2017 (7) TMI 850 - AT - Service Tax

Business Auxiliary Service - facilitation fee - Revenue entertained a view that the amount received by the appellant in the name of facilitation fee , is commission from various shops and emporia for providing services of promoting or marketing or selling of goods provided or belonging to the emporia/shops, is liable to Service Tax under the category of Business Auxiliary Service in terms of clause 19(i) of Section 65 of Finance Act, 1994 - Held that - It is clear that the appellant, by the act of stopping the buses only in front of contracted emporium and not in front of others, engaged in providing customers to the emporium resulting in promotion of sales. This is clearly in the nature of promoting the sales of goods belonging to the clients and facilitation fee received by the appellant from the emporium is nothing but in the nature of commission received for providing such services - the activity of the appellant is covered by the definition of Business Auxiliary Service leviable to service tax. Extended period of limitation - Held that - The appellant was already paying service tax under various categories and separate litigation was there whether the activity undertaken by the appellant is covered within the definition of tour operators - the appellant is a State Government undertaking which can have no intention to deliberately evade payment of service tax - extended period not invoked. The case is remanded to the original adjudicating authority for requantification of the demand falling within the normal time limit - appeal allowed by way of remand.

Summary

Issues:
Interpretation of 'Business Auxiliary Service' for taxation purposes, Liability for Service Tax on facilitation fee received, Applicability of time limitation for demand of Service Tax.

Interpretation of 'Business Auxiliary Service' for taxation purposes:
The case involved a Govt. company promoting tourism through luxury trains, charging a facilitation fee from shops for stopping the trains near them. The Revenue argued that the facilitation fee constituted commission for promoting sales, falling under 'Business Auxiliary Service' liable for Service Tax. The Tribunal analyzed the definition of 'Business Auxiliary Service' and concluded that the company's activity of providing customers to shops by stopping the trains near them indeed promoted sales, making it a taxable service.

Liability for Service Tax on facilitation fee received:
The company contended that as a State Govt. undertaking focused on tourism promotion, their activity did not qualify as 'Business Auxiliary Service'. They argued that the facilitation fee was not commission but payment for stopping the trains near shops. However, the Revenue maintained that the company's actions amounted to promoting sales of goods belonging to the shops, falling within the ambit of 'Business Auxiliary Service'. The Tribunal upheld the Revenue's view, ruling that the facilitation fee received was akin to commission for providing sales promotion services, thus liable for Service Tax.

Applicability of time limitation for demand of Service Tax:
Regarding the time limitation for demanding Service Tax, the company argued that the demand was time-barred due to lack of positive evidence in the show cause notice. The Tribunal noted that the company had been audited multiple times, paying service tax under various categories. Considering the company's status as a State Government undertaking and lack of intent to evade tax, the Tribunal held that the demand beyond the normal time limit should be set aside. The case was remanded for recalculating the demand within the normal time limit, emphasizing the importance of adhering to statutory limitations in tax assessments.