2023 (3) TMI 443 - AT - Service Tax

Classification of services - Business Auxiliary service or not - business of promoting and marketing post-paid mobile connections and providing services of finding prospective customers, billing, collection of cash/cheques of mobile bills, evaluation of prospective customers and other customer care services for M/s. Aircel Ltd. in their capacity as an authorized agent, for which they received commission from M/s. Aircel Ltd. - waiver of penalty u/s 80 of FA.

HELD THAT:- In the case of CHOTEY LAL RADHEY SHYAM VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, LUCKNOW [2015 (11) TMI 979 - CESTAT ALLAHABAD], the Tribunal had set aside the demand observing that the assessee therein, who is an agent of M/s. BSNL, being engaged only in the purchase and sale of SIM cards and recharge coupons, the demand could not sustain, as M/s. BSNL had already paid the Service Tax on the SIM cards and recharge coupons. The said decision, however, would not be applicable to the case of the appellant on merits since the appellant herein is not only engaged in the purchase and sale of SIM cards, but also doing the activity of procurement of clients, promotion of sales, evaluation of prospective customers and other customer care services.

The facts, however, reveal, that the appellant was under the bona fide belief that they were not liable to pay the Service Tax as the commission paid to them was part of the charges received by the telecommunication service provider for providing the post-paid connections. Taking note of this, it is opined that the appellant has furnished reasonable cause for failure on their part to pay the Service Tax. It is also noted that they have paid up a major part of the Service Tax.

Penalty - HELD THAT:- Section 80 of the Finance Act, 1994, as it stood during the relevant period, provided that penalty not to be imposed in certain cases when the assessee is able to establish reasonable cause for non-payment of Service Tax - this is a fit case to invoke Section 80 of the Act ibid. to set aside the penalty imposed on the appellant under Sections 77 and 78.

The impugned order is modified to the extent of setting aside the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, without disturbing the confirmation of demand of Service Tax along with interest - appeal allowed in part.