2016 (1) TMI 739 - AT - Service Tax

Business Auxiliary Services - provision of services in relation to filing drawback claims, filing application for DEPB, EPCG licences etc. - change in the definition w.e.f. 10/09/2004 - . It is argued on behalf of the appellant that in spite of the amendment, the service provided by them does not fall under any of the categories (i) to (vii) under the Business Auxiliary Services head. - Held that - the service provided by the appellant does not fall under any of the sub-Clause (i) to (vii) of Section 65 (19) under the head Business Auxiliary Services. We take notice of the fact that the appellant have neither facilitated sale of any goods of their client nor service. It is admitted fact that the appellants are not involved in any activity directly relating to promoting or marketing of goods. The appellants provided services like filing drawback claims, filing application for DEPB, EPCG licences, processing application for Star Export House Certificate etc. The scope of Business Auxiliary Services (BAS) does not cover the activities of appellants as they do not deal with promotion or marketing of goods or services. There is no incidental or auxiliary service to such marketing. - Demand set aside - Decided in favor of assessee

Summary

Issues Involved:
- Whether the appellant rendered Business Auxiliary Services for the financial year 2004-2005.

Analysis:

Issue 1: Business Auxiliary Services for 2004-2005
The appeal revolved around the question of whether the appellant provided Business Auxiliary Services during the financial year 2004-2005. The appellant disputed their liability for this period, arguing that the services they offered, such as facilitating clients in receiving export incentives and duty drawbacks, were not taxable under Business Auxiliary Services. The show cause notice alleged that the appellant collected tax from clients but did not deposit it regularly in the Central exchequer. The order-in-original confirmed the demand, stating that the appellant's services promoted and encouraged the sale of clients' goods, making them liable for tax. The appellant contested this decision, highlighting that their services did not involve promoting or marketing goods directly. The appellate tribunal found that the appellant's services did not fall under Business Auxiliary Services as they did not deal with promoting or marketing goods, leading to the setting aside of the demand and penalties imposed under various sections of the Act.

Conclusion:
The appellate tribunal ruled in favor of the appellant, stating that their services did not qualify as Business Auxiliary Services under the relevant provisions. The tribunal emphasized that the appellant's activities did not involve promoting or marketing goods directly, leading to the decision to set aside the demand and penalties imposed by the original order.