Whether service tax need to be paid on Commission received by dealers of motor vehicles from finance companies?

PJ/Case Laws/2012-13/1130

Case:- COMMISSIONER OF C.EX. , JAIPUR VERSUS AJMER AUTOMOBILES (P) LTD

Citation: - 2012 (26) S.T.R 19 (Tri- Del)

Issue: Whether service tax need to be paid on Commission received by dealers of motor vehicles from finance companies?

Brief fact: - TheAppeals is against Joint Commissioner Order No. 09/ST/JP-11/2005. The Commissioner (Appeal) by his order dated 31-03-2006 set aside the order of Joint Commissioner.
Aggrieved by this order the revenue has filled Appeal No. 262/2006 before the Tribunal. In the meanwhile Commissioner issued a SCN dated 30-07-2007 for review of the order dated 25-11-2005 of the Joint Commissioner. This SCN was decided by order dated 25-11-2005 of the Joint Commissioner. This SCN was decided by Order dated 23-10-2007.
Aggrieved by this Order M/s Ajmer Automobiles have filed Appeal no. ST. 46/2008-SM.

When the SCN dated 30-07-2007 was issued the Order-In- Original dated 25-11-2005 was already set aside by order dated 31-03-2006. So the review of order was not sustainable & the Order-in-Original dated 23-10-2007 issued by Commissioner is not maintainable. However, the same matter is subject matter of Appeal NO. 262/2006 filed by the Department which is maintainable.

Now the Appeal filled by the department against the order of Commissioner (Appeal) is to be decided.

Appellant Contention:- The Ld DR assails the finding of the Commissioner (Appeals) that there was no evidence of receipt of any commission by the respondent from finance companies. He relies on the entries in the books of accounts of the Respondent. The Ld DR replied arguing that a wrong section mentioned in the SCN cannot be fatal to the proceedings so long as there is a provision available in the statute book on the date of issue of SCN which would sustain the SCN if the facts relevant for understanding the offence and the nature of offence are stated in the SCN though with an error in section number. He relies on the following case law in the matter :-(1) C.C.E. v. Pradyumna Steel Ltd. - 1996 (82) E.L.T. 441 (S.C.). (2) C.C.E. v. Lanjekar Sales Corporation - 2007 (210) E.L.T. 79 (Tribunal) = 2007 (5) S.T.R. 272 (Tribunal). (3) LVR & Dong-In Stone Ltd. v. CC. 1994 (72) E.L.T. 377.
He also argues that suppression of information by the respondent inasmuch as the companies were never disclosed in ST-3 return. Making records available during the course of audit is not a sufficient ground to exonerate the respondent from the charge of suppression. He further submits that para 2 of the Show Cause Notice gives the details of suppression and the words "suppressed" and "evaded the payment of service tax." are used many times and the argument of the Appellant that there was no allegation in the Show Cause Notice regarding suppression is not correct.
Respondent contention:- The main contention of respondent are :-
(i) Section 73(1) (a) of the Finance Act, 1944 was substituted w.e.f. 10-9- 2004 and therefore the SCN issued on 10-8-2005 invoking, this provision is not maintainable (ii) Under the revised provision 73(1) in force on the date of issue of SCN, it is necessary to prove suppression of information to invoke extended period of time. No suppression of information is involved because the entire record was produced to the audit party and replies to queries raised by the Audit party were given promptly.

Reasoning of Judgment: This wrong mention of the section is not fatal to the Show Cause Notice so long as the ingredients of the new provision under Section 73(1) are satisfied

The new section requires that Notice can be issued invoking the extended period only if there was suppression of information. In this case the in-formation regarding commission received and also about payments received from the manufacturer was not disclosed in the service tax returns. This cannot considered as suppression with intent to evade tax, because the Assessee had a bona fide belief that they were not liable to pay tax on the amount received by them out of commission received by Maruti Udyog Ltd. on which Maruti Udyog Ltd. had paid Service tax. So this is not a fit case to invoke the extended period alleging suppression. So the Appeal fails on account of time bar and also on merits.

Decision: -Appeal disposed off.

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PJ/Case Laws/2012-13/1130

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