2011 (4) TMI 1147 - AT - Service Tax

Waiver of pre-deposit - demand has been confirmed by treating the commission amount received by the assessee who are registered for banking and financial services and engaged in the business of financing commercial vehicles, cars, two wheelers etc., from vehicle dealers, as taxable under the category of Business Auxiliary Service - service provided by the assessee would be covered by the definition of commission agent and prima facie is classifiable under the category of Business Auxiliary Service Held that - no prima facie case for total waiver has been made out, directed pre-deposit of Rs. 20,00,000/- (Rupees Twenty lakhs only) towards tax and on such deposit, the pre-deposit of balance amounts in dispute shall stand dispensed with and recovery thereof stayed pending the appeal

Summary

Issues:
1. Waiver of pre-deposit of service tax, education cess, and secondary & higher education cess.
2. Classification of service provided by the assessee under the category of "Business Auxiliary Service."
3. Interpretation of the definition of a "commission agent" in the context of the case.

Analysis:
1. The judgment dealt with the application for waiver of pre-deposit of service tax, education cess, and secondary & higher education cess amounting to Rs. 57,01,833/- under the proviso to Section 73(1) of the Finance Act, 1994. The demand was confirmed based on the commission amount received by the assessee, engaged in financing commercial vehicles, from vehicle dealers, treated as taxable under "Business Auxiliary Service." The Tribunal directed a pre-deposit of Rs. 20,00,000/- towards tax within 8 weeks, with the balance amounts dispensed with pending the appeal.

2. The assessee's service involved paying the loan amount to vehicle dealers instead of individual borrowers, with some borrowers negotiating interest rates resulting in dealers granting commissions to promote their business. The Tribunal found that the service provided by the assessee, promoting and causing the sale of vehicles for dealers in return for a commission, fell under the definition of a "commission agent" and was classifiable under "Business Auxiliary Service." The contention that money must have been received directly from the borrower was deemed prima facie untenable, as the assessee acted on behalf of the borrower by dealing with title documents of the vehicles, thus acting as a "commission agent."

3. The interpretation of the definition of a "commission agent" was crucial in determining the classification of the service provided by the assessee. The Tribunal held that the assessee's actions in promoting and causing the sale of vehicles for dealers, receiving commissions in return, met the criteria of a "commission agent." The Tribunal emphasized that the service provided by the assessee involved acting on behalf of both the borrower and the dealer, thereby falling under the category of "Business Auxiliary Service." Consequently, the Tribunal concluded that no prima facie case for total waiver of pre-deposit had been established, leading to the directive for a partial pre-deposit and stay of recovery pending the appeal.

This detailed analysis of the judgment provides insights into the issues of waiver of pre-deposit, classification of services under "Business Auxiliary Service," and the interpretation of the definition of a "commission agent" as addressed in the legal proceedings before the Appellate Tribunal CESTAT, CHENNAI.