Tax Management India. Com
                            Law and Practice: A Digital eBook ...
TMI - Tax Management India. Com
Case Laws Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Manuals News SMS Articles Highlights
        Home        
 
Extracts
Home List
← Previous Next →

Commissioner of Central Excise & Service Tax, LTU, Chennai Versus Sundaram Finance Ltd. And Vice-Versa

2017 (11) TMI 1002 - CESTAT CHENNAI

Business Auxiliary Service - For operation of receiving EMI payments and remitting the same to SPV / Trust, the appellant-assessee is paid a consideration in percentage terms - Securitization Service Fee - Revenue held a view that this fee is liable to service tax under 'Business Auxiliary Service' as the appellant-assessee provided service to the SPV / Trust which will fall under clause (iv) of Section 65 (19) prior to 10.9.2004 - Held that: - Securitization Service Fee in fact which is sought .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed by contractual arrangements nor factually established - decided against Revenue. - Business auxiliary services - the allegation is that the appellant-assessee is providing service to ICICI bank which is incidental or auxiliary to the bill collection - Held that: - The cheques and other bills collected by the appellant-assessee are on their own account which are further passed on in terms of agreement with the ICICI bank. The conditions of transaction and schedule of payment will not influ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hadra Reddy, JC (AR) For the Revenue ORDER Per B. Ravichandran These two appeals are on common dispute regarding service tax liability of the appellant-assessee under the category of "Business Auxiliary Service" in terms of Section 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 th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pared to actual receivables, which included interest. Simultaneously, they have entered into an agreement with Trust / SPV which mandates the appellant-assessee to collect all these receivables on the fixed periodicity from the loan clients and deposit the same in return of the said consideration received on sale of receivables. For such operation of receiving EMI payments and remitting the same to SPV / Trust, the appellant-assessee is paid a consideration in percentage terms. This amount is na .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the original authority. On appeal, vide impugned order, the Commissioner (Appeals) set aside the demand against the appellant-assessee. The Revenue being aggrieved, filed this appeal. 3. Ld.A.R appearing for the Revenue elaborated the grounds of appeal. He submitted that the appellant-assessee sold future receivables as an asset to the SPV / Trust. They received consideration for the same. Similarly, in order to fulfil the arrangements of return of money they are obligated, in terms of separ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ned. 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 / SPV have sold their shares through PTC to various stake holders and are being obligated to repay to the PTC holders as per the agreed schedule. Submitting that by the services of the appellant-assessee in collecting, depositing the cheques from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ont sale of future receivables, they have undertaken the timely payment of the amount and one of the conditions is to collect the same as per the EMI schedule from various loan clients and deposit in the prescribed time schedule. This is nothing but a guaranteed obligation guarding against default. This cannot be categorized as auxiliary / support service of bill collection or deposit of cheque in pursuance of supporting or enabling an activity which is otherwise to be rendered by the Trust / SP .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntractual 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to any of the services rendered under the categories mentioned under BAS as evident from the facts discussed in the impugned order as well as analyzed as above. For an activity of service which is incidental or auxiliary support service, the activity of the main person (service receiver) is to be identified. In the present case, the obligation of the Trust for PTC holders is identified as the main activity which is incidentally or auxiliarily supported by the appellant-assessee. We find no rea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reement 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 i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ice of incidental or auxiliary nature rendered to ICICI which will support the main services or activity of the ICICI bank to the obligors. In fact, the loan client / obligor is in no way connected or aware of the agreements between the appellant-assessee and the ICICI bank. In such situation, it is not legally tenable to hold the appellant-assessee as a collection agent for collection of cheques, remittance and for further payment to ICICI. Though the agreement refers the appellant-assessee as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

principal to principal. 8. Ld. Special Counsel appearing for the Revenue contested the grounds of appeal of appellant-assessee and submitted that the wording of the agreement and the method of accounting followed by the appellant-assessee makes it clear that 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 afte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ute in the present appeal also is almost on similar footing as that of the above mentioned appeal by Revenue. The differences are mainly accounting and the status of service recipient. Instead of Trust, ICICI bank is involved in the transaction. Further, the justification of tax liability under BAS in the appeal by the Revenue is with reference to obligation of the Trust to PTC holders and in the present case, the allegation is that the appellant-assessee in providing service to ICICI bank which .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

smitted to ICICI bank as per the agreed schedule towards servicing of already obtained consideration by the appellant-assessee. Hence there is no tripartite arrangement. The role of the appellant-assessee is mainly with reference to discharging the obligation of servicing the amount already received. All these conditions are put by ICICI bank with reference to various loans extended to different identified obligors. This by itself does not make the appellant-assessee as a collection agent of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 contends that substantial amount is accounted as profit on sale of receivables out of which some amount is allocated as expense for collecting services. We note that accounting as followed by the appellant-assessee has been statutorily audited an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.