Commissioner of Central Excise, Salem and Another Vs. Phoenix Marketing and Another - Court Judgment

SooperKanoon Citationsooperkanoon.com/942191
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Chennai
Decided OnNov-11-2009
Case NumberAppeal No.S/168 of 2008 & S/183 of 2008
Judge THE HONOURABLE MS. JYOTI BALASUNDARAM, VICE PRESIDENT
AppellantCommissioner of Central Excise, Salem and Another
RespondentPhoenix Marketing and Another
Advocates:Shri S.Venkatachalam, Advocate. Ms.Indira Sisupal, JDR
Excerpt:
the assessee, who is rendering banking and financial services/business auxiliary service as a direct selling agent for m/s.hdfc bank ltd., is aggrieved by the imposition of penalties under section 76 and 78 of the finance act, 1994 for delay in payment of service tax on agency commission and incentives. revenue is in appeal against the reduction of penalties by the commissioner (appeals). 2. i heard both sides. the argument of the assessee that they were under a bona fide belief that they were not liable to pay service tax is not tenable as service tax liability was introduced on such service from july’03 and the non-payment continued till oct 04. i, therefore, hold that the assessee is liable to penalty. however, i accept the assessee’s contention that service tax is not payable on incentives collected, in the light of the tribunal’s order in kerala publicity bureau vs cce [2008 (9) str 101]. the service tax liability would thus get reduced to approx. rs.75,000/- from rs.1,20,144/-. i, therefore, reduce the penalty under section 76 to rs.50,000/- (rupees fifty thousand only). the penalty under section 78 is set aside as penalties under section 76 and 78 are mutually exclusive. the appeal no.s/183/08 is thus partly allowed as above. 3. appeal no.s/168/08 seeking enhancement of penalties to the amount of tax confirmed is dismissed in the light of the decision in the earlier appeal.
Judgment:

The assessee, who is rendering Banking and Financial Services/Business Auxiliary Service as a direct selling agent for M/s.HDFC Bank Ltd., is aggrieved by the imposition of penalties under Section 76 and 78 of the Finance Act, 1994 for delay in payment of service tax on agency commission and incentives. Revenue is in appeal against the reduction of penalties by the Commissioner (Appeals).

2. I heard both sides. The argument of the assessee that they were under a bona fide belief that they were not liable to pay service tax is not tenable as service tax liability was introduced on such service from July’03 and the non-payment continued till Oct 04. I, therefore, hold that the assessee is liable to penalty. However, I accept the assessee’s contention that service tax is not payable on incentives collected, in the light of the Tribunal’s order in Kerala Publicity Bureau Vs CCE [2008 (9) STR 101]. The service tax liability would thus get reduced to approx. Rs.75,000/- from Rs.1,20,144/-. I, therefore, reduce the penalty under Section 76 to Rs.50,000/- (Rupees Fifty thousand only). The penalty under Section 78 is set aside as penalties under Section 76 and 78 are mutually exclusive. The Appeal No.S/183/08 is thus partly allowed as above.

3. Appeal No.S/168/08 seeking enhancement of penalties to the amount of tax confirmed is dismissed in the light of the decision in the earlier appeal.