PER: MATHEW JOHN, J.
1. This appeal is against an impugned order dated 10.11.2010 issued by Commissioner (Appeals) disposing of two appeals filed by Revenue against two orders passed by the adjudicating authority.2. The matter arose from two different show cause notices as under:-
Sl.No. SCN No. and date Noticee Party to whom service was provided Tax demanded Period involved 1. V(ST)15-64/07-Adj.II/1461 dt. 5.6.08 M/s. Jabalpur Motors Ltd., Bamhori Maruti Finance Ltd 827838 09/04 to 03/06
2. V(ST)15.66/08-Adj.II/28490 dt. 21.10.08 M/s. Jabalpur Motors Ltd., New Siyaganj ICICI Bank and HDFC Bank 1122722 07/03 to 03/05
3. In respect of the matter dealt with in the first SCN the appellants were assisting Maruti Finance Ltd. in the process of granting motor vehicle loans to the customers of Maruti Udyog Ltd. They received commission from Maruti Finance Ltd for the services provided to them. The appellants paid service tax on such activity from 10.9.04 under the category of Business Auxiliary service. In 2008 a show cause notice was issued to the appellant on the ground that they should have paid service tax on the commission received by them from Maruti Finance Ltd. from July, 2003 to March, 2006. On adjudication the adjudicating authority took note of the fact that the appellants had paid service tax from 10.9.2004 and has confirmed the demand for the period July, 2003 to 9th of September 2004. Further penalty under section 78 of Finance Act 1994 equal to the duty payable for the period July 2003 to March, 2006 including the tax already paid for the period 10.9.04 to March, 2006 was imposed. Further penalties were imposed under Section 76 and 77 also. On appeal filed by Revenue the Commissioner (Appeals) has increased the penalty under section 76.
4. The Counsel for the appellant submits that M/s. Maruti Finance had paid service tax on the commission received from the financial institutions and the money they got was out of such amount on which service tax had been paid by Maruti Finance Ltd. They point out that even in the case of Roshan Motors Ltd. vs. CCE 2009 (13) STR 667 (Tri.-Delhi) it is held in para 7 of the order that suppression cannot be alleged against that who was assessee similarly placed.
5. The Counsel also submits that there is no case at all for imposing penalty taking into account that fact that taxes for the period from 10.9.2004 were paid along with interest by different challans dated 02.02.06, 06.02.06, 05.03.06, 31.03.06, 05.05.06 and 06.02.07.
6. In the case of second notice service i.e. provided to ICICI Bank Ltd. and HDFC Bank Ltd. Here the argument that they were getting money from amounts on which service tax was paid by somebody else is not applicable.
7. The Ld. A.R. for Revenue submits that it is decided by the Tribunal in the case of Roshan Motors (Supra) has decided that service tax was payable on the activity of the appellant even before 10.9.2004. He also submits that the appellants have so far not produced any proof that Maruti Finance Ltd. had paid service tax on the amounts involved. He also submits that since the appellant did not disclose to the department the fact that they were rendering such service and receiving commission, extended period of time can be invoked for demanding tax and consequently penalty also is imposable. He also points out that appellants were not disclosing information about commission received in spite of repeated follow up by the department. He points out that penalty is imposed on the appellants for the period after 10-09-2004 because the payments were not made in time but much after the due dates.
8. In respect of the second Show Cause Notice the Ld. A. R. points out that the argument that the appellant had received money out of commission amount on which another person has paid service tax is not applicable.
9. I have considered arguments on both sides. I find merit in the argument that till the introduction of Cenvat Credit Rules, 2004 there is no case to demand service tax from a sub-contractor out of value realised by the main person rendering service in cases where service tax on full value was paid by the main contractor. The fact of payment of service tax by Maruti Finance Ltd is not confirmed from departmental sources in this case. However there have been many assessees, similarly placed and the Tribunal has dropped demand against such assessees as may be seen from the following decisions, among others.
(i) CCE Vs. Hira Automobiles-2009 (16) STR 408 (Tri-Del)
(ii) Popular Vehicles and Services Ltd.[2010] 25 STT 364 (Bang-CESTAT)
10. In the facts of the case, and on the basis of precedent decisions I am of the view that the demand for the period July, 2003 to 9.9.04 is not maintainable and is also time barred in view of the letter F.No. RST/IND/Ass/02/04-05/4305 dated 5.10.04 from the Supdt. of Central Excise advising them they have to pay service tax on commission received by them from 10.9.2004 showing an understanding that liability did not exist prior to that date. The decision of the Tribunal in the case of Roshan Motors (Supra) also adopts such a view.
11. For the remaining period the appellants have already paid tax along with interest before the issue of Show Cause Notice. However there is delay in payment of tax and failure to file returns. In view of the provisions in section 73(3) of Finance Act 1994, I am of the view that the SCN issued in this case for demanding the duty already paid and imposing penalty is not maintainable because I do not see any malafide suppression of information on the part of the Appellants. The decision of the Allahabad High Court in the case of CCE Vs. Auto world-2010 (18) STR 5 (All) is also to this effect. So I set aside the penalties imposed on the appellants.
12. Thus the appeal is allowed by setting aside the impugned order.