2017 (9) TMI 1491 - AT - Service Tax

Levy of service tax - services provided by an authorized person to Member of a recognized association - whether the service is classifiable under Business Auxiliary Services? - Held that - Having established that the appellant renders Business Auxiliary Services to M/s. Geojit BNP Paribas Financial Services and M/s. Geojit Comtrade Ltd. with the former being privileged for special treatment and exclusion, thereby, from taxability owing to specific provisions, and it being clear that sub-brokers in the commodities trade not enjoy the same privilege, the services rendered by appellant to M/s. Geojit Comtrade Ltd. is liable to service tax - demand upheld - appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the services provided by the appellant are liable to service tax under Business Auxiliary Service.
2. Whether the penalties imposed under Section 76 and 78 of the Finance Act, 1994 are justified.

Analysis:
Issue 1:
The appeal was against the order passed by the Commissioner (Appeals) concerning the service tax liability of the appellants who acted as intermediaries between principals and individual investors. The appellants claimed to be sub-brokers exempt from service tax as they rendered services on behalf of the principals. However, the impugned orders rejected this contention and classified the services under Business Auxiliary Service, making them liable to tax. The original authority concluded that the appellants were promoting and marketing the services provided by the principals, falling under taxable service as per the Finance Act, 1994. The learned AR supported the findings of the impugned order, emphasizing a re-computation of tax liability. The Tribunal upheld the impugned order, stating that the Commissioner (A) provided reasoned findings based on facts and law, ultimately dismissing the appeal.

Issue 2:
Regarding the penalties imposed under Section 76 and 78, the Commissioner (A) had imposed penalties in certain appeals. However, the Tribunal observed that penalties had been improperly imposed in light of settled rulings of the Hon’ble Tribunal and a decision of the Hon’ble High Court of Karnataka. The Tribunal set aside the penalty imposed under Section 76 in specific appeals, while not interfering with the penalty imposed under Section 77. The reasoned findings of the Commissioner (A) were deemed appropriate, and the impugned order was upheld by the Tribunal, thereby dismissing the appellant's appeal.