2009 (1) TMI 141 - AT - Service Tax

Commission paid by banks for marketing of loans - refund claim for the erroneous payment of tax under the category of Business Auxiliary Service - Commissioner (Appeals) observed that the respondents received reduced amount from Bank/Finance company after deductions of incentive passed on to the buyers of the vehicles and directed the adjudicating authority to sanction the refund after verification application by revenue for staying the operation of the order of the Commissioner (Appeals), is rejected

Summary

The Appellate Tribunal CESTAT NEW DELHI citation 2009 (1) TMI 141 - CESTAT NEW DELHI, heard by S/Shri M. Veeraiyan, Member (T) and P.K. Das, Member (J), involved an application filed by the Revenue to stay the operation of an order passed by the Commissioner (Appeals). The case revolved around respondents who sourced loans for car buyers and received commissions from banks. The respondents deposited tax on these services, later filing a refund claim due to erroneous tax payment under the Business Auxiliary Service category. The adjudicating authority rejected the claim, but the Commissioner (Appeals) overturned this decision, noting that the respondents did not receive the full commission amount. The Commissioner directed the adjudicating authority to verify the refund. The Revenue argued that service tax should be paid on the gross amount received by the dealers, citing a Tribunal decision and Board's Circular. However, the Tribunal found no reason to stay the Commissioner (Appeals) order, as the reduced commission amount received by the respondents required verification. Consequently, the Revenue's application was rejected. The judgement was dictated and pronounced in open court.