P.K. Das, Member (J)

1. Revenue filed this appeal against the order of the Commissioner (Appeals) whereby penalties under Section 76 & 78 of Finance Act were set aside.

2. After hearing both sides and on perusal of the records, I find that the respondents were receiving commission from the customers for arranging loan from bank. The learned Chartered Accountant on behalf of the respondents submits that there was a doubt about levy of tax relating to services Motor Vehicles and Business Auxiliary Services for arranging finance. He also submits that they have deposited the tax in the month of November, 2006 for the period September, 2004 to March, 2006. Show cause notice was issued on 7.2.2008. The original authority confirmed the demand of tax of Rs. 11,72,392/- and appropriated the amount as deposited by them and also imposed penalty of equal amount under Section 78 of the Act and penalty under Section 76 of the Act. The Commissioner (Appeals) set aside the penalties under Section 76 & 78 of the Act. The Commissioner (Appeals) observed as under:

I have examined the case records. The appellants are pleading vehemently, that there was no suppression of facts or any intent to evade payment of service tax. The appellants had been paying service tax on finance commission received from banks but were not doing so on finance payments from MUL. In a letter date dt. 25.10.2004 the appellants had informed the department that the agreement for financing the cars/motor vehicles was between MUL & different banks and service tax was paid directly by the MUL. This is also clear form the clarification note of MUL which is on record. There is also on record a copy of letter dated 22.9.2006 in which MUL has informed all its dealers that as per legal opinion received by the MUL service tax was now payable by the dealers on fees/commission received by them for MF business done on or after 10.9.2004. It further informs the dealers that the service tax paid by them would be reimbursed to them by the MUL. It is the submission of the appellants that they were in the process of calculating the tax, when the audit party visited them and pointed out the liability, which was already in their knowledge.

3. It is seen that the Tribunal in an identical issue in the case of Wings Group of Companies v. Commr. of ST., Bangalore reported in : 2008 (11) STR 63 (Tri.-Bang.) while deciding the stay application observed that activity of arranging loan and receiving commission would come within the purview of "Business Support Services" effective from 1.5.2006 and not under "Business Auxiliary Services". Thus, it is clear that there was doubt on the levy of tax on the said activity. Hence, the Commissioner (Appeals) rightly set aside the penalties invoking Section 80 of the Act. I do not find any reason to interfere with the order of the Commissioner (Appeals). Accordingly, appeal filed by the Revenue is dismissed.

(Dictated & pronounced in the Open Court.)