2018 (9) TMI 36 - AT - Service Tax

Business Auxiliary Service - commission received from HDFC Bank as a recovery agent during the period 2008-2009 to 2012-2013 - Demand of Service Tax - Held that - In all the years the services provided by the appellant remained below the threshold limit of ₹ 10 lakhs. Moreover, with regard to the issue of sale of goods was not disputed by the authorities below and not consider in the impugned order - as the value of services provided by appellant falls within the threshold limit of 10 lakhs, no Service Tax is payable by the appellant - appeal allowed - decided in favor of appellant.

Issues involved:
Appeal against demand of service tax under 'Business Auxiliary Service'; Consideration of threshold limit for service tax liability; Validity of demand based on profit and loss account; Sale of goods to HDFC Bank and its impact on service tax liability.

Analysis:

1. Demand of Service Tax under 'Business Auxiliary Service': The appellant, a recovery agent of HDFC Bank, was in appeal against an order confirming the demand of service tax under the category of 'Business Auxiliary Service'. The Revenue based its decision on the receipts shown in the profit and loss account, alleging that they all pertained to commission received from HDFC Bank. A Show Cause Notice was issued demanding service tax amounting to ?18,21,913.00. The appellant contested this demand, arguing that the services provided by them remained below the threshold limit of ?10 lakhs in all the years, hence no service tax was payable. The authorities did not consider this threshold limit aspect, leading to the appeal before the tribunal.

2. Consideration of Threshold Limit for Service Tax Liability: The appellant submitted that the value of services provided by them each year was below ?10 lakhs, which exempts them from service tax liability. The tribunal observed that the profit and loss account details provided were not considered by the lower authorities. Upon reviewing these documents, it was established that the services provided by the appellant indeed remained below the prescribed threshold limit in all relevant years. This crucial aspect was overlooked by the authorities below, leading to the tribunal's decision that no service tax was payable by the appellant.

3. Validity of Demand Based on Profit and Loss Account: The appellant clarified that apart from the commission received for their services, the remaining amount in the profit-loss account pertained to goods sold to HDFC Bank, for which invoices were raised. This distinction was crucial in determining the actual value of services provided by the appellant. The tribunal noted that the issue of sale of goods was not disputed by the lower authorities and was not considered in the impugned order. Consequently, with the value of services falling below the threshold limit and the sale of goods being a separate transaction, the tribunal held that the demand of service tax was not sustainable.

4. Sale of Goods to HDFC Bank and Impact on Service Tax Liability: The appellant's argument regarding the sale of goods to HDFC Bank, distinct from the services provided, played a significant role in the tribunal's decision. By highlighting that the value of services remained below the threshold limit and the sale of goods aspect was not disputed, the tribunal concluded that no service tax was payable. This distinction between services and goods sold was pivotal in setting aside the impugned order and allowing the appeal with consequential relief to the appellant.

In conclusion, the tribunal's detailed analysis of the profit and loss account, consideration of the threshold limit for service tax liability, and recognition of the sale of goods as a separate transaction were instrumental in overturning the demand of service tax against the appellant.

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