COMMISSIONER SERVICE TAX Vs. MANAN MOTORS PVT LTD

JUDGEMENT

(1.) THIS appeal has been filed on the following proposed substantial question of law:

(2.) WE have heard Mr. Darshan M. Parikh, learned counsel appearing for the appellant in this Tax Appeal. The facts in brief are that M/s. Manan Motors Private Limited, Ahmedabad, (hereinafter referred to as 'the assessee' for short), is engaged in providing Services as Authorized Service Station, falling under the category of 'service of motor vehicles' and 'business auxiliary service'. The assessee has allowed financial institutions like ICICI and HDFC to keep their counters/desks for providing the suitable environment to them to boost up their business. In response the said financial companies were giving them a substantial amount under head 'commission/incentive/remuneration, etc. therefore, the assessee was liable to pay service tax on the commission received from the financial institutions under 'business auxiliary service'. The assessee had paid the amount of service tax and interest within time whenever it was due for the period between 01.07.2003 and 31.12.2005. The following chart will demonstrate the details of payments made against the service tax and interest liability of the assessee:

(3.) WE are in agreement with the view taken by the Tribunal, though Mr. Darshan M. Parikh, learned counsel for the appellant has vehemently urged that under section 73 read with sub-section (1A) of the Finance Act, once show cause notice has been issued then the assessee is required to make payment of penalty. He has further argued that even before the issuance of show cause notice if the service tax and interest has been deposited by the assessee, still he would require to deposit the penalty as he would have known as to what penalty would be levied on the assessee, therefore, atleast he should have deposited the 25% of the penalty amount within thirty days. WE do not agree with the argument of learned counsel for the appellant as the Board's Circular dated 03.10.2007 in paragraph no.3.1 has considered the proviso to section 73 that where a person has paid service tax in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person to whom notices are served under sub-section (1) shall be deemed to be concluded. In the instant case was not contesting the Service Tax liability and had deposited the entire service tax and interest much before the issuance of show cause notice and discharged 25% of the amount of service tax liability, and at that time, neither any penalty was levied by the appellant nor any quantum of penalty was fixed. Therefore, the assessee has not committed any illegality in not depositing any penalty amount.