2009 (5) TMI 382 - AT - Service Tax

Business Auxiliary Services- The assessee was an authorized dealer for a two wheeler manufacturer and registered under service tax. It was alleged that the assessee was providing business auxiliary services to various financial institutions for which it received commission on the volume of business carried out by the financial institutions in its premises and it had not paid service tax on same. Accordingly a show cause notice was issued and on adjudication the adjudicating authority confirmed demand of service tax along with interest and penalty. The Commissioner (Appeals) upheld the said order. In the light of the decision of CCE v. Chadha Auto Agencies 2008 -TMI - 30029 - CESTAT BANGALORE held that- there was nothing on the record to indicate that the assessee had been promoting the services provided by various financial institutions specifically thus the impugned order was liable to set aside and appeal allowed.

Summary

Issues:
Service Tax liability for business auxiliary services provided by the appellant.

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 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. The appellant contended that they only provided table space for conducting business in their premises and received payments as rent, not as remuneration for services. The appellant cited precedents to support their argument.

The JCDR argued that the payments received were commission based on the net value of sales, indicating they fell under business auxiliary services. The Tribunal considered both sides' submissions and found that the services provided involved providing space to financial institutions to solicit business but not distributing loans. The Commissioner (Appeals) rejected the appeal due to lack of evidence regarding the nature of payments received. However, the Tribunal, following precedents, held that merely providing space for a fee did not constitute business auxiliary services.

The Tribunal emphasized that there was no evidence of the appellant promoting financial institutions' services or receiving commission for providing loans. They concluded that the payments were for occupying table space, not for business auxiliary services. Citing previous rulings, the Tribunal set aside the Commissioner (Appeals) order and allowed the appeal in favor of the appellant, granting consequential relief.

In conclusion, the judgment focused on whether the appellant's provision of space to financial institutions constituted business auxiliary services for which Service Tax was applicable. The Tribunal found that the payments received were for table space rental, not commission for promoting financial services, thus exempting the appellant from Service Tax liability.