2015 (9) TMI 310 - AT - Service Tax

Business Auxiliary service - Denial of SSI exemption - whether the commission received by the appellants from the banks is chargeable to service tax under Section 65 (19) of the Finance Act, 1994 under Business Auxiliary Services - whether small scale exemption will be admissible to the appellants or not - Held that - services provided by these appellants as a Commission Agents are classifiable as Business Auxiliary Services. Appellants are arranging loans for the banks and thus promoting marketing the services provided by the Banks and are paid commission on such services from the bank. These activities have been correctly held to be classifiable under Business Auxiliary Services. So far as admissibility of small scale exemption notification is concerned, the services are provided to the customers on behalf of the banks and appellants are only acting as an agent of service provider. Accordingly, admissibilities of small scale benefit has been rightly denied by the First Appellate Authority as appellants are providing branded services on behalf of the banks. - Decided against assessee.

Summary

Issues:
1. Classification of services under Business Auxiliary Services for service tax.
2. Admissibility of small scale exemption for the services provided.

Classification of services under Business Auxiliary Services:
The appeal involved the question of whether the commission received by the appellants from banks is subject to service tax under Section 65(19) of the Finance Act, 1994, specifically under Business Auxiliary Services. The definition of Business Auxiliary Service as per Section 65(19) includes various activities related to promotion, marketing, customer care, procurement, production, and provision of services on behalf of the client. The Tribunal observed that the services provided by the appellants, acting as Commission Agents arranging loans for banks and receiving commission for such services, fall under the ambit of Business Auxiliary Services. The Tribunal upheld the classification of these activities as falling within the definition of Business Auxiliary Services and found no reason to interfere with the orders passed by the First Appellate Authority.

Admissibility of small scale exemption:
Another issue in the appeal was the admissibility of the small scale exemption notification for the services provided by the appellants. The Tribunal noted that the services were being provided to customers on behalf of the banks, with the appellants acting as agents of the service provider. Consequently, the Tribunal agreed with the First Appellate Authority's decision to deny the small scale benefit to the appellants. This denial was based on the reasoning that the appellants were providing branded services on behalf of the banks. As a result, the Tribunal dismissed the appeals filed by the appellants, affirming the denial of the small scale exemption notification.

In conclusion, the Tribunal upheld the classification of the services provided by the appellants as Business Auxiliary Services under the Finance Act, 1994. Additionally, the Tribunal agreed with the denial of the small scale exemption benefit to the appellants due to their role as agents providing branded services on behalf of the banks. As a result, the appeals filed by the appellants were dismissed.