2009 (5) TMI 253 - AT - Service Tax

Renting of space - whether the services provided by the appellants are in the nature of business auxiliary services - appellants are providing counter/table space, to financial institutions in their premises, to solicit business of loan/advances, to the buyer of vehicles who require such loans. It is undisputed that the loans are not distributed by the appellant. - We find that there is nothing on the record to indicate that the appellant had been promoting the services provided by various financial institutions specifically. The appellants have been informing their buyers about the various types of loans available and directing them to the financial institutions - the issue is now squarely covered by the decision of this Tribunal in the case of Silicon Honda v. CCE, Bangalore, 2007 - TMI - 1555 - CESTAT, BANGALORE - impugned order upholding demand and peanlty is liable to be set aside

Summary

Issues:
Service Tax liability on business auxiliary services provided by the appellant without payment.

Analysis:
The appellant, an authorized dealer for a motor company, was alleged to have provided business auxiliary services to financial institutions without paying Service Tax. The issue revolved around whether the payments received by the appellant were in the nature of rent for providing space or as remuneration for services. The adjudicating authority confirmed the demand for Service Tax, Education Cess, and imposed a penalty. The appellant appealed to the Commissioner (Appeals) who upheld the original order, leading to the current appeal.

The appellant argued that they only provided table space to financial institutions for conducting business, receiving payments akin to rent. They contended that they did not provide services to the financial institutions directly. The appellant cited precedents to support their position. On the other hand, the JCDR argued that the payments were commission based on the volume of sales, categorizing it as business auxiliary services.

The Tribunal analyzed the submissions and records, focusing on whether the services provided were indeed business auxiliary services. It was noted that the appellant facilitated loan transactions by suggesting financial institutions to vehicle buyers but did not distribute loans themselves. The Commissioner (Appeals) rejected the appeal due to lack of evidence regarding the nature of payments received by the appellant.

The Tribunal referred to previous decisions where it was established that merely providing space for financial institutions without actively promoting their services did not constitute business auxiliary services. The Tribunal found that the appellant's role was limited to informing buyers about available loans and directing them to financial institutions present on their premises. The Tribunal concluded that the payments received by the appellant were for leasing table space and not for providing business auxiliary services. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.