RAJ AUTO CENTRE Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) LEARNED advocate appearing for the appellant submits that they have Authorized Service Station for providing service to two wheelers and registered with the Service Tax Department for payment of service tax. He elaborates that wherever the services were being provided on charges from the customers, service tax was being paid by them. However, when the service provided by the appellants to their customers was under free -coupons given by the manufacturers for the warranty period, no service tax were being paid by them under the impression that as no charges being recovered by them from the customers, no tax is required to be paid by them. Subsequently, when the Revenue directed them to pay the tax, they paid the entire amount of service tax of Rs. 2,50,220 for the entire period from July 2001 to March 2006. He submits that he is not challenging the payment of tax by them.

(2.) THE challenge in the present appeal is to imposition of penalty of identical amount under the provisions of Section 78 and Rs. 100 per day under Section 76 of Finance Act, 1994. He submits that the issue as to whether the service tax is required to be paid on the free services given by the authorized dealers, for which they were reimbursed by the vehicle manufacturer, was not free from the doubts. He relies upon the Board Circular No. 87/05/2006 -ST, dated 6 -11 -2006, wherein by taking note of the fact that such doubt has arisen, it was clarified that such services would be liable to service tax. He also refers to the Tribunal decision in the case of Dixon Electronics v. CCE : [2009] 18 STT 325 (New Delhi - CESTAT) wherein under the similar circumstances penalties were waived in terms of Section 80 of the Finance Act, 1994.