2010 (6) TMI 128 - AT - Service Tax

Business Auxiliary Services- The appellant is a dealer of automobiles for Hero Honda and Tata Motors. The allegation against the appellant is that the activity taken over by the appellant by helping in financial assistance to the buyers through financial institution is classifiable under Business Auxiliary Services as defined under Section 65 (19) of Chapter V of the Finance Act, 1994. Held that-in the light of the decisions of Silicon Honda vs. CCE, Bangalore, 2007 -TMI - 1555 - CESTAT, BANGALORE, the activity taken over by the appellant is not a Business Auxiliary Service . Hence the demands are not sustainable. Accordingly, the impugned order is set aside and the appeal is allowed.

Summary

Issues:
1. Confirmation of service tax under 'Business Auxiliary Services' along with interest and penalties.
2. Classification of the appellant's activity under Business Auxiliary Services.
3. Interpretation of the definition of Business Auxiliary Services under Section 65(19) of the Finance Act, 1994.
4. Applicability of penalties under Section 76, 77, and 78 of the Finance Act, 1994.

Analysis:
The Appellate Tribunal CESTAT, Mumbai heard an appeal concerning the confirmation of service tax under 'Business Auxiliary Services' by the appellant, a dealer of automobiles, involving a commission received from banks for arranging finance for customers. The appellant argued that they merely provided table space to financial institutions for customer finance assistance, not promoting the banks' business. The appellant cited a case precedent to support their position. The Departmental Representative contended that the appellant admitted liability during investigation, and the activity fell under Business Auxiliary Services as per a circular. The Tribunal noted the similarity with a previous case and quoted a relevant observation. The Tribunal agreed with the appellant, emphasizing that providing table space for financial institutions did not constitute Business Auxiliary Services, as established in the precedent case. Consequently, the impugned order was set aside, and the appeal was allowed with possible consequential relief, if any. The judgment highlighted the importance of specific facts and evidence in determining the classification of services under tax laws and the significance of legal precedents in decision-making.