CESTAT allows appeal on service tax exemption for Business Auxiliary Services

The Appellate Tribunal CESTAT, New Delhi, allowed the appeal in a case concerning the availability of small scale exemption under Notification No.6/2005 for service tax on 'Business Auxiliary Services'. The appellant, a distributor of garment items and washing products, was found entitled to the exemption as they provided services under their own name to banks and institutions, not under the brand name of the manufacturer. The Tribunal set aside the previous order confirming service tax liability and remanded the matter for re-adjudication based on their ruling, granting the appellant the opportunity to contest other issues of merit and limitation.

---

---

Issues: Availability of small scale exemption under Notification No.6/2005 for service tax on 'Business Auxiliary Services'.

In this judgment by the Appellate Tribunal CESTAT, New Delhi, the issue at hand involves the availability of exemption under Notification No.6/2005 for service tax on 'Business Auxiliary Services'. The appellant, a distributor of garment items and washing products manufactured by a company, had the service tax confirmed against them under the category of 'Business Auxiliary Services'. The appellant contested the demand on merit and limitation, and also sought small scale exemption under the notification. The lower authorities denied the exemption, stating that the appellant was providing services under the brand name of the manufacturer. The appellant argued that providing services to a brand name owner should not disentitle them from the benefit of the Notification. The Tribunal's decision in a similar case was cited in support of this argument.

The Tribunal, after dispensing with the condition of pre-deposit of duty and penalty, proceeded to decide the appeal. The issue of availability of exemption under the Notification was thoroughly discussed. The Tribunal referred to a previous judgment where it was held that the exemption does not apply to services provided under a brand name of another person. In this case, the services were provided under the appellant's own name to banks and other institutions, not using the brand name of the recipients. Therefore, the Tribunal concluded that the appellant was entitled to the benefit of the Notification. The impugned order was set aside, and the matter was remanded to the original authority for re-adjudicating the liability based on the Tribunal's rulings.

In conclusion, the Tribunal allowed the appeal, remanding the matter for a fresh decision on the applicability of the small scale exemption under Notification No.6/2005. The appellant was given the opportunity to contest the demand on other issues of merit and limitation. The stay petition and appeal were disposed of accordingly.

---