AKAR MOTORS Vs. COMMISSIONER OF C. EX., DAMAN

JUDGEMENT

(1.) APPELLANT is an authorized service station. On being asked by the department that they are required to pay service tax on the amounts received by them as an incentive from the banks as DSA/DSTs, PDI charges from Bajaj Auto and reimbursement for free services rendered by them to Bajaj Auto, appellants paid the full amount of service tax amounting to Rs. 3,36,297/ -. However, subsequently show cause notice was issued proposing penalty under various Sections of Finance Act, 1994 and in the impugned order Commissioner has upheld the penalty under Section 78 of Finance Act, 1994 imposable on the ground of non -payment of service tax because of suppression/mis -declaration etc. and has also imposed penalty of Rs. 1000/ - under Section 77 of Finance Act, 1994 for violation of various provisions.

(2.) LEARNED advocate Shri Hardik Modh appearing for appellants submits that during the relevant period, there were doubts about liability of such services to service tax, which was finally clarified by the Board vide circular No. 87/05/2006 -S.T., dated 6 -11 -2006. He also relied upon the decision of this Tribunal in the case of Vishal Traders - 2010 (19) S.T.R. 509 (Tri. -Del.) wherein it was held that when the CBE and C issued a circular clarifying the doubts, intention to evade service tax cannot be attributed. He submits that he is not challenging the liability of service tax but in view of the bona fide belief of the appellants, penalties imposed on the appellant under Section 77 and 78 of Finance Act, 1994 may be set aside. On the other hand learned DR submits that appellants intentionally did not pay the service tax and therefore, pernalties are rightly imposed.

(3.) I have considered the submissions made by both the sides. In this case as submitted by the learned advocate, Board had issued clarification with regard to liability of service tax, on free services given by the authorized dealers and charges reimbursed by the vehicle manufacturers and commission received by the auto dealers for introducing customers to seek finance/loans. Further, I also find that the decision cited by the learned advocate is also relevant and Tribunal has taken a view that in situations where Board issued a clarification that there was doubts and clarifies the doubts, persons who are liable to service tax cannot be held to be liable to suppression of facts and imposition of penalty. I find that this is a fit case for applying the provisions of Section 80 of Finance Act, 1994 and waiver of penalty imposed under Section 78 of Finance Act, 1994. Since penalty under Section 77 is imposed for violation of provisions and it does not require the department to prove suppression of facts or intention to evade duty etc., I feel that penalty under Section 77 need not be set -aside. Accordingly, appeal is partially allowed by way of setting aside penalty imposed under Section 78 and upholding penalty imposed under Section 77 of Finance Act, 1994 and also upholding the confirmation of duty demand made against the appellants and already paid by them.