NAGAPPA MOTORS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE issue in this appeals being common, they are heard together and disposed of by this common order.

(2.) The assesses herein are providers of taxable services under the category of 'Authorized Service Station' to various customers of M/s. Hero Honda Motors Ltd. They collected service tax for the period from 2001 to Nov -04 from M/s. Hero Honda Ltd. but did not credit the amount equal to 50% of the tax reimbursed by the manufacturer, into the government account. The provisions of Section 11D were invoked against the assesses for recovery of the amounts collected from the manufacturers, together with interest, and penal action was also proposed. The demands were confirmed by the adjudicating authority who also imposed penalties; the Commissioner (Appeals) upheld the tax demands but set aside the penalties on the ground that intention to evade service tax is not conclusively proved. The assesses are in appeal against the confirmation of the demands along with interest while the Revenue is in appeal against the setting aside of the penalties.

(3.) I have heard both sides and find force in the submission of the assesses that the excess amount collected from M/s. Hero Honda is not required to be credited into the account of the Central Government under Section 11D for the reason that during the period in dispute, Section 11D provided for credit into the government account of an amount collected in excess of the duty assessed or determined, from the buyer of such goods. In this case, there is no dispute that whatever the assesses collected from the buyers was credited into the government account. The demand is on the amount reimbursed by M/s. Hero Honda who is not the buyer of the goods. Therefore, I accept the contention of the assesses that they are not liable to pay the amount collected from M/s. Hero Honda to the credit of the Central Government. I, therefore, hold that the demands of tax are not sustainable. As a consequence, no penalty can be imposed upon the assesses.