by the clearing and forwarding agent is all encompassing in that. It covers not only the person directly dealing with the goods but it would also include indirect services which are connected with the clearing and forwarding operations. In the instant case, the party was admittedly facilitating and promoting the sale of goods from the factory, warehouse and other outlets owned by the principle and the avowed aim to the Del Credre Agent Agreement is "to maximize market penetration and effective use the distribution networks and channels". For the purpose, vide clause 6 of the Del Credre Agent Agreement, Clauses 5 to 8, 10 to 15, 17 to 29 ....
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....earing and forwarding agent." 10. It is further the contention of the respondent that the assessee came to know about its liability to pay service tax after the decision of the Hon'ble Apex Court in the case of Laghu Udyog Bharati (supra) and the respondent assessee voluntarily deposited service tax of Rs. 2,28,971/- for the period from August, 1999 to February, 2001 and Rs.1,61,419/- for the period from March, 2001 to November, 2001 i.e. before issuance of show cause notice and respondent has deposited the service tax on the entire commission received from M/s. IPCL under the bona fide belief in spite of the fact that the service tax on commission received as commission agent for providing Del Credre Services was not leviable as the said commission was exempt under the category of "Business Auxiliary Service". It is the case of the respondent that the 'commission agents' have been brought under the category of "Business Auxiliary Service" w.e.f. 1-7-2003. The definition of the "Business Auxiliary Services" reads as under :- 'The definition of business auxiliary service has been given under clause (19) of Section 65. That is: "business auxiliary service mea....
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....ects payment of sale price of such goods or service; or (iii) guarantees for collection or payment for such goods or services, or (iv) undertakes any activities relating to such sale or purchase of such goods or services; (b) "information technology service" means any service in relation to designing, developing or maintaining of computer software, or computerized data processing or system networking, or any other service primarily in relation to operation to computer system". 11. In support of their contention, the respondent has further placed reliance upon the decision of the Special Bench/Larger Bench of the Tribunal in the case of Larsen & Toubro Ltd. v. Commissioner of Central Excise, Chennai, 2006 (3) S.T.R. 321 (Tri.- LB) wherein it has been held that services of commission agent are included in the definition of "Business Auxiliary Service". 12. We have heard learned Counsel for the parties and perused the record. 13. We find no force in the arguments raised by the counsel for the appellant. While passing the impugned order, the Tribunal has concluded that the case of the respondent-assessee is clearly covered by the ratio of the decision in the case of M....