2016 (2) TMI 369 - AT - Service Tax

Classification of services - Business Auxiliary Service (BAS) or not - assessee required to verify the details relating to residential address and /or employer office address or any other details in respect of the applicants seeking financial assistance from various banks and in respect of which these banks sought such verification - Held that - verification of correctness fairness and authenticity of information furnished by those seeking loan from Bank would not be classifiable under BAS - Demand set aside - Decided in favor of assessee.

Summary

Issues:
- Service tax demand for the period 2002-03 to 2006-07 under Business Auxiliary Service (BAS) sustained
- Classification of service provided by the appellant to various banks
- Interpretation of BAS under Section 65(19) of the Finance Act, 1994

Analysis:
The appeal was filed against the order-in-appeal sustaining a service tax demand of Rs. 12,98,148 for the period 2002-03 to 2006-07 under Business Auxiliary Service (BAS) due to the appellant providing a service without paying service tax. The appellant contended that the service provided was only to verify details of applicants seeking financial assistance from banks, which falls under Business Support Service (BSS) effective from 01.06.2006, for which they have been paying service tax since then. The appellant cited relevant judgments supporting their argument.

The Departmental Representative (DR) argued that customer evaluation falls under BAS, supporting the impugned order. However, the Tribunal analyzed the contentions of both sides and concluded that the service rendered by the appellant was solely to verify details provided in applications to banks, not involving customer evaluation or promoting bank services. The Tribunal referenced previous judgments to support its decision, highlighting that mere verification of addresses does not constitute a service equivalent to promoting or marketing bank services, as clarified under Section 65(19) of the Finance Act, 1994.

The Tribunal referred to the judgments in the cases of Rakesh Porwal & Associates and S. R. Kalyanakrishan, where similar issues were addressed, emphasizing that verification of information for loan applicants does not classify as BAS. Consequently, the Tribunal held that the impugned order was not sustainable, setting it aside and allowing the appeal with consequential relief to the appellant. The decision was based on the interpretation of the nature of the service provided by the appellant, distinguishing it from activities falling under BAS as defined by the relevant legal provisions.