2011 (8) TMI 903 - AT - Service Tax

CESTAT upholds taxability of services as Business Auxiliary Services but allows exemption under Notification 6/2005-ST

PEOPLES AUTOMOBILES LTD. Versus COMMISSIONER OF C. EX., KANPUR

The Appellate Tribunal CESTAT, New Delhi upheld the taxability of services provided by the appellants as Business Auxiliary Services, following ... Demand - commission from the banks and non-banking financial corporation for acting as their direct selling agents/authorized dealers/recovery agents - Business Auxiliary Services - Notification No. 6/2005-S.T., dated 1-3-2005 - First Proviso to the Notification is to the effect that nothing contained in the notification shall apply to taxable services provided by a person under a brand name or trade name whether registered or not of another person - The notification does not put restriction with reference to the brand name of the service recipient but the same debars the benefit to the service provider, if the brand name or trade name of another person is being used as service provider - Decided in favor of the assessee Issues:1. Determination of services under Business Auxiliary Services.2. Applicability of exemption Notification No. 6/2005-S.T. for taxable services provided under a brand name or trade name of another person.Analysis:1. The appellants received commission from banks and financial corporations for acting as direct selling agents, authorized dealers, and recovery agents. Revenue treated these services as Business Auxiliary Services from 1-7-2003, leading to demand confirmation and penalties. Tribunal noted that previous decisions established that services provided by direct sales agents to banks for arranging finance fall under Business Auxiliary Services. The appellants' argument that their services were not taxable was dismissed based on precedents like Malpani Finance v. CCE, Auto World v. CCE, Bridgestone Financial Services v. CCE, and Roshan Motors Ltd. v. CCE. The Tribunal upheld the taxability of the services provided by the appellants.2. The appellants claimed exemption under Notification No. 6/2005-S.T., which exempts taxable services up to a certain limit. However, lower authorities denied the exemption, citing that services provided under a brand name of another person, such as ICICI Bank and HDFC Bank, are not eligible for the exemption. The Tribunal analyzed the First Proviso to the Notification, which excludes services provided under a brand name of another person from the exemption. The Tribunal disagreed with the lower authorities, stating that the services were provided under the appellants' name to the banks, not under the banks' brand name. Therefore, the appellants were entitled to the benefit of the exemption notification. The demand confirmation was set aside, and the matter was remanded for reevaluation of liability for each financial year based on the Tribunal's findings.This judgment by the Appellate Tribunal CESTAT, New Delhi, provided a detailed analysis of the issues related to the classification of services under Business Auxiliary Services and the applicability of exemption Notification No. 6/2005-S.T. for services provided under a brand name of another person. The Tribunal relied on previous decisions to establish the taxability of services provided by direct sales agents to banks. Additionally, it clarified that services provided under the appellants' name to banks were eligible for the exemption, overturning the lower authorities' decision.