2013 (12) TMI 855 - AT - Service Tax

Waiver of pre deposit - Demand of service tax - Business Auxiliary Services - Held that - after perusal of the assignment agreement and agreement for appointing the applicant as Collection Agent the services rendered by the applicant to the buyers of their assets like ICICI Bank in their capacity as collection agent is a service classifiable under Business Auxiliary Service But the applicant has not paid any service tax for such activity. Regarding the value of the service we see some force in the argument of Revenue that the value of such service can appear in expenditure side if the amount inclusive of this amount is appearing on receipt side of the balance sheet in some other entry. So the case cannot decided solely for the reason that figures are taken from the expenditure side of the balance sheet - agreement is for a period subsequent to the period of dispute - Assessee directed to make a pre deposit - Conditional stay granted.

Issues:
1. Whether the expenditure incurred by the applicant for collection activities is subject to service tax under Business Auxiliary Services.
2. Whether the consideration for services rendered by the applicant as a Collection Agent is adequately reflected in the books of accounts.
3. Whether the nature of the transaction in question was different during the period under consideration.

Analysis:
1. The Revenue contended that the expenditure incurred by the applicant for collection activities, though accounted for in their books, represents the value of services provided to buyers of their assets and should be subject to service tax under Business Auxiliary Services. The Tribunal acknowledged that the services rendered by the applicant could be classified as Business Auxiliary Services. However, the applicant had not paid service tax for such activities. The Tribunal noted the argument that the value of the service might also appear on the receipt side of the balance sheet, not solely on the expenditure side, indicating a need for further examination beyond the figures from the expenditure side.

2. The Special Counsel for Revenue highlighted the Collection Agreement between the applicant and ICICI Bank, emphasizing the fees paid for services rendered by the applicant as a Collection Agent. The Revenue argued that the consideration for services was built into the sale price of the assets, with the actual value reflected in the applicant's books as expenditure. The Tribunal noted the fees mentioned in the agreements appointing the applicant as Collection Agent but expressed doubts about whether these nominal fees truly represented the value of services provided. The Tribunal recognized the need for a deeper analysis to determine the true consideration for the services rendered.

3. The Tribunal observed an agreement dated after the disputed period, which shed light on the nature of the transaction between the applicant and ICICI Bank. While this agreement was subsequent to the period under review, the Tribunal found it helpful in understanding the transaction. The specific clauses of the agreement highlighted the appointment of the applicant as a Collection Agent and the payment terms for collection management fees. The Tribunal indicated that a thorough examination of whether the nature of the transaction differed during the relevant period would be conducted during the final hearing of the appeal.

In conclusion, the Tribunal directed the applicant to deposit a specified sum within a set period, with the pre-deposit of the balance tax, interest, and penalties waived and recovery stayed during the appeal process. The judgment highlighted the complexities surrounding the taxation of services provided by the applicant and the need for a detailed assessment of the nature and value of these services in relation to the sale of assets and collection activities.

← Previous Next →