2015 (11) TMI 474 - AT - Service Tax

Demand of service tax - Business Auxiliary service - Bar of limitation - whether the appellant is required to discharge service tax liability under the Business Auxiliary Service for the commission received by them from M/S Thomas Cook for the purpose of restricted money changing business in their premises - Held that - Agreement is termed as an agency agreement and the appellants are appointed as an agent. The duties which have been cast upon the appellant are very clear that they should surrender the amounts collected in foreign exchange to M/s Thomas cook India Ltd. and in turn Thomas Cook will pay the appellant the amount equivalent in Indian rupees on the date of transaction and appellant will also get incentive on Indian rupee transaction, as per agreement. We find that the activity as is in transaction of the appellant would be covered under the category Business Auxiliary services , as the appellant is acting as agent of Thomas Cook, and it is very clear from the closure of agreement that appellant has been given restricted money exchange agency by Thomas Cook India Ltd. (from the authorization they have received for engaging in money exchange). - undisputedly appellant are acting as an agent of Thomas Cook India Ltd. We find that appellant has no case on merits. Appellant could have had a bona-fide belief that they are not liable to service tax under the category of Business Auxiliary Services . The service tax liability was first indicated by the officers of audit team. We find that the appellant has taken the point of limitation before the lower authorities but both the authorities did not record any finding, which leads to inference that the challenge on limitation is accepted. We also find that the appellant could not be faulted for any bona-fide belief that the amount received as incentive is taxable under the Business Auxiliary Services. - Decided in favour of assessee.

Summary

Issues involved:
Whether the appellant is liable for service tax under 'Business Auxiliary Service' for commission received from M/S Thomas Cook for restricted money changing business.

Analysis:
The issue in this case revolves around the service tax liability of the appellant under 'Business Auxiliary Service' for the commission received from Thomas Cook for conducting restricted money changing business in their premises. The lower authorities held that the commission received falls under the service tax net. The appellant argued that the activity is not taxable as it involves the purchase and sale of foreign exchange, which is incidental to their main hospitality business. They contended that the incentive received is a discount and not taxable under business auxiliary services. The appellant also highlighted that they had already discharged the service tax liability and interest. On the question of limitation, the appellant claimed a bona-fide belief that they were not liable for service tax under 'Business Auxiliary Services' due to the nature of their business activities.

The departmental representative, however, maintained that the appellant acted as an agent for Thomas Cook and received commission for their services. They argued that the appellant did not disclose the commission received, leading to the invocation of the extended period for raising demands. The representative supported the lower authorities' decision to confirm the service tax liability, interest, and penalties.

Upon reviewing the agreement between the appellant and Thomas Cook, the tribunal found that the appellant was appointed as an agent by Thomas Cook for the restricted money exchange business. The tribunal concluded that the appellant's activities fell under 'Business Auxiliary Services' as they were acting as an agent of Thomas Cook. The tribunal rejected the appellant's argument that their activities were not taxable under business auxiliary services due to the nature of their main hospitality business.

Regarding the limitation issue, the tribunal acknowledged that the appellant could have genuinely believed they were not liable for service tax under 'Business Auxiliary Services.' The tribunal noted that the service tax liability was first brought to the appellant's attention by the audit team. Ultimately, the tribunal ruled in favor of the appellant on the limitation issue, holding that the demands raised beyond the limitation period could not be enforced.

In conclusion, the tribunal allowed the appeals filed by the appellant solely on the limitation grounds. The appeals were granted on limitation, and any consequential relief was provided accordingly. The miscellaneous applications for an extension of stay were also disposed of by the tribunal.