2014 (2) TMI 98 - AT - Service Tax

Classification of service - Whether the table space provided by the Automobile dealers to financial institutions fall under Business Auxiliary service or not - Held that - no uniform principle emerges as would guide determination of whether a particular transaction involving an interface between an automobile dealer and bank or financial institution would per se amount to BAS. The identification of the transaction and its appropriate classification as the taxable BAS or otherwise must clearly depend upon a careful analysis of the relevant transactional documents. Only such scrutiny and analysis would ensure rational classification of the transaction. Where mere space is provided along with furniture for facilitating accommodation of representatives of financial institutions in the premises of an automobile dealer and consideration is received for that singular activity, such consideration may perhaps constitute a rent for the provision of space and associated amenities. Such restricted relationship/transaction may not amount to BAS. If on the other hand, the transactional documents and other evidence on record indicates a substantial activity falling within the contours of any of the integers of the definition of BAS, spelt out in Section 65 (19), then it would be legitimate to conclude that BAS is provided - The appeal stand remitted to the appropriate Bench in the West Zonal Bench of this Tribunal for adjudication on merits - Decided in favour of assessee.

Issues Involved:
1. Classification of services provided by automobile dealers to financial institutions.
2. Whether provision of table space by automobile dealers to financial institutions constitutes Business Auxiliary Service (BAS).

Issue-wise Detailed Analysis:

1. Classification of Services Provided by Automobile Dealers to Financial Institutions:
The core issue before the Tribunal was the classification dispute regarding whether the transaction between the assessee (automobile dealer) and banking/financial institutions falls within the definition of Business Auxiliary Service (BAS) as per Section 65(19) and Section 65(105)(zzb) of the Finance Act, 1994. The Revenue contended that the services provided, including the provision of space to financial institutions, constituted BAS. The assessee contested this classification.

The Tribunal emphasized that the jurisdiction to adjudicate classification disputes lies with a Division Bench as per Section 86(7) of the Finance Act, 1994, and Section 35D of the Central Excise Act, 1944. The single Member's referral to a larger Bench due to conflicting opinions in previous judgments was deemed appropriate.

2. Whether Provision of Table Space by Automobile Dealers to Financial Institutions Constitutes BAS:
The Tribunal noted that the specific issue referred to the larger Bench was not clearly structured. Provision of table space by automobile dealers to financial institutions could have various underlying purposes and transactional instruments. The essential nature of the transaction must be identified through the relevant transactional documents, agreements, or MOUs between the parties.

The Tribunal analyzed several judgments with differing opinions on whether such transactions constituted BAS:
- Silicon Honda: The Tribunal held that mere provision of table space without evidence of commission for loan facilitation did not constitute BAS.
- Chambal Motors: The Tribunal remitted the matter for fresh consideration, directing analysis of the nature of agreements and whether commission was paid for promoting banking services.
- Chadha Auto Agencies: The Tribunal concluded that providing table space alone did not amount to BAS, as the remuneration was for occupying space.
- Roshan Motors Limited: The Tribunal found that the assessee provided BAS by promoting financial services and assisting in loan processing, receiving a fee for these services.
- Brij Motors Pvt. Ltd.: The Tribunal held that promoting financial services and receiving commission constituted BAS.
- TVS Motor Co. Ltd.: The Tribunal concluded that close association and promotion of banking services by the assessee amounted to BAS.
- South City Motors Ltd.: The Tribunal found that facilitating various activities of banks and marketing loan schemes constituted BAS.
- Tribhuvan Motors Limited: The Tribunal held that mere provision of table space without evidence of commission did not constitute BAS.

The Tribunal concluded that no uniform principle emerged from these judgments. The classification of a transaction as BAS depends on a careful analysis of the transactional documents. If the transaction involves substantial activities falling within the definition of BAS, it would be classified as such. Conversely, if it involves mere provision of space, it may constitute rent and not BAS.

Conclusion:
The Tribunal answered the reference by stating that the classification of transactions between automobile dealers and financial institutions depends on the analysis of transactional documents. The appeal was remitted to the appropriate Bench for adjudication on merits in light of the observations and principles outlined in the order.

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