2008 (1) TMI 330 - AT - Service Tax

Services to ICICI Bank under an agreement for marketing their products under retail finance business - appellants contend that they were only getting commission and they were not carrying out any marketing/sales promotion hence, their activity is not business auxiliary services - prima facie, the assessee s plea is acceptable - As the Commissioner has not given any finding on merits, therefore, the impugned orders are set aside by allowing the stay application appeal - matter remanded

Summary

Issues: Stay applications concerning service tax on commission income under business auxiliary services category.

The judgment by the Appellate Tribunal CESTAT, Bangalore involved two stay applications concerning the imposition of service tax on commission income under the category of business auxiliary services. The appellants, who were providing services to a bank under a marketing agreement, contested that they were only receiving commissions on product sales and not engaged in marketing or sales promotion activities. The revenue department sought to recover service tax for the period from July 2003 to March 2005. The Commissioner (Appeals) rejected the stay application, directing the pre-deposit of the entire disputed amounts under section 35F of the Act. The appellants' appeals were dismissed for non-compliance as they did not deposit the required amounts. However, the appellants argued that a previous judgment by the same Bench had ruled in favor of their position, indicating that their activities were not covered under the business auxiliary services category.

Upon careful consideration, the Tribunal found the appellants' plea prima facie acceptable based on the cited judgment. As the Commissioner had not provided any findings on the merits of the case and had only dealt with the stay application, the Tribunal set aside the impugned orders. The matter was remitted back to the Commissioner (Appeals) for a decision on the case in light of the relevant citation, granting the appellants an opportunity for a hearing. Both stay appeals were allowed without requiring the appellants to make pre-deposits under section 35F of the Central Excise Act. The Commissioner (Appeals) was instructed to make a decision within four months from the receipt of the Tribunal's order.