2018 (10) TMI 1850 - AT - Service Tax

Levy of Service Tax - Business Auxiliary service - appellant was receiving certain amounts from various Banks and Financial Institutions for arranging finance for their customers - period July 2003 to March 2005 - extended period of limitation - penalty - HELD THAT - It is seen from the sample agreement that the appellant as representative of the Bank was required to explain the financial scheme and facilities to the customers and facilitation depends in giving loan to the customers - thus this activity is to be classified under BAS for payment of service tax. Time Limitation - HELD THAT - It is seen that the fact of providing such services to Banks and Financial Institutions was detected by the Revenue in view of the report of investigation - Revenue was fully justified in invoking extending period for demand of service tax under Section 73 of the Finance Act 1994. Penalty - HELD THAT - Keeping in view the fact that the service tax liability has already been discharged along with interest this is a fit case for waiver of penalty by taking recourse to Section 80 of the Finance Act 1994. Appeal allowed in part.

Summary

Issues:
1. Challenge to Order-in-Appeal No.03/ST/B-I/2007 dated 30.08.2007.
2. Liability of service tax under Business Auxiliary Service (BAS) for commission received.
3. Contesting demand of service tax on the ground of time-bar.
4. Waiver of penalty.

Analysis:
1. The appeal challenged the Order-in-Appeal No.03/ST/B-I/2007 dated 30.08.2007. The appellant, an authorized dealer for "Hero Honda" branded Motorcycles, received commission for arranging finance for customers through Banks and Financial Institutions. The Department issued a show-cause notice, alleging liability for service tax under the category of Business Auxiliary Service (BAS). The authorities confirmed a service tax amount of ?88,828 for the period July 2003 to March 2005, leading to the challenge in the present proceeding.

2. The appellant contended that the service tax was already paid along with interest post an order-in-original. The demand for service tax was contested primarily on the grounds of being time-barred. The appellant argued against the imposition of a penalty, seeking its waiver. The Revenue, however, supported the impugned order, highlighting a dealer-agreement with ICICI Bank, emphasizing the promotion of the bank's business through loans to customers.

3. The Tribunal observed that the appellant facilitated Banks in providing loans to customers, receiving commissions for such activities. Reviewing the sample agreement, it was noted that the appellant's role involved explaining financial schemes to customers, ultimately leading to loan facilitation. Consequently, the Tribunal upheld the liability for service tax under the category of BAS. The appellant's challenge on the basis of being time-barred was dismissed, as the Revenue was deemed justified in invoking an extended period for service tax demand under Section 73 of the Finance Act, 1994.

4. Considering the circumstances, including the discharge of service tax liability with interest, the Tribunal deemed it appropriate to partially allow the appeal. The waiver of penalty was granted under Section 80 of the Finance Act, 1994, given the facts and context of the case. The decision was pronounced in open court, concluding the proceedings.