2007 (4) TMI 27 - AT - Service Tax

Business Auxiliary Service Revenue contended that the appellant activity i.e. providing the space in his premises to the financial institution and receiving some money for that lease of table space is covered under the business auxiliary service Held that revenue contention is not correct

Summary

Issues:
1. Classification of activity as 'Business Auxiliary Services' for providing space to financial institutions.
2. Interpretation of the term 'Commission Agent' in relation to the Finance Act.
3. Consideration of remuneration paid by financial institutions for occupying space.
4. Promotion of financial institution's business through assistance in providing loans.

Analysis:
1. The appeal concerned the classification of the activity of providing space to financial institutions as 'Business Auxiliary Services'. The appellant argued that merely providing table space on lease to financial institutions does not fall under this category as they are independently engaged in servicing motor vehicles. They contended that facilitating loans for customers does not make them a 'Commission Agent' as defined in relevant notifications granting exemption from service tax for Commission Agents.

2. The appellant highlighted that they do not cause sale or purchase of services on behalf of another person for a consideration, nor do they promote or market the financial corporation's services. They emphasized that the financial institutions are not obligated to promote their business through the appellant. The argument was supported by the fact that the financial institutions pay remuneration for occupying table space, rather than the appellant receiving consideration from them.

3. The Judicial Member noted that the impugned order did not provide evidence of financial institutions giving commission to the appellant for providing loans to their customers. The appellant's assertion of being paid for occupying table space remained unchallenged. Therefore, the mere provision of space to financial institutions, with remuneration for the lease, did not meet the criteria for 'Business Auxiliary Services'. Consequently, the impugned order was set aside, and the appeal was allowed.

4. The judgment emphasized the importance of evidence and the specific definitions within the Finance Act regarding the classification of services for taxation purposes. The decision clarified that the activity in question did not align with the characteristics of 'Business Auxiliary Services', as the appellant's role primarily involved leasing space to financial institutions without actively promoting or marketing their services.