The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), upheld the service tax demand under Business Auxiliary Services (BAS) and observed that financial hardship is not reason to avoid payment of service tax.
The appeal has been filed by Natural Petrochemicals Pvt. Ltd against demand of Service Tax under the head of Business Auxiliary Service.
The Counsel for the appellant pointed out that the appellants are inter alia engaged in providing services under the category of Goods Transport Agency and Business Auxiliary Service. During the course of audit, it was noticed that the appellants had received the commission income from M/s Gopal Enterprise and Galaxy Enterprise amounting to Rs. 78,08,192/- and Rs. 5,30,085/- respectively.
During the audit, they were asked about the chargeability of Service tax on the said commission received by them under the head of Business Auxiliary Service. Later on, show cause notice was issued and demand of service tax was confirmed against the appellant.
The Counsel further argued that the Business Auxiliary Service was first time made taxable w.e.f 01.07.2003, however vide Notification No. 13/2003-ST dated 20.06.2003, the same was exempted up to 09.07.2004. The said income became taxable only w.e.f 09.07.2004.
The Authorized Representative relied on the impugned order and pointed out that the appellant had not disclosed the said income under their monthly returns. It was further pointed out that even if the appellant’s believed that the said income was exempt, they were still required to declare the same in their monthly returns which they failed to do.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It is noticed that the appellant had not declared the said income in their monthly returns. Even if the appellant believe that the said income was exempted from service tax, they should have declared the same as exempted income. It is noticed that in their pleadings, they have also argued that they have not paid the service tax due to financial Hardship.”
“These facts clearly indicate that the appellant were fully aware about the taxability of the service and deliberately neither paid the tax nor declared the said income in the monthly returns. In these circumstances, we find that the appellant are fully aware of their liability and choose not be paid service tax on account of financial Hardship or otherwise” the Bench concluded.
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