Imposition of penalty when reasonable doubt exits

PJ/Case Laws/2011-12/1501

Case: C. R. SCOOTERS v/s COMMISSIONER OF CENTRAL EXCISE, VADODRA

Citation: 2012 (25) S.T.R. 177 (Tri.- Ahmd)

Issue:- Free services provided by Authorised Service station for reimbursement by manufacturer & Commission received from banks for introducing clients for loan – Service tax liability – reasonable doubt regarding levy of service tax – no penalty imposable.

Brief Facts:- Appellant has an authorized service station and service tax demand was made on the ground that service tax is payable on the complimentary and warranty service provided to the customers at the cost of motor-vehicle manufacturers and commission/incentive received from the banks or financial institutions in respect of the loans advanced to the customers. Full amount of service tax and interest has been paid and the same is not being disputed also. The period involved is 2002-03 to 30-9-2006.

Appellant’s Contention:- Appellant relied upon the several decisions of the Tribunal and clarification issued by the Board to submit that no penalty is imposable on the Appellants, in view of the fact that there were confusion/doubts about the service tax liability in respect of these services.

Reasoning of Judgment:- The Tribunal found in the clarification issued by the Board in Circular No. 87/05/2006-ST., dated 6-11-2006 that it has been brought to the notice that certain doubts have arisen in respect to activities undertaken by authorized motor vehicle dealers and service stations. The issues considered by the Board in the Circular was liability of service on free services given by the authorised dealers for which they are reimbursed by the manufacturers and commission/incentive received by them from banks/non-banking financial companies for introducing customers for finance/loans. In the clarification, the Board clarified that service tax is liable to be paid in respect of these two services. From the Circular itself it becomes quite clear that there were doubts/confusion in the field prior to 6-11-2006 and therefore, the claim of the learned counsel that there was reasonable cause for non-payment of service tax since appellant entertained a belief that they are not liable to pay duty. Further, The Tribunal also found that the Tribunal also took a view that assessees are not liable to penalty in respect of these two services, in various decisions cited by the counsel. In the case of Shri Raj Auto Centre v. C.C.E., Ahmedabad - 2010 (18) S.T.R. 457 (Tri.-Ahmd.), the issue of service tax liability on free services was considered and it was held that no penalty is liable. Similarly, in the case of commissions also, in the decision rendered in the case of Akar Motors - 2010 (20) S.T.R. 481 (Tri.-Ahmd.) a same view was taken. In view of the Circular issued by the Board and in view of the decisions cited above, the Tribunal was of the view that Appellants are not liable to any penalty and Section 80 of Finance Act, 1994 is required to be invoked in this case on the ground that there was sufficient cause for non-payment of duty. Accordingly, appeal is allowed with consequential relief to the Appellants

Decision:- Appeal allowed.

Comments

PJ/Case Laws/2011-12/1501

Post a Comment

Query