9911796707
TMI Blog2009 (9) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. M/s. A.P. Trade Promotion Corporation Ltd. (APTPC) is an Andhra Pradesh State Government company engaged in provision of various taxable services. The authorities noticed that APTPC had rendered taxable services of hire purchase of consumer durables and vehicles to the employees working in various state government departments during the period from 2003-04 to 2005-06 and failed to pay service tax due on the services provided. During the material period, APTPC had collected interest on service charge from employees of various government departments who purchased vehicles and consumer durables which APTPC had financed. It had also collected commission on sale of such goods. After due process, the Commissioner found that APTPC had received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxable service was received. As regards liability confirmed against the appellants towards commission received on sale of consumer durables and two wheelers arranged by them, it is claimed that tax on such Business Auxiliary Service was exempted under Notification No. 13/2003-S.T., dated 20-6-2003 which was withdrawn only under Notification No. 19/2005-S.T., dated 7-6-2005. They had not received any amounts during 2005-06. The service tax due on the value of Rs. 20,18,254/- for the material period, therefore, was not sustainable. The impugned order confirmed demand of service tax on the entire service charge reflected in the annual accounts. These charges included all the revenue of the Corporation. The appellants had engaged in provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium) on a periodic basis. As is the case in respect of general insurance business, it has been provided in the Service Tax Rules that in the case of an insurance agent for life insurance, the person liable to pay service tax will be the concerned insurance company who has appointed the agent, Notification No.12/2002-ST. refers." On the above basis, vacation of the impugned order has been canvassed. During hearing, the learned Counsel reiterated grounds taken in the appeal. He relied on the following decisions of the Tribunal and claimed that APTPC was involved in the business of hire purchase finance which was not covered by Section 65(105) of the Act and therefore, the demand of service tax for the activity of providing hire purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions relating to valuation (S.67). All such interests that are in the nature of interests on loans would thus remain excluded from taxable value. Further, clarifications on these issues would be issued shortly." As regards the demand on service charge, he submitted that major share of the item was commission received from M/s. United India Insurance Company for marketing insurance policy to the engineering students in the State of Andhra Pradesh. The service involved was classifiable under Insurance Auxiliary Service' under Section 65(105) (zl) of the Act. The Ministry had clarified vide letter F. No. B.11/1/2002-TRU, dated 1-8-2002 that in respect of service involved, the Insurance Company was liable to pay service tax and not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to the business of hire purchase finance engaged in by M/s. APTPC is not sustainable. Moreover, as noted by the Commissioner in the impugned order, the demand is based on financial accounts of the assessee. We find that service tax is leviable only on the taxable value realized. A major portion of the taxable value is on account of interest charge realized which in any case could not have validly formed part of taxable value since interest on loan was not taxable as per Section 67 of the Act as it existed at the material time. We also find force in the submission by the learned Counsel that commission received by APTPC as insurance agent is not liable to service tax. In the light of the clarification issued by Ministry in its letter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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