2018 (9) TMI 648 - AT - Service Tax

Time Limitation - Business Auxiliary Services - promotion/marketing of Auto Loan products of the financial institution - Held that - There is no dispute that the issue was not free from doubt, there were conflicting opinion from different bench and the matter was referred to Larger Bench. The issue was also clarified by the board Circular No. 87/5/2006 dated 06.11.2006. In these circumstances, the entertaining bonafied belief by the appellant appears to be reasonable - the malafide intention cannot be attributed to the appellant. The impugned order is set aside only on ground of limitation - appeal allowed.

Summary

Issues:
1. Time-barred demand invoking extended period.
2. Conflicting judgments on the issue of Business Auxiliary Service (BAS).
3. Bonafide belief of the appellant regarding Service Tax payment.

Analysis:

1. Time-barred demand invoking extended period:
The appellant provided Business Auxiliary Service to a financial institution for promoting Auto Loan products and received commission during a specific period. A Show Cause Notice was issued demanding Service Tax along with interest. The adjudicating authority confirmed the demand and imposed penalties. The appellant contended that the demand was time-barred as the Notice was issued invoking the extended period. The issue of time limitation was crucial, and the appellant argued that conflicting judgments existed on this matter. The Larger Bench clarified that the classification of the transaction as taxable BAS depended on a careful analysis of relevant documents. The appellant's reliance on Circular No. 87/05/2006/ST further supported their argument against malafide intention, leading to the demand for the extended period being deemed unsustainable.

2. Conflicting judgments on the issue of Business Auxiliary Service (BAS):
The conflicting judgments on whether the transaction between an automobile dealer, bank, or financial institution constituted BAS created uncertainty. The Larger Bench emphasized the need for a detailed scrutiny of transactional documents to determine if BAS was provided. The appellant's argument, supported by relevant case laws, highlighted the lack of a uniform principle in determining the nature of such transactions. The Board's circular further clarified the issue, reinforcing the appellant's claim of a bonafide belief regarding the Service Tax liability.

3. Bonafide belief of the appellant regarding Service Tax payment:
The Revenue contended that the appellant, being a registered service provider under an authorized service station, should have been aware of the Service Tax regulations. However, the appellant's argument of having a bonafide belief regarding the payment of Service Tax was found reasonable by the Tribunal. Considering the lack of clarity due to conflicting judgments and the Board's circular, the Tribunal held that the appellant's belief was justified. Consequently, the demand for the extended period was set aside solely on the grounds of limitation, without addressing the issue on its merits, leading to the appeal being allowed in favor of the appellant.

This detailed analysis of the judgment in the Appellate Tribunal CESTAT AHMEDABAD case provides insights into the issues of time limitation, conflicting judgments on BAS, and the appellant's bonafide belief, resulting in a favorable outcome for the appellant based on the grounds of limitation.