TMI Blog2010 (2) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... o, Popular Automobiles or PAC henceforth) seek to vacate the Orders in Appeal No.62/07 and 64/07 passed by the Commissioner (Appeals). The impugned orders sustained demands of service tax and interest confirmed against Popular Automobiles and penalties imposed on it for having rendered Business Auxiliary Service (BAS) to clients without following statutory formalities including payment of service tax due. The details are as follows. Sl. No. Appeal No. Order-in-Appeal No. Order-in-Original No. Period of Dispute Duty (Rs) Penalty (Rs) 1 92/08 64/2007 dtd.30.11.07 4/06 dtd. 17.02.06 01.07.03 to 30.06.04 32,60,994/- 32,60,994/- u/s 78 of Finance Act, 1994 (the Act), 125/- per day u/s 76 1000/- u/s 77 2 95/08 62/2007 dtd.30.10.07 16/2006 dtd. 07.06.2006 01.04.05 to 30.09.05 32,74,870/- 32,74,870/- u/s 78 150/- per day u/s 76 1000/- u/s 77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006. Disposing Show Cause Notice No.24/05 dt.13.04.05, the original authority demanded service tax of ₹ 32,60,994/- along with applicable interest and imposed equal penalty under Section 78 and other penalties under Section 76 and Section 77 of the Act vide Order No.4/2006 dated 17.02.2006. Vide the impugned orders, the Commissioner (Appeals) sustained the orders of the original authority. 3. In the appeals filed before us, the appellants have taken the following common grounds against the impugned orders, Orders-in-Appeal No.62/2007 and 64/2007. A. Order of the Commissioner of Central Excise (Appeals) is opposed to the law, facts and circumstances of the case. The order, if allowed to stand, would occasion a travesty of justice and cause irreparable loss and hardship to the appellant company. B. The lower authorities ought to have found that there was no service provided by the appellant to MIBL and much less a taxable service under the head of Business Auxiliary Services. The service if any provided under the scheme evolved by Maruti Udyog Limited was by MIBL to the National Insurance Company and in respect of the said service National Insurance Company had already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yog Limited, there was no scope for levying any tax on the appellant under the head of business auxiliary services in respect of the amounts received from Maruti Udyog Limited. G. The appellant would submit that there was no justification whatsoever for imposing a penalty equal to the tax amount confirmed on the appellant company. While there was no positive act of suppression or willful misstatement justifying the invocation of the penal provisions against the appellant company, it was also not open to the appellant to mechanically impose a penalty equal to the tax amount confirmed on the appellant company. It is trite that under Section 78 of the Finance Act, 1994 as amended only the penalty is mandatory, the quantum being discretionary. There was also no justification for the imposition of separate penalties under Sections 76 and 77 of the Act. 4. We have heard both sides. 5. We have carefully considered the case records and the rival submissions. Appellants are dealers of maruti brand vehicles. MUL had floated a subsidiary company by name Maruti Insurance Brokers Ltd. which acted as an agent of National Insurance Company and provided customized maruti insurance to buye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to select finance companies. Unless the dealers suggest to its customers to approach these companies, the purchasers of cars may avail the same services from any of the several providers of such services in the market. Apart from this the appellant does not do anything to promote the service provided by MIBL/MUL to NIC and finance companies. MUL alone has evolved an arrangement for provision of service to the insurance company and the finance companies. MUL receives commission for these services and pays tax on the same under IAS and BAS. The agreements involved are not discussed by the authorities. We take that the activities of PAC are outside these agreements. We hold that the appellant incidentally assisted the provision of IAS by MIBL and BAS by MUL and did not render any taxable service. 8. MUL received commission from finance companies and discharged service tax liability under Business Auxiliary Service. Appellant received a part of this amount, which had suffered service tax. It is argued that the appellant was not liable to pay service tax under BAS. The penalty imposed was not justified, since there was no positive act of suppression or willful misstatement justifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties did not yield any outcome different from those brought about by the services of MIBL/MUL. Once commission is paid for the respective services under IAS and BAS by MIBL/MUL, no liability survives on account of the impugned received from PAC. The total liability under IAS and BAS for promoting provision of these services by MIBL/MUL cannot exceed the tax due on the commission paid by NIC and banks/finance companies. 8.2. In the case of JR Communications Power Controls Vs Commr. Of CCE, Trichy [2009 (14) STR 379 (Tri.-Chennai)] cited by the Ld Counsel for Popular Automobiles, BSNL had paid sales tax on sale of sim cards and recharge coupons on the value charged from the ultimate customer. As the entire sales tax liability was discharged, it was held that no tax need be collected from an intermediary like the appellant therein who had received discount from BSNL from the ultimate sale price at which the appellant had sold the sim cards and recharge coupons. No liability survived on account of sale of the same sim cards and recharge coupons by the appellants on the discount it had received from BSNL. The tax paid on commission paid by NIC and banks/finance companies is simil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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