2015 (5) TMI 635 - AT - Service Tax

Receipt of commission for disbursement of govt. teacher s salary - Business Auxiliary Services - Penalty u/s 78 - Held that - lower authorities were error in holding that appellant would fall under the category of commission agent and the amount received by them from the Government of Maharashtra through Zilha Parishad as service charges for disbursement of salaries of Govt. teachers cannot be considered as commission received though it may be entered in the records of the appellant as commission received. - an amount received as a consideration for disbursement of salaries to the Govt. teachers on direction of Zillha Parishad can never be an activity covered under the definition of Business Auxiliary Service and more so it cannot be termed as an amount received by the appellant as commission agent. In view of the facts and circumstances of this case, we hold that the impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.

Summary

Issues involved:
Interpretation of the definition of commission agent under the Finance Act, 2005 in the context of services provided for disbursement of government teachers' salaries.

Detailed Analysis:
The case involved a dispute where the appellant, engaged in providing services under Banking and other Financial Services, received a commission for disbursing government teachers' salaries. The revenue authorities contended that this commission fell under Business Auxiliary Services, leading to a demand for service tax, interest, and penalties. The adjudicating authority confirmed the demand, which was upheld by the first appellate authority.

Upon hearing both sides and examining the records, the Tribunal considered whether the appellant's activities qualified them as a commission agent as per the Finance Act, 2005. The Tribunal noted that the lower authorities erred in categorizing the appellant as a commission agent. The definition of a commission agent under the Act includes activities related to the sale or purchase of goods or services, which the appellant's disbursement of salaries did not fall under. The Tribunal emphasized that receiving consideration for disbursing government teachers' salaries did not constitute Business Auxiliary Services or commission agency activities.

The Tribunal referred to the specific provisions of the Finance Act, 2005, which clarified the role of a commission agent, and concluded that the appellant's actions did not align with the activities outlined in the definition. Therefore, the Tribunal held that the impugned order was unsustainable and set it aside, allowing the appeal in favor of the appellant.

In summary, the Tribunal's decision centered on interpreting the definition of a commission agent under the Finance Act, 2005, in the context of the appellant's service of disbursing government teachers' salaries. The Tribunal found that the appellant's activities did not meet the criteria of a commission agent as per the Act, leading to the setting aside of the demand for service tax, interest, and penalties.