2013 (12) TMI 1224 - AT - Service Tax

Demand of service tax - Business Auxiliary Service - Held that - to arrange for finance and granting of loans to provides certain services relating to the granting of loans, for an on behalf of the bank and for these activities the assessee is receiving commission, hence is liable to service tax under the Business Auxiliary Service - Following decision of South City Motors Ltd. V. Commissioner of Service Tax, Delhi reported in 2011 (11) TMI 408 - CESTAT, NEW DELHI - Decided against assessee.

Summary

Issues: Classification of service for service tax under "Business Auxiliary Service"

In this case, the appellants filed appeals challenging the classification of the service under "Business Auxiliary Service" for service tax purposes. The common issue in all appeals was the classification of the service, and the appeals were being heard together.

The appellants had paid service tax under "Business Auxiliary Service" and later filed refund claims, arguing that the activities they undertook did not fall under this category. However, both the adjudicating authority and the Commissioner (Appeals) rejected their refund claims.

The appellants contended that they received commission from banks/financial institutions for facilitating and promoting the marketing of their finance schemes. They argued that their activities, which involved explaining various schemes to customers and assisting in granting loans on behalf of the banks/finance companies, did not fit within the definition of "Business Auxiliary Service."

The Revenue cited a previous Tribunal decision in the case of South City Motors Ltd. v. Commissioner of Service Tax, Delhi, where similar activities were held to fall under "Business Auxiliary Service." The Revenue argued that based on this precedent, the demand for service tax was justified.

The Tribunal, considering the precedent in the South City Motors Ltd. case, held that arranging finance and granting loans on behalf of banks/finance companies constituted services falling under "Business Auxiliary Service." Since the appellants were receiving commission for these activities, they were liable for service tax under this category. Consequently, the appeals were dismissed, and the miscellaneous applications were disposed of.

This judgment highlights the importance of the specific activities undertaken by the appellants in determining the classification for service tax purposes. The Tribunal's decision was based on the interpretation of "Business Auxiliary Service" and the applicability of precedent in similar cases. The outcome underscores the need for clarity and consistency in the classification of services to ensure compliance with service tax regulations.