2011 (8) TMI 199 - AT - Service Tax

Demand - business auxiliary services - The Revenue entertained a view that such services are in the nature of promotion and marketing services for the banks and fall under the category of business auxiliary services . As such, the commission received by them is liable to be taxed - the show cause notice has relied upon the certificate from the banks giving quantum of total payout without indicating as to whether the entire payout was received by the appellants or only a part was received by the appellants or other part was received by the customers of the appellants. The above position would become clear from the TDS certificate issued by the bank, which would admittedly relate to the quantum of commission received by the assessee themselves. Inasmuch as neither of the authorities below have verified the commission amount stated in the TDS certificate, which we think would be the correct basis for arriving at the correct value of the services rendered by the appellants - matter remanded to examine the facts and details.

Summary

Issues:
Service tax liability on commission received for procuring loans from banks.

Analysis:
The case involved a dispute regarding the service tax liability on commission received by the appellants for facilitating loans from banks for their customers. The Revenue contended that such services fell under the category of business auxiliary services, making the commission taxable. The appellants argued that the commission varied and was not solely for promotion and marketing for the banks. However, the Tribunal found no merit in this argument, stating that the services provided were not dependent on the commission amount received.

The confirmation of the demand was based on the banks' statement indicating the gross payout. The appellants claimed that part of the commission went directly to customers, and only the actual commission received by them should be taxed. The Tribunal clarified that the total commission earned by the appellants, regardless of distribution, constituted the value of services rendered. The decision was supported by previous Tribunal rulings.

The issue of whether the entire payout from banks was received by the appellants or shared with customers was not clearly addressed in the proceedings. The Tribunal noted that verification based on the TDS certificate issued by banks would provide the correct basis for determining the value of services. As a result, the Tribunal set aside the order and remanded the matter to the original authority for proper verification and clarification from banks if necessary.

Additionally, the appellants had claimed exemption under Notification No. 25/04-ST during the proceedings, which was not discussed by the lower authorities. The Tribunal directed the adjudicating authority to address this claim upon remand. Ultimately, both appeals were allowed for remand, providing an opportunity for further examination and clarification on the issues raised.