2012 (12) TMI 36 - AT - Service Tax

Recovery of Service tax along with Interest and Penalties - Business Auxiliary Service - Held that - Taxable value of service is payable on the gross value of the service received by the person providing services. In this case, there is no proof that the disputed amounts have been received by the appellant. On the contrary prima facie assessment of the evidence presented shows that the impugned amount was not received by the appellant - Requirement of pre-deposit for admission of appeal is waived and there shall be collection of such dues during pendency of the appeal.

Summary

Issues:
1. Whether service tax is payable on the gross value of services provided by the appellant?
2. Can the appellant be charged service tax on amounts not actually received by them?
3. Is the appellant liable for service tax on the differential amount shown in the books of account of the bank but not received by them?

Analysis:

Issue 1:
The appellants provided services of canvassing clients to ICICI bank for increasing loan business, receiving commission payments. The Revenue initiated proceedings for recovery of service tax on differential amounts shown in bank's books but not paid to the appellants. The Revenue argued that service tax should be paid on the gross value of services rendered. However, under Section 67 of the Finance Act, 1994, service tax is payable on the gross value of services received by the service provider. The Tribunal found no proof that the disputed amounts were actually received by the appellant. Therefore, the Tribunal ruled in favor of the appellant, waiving the requirement of pre-deposit for appeal admission.

Issue 2:
The appellant contended that they should not be charged service tax on amounts not received by them. They argued that the difference in payments shown in the bank's books was actually paid back directly to the customers by the bank, not received by the appellant. The appellant highlighted that the Tax Deduction at Source (TDS) certificate issued by the bank was only for the amount they received, indicating that no higher amount was paid to them. The Tribunal acknowledged the appellant's argument and found merit in their contention that they can only be taxed on the consideration they actually received for providing the service.

Issue 3:
The Revenue argued that the real value of services rendered by the appellant was what was shown as payment in the bank's books, and the payments to customers were made with the appellant's consent. However, the Tribunal observed that there was no evidence to prove that the disputed amounts were received by the appellant. The Tribunal emphasized that service tax should be paid on the gross value of services received by the service provider, and in the absence of proof of actual receipt by the appellant, the Revenue's argument was not upheld.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that service tax should be levied on the actual amounts received by the service provider as per Section 67 of the Finance Act, 1994. The Tribunal found no evidence that the disputed amounts were received by the appellant, thereby waiving the pre-deposit requirement for appeal admission.