2010 (5) TMI 349 - AT - Service Tax

Waiver of pre-deposit - service tax liability under the category of Business Auxiliary Services - commission received towards tax collection from Central and State Governments and sale of bonds - Held that - activity may be called as an operation of bank accounts which prima facie may not be covered under the category of Banking and Other Financial Services - application for waiver of pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of the appeal

Summary

Issues: Service tax liability for business auxiliary services including tax collection, sale of government bonds, credit cards, and mutual fund units.

Analysis:
The judgment deals with a stay petition filed for the waiver of pre-deposit of various amounts related to service tax liability under the category of "Business Auxiliary Services." The appellant's services included tax collection, sale of government bonds, credit cards, and mutual fund units. The Chartered Accountant representing the appellant argued that the commission received for tax collection and sale of bonds should not be considered as 'Business Auxiliary Service' as per the definition of 'commission agent' provided in a circular. Referring to a previous decision, it was highlighted that the activity of tax collection was considered taxable under 'Banking and Other Financial Services' until a specific exemption was granted. Regarding the commission received for marketing and sale of mutual fund units, it was argued that units of mutual funds are goods and, therefore, the service cannot be classified as 'Business Auxiliary Services.' The appellant had a direct agreement with VISA for credit card membership, indicating that the commission received for marketing and selling credit cards should not be considered under the said category.

The Joint Commissioner reiterated the findings mentioned in the Order-in-Original. Upon careful consideration of the submissions and records, the Tribunal found that a significant portion of the demand was related to the commission received for tax collection and sale of government bonds. The Tribunal observed that the appellant's activity of collecting taxes and duties and remitting them to the government treasury could be likened to an operation of bank accounts, which may not fall under the category of "Banking and Other Financial Services." Consequently, the Tribunal concluded that the appellant had established a prima facie case for the waiver of pre-deposit of the amounts determined by the adjudicating authority. As a result, the application for the waiver of pre-deposit was allowed, and the recovery of the amounts was stayed pending the disposal of the appeal.