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Ved Automotives Versus Commissioner of Central Excise, Kanpur

2016 (11) TMI 836 - CESTAT ALLAHABAD

Classification of service - commission received from banks and financial institutions - Business Auxiliary Service (BAS) - suppression of disclosure of the transaction - interpretation of statute - Held that: - there was interpretational issue, as to liability to service tax in the matter, as is evident by the nature of activity and clarification by the Larger Bench of this Tribunal. Accordingly, we hold - (i)Service tax is payable under the category of BAS under Section 65(19), by the appellant .....

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ty to service tax was confirmed under the classification Business Auxiliary Service (BAS) for commission received from banks and financial institutions. 2. The brief facts are that the Revenue on the basis of information that banks and financial institutions were paying commission to the direct selling agent(s) and most of these direct selling agents are not paying service tax on the commission received by them from banks or financial institutions, collected information from the banks and i .....

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they were using brand name of another, that is ICICI Bank Ltd. and it further appeared that the appellant had deliberately and wilfully suppressed the disclosure of the transaction and not paid service tax. Accordingly, it was proposed to demand service tax of ₹ 44,448/- along with interest and further penalty was imposed under Sections 76, 78 and for contravention of the provisions of Section 70 of the Finance Act. Two more show cause notices were issued as under for similar receipts : SC .....

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cles. There is no principal and agent relationship in the agreement with the finance company. They are not providing any service of any nature to any of the financing company. They only act as a channel between the customer or a prospective customer of the vehicle and the bank or financial company. For that, they are not rendering any service for and on behalf of the banks, and as such no service tax is exigable. They are only getting share of income from banks/finance companies out of their inc .....

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r failure to take the service tax registration and to assess the service tax liability and not submitting ST-3 Returns. 5. Being aggrieved, the appellant preferred appeal before ld. Commissioner (Appeals), who vide the impugned order was pleased to confirm the demand but was pleased to drop the penalty under Section 76 holding that there is no scope for imposing double penalty both under Sections 76 and 78. The ld. Commissioner (Appeals) also observed that the contention of the appellant th .....

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in the cases of Malpani Finance v. CCE - 2008 (10) S.T.R. 300 (Tri.-Del.) and Bridgestone Financial Services v. CCE - 2007 (8) S.T.R. 505 (Tri.). 6. Being aggrieved, the appellant is in appeal before this Tribunal. 7. The appellant is absent in spite of notice and was also absent on previous four dates. Hence, the appeals are taken up for ex parte disposal with assistance of ld. AR for Revenue. 8. The appellants have raised the following grounds : - (i) There is failure of natura .....

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g on behalf of Bank, as the customers of appellant are free to get finance from any Bank/Finance Company of their choice; (vi) Liability to service tax, if any, is on Bank/Financial Institutions. Appellants have not charged or collected any service tax; (vii) The payments received from Bank and Financial Industries, are not related to any service provided by appellant, hence, not taxable. Appellant is not promoting the business of Bank/Financial Institutions. (viii) Tax was not paid due to inter .....

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duced any agreement between them and Bank/Financial Institution to the effect that there is agreement to provide only space/venue to the Bank/Financial Institution in the appellant s premises. We further notice from the statement of commission paid by ICICI Bank, that the amount varies month to month. In some months, commission is less than ₹ 1,000/- whereas in some months it exceeds ₹ 30,000/-. Thus the documents on record prove that commission/incentive earned by appellant depends .....

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rder of reference and the other decisions which were cited at bar, it is clear that no uniform principle emerges as would guide determination of whether a particular transaction involving an interface between an automobile, dealer and bank or financial institution would per se amount to BAS. The identification of the transaction and its appropriate classification as the taxable BAS or otherwise must clearly depend upon a careful analysis of the relevant transactional documents. Only such scrutin .....

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