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TMI Blog2017 (11) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 65 (19) read with Section 65 (105) (zzb) of Finance Act, 1994. Both the Revenue as well as the assessee are in appeal in two different proceedings. We are considering the appeal filed by Revenue first. Appeal ST/166/2010 2. The brief facts of the case are that the appellant-assessee is a non-banking financial company. They are in the business of extending loans to various clients for purchase of vehicle etc. The loans are paid back on regular EMI basis. The appellant-assessee entered into an agreement with another person viz. "Trust/Special Purpose Vehicle (SPV)" to whom they have sold the receivables towards these loans extended to various clients. On sale of such future receivables, appellant received a discounted consideration when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement, to collect all the EMI payments and remit it to the Trust / SPV as per the schedule. These incidental activities which are mandated as per the agreement entitles the appellant-assessee certain consideration which is a percentage of payment. He submitted that it is clearly an activity which is incidental or auxiliary to the support service relating to billing, collection, recovery of cheque, remittance of amount and will be correctly liable to tax under the tax entries above mentioned. He contested the finding of the impugned order stating that there is a wrong appreciation of facts and the tax liability has been incorrect set aside. He further reiterated, more specifically, para-9 of the grounds of appeal which states that Trust / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r mainly on the ground that appellant-assessee was engaged in the activity of incidentally or auxiliarily support the services such as billing, collection of cheque, remittance etc. Accordingly, tax liability is sought to be upheld. We note the contractual arrangement between the appellant-assessee and the Trust / SPV is on principal to principal basis and the obligation to collect the cheque and deposit as per the schedule of agreement is nothing but an obligation in pursuance of the main agreement of upfront sale of future receivables which would be recouped on regular basis later. It is further submitted that the contention of the Revenue that obligation of the Trust to the PTC holders is connected to the cheque collection and deposit by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement which provided the appellant-assessee to collect various cheques from the identified obligors (loan clients) and to deposit in a prescribed schedule with the bank. For this, some fee is paid to the appellant-assessee. The Revenue entertained a view that the taxable services are clearly identified in terms of the agreement. However, the consideration is not manifestly emerging from the records. The Revenue's inference is that appellant-assessee by showing certain consideration which is, in fact, taxable under the Business Auxiliary Service as a profit on sale of receivables tried to evade tax liability. Based on this premise, service tax demand was confirmed against the appellant-assessee. 7. Ld.Consultant for the appellant-asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they are nothing but service providers incidental or auxiliary to bill collection by depositing the cheques of the obligors with the ICICI bank as per the predetermined obligation. The appellant-assessee changed the method of accounting after the dispute arose for service tax. They are showing very nominal amount as fee towards collection and deposit of receivables from the obligors into bank account and showing a substantial amount as profit on sale of receivables. This is nothing but a device arranged by the appellant-assessee to avoid tax liability. The service charges and expenses are shown out of such profit and this is only an accounting method to avoid tax. 9. We have heard both sides and perused the appeal records. The dispute in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the identified obligors to be paid to the ICICI bank. We may note here that even in case of non-collection of such amounts from obligors, the appellant-assessee has to discharge the amount due to ICICI bank, from their resources. This will only indicate that the transaction is a financial arrangement on principal to principal basis between the appellant-assessee and ICICI bank. The conditionalities of such transaction between the two principals will not determine and make one of the contracting party a agent of the other. In any case, we note that the amount received by the appellant-assessee is inferred from the accounts maintained by them. The fee which is allocated for such work of depositing cheque is very nominal. The Revenue cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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