Case remanded for reconsideration on merits, emphasizing thorough review of arrangement & commission passing.

The court remanded the case to the Appellate Commissioner for reconsideration and decision in accordance with the law and observations made in the judgment. The appeals were allowed for reconsideration on merits to determine the nature of the arrangement and commission passing, emphasizing the need for a thorough review of the issues raised in the appeals.

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Issues:
1. Confirmation of Service Tax demand on Business Auxiliary Service.
2. Imposition of penalties under various sections of the Finance Act, 1994.
3. Interpretation of the definition of 'Business Auxiliary Services' and determination of client relationship.
4. Applicability of Service Tax on services provided in connection with Banking and Financial Services.
5. Allegation of double taxation and lack of value addition by the assessees.

Analysis:

Issue 1: Confirmation of Service Tax demand on Business Auxiliary Service
In Service Tax Appeal No. 239/2006, the adjudicating authority confirmed a demand of Rs. 1,67,278 for Service Tax not paid on services rendered under 'Business Auxiliary Service'. The respondent-assessee had received commission from a bank for facilitating loans for customers. The Revenue alleged deliberate suppression of information to evade tax. The assessee argued that they provided services under an agreement with the bank, retaining only a portion of the commission. The authority confirmed the demand, adjusted the paid amount, and imposed penalties and interest.

Issue 2: Imposition of penalties
Penalties under Section 78, Rs. 100 per day under Section 76, and Rs. 1,000 under Section 77 were imposed in Service Tax Appeal No. 239/2006. Similar penalties were imposed in other appeals (Nos. 240/2006 and 241/2006) challenged by the Revenue, which were set aside by the Appellate Commissioner.

Issue 3: Interpretation of 'Business Auxiliary Services' and client relationship
The Appellate Commissioner set aside the orders based on the premise that banks cannot be clients of Business Auxiliary Service providers. The Commissioner held that the service provided did not fall under 'Business Auxiliary Services' as there was no direct remuneration from the client. The Commissioner also noted the lack of value addition by the assessees and the absence of input or output service concept in the context of services provided to bank customers.

Issue 4: Applicability of Service Tax on services related to Banking and Financial Services
The Revenue argued that Business Auxiliary Service providers can have clients, including banks. The services provided were deemed to fall under the promotion or marketing of services provided by the client, as per relevant provisions. The nature of services provided by the assessees was linked to Banking and Financial Services, making banks their clients.

Issue 5: Allegation of double taxation and lack of value addition
The Appellate Commissioner's decision was based on the misconception that banks cannot avail Business Auxiliary Services. The assessees provided services related to the promotion or marketing of Banking and Financial Services offered by banks. The appeals were allowed for reconsideration on merits to determine the nature of the arrangement and commission passing.

In conclusion, the judgment remanded the matters to the Commissioner for reconsideration and decision in accordance with the law and observations made in the judgment. The appeals were allowed by way of remand, emphasizing the need for a thorough review of the issues raised in the appeals.

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