2007 (10) TMI 392 - AT - Central Excise

Business Auxiliary Services - Vehicle loans - Show cause notice - whether, the consideration received should be treated on value-cum-duty basis?

Summary

Issues:
Challenge to order of Commissioner (Appeals) regarding service tax demand and penalties under Finance Act 1994.

Analysis:
The Revenue challenged the Commissioner (Appeals) order confirming a service tax demand of Rs. 1,65,195/- along with penalties under Sections 76, 77, and 78 of the Finance Act 1994, and interest under Section 75. The dispute arose from the respondent-assessee providing 'Business Auxiliary Services' without registration or payment of due service tax. The Revenue contended that the services fell under 'Business Auxiliary Services' category.

The respondent-assessee defended by stating they received variable commission rates from the bank for their services. The adjudicating authority found the services provided by the assessee were indeed 'Business Auxiliary Services' based on facilitating loans for commercial vehicles and the Board's Circular. The service tax liability was calculated at Rs. 1,65,195/- based on commission amounts received.

The Appellate Commissioner held that service tax was not leviable on a 'sole-proprietary firm' under 'Commercial Concern.' The definition of 'Business Auxiliary Services' included promotion or marketing services for clients. The issue was whether a sole-proprietor qualified as a 'commercial concern' providing such services.

The judgment clarified that a sole-proprietor's business activity constituted a 'commercial concern,' making them liable for service tax under 'Business Auxiliary Services.' The Appellate Commissioner's decision was overturned, emphasizing that a sole-proprietorship was indeed a commercial entity. The case was remanded for a fresh consideration of the merits and agreements related to the service provided.

In conclusion, the impugned order was set aside, and the matter was remanded to the Commissioner (Appeals) for a reevaluation in accordance with the law. The judgment highlighted the erroneous interpretation of 'commercial concern' and emphasized that a sole-proprietor's business activities fell within the ambit of taxable services. The appeal was allowed for further review and decision-making.