2011 (7) TMI 990 - AT - Service Tax

Revenue appeal allowed, denying refund for services to bank. Tribunal clarifies service provider distinction.

The Revenue's appeal was allowed, denying the refund to the Respondent for services provided to a bank. The Tribunal determined that the Respondent did ... Refund of service tax paid - first Appellate Authority who granted relief to the Respondent on the ground that the Respondent was a sourcing agent to the bank and such service being taxable with effect from 10-9-2004, but the Respondent was not liable to Service Tax. - Notification No. 14/2004, dated 10-9-2004 - held that:- Nowhere the Respondent has pleaded that it was collaborator to the financing bank to serve clients of the Bank concerned. - the moment service was provided by the Respondent to the funding bank service of the bank begins to serve clients of the later. - no tripartite agreement was executed among the Respondent, financing bank and the borrower, nor there is any letter of appointment in that regard. There is no role of the Respondent to discharge any obligation to the prospective borrowers of the Bank. Therefore the material fact suggests that there was no provision of service to third party by the Respondent on behalf of the financing bank. The first Appellate order proceeded under misconception of law misconstruing the notification benefit. - Decided against the assessee - refund rejected. Issues:1. Admissibility of refund to the Respondent for service provided to a bank.2. Interpretation of Notification No. 14/2004-S.T., dated 10-9-2004.3. Determination of the nature of services provided by the Respondent to the financing bank.Analysis:1. The Revenue appealed against the first Appellate order granting a refund to the Respondent for services provided to ICICI Bank Ltd. The Respondent sourced customers for housing finance from ICICI, HFC, and was remunerated by ICICI, HFC. The Show Cause Notice demanded the discharge of Service Tax liability, leading to the appeal. The Adjudicating Authority and the first Appellate Authority differed on whether the service was taxable. The Appellate Authority relied on Notification No. 14/2004, dated 10-9-2004, and allowed the refund claim. The Revenue contended that the service nature was misconstrued, challenging the refund's admissibility.2. The Tribunal analyzed the modus operandi of the Respondent, highlighting its role as a service provider to the financing bank. It differentiated between the service to the bank and the subsequent banking or financial service to clients. The Tribunal noted the absence of evidence supporting the Respondent's provision of service to clients on behalf of the bank. The notification categorized claimants into two parts, neither of which applied to the Respondent due to the lack of evidence showing service provision to bank clients.3. The Tribunal emphasized that the Respondent did not have a tripartite agreement with the bank and borrowers, nor did it have obligations to prospective borrowers. The Respondent's role was clarified as a service provider to the funding bank, not on behalf of the bank to its clients. The Tribunal concluded that the first Appellate order was erroneous, as the Respondent did not fall under the notification's categories and did not provide services to bank clients. Consequently, the Revenue's appeal was allowed, denying the refund to the Respondent.This detailed analysis of the judgment showcases the issues surrounding the admissibility of the refund, the interpretation of the relevant notification, and the determination of the nature of services provided by the Respondent to the financing bank, as addressed by the Tribunal in its decision.