The New Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT) clarified that the activity of receipt of commission in consideration of rendering ‘business auxiliary services’ is not covered under the Negative List of Section 66D of the Finance Act, 1994, and hence, taxable.
Observing that non-filing of ST-3 returns and non-payment of tax in the given circumstances is a positive act of evading tax, the Tribunal held that the appellant is liable to pay service tax on the amount of commission received, for the disputed period as well as the succeeding period.
A Single Bench of Rachna Gupta (Judicial Member) observed that the appellant was aware of his tax liability was still not filing ST-3 returns and was not paying tax, despite acknowledging his liability on the amount of commission received while rendering taxable service.
The Bench also found that even though the appellant has settled the demand proposed under the earlier show cause notice under Sabka Vishwas (Legacy Dispute Scheme, 2019), the subsequent non-payment and non-filing of returns would be held as the definite act of suppression on the part of the appellant, that too with clear intent to evade payment of service tax.
The Bench therefore concluded that such an act of the appellant amounts to the violation of provisions of the Finance Act, including Section 70 thereof, and accordingly, for committing an act of suppression and wilful misrepresentation, the Department had rightly invoked the proviso to Section 73(1) of the Finance Act, 1944, while issuing the show cause notice for the extended period.
Briefly, the appellant had received Rs. 17.53 lacs as commission for rendering the business auxiliary services which are neither covered under the negative list of the services as specified in Section 66D of the Finance Act, 1994, nor are covered in Mega Exemption Notification No. 25/2012 dated June 20, 2012. Since the appellant did not pay service tax on the said commission, the AO proposed to recover service tax amounting to Rs. 2.77 lacs from the appellant along with the proportionate interest and penalties, which was ultimately confirmed vide an Order-in-Original.
Appearances:
Chartered Accountant Raghav Rathi, for the Appellant/ Taxpayer
Rohit Issar, for the Respondent/ Revenue
