2018 (5) TMI 723 - AT - Service Tax

Business Auxiliary Service - appellant has facilitated various banks and Non Banking Financial Institutions, in the activity of sanctioning bank loans to the customers who would like to purchase vehicle of M/s Tata Motors - Held that - the liability to BAS will need to be carefully re-examined in the light of the Larger Bench decision of the Tribunal in the case of Pagariya Auto Center 2014 (2) TMI 98 - CESTAT NEW DELHI (LB) and the nature of activities rendered by the appellant will need to be examined by considering the various contracts examined by the appellant with Banks and NBFCs - matter remanded to the original authority for re-examination - appeal allowed by way of remand.

Summary

Issues:
1. Whether the commission received by the appellant from banks/NBFCs is liable to service tax under Business Auxiliary Service (BAS) category.
2. Whether the activity of the appellant falls under BAS or "Renting of Immovable Property Service."

Analysis:
The appellant, an authorized dealer of a car manufacturer, facilitated banks and NBFCs in sanctioning loans for customers. The dispute arose regarding the liability of service tax on the commission received by the appellant. Both authorities held the commission as taxable under BAS. The appellant argued they only provided space for banks/NBFCs to conduct financing activities, not acting as agents. The Tribunal referred to the decision in M/s Pagariya Auto Center vs. CCE, Aurangabad, laying down guidelines for BAS classification. The AR contended that the appellant actively promoted loans, justifying the tax demand.

The Tribunal examined the contracts between the appellant and banks/NBFCs to determine BAS liability. Citing the Larger Bench's observation in Pagariya Auto Center, the Tribunal emphasized the need for a careful analysis of transactional documents for rational classification. The Tribunal concluded that a re-examination was necessary based on the nature of activities and contracts with banks/NBFCs. Consequently, the impugned order was set aside, and the matter remanded for denovo proceedings, allowing the appellant to present their case.

In conclusion, the Tribunal allowed the appeal by way of remand, directing a thorough re-examination of the appellant's activities and contracts with banks/NBFCs to determine the liability under the BAS category. The decision highlighted the importance of scrutinizing transactional documents for accurate classification and rational tax determination, following the guidelines set by the Larger Bench's decision in similar cases.