2018 (5) TMI 722 - AT - Service Tax

Business auxiliary service - appellant arranges the borrowers, who need money and introduces them with the money lenders, who provide money on loan basis - Held that - the issue arising in the present case stand settled by this Tribunal in the case of Amarnath Associates 2017 (7) TMI 95 - CESTAT NEW DELHI , where the Tribunal has held that the ingredients mentioned in the definition of business auxiliary service are absent in the case of the appellant, and thus, the service tax demand cannot be fastened against the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of taxable category of business auxiliary service for a finance broker.

Analysis:
The appeal was against an order passed by the Commissioner, Customs & Central Excise (Appeals), Jaipur, regarding the appellant, a finance broker, arranging borrowers with money lenders and collecting commission. The department interpreted this activity as falling under the taxable category of business auxiliary service. The appellant argued that no service was provided on behalf of another person, thus not categorizable as a taxable service. Reference was made to a Tribunal order in a similar case. The Revenue reiterated the findings in the impugned order.

Upon hearing both sides, the Tribunal referred to a previous final order in a similar case where it was held that the appellant's activities did not meet the criteria of business auxiliary service. The Tribunal noted that the appellant facilitated loan transactions without entering into contracts with lenders or borrowers, thus failing the description as an agency or commission agent. The consideration received by the appellant was not connected to the sale of a product or service, as required for classification under business auxiliary service. The Tribunal found that the appellant's activities did not fit the definition of business auxiliary service and, therefore, set aside the impugned order, ruling in favor of the appellant. The Tribunal also noted that the denial of Cenvat credit was not pressed by the appellant, and the impugned order related to Cenvat credit would stand.

In conclusion, the Tribunal found no merits in the impugned order and allowed the appeal in favor of the appellant, setting aside the order and ruling that the appellant was not liable to service tax.