2017 (7) TMI 993 - AT - Service Tax

Business Auxiliary Services - mobilization of deposits/debentures, delivering deposits/debenture receipts, and providing other incidental services - whether the activities carried out by the appellant would fall under the scope of BAS under Section 65 (19) of the Finance Act, 1994 as it stood prior to 10.09.2004 before its amendment? - Held that - it is seen that the adjudicating authority has found that the appellant accepted application forms from investors applied for debentures/deposits of their client and in a fiduciary capacity on behalf of those companies in handling the applications from the investors; that they have to coordinate with these companies in the advertisement, canvassing and that they have to identify prospective customers for lending based on predetermined criteria. Time limitation - Held that - It has to be seen that appellants were discharging service tax under Banking and Financial Services and were filing regular returns - It is correct that there was confusion prior to 10.09.2004 as to whether all the services rendered on behalf of client would fall under BAS - when the appellant has written letter dated 29.10.2004 immediately, the fact has come to the knowledge of department and therefore in our view the SCN dated 02.05.2006 is time barred. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Whether the activities carried out by the appellant fall under the scope of Business Auxiliary Service (BAS) under Section 65(19) of the Finance Act, 1994 before its amendment on 10.09.2004.

Analysis:
1. The case involved the appellants providing non-banking financial services and entering into an agreement with certain companies. The issue was whether the activities conducted by the appellants prior to the amendment of the definition of BAS on 10.09.2004 fell under BAS. The department alleged that the appellants were liable to pay service tax on BAS from 01.04.2004 to 09.09.2004. The show cause notice was issued proposing a demand, interest, and penalties under the Finance Act, 1994. The Commissioner confirmed the demand, interest, and penalties, leading the appellants to appeal.

2. The appellant argued that the show cause notice proposing service tax for the period before the amendment was time-barred as there was no failure to disclose material facts. They contended that their activities did not fall under the previous sections of BAS and only after the amendment, their services would be taxable under BAS. The appellant believed they were under a bonafide belief that their activities did not fall under BAS before the amendment. The department, on the other hand, claimed that the activities carried out by the appellant would fall within the scope of BAS even before the amendment as they involved promotion, marketing, customer care services, and incidental support services.

3. The appellate tribunal analyzed the definition of BAS before and after the amendment on 10.09.2004. The department alleged that the activities of the appellant, such as promotion, marketing, customer care services, and incidental support services, fell under BAS even before the amendment. The tribunal considered the arguments presented by both sides and found that there was confusion before the amendment regarding the applicability of BAS to services provided on behalf of a client. The tribunal concluded that the show cause notice issued after the appellant's letter requesting changes in the Registration Certificate was time-barred. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by both parties, and the tribunal's decision based on the legal provisions and factual circumstances of the case.