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When issue is settled by the Larger Bench, penalties can be set aside considering the bonafide of the Appellant. Target incentive received from manufacturer in the nature of trade discount not exigible to service tax.
Facts
The Appellant received certain amount from financial institutions as commission for marketing of Auto Loan products and also an amount from manufacturers of car under the head Target Incentive Scheme. Department demanded service tax under ‘business auxiliary service’ in relation to the aforesaid receipts and also imposed penalties. In the matter of incentives it was argued that the issue is well settled by the judgement of the Tribunal in favour of the Appellant in the case of Commissioner of Service Tax vs. Sai Service Station Ltd [2013-TIOL-1436- CESTAT-MUM} and in case of commission from financial institution, it was stated that the issue is settled against them by the larger bench of the Tribunal in the case of Pagariya Auto Centre vs. Commissioner of Central Excise, Aurangabad [2014-TIOL-2875-CESTAT-MUM], however penalties should be set aside in relation thereto.
Held
The Tribunal confirmed the demand along with interest in relation to the amount received from financial institution for promoting their products by considering the decision of the larger bench in the case of Pagariya Auto Centre (supra). However, it was held that since the issue has been settled by the Larger Bench, Appellant could have entertained a bona fide belief and therefore penalties are set aside by invoking provisions of section 80 of the Finance Act,1994. Further relying on the decision of Sai Service Station (supra) demand against the amounts received as incentives is set aside.
