As regards the penalty set aside by first appellate authority under section 76 of Finance Act, 1994, for the quarter ending 30.09.2006, I find from the Form ST-3 return produced by ld. Counsel for the assessee, that the said form specifically indicate the taxable service rendered from April 2006 to September 2006 is Nil. Such return has been filed with the lower authorities on 25.09.2006.
It is undisputed that the appellant is a State Government entity and has been providing services of testing and certifying the quality of the seeds in the State. We find that the appellant was informed on 01.08.2006 by the office of the Commissioner of Service Tax that their activities would not fall under the category of services rendered and they would not be covered under the Service Tax.
Provisions of the section 73(1A) of the Finance Act, 1994 will apply in full force in this case, as there is payment of entire amount of service tax liability and interest thereof before the issuance of show cause notice (SCN). In my view, it is a fit case wherein the proceedings initiated against the assessee for the imposition of penalties, under various sections needs to be set aside and I do so.
Issue involved in this case is regarding the bona fide belief of the assessee during the relevant period. During the relevant period, the activity of receiving commission from the bankers for providing the help of identifying the purchasers of the vehicles and completing all the formalities was in dispute before the Tribunal. The said dispute got settled against the assessee. In my considered view, the appellant M/s. Rajesh Auto Finance/Shri Rajesh Biharilal Gandhi would have entertained a bona fide belief that the services rendered by them are not liable to service tax under the category of business auxiliary services.
Since a substantial amount has already been paid and regarding the balance amount also the appellant claims to have paid but does not have the evidence in view of the destruction of documents in flood, I consider that the appellant has made out a strong prima facie case for waiver of pre-deposit and grant of stay. Accordingly, the requirement of pre-deposit of service tax demanded with interest and penalty is waived and stay against recovery is granted during the pendency of appeal.
Apparently the Superintendent took objection for the debit of interest in the cenvat credit and thereafter the appellants made the cash payment. Under these circumstances it has to be held that the payments made by the appellant were under protest only and therefore the time limit under Section 11B would not be applicable.
There being no dispute to the services rendered by the appellant under the category of Travel Agent Services, the benefit of notification which are there in the statute, should have been automatically be given to the assessee. Even in the absence of any such claim the benefit should have been granted to them. Be that as it may, the specific plea of the assessee that they are eligible for the benefit of Notification No. 6/2005-ST, cannot be disregarded for the services rendered up to the first four lakhs, during the period April 2005 to March 2006, for which the appellant is eligible for the benefit of notification, provided he has not crossed the limit of Rs. Four lakhs during the preceding Financial Year.
There is no provision in the rules that credit was not available to unregistered manufactures. Manufacturers exempted from the registration do not cease to be a manufacturer of excisable goods. This case squarely covers the issue in this case also. Therefore, in respect of the goods manufactured during the period when the appellant was not registered, credit can be taken subsequently also. This view is further supported by the consistent stand taken by various judicial forums in the case of clandestine removals, even if the duty is paid subsequently, Cenvat credit on inputs used will be available to the assessee/manufacturer subject to the conditions that proper documents showing the payment of duty are available.
The first question that we have to consider is whether an agent of a principal who is also a dealer under the Act is entitled to the same rights as his principal has under the Act. Under the general law the agent merely represents his principal. Therefore, while functioning within the scope of the agency he can exercise all the rights which his principal could have exercised. In fact, in the case of an ordinary agency, the agent merely acts for his principal. This provision must hold good even under the Madras General Sales Tax Act unless otherwise provided therein.
we find that the appellant’s claim that they have produced some records and the documents, indicating that the income mentioned in the balance sheet may not be totally out of the income as a recovery agent is borne out from the Chartered Accountant’s certificate and adjudicating authority has recorded the same in the submissions made by assessee. It is also seen that the adjudicating authority has recorded that the appellant has produced a Chartered Accountant’s certificate. Suffice to say that the adjudicating authority should have given a finding on this issue, we are of the view that the entire issue needs to be re-considered by lower authority. We also find that the issue involved in this case also needs to be appreciated from the factual matrix, as regards the receipts indicated in the balance sheet of the appellant and the certificate issued by Chartered Accountant to that extent. It our opinion, this exercise is better left to the adjudicating authority to appreciate all the evidences available and that may be produced by the appellant.
