2018 (7) TMI 1220 – CESTAT CHENNAI – TMI – Business Auxiliary Service – respondents had tie up with various financial institutions like GE Countrywide, TVS Finance etc. for purchase of consumer durables from the show rooms; that in respect of customers who avail the loan facility from such financial institutions, the respondents receive incentives depending on the quantum of business provided through them – whether the service would fall under the category of Business Auxiliary Services or not?
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Held that:- To determine whether a particular activity would constitute “Business Auxiliary Service’, the Larger Bench in the case of M/S PAGARIYA AUTO CENTER VERSUS CCE, AURANGABAD [2014 (2) TMI 98 – CESTAT NEW DELHI (LB)], has held that “transactional documents and other evidence on record” should indicate that the substantial activity is falling within the contours of BAS – In the case before us, these tests have not been applied – Interests of justice require that the matter should b
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uant to investigations carried out by the Directorate General of Central Excise Intelligence (DGCEI), it appeared that respondents had tie up with various financial institutions like GE Countrywide, TVS Finance etc. for purchase of consumer durables from the show rooms; that in respect of customers who avail the loan facility from such financial institutions, the respondents receive incentives depending on the quantum of business provided through them. It appeared that department took the view that by providing the services, the respondents were operating an agent of financial institutions to promote the business of the latter for which activity they receive commission. Hence the said services are appropriately covered under Business Auxiliary Service as defined under Section 65 (19) of the Finance Act, 1994. Accordingly, a show cause notice dt. 26.03.2009 was issued to appellant, inter alia proposing demand of service tax liability of ₹ 35,23,936/- with interest thereon, for the
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The customers of respondents were directed to approach only such banks / financial institutions who have tie up with them and not to others. iii) The representative of income by financial institutions had not been brought to the notice of the department. iv) From the statement of Shri S. Jeyaraj, Accounts Manager of respondents, it had been clearly brought out that as representatives of financial institutions with whom respondent had tie up were available in the show rooms. If the customers wish to avail loan, the respondent directs them to approach such representatives. Shri S. Jeyaraj has admitted the fact that for promoting the business of these financial institutions the respondent had received volume based incentives. The statement of Shri Jeyaraj has not been retracted nor disputed by the respondent. 3. On the other hand, on behalf of the respondent, Ld. Counsel Shri K.A.Parthasarathy made oral and written submissions which can be broadly summarized as under : i) The Larger Bench
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hey had given reply on 10.10.2007 along with copies of General Ledger for the years 2003-04, 2004-05 and 2005-06. Further in response to summons dt. 15.11.2007 they had submitted a letter dt. 26.11.2007confirming that they had furnished necessary details including Balance Sheet, Profit and Loss Account etc. and also pointed out that they were not rendering any activities which are liable for service tax. However, SCN has been issued only on 26.03.2009 for the period 1.10.2003 to 30.09.2008 and as such the same is clearly barred by limitation. v) As alternative plea, Ld. Advocate submits that even in case the tax liability is confirmed against the respondents there cannot be any penalty that can be imposed. The decisions of the Tribunal following Larger Bench decision in Pagariya Auto Center Vs CCE Aurangabad – 2014 (33) STR 506 (Tri.-LB), for example Ved Automotives Vs CCE Kanpur – 2016 (44) STR 140 (Tri.-All) ; Addis Marketing Vs CCE Mumbai – 2017 (50) STR 56 (Tri.-Mumbai) etc. have a
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I) and also to worksheets containing details of payments received towards commission by respondents (Annexure-III). All the same, both the lower authorities have not done any analysis of these communications. Further, even though in the reply to SCN dt. 30.04.2009 the respondents had inter alia, submitted a chronology of communications between DGCEI and, in particular, the fact of their having given all details called for and had contended that the demand is therefore barred by limitation of time, both the lower authorities have not gone into depth on these aspects. 6. Be that as it may, following the principle of stare decisis, this forum will fully rely on the ratio laid down by the Larger Bench of the Tribunal in Pagariya Auto Center Vs CCE Aurangabad (supra). The relevant portions of the Tribunal s Larger Bench decision are as under : 20. On a consideration of the apparent conflict of opinion in the decisions mentioned in the order of reference and the other decisions which were ci
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a substantial activity falling within the contours of any of the integers of the definition of BAS, spelt out in Section 65(19), then it would be legitimate to conclude that BAS is provided. 7. The takeaway from the ratio laid down by the aforesaid Larger Bench decision is that each and every case has to be analyzed in its entirety to determine whether there is a relationship / transaction which would fall within the fold of Business Auxiliary Service as defined in Section 65 (19) ibid. The Larger Bench has also held that if only mere space is provided along with furniture for facilitating accommodation of representatives of financial institutions within the premises of automobile dealer and consideration is received for that singular activity, such restricted relationship / transaction may not amount to Business Auxiliary Service. To determine whether a particular activity would constitute Business Auxiliary Service , the Larger Bench has held that transactional documents and other ev
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rvices for commission received from the financial institution, while the tax demand on amount received as target incentive is set aside. Interest liability on the tax confirmed is upheld while penalties are set aside. Appeal disposed of. In Ved Automotives Vs CCE Kanpur – 2016 (44) STR 140 (Tri.-All), the Tribunal in fact not only held that penalty is not imposable but also that extended period is not invocable. Relevant portion of this order is as under : 11. Thus, we find that there was interpretational issue, as to liability to service tax in the matter, as is evident by the nature of activity and clarification by the Larger Bench of this Tribunal. Accordingly, we hold- (i) Service tax is payable under the category of BAS under Section 65(19), by the appellant for the normal period; (ii) Extended period is not invocable; (iii) Penalties imposed are set aside. So also, in Addis Marketing Vs CCE Mumbai – 2017 (50) STR 56 (Tri.-Mumbai), the Tribunal similarly set aside penalties on the
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– relates to Business Auxiliary Service (Commission on sale of car) require to be re-considered applying the Notification No. 14/2004-S.T. by the Adjudicating Authority. (d) Penalties imposed under Sections 76, 77 and 78 are set aside. Following the above ratio, we hold that there cannot be any imposition of penalties in this case and therefore the penalties are set aside. 9. To sum up – (i) The matter is remanded for de novo consideration by the original authority to apply the tests laid down by the Larger Bench in Pagariya Auto Center (supra). (ii) In such de novo proceedings, the adjudicating authority shall also look into the contention of the respondents that the proceedings per se are hit by limitation. Needless to say, the respondents should be given suitable opportunity for presenting the case including the submissions of additional documents, if any, (iii) Penalties imposed under Sections 77 and 78 of the Finance Act, 1994 are set aside. 10. Appeal is allowed by way of remand
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