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TMI Blog2016 (2) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... advertisements, all of which may be considered to be essential to bringing the banking institution to the doorstep of the customer and is, thereby, inextricably enmeshed with the financial product offered by the bank. The costs claimed to be reimbursibles are, therefore, not attributable to the 'business auxiliary service' rendered by the assessee but to the cost of the product itself. Not surprisingly, the bank reimburses these expenses. Therefore, these fall outside the scope of inclusion within the meaning of 'gross amount charged' in section 67 of Finance Act, 1994 in the context of the identified taxable service. The assessee's claim of reimbursable expenses having been evidenced except for ₹ 52,96,730/- and the tax having been paid on the unevidenced portion of receipts, further demand of tax envisaged in the show cause notice fails to survive. It would appear that the adjudicating authority was itself not unambiguously certain about the taxability and its scope; the assessee cannot be placed on a higher pedestal of more exacting standards of comprehension and compliance. Invoking of section 73(4) of Finance Act, 1994 is, therefore, not warranted. The first appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,79,930/-. Admittedly, they could furnish expense vouchers amounting to ₹ 1,49,47,365.58 and service tax liability on the remaining ₹ 52,96,730/-, being ₹ 5,46,266/-, was paid on 27th June 2006 along with interest of ₹ 1,40,470/-. They claimed to have discharged service tax on the fixed monthly remuneration which, according to them, is the consideration for service rendered. 3. The first appellate authority concluded that the activities of M/s Baven Desai are covered by section 65(19)(ii) of Finance Act, 1994 and that 'gross amount charged' in section 67 of Finance Act, 1994 precluded acceptance of claim for abatement of reimbursements in computation of the total costs involved in providing the taxable service. The plea for non-inclusion of expenses of personnel and administration as well as infrastructure costs from taxable value was not found to be acceptable. For this, reliance was placed by the first appellate authority on Atlanta v Commissioner of Central Excise [2005 (179) ELT 455 (Tri-Chennai) and re Amit Sales [2009 (13) STR 165 (Tri-Del)]. The further claim to be taxable as provider of 'support services of business or commerce' f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendering of adjudication by Additional Commissioner of Service Tax, Mumbai. 8. Turning to the issue of wrongful classification of service, we observe that this has not been considered by the lower authorities who were content to merely observe that it was the assesse who had assigned to themselves this classification before payment of tax and proceeded to restrict the scope of adjudication and appeal to valuation of taxable service. We are unable to convince ourselves of the validity of such a simplistic assumption. Two rival classifications have been submitted before us and, undoubtedly, the two attract identical rates of duty. Nonetheless, the chronological dimension renders the two conflicting claims, attached, as they are, to alternatives of a rate or zero at the relevant point in time, liable to determination for according constitutional approval to the tax collected. The two rival entries are complex in description and multifarious in composition. Both relate to activities that are relevant only in a business context, i.e. the recipient of service has to be a business entity. Both are subject to tax, albeit not in chronological proximity, because these are activities that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawn attention to two categories of receipts indicating that more than one service is rendered. The decision of this Tribunal in re SR Kalyanakrishnan referred supra was in the context of a specific set of activities relating to applications for loan and was followed in re wings Group of Companies owing, presumably, to identical transactions by that service provider. We notice that the assessee in this appeal was in the business of making potential customers of M/s ABN Amro aware of the various financial products offered by the bank. This included calling up individuals, obtaining application forms and furnishing them to the bank. M/s Baven Desai, admittedly, goes beyond a restricted range of activities and is in effect a 'front office' of M/s ABN Amro Bank. Hence, the decisions cited on behalf of the assessee do no support its claim of exclusion from taxability as provider of 'business auxiliary service' for which a consideration is received. 11. M/s Baven Desai has claimed that the remuneration received by them for rendering taxable service, in accordance with the agreement, is a per mensem amount of ₹ 40,000 and that tax has been discharged on this amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is, and has been, the peculiarity of the banking sector since it first came into being. M/s Baven Desai, notwithstanding its credibility within its circle, cannot pretend to provide institutional credibility to its client in relation to the financial products of the latter. While M/s Baven Desai may undertake to popularize the products amongst the populace, the potential customer will look for the symbols of the client as the sole reassurance in relation to the offerings. Further, the industry in which the client, M/s ABN Amro Bank, operates is subject to rigorous regulation in the number of branches that it can operate. An existing service provider may, additionally, be required to operate a 'front office' of the client to reinforce the credibility of the financial products. These may be mandates of the client for which the client may have to make a separate payment - whether these are for actual or on lumpsum is a matter of commercial agreement. To the extent that compliance with these mandates are liable to classified only within services that are 'as yet' not taxable, it would be contrary to legislative sanction to determine tax liability on such receipts. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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