2013 (2) TMI 5 - AT - Service Tax

Business Auxiliary Services Incentive/commission received from Bank/Financial Instituition should be treated as Business Auxiliary Services or not Assessee is a dealer of motor vehicle and claims to have provided some space in their premises to the bank/financial institution Received amount from the bank and recorded the same as incentive received Held that -Amounts received from the bank/financial institution have been recorded as incentive. Therefore, the claim that it was towards providing office space along with furniture is not substantiated. Prima facie, the applicant has sponsored the services provided by the bank/financial institution and received commission/incentive for their activities Liable for Service tax under the BAS Against the assessee. Assessee received sum in respect of services rendered for registration of vehicle with the RTO authorities. Liable for Service tax under the BAS. Against the assessee.

Summary

Issues:
1. Whether the amounts received by the appellant from a bank/financial institution and customers are liable for Service tax under Business Auxiliary Service (BAS)?
2. Whether the appellant's claim of providing office space and furniture to the bank/financial institution is substantiated?
3. Whether the extra amounts collected from customers for vehicle registration can be treated as falling under BAS?

Analysis:
1. The appellant, a dealer of motor vehicles, received amounts from a bank and customers. The show-cause notice proposed treating these amounts as charges for rendering BAS. The original authority dropped the proceedings, but the Commissioner reviewed and confirmed the demand of Service tax along with penalties. The Tribunal observed that the amounts received from the bank were recorded as incentives in the balance sheet, indicating sponsorship of services provided by the bank. The Tribunal found that the appellant received commission/incentive for promoting the bank's activities, making the amounts liable for Service tax under BAS. Similarly, the amounts received for vehicle registration activities were also considered liable for Service tax under BAS.

2. The appellant contended that the amount received from the bank was for providing office space and furniture, not for promoting the bank's business activities. However, the Tribunal noted that the appellant's claim was not substantiated as the amounts were recorded as incentives received. The Tribunal found that the appellant had indeed sponsored the services of the bank, leading to the receipt of commission/incentive. Therefore, the contention of providing office space along with furniture was not accepted.

3. The appellant argued that the extra amounts collected from customers for vehicle registration were for optional registration work and should not be considered under BAS. The Tribunal, after considering submissions from both sides, held that the amounts received for registration activities could be treated as falling under BAS. The Tribunal did not find any plea of financial hardship and directed the appellant to deposit a specified amount within a given timeline, waiving the pre-deposit of the balance dues and staying recovery until the appeal's disposal.

In conclusion, the Tribunal upheld the Commissioner's decision to levy Service tax on the amounts received by the appellant from the bank and customers, considering them as falling under Business Auxiliary Service. The Tribunal's decision was based on the recording of amounts as incentives received and the promotion of services provided by the bank, leading to the receipt of commission/incentive by the appellant.