Case Law Details
Bikes Auto Vs C.S.T.-Service Tax – Ahmedabad (CESTAT Ahmedabad)
CESTAT find that the issue on merit is not under dispute as Larger Bench in the case of Pagaria Auto Center- 2014 (33) S.T.R. 506 (Tri.- LB) clearly held that the Commission received from the financial institution towards sale of their loan product is liable to Service Tax. Accordingly in the present case the activity of assessee for sale of loan product of financial institution is taxable.
Service Tax demand demand not sustainable if not issued was Time barred
However, the appellant have strongly submitted that the demand is time barred. In this regard, we find that there is no dispute that there were contrary judgments on the issue of taxability. Therefore, the legal position was not clear, hence it can be convenient view that being complex issue involved interpretation on the legal issue of the present case, the appellant had entertained the bona fide belief that the activity of the appellant is not liable to Service Tax. Due to contrary decisions on the issue, the Larger Bench has finally resolved the issue in Pagaria Pagariya Auto Center (supra). It is a settled law that when there are a contrary views on some legal issue and the matter is finally resolved by the Larger Bench, no doubt can be raised on the bona fide belief of the assesse for non-payment of Service Tax. In the present case the period of demand involved is 2003-04 to 2005-06, however the Show Cause Notice was issued on 23.10.2008 i.e. after almost 2 years.
5. Accordingly, in our view, the demand is not sustainable on time bar itself. Hence, the demand is set aside only on the ground of time bar.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellants are engaged in trading of automobile vehicle as dealers of vehicle manufacturer. In addition to the said trading activity they also carry out the activity of helping the purchaser of the vehicle for arranging the loan from the financial institution and also arrange for sitting of representatives of the financial institution in their premises for the purpose of sanction of loan to the customers. The case of the department is that the service charges received towards above activity of promotion of loan of financial institution is liable to Service Tax under Business Auxiliary Service. Accordingly the demand of Service Tax along with interest and penalties was confirmed by the Adjudicating Authority and upheld by Commissioner (Appeals). Therefore, the present appeal filed by them.
2. Shri Vipul Khandhar, Learned Chartered Accountant appearing on behalf of the appellant submits that he does not press on the taxability of the activities however, he strongly argued that the demand is hit by limitation. It is his submission that the issue of taxability was under serious doubt and there were contrary judgments and finally the issue was resolved in favour of the Revenue by the Larger Bench in the case of Pagariya Auto Center- 2014 (33) S.T.R. 506 (Tri.- LB). Therefore, the appellant had bona fide belief that these activities are not liable for Service Tax. Hence, there was no suppression of fact on mala fide intention with intent to evade payment of duty on the part of the appellant. The demand for the period 01.07.2003 to 31.12.2005 is time barred.
3. Shri Vijay G. Iyengar, Learned Assistant Commissioner (Authorized Representative) appearing on behalf of the Respondent reiterates the finding of the impugned order.
4. We have carefully considered the submissions made by both the sides and perused the records, we find that the issue on merit is not under dispute as Larger Bench in the case of Pagaria Auto Center- 2014 (33) S.T.R. 506 (Tri.- LB) clearly held that the Commission received from the financial institution towards sale of their loan product is liable to Service Tax. Accordingly in the present case the activity of assessee for sale of loan product of financial institution is taxable. However, the appellant have strongly submitted that the demand is time barred. In this regard, we find that there is no dispute that there were contrary judgments on the issue of taxability. Therefore, the legal position was not clear, hence it can be convenient view that being complex issue involved interpretation on the legal issue of the present case, the appellant had entertained the bona fide belief that the activity of the appellant is not liable to Service Tax. Due to contrary decisions on the issue, the Larger Bench has finally resolved the issue in Pagaria Pagariya Auto Center (supra). It is a settled law that when there are a contrary views on some legal issue and the matter is finally resolved by the Larger Bench, no doubt can be raised on the bona fide belief of the assesse for non-payment of Service Tax. In the present case the period of demand involved is 2003-04 to 2005-06, however the Show Cause Notice was issued on 23.10.2008 i.e. after almost 2 years.
5. Accordingly, in our view, the demand is not sustainable on time bar itself. Hence, the demand is set aside only on the ground of time bar. The appeal is allowed with consequential relief.
(Pronounced in the open Court on 14.03.2023)
