2018 (6) TMI 672 - AT - Service Tax

Business Auxiliary Service - appellant are engaged in providing certain services of customer assessment and documentation on behalf of ICICI in respect of sanction of commercial loans to vehicles - whether the activities undertaken by the respondents fall under Business Auxiliary Service ? - Held that - From the records it is seen that the respondents entered in to agreements with ICICI bank for providing services of franchisee for marketing and sourcing of its auto products; their main business is to locate the customers, assess their credit worthiness and prepare the documentation on behalf of ICICI Bank in the category of commercial vehicles. It is to be seen that as per Section 65(19) of Finance Act, 1994 Business Auxiliary Service includes any incidental or auxiliary support service includes services such as billing, collection or recovery of cheques amounts and remittance, evaluation of prospective customer and public relation services - the services rendered by respondents come under the ambit of Business Auxiliary Service during the relevant period. Regarding the fines and penalties also, the respondents have not made out any strong case in their favor. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
Classification of services under Business Auxiliary Service (BAS) as per Section 65(19) of the Finance Act, 1994.

Analysis:
The case involved M/s. Combined Financial Services and M/s. Kar Point Services Pvt. Ltd. providing services for customer assessment and documentation on behalf of ICICI for commercial vehicle loans. The Central Excise Intelligence opined that these services fell under BAS. Show Cause Notices were issued, confirmed by the Additional Commissioner, and appealed by the assessee-respondent. The Commissioner of Customs (Appeals) set aside the orders of the Original Authority, leading to the department's appeals against the Orders-in-Appeal.

The departmental representative argued that the services provided were akin to promoting or marketing services, falling under BAS as per Section 65(19) of the Finance Act, 1994. The representative referred to relevant case laws and circulars to support their stance. They highlighted the importance of distinguishing between Business Auxiliary Service and Business Support Services, emphasizing the applicability of tax liability from specific dates based on the nature of the services rendered.

On the other hand, the respondents contended that their activities were more in the nature of Business Support Services rather than Business Auxiliary Services. They detailed their operational processes, emphasizing their role as assisting bank officers in documentation and loan processing rather than actively promoting or marketing products or services. They argued that their services did not align with the definition of Business Auxiliary Service.

After hearing both sides and examining the records, the Tribunal found that the activities of the respondents indeed fell under Business Auxiliary Service. The Tribunal noted that the respondents acted as a front office for the bank, processing loan applications and documentation on behalf of ICICI. The Tribunal cited relevant case laws to support their decision, emphasizing the wide scope of Business Auxiliary Service as per the Finance Act, 1994. The Tribunal concluded that the services provided by the respondents clearly fell within the ambit of Business Auxiliary Service during the relevant period, dismissing the arguments raised by the respondents. Consequently, the appeals filed by Revenue were allowed, upholding the Orders-in-Original.

In summary, the judgment addressed the classification of services under Business Auxiliary Service, analyzing the nature of activities undertaken by the respondents and applying relevant legal precedents to determine the tax liability. The Tribunal's decision highlighted the broad interpretation of Business Auxiliary Service and upheld the applicability of tax in this case.