2014 (7) TMI 746 - AT - Service Tax

Dispute over service tax exemption for service provider assisting bank

CCE, Chandigarh Versus M/s. AS. Financial

The case involved a dispute over service tax exemption for a service provider assisting ICICI Bank in marketing and loan assistance services. The Revenue ... Small service provider Exemption under notification no.6/05-ST - providing the services under the brand name/trade mark of ICICI Bank Ltd. - Held that:- Just by providing the ‘Business Auxiliary Service’ to ICICI Bank Ltd. by using the promotional material provided by ICICI Bank Ltd., the Respondent cannot be treated as using the brand name of ICICI Bank Ltd. and providing their service under the brand name of ICICI Bank. In fact the Respondent are not the Franchise of ICICI Bank Ltd. in the sense that they are providing financial services by using the business model and brand name of ICICI Bank. It is not the case of the department that the respondent for using the brand name or trade name of ICICI Bank Ltd. were paying some amount to the bank. On the contrary, it is the ICICI Bank which is paying to the respondent for providing the marketing services. The respondent, therefore, cannot be treated using the brand name of ICICI Bank Ltd. - No infirmity in impugned order - Decided against Revenue. Issues:Dispute over service tax exemption under notification no.6/05-ST for a service provider assisting ICICI Bank in marketing and loan assistance services.Analysis:The appeal by the Revenue concerns a dispute over service tax exemption for a service provider assisting ICICI Bank in marketing and loan assistance services. The respondent was providing services covered under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994, without paying service tax based on an exemption for small-scale providers. The Revenue contended that the respondent was not eligible for exemption as they were providing services under the brand name of ICICI Bank. The Asstt. Commissioner confirmed a service tax demand against the respondent, but the Commissioner (Appeals) set aside this order, stating that the respondent's turnover was within the exemption limit each financial year. The Revenue appealed this decision.The Revenue argued that the respondent was providing Business Auxiliary Services under ICICI Bank's brand name, citing various clauses in the agreement. These clauses required the respondent to use approved materials, display ICICI Bank's franchisee sign, and promote services under ICICI Bank's brand name. The Revenue contended that the respondent's services were not eligible for the small-scale provider exemption due to branding under ICICI Bank.Upon review, it was established that the respondent provided marketing services for ICICI Bank's services and assisted customers in obtaining loans, falling under taxable Business Auxiliary Services. However, the turnover of the respondent was below the exemption limit each financial year. The key dispute was whether the respondent provided services under ICICI Bank's brand name. The agreement clauses cited by the Revenue did not conclusively prove branding under ICICI Bank. Merely using promotional materials and displaying the franchisee sign did not equate to providing services under ICICI Bank's brand name. The respondent was not a franchisee in the sense of providing financial services using ICICI Bank's business model and brand name. The department did not claim the respondent paid ICICI Bank for using its brand name. As ICICI Bank paid the respondent for marketing services, branding under ICICI Bank was not established. Consequently, the appeal was dismissed, upholding the Commissioner (Appeals) decision in favor of the respondent.