2016 (5) TMI 844 - AT - Service Tax

Business Auxiliary Service - Arranging loans to customers from banks and thus promoting/marketing services provided by banks i.e Direct Selling Agent of the bank - Demand of Service tax along with interest and penalties - Held that - appellant s argument that they have provided only space to the bank and therefore, their service is classifiable under Business Support Service is not supported or backed by any evidence in the form of an agreement with the bank. Reliance on the judgment of Chambal Motors (P) Ltd. v. Commissioner of Central Excise, Jaipur-I 2007 (10) TMI 552 - CESTAT NEW DELHI and Auto World Vs. Comm. of C.Ex., Allahabad 2008 (5) TMI 120 - CESTAT NEW DELHI(CESTAT) does not favour the appellant. In the former case, it was held that Service Tax is payable on the commission received from the banks and, in the latter judgment it was held that the service rendered by the applicant falls under Business Auxiliary Service. Therefore, Service Tax is payable by the appellant. The plea that the demand is time-barred is not acceptable because there was suppression of facts regarding receipt of commission from the bank and, therefore, extended period of time is invocable. Benefit of exemption - Notification No. 6/2005 - Held that - it is found that the Commissioner came to the conclusion that they are using a brand name which disentitles them from the benefit of the notification. It is also noted that there is no evidence on record to indicate that the total value of service provided by them apart from the value of services to the bank did not exceed the exemption limit. - Decided against the appellant

Summary

Issues:
1. Classification of services provided by the appellant under Service Tax.
2. Applicability of Business Support Service classification.
3. Payment of Service Tax, interest, and penalties by the appellant.
4. Ex parte order request by the Tribunal on merits.
5. Exemption under Notification No. 6/2005.

Analysis:
1. The judgment deals with the classification of services provided by the appellant for arranging loans from banks under Service Tax. The appellant was considered a Direct Selling Agent of the bank, leading to a show cause notice demanding Service Tax under 'Business Auxiliary Service.' The Dy. Commissioner confirmed the demand in adjudication proceedings, which was upheld by the Commissioner (Appeals). Various judgments were cited to support that services provided by such agents are taxable under 'Banking or Financial Service' or 'Business Auxiliary Service.'

2. The appellant's argument that they provided only space to the bank and their service should be classified under 'Business Support Service' was rejected due to lack of evidence in the form of an agreement with the bank. The judgments of Chambal Motors and Auto World were referenced to establish that Service Tax is payable on the commission received from banks, and the service rendered falls under Business Auxiliary Service. The plea of time-barred demand was dismissed due to suppression of facts regarding commission receipt from the bank.

3. Although the appellant had paid the total amount of Service Tax, interest, and penalties, they requested an ex parte order by the Tribunal on merits. The Tribunal found that the appellant provided marketing services to banks by facilitating loans, and the argument for classification under 'Business Support Service' lacked evidential support, leading to the dismissal of the appeal.

4. The issue of exemption under Notification No. 6/2005 was also addressed in the judgment. The Commissioner concluded that the appellant's use of a brand name disqualified them from the exemption. Additionally, there was no evidence to show that the total value of services provided by the appellant did not exceed the exemption limit, further supporting the dismissal of the appeal.