Tribunal rules commission from financial institutions for loan services not taxable as business auxiliary service

The Tribunal allowed the Revenue's appeal against service tax demands, overturning the earlier decision confirming the demands under business auxiliary service. The Tribunal determined that the commission/incentive received by the respondent from financial institutions was for services related to granting loans, not for providing space/accommodation. Relying on the statement of the authorized representative and previous judicial decisions, the Tribunal set aside the orders-in-appeal, emphasizing that the service rendered was taxable only from a specific date.

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Issues:
1. Appeal against service tax demands under business auxiliary service.
2. Interpretation of service provided by the respondent to financial institutions.
3. Reliance on statement of authorized representative for determining nature of services.
4. Absence of respondent during proceedings.

Analysis:
1. The appeal was filed by the Revenue against the order-in-appeal confirming service tax demands. The primary adjudicating authority had upheld the demand under business auxiliary service, while the Commissioner (Appeals) set aside the orders-in-original, stating that the service rendered was business support service taxable only from a specific date.

2. The Revenue contended that the commission/incentive received by the respondent from financial institutions was for services related to granting loans, not for providing space/accommodation. A statement by an authorized representative, Shri Brij Mohan, supported this claim, emphasizing that the respondent did not charge rent from the institutions. The Tribunal noted that previous judicial decisions also supported taxing such commissions/incentives under business auxiliary service.

3. Despite the absence of the respondent during the proceedings and no request for adjournment, the Tribunal considered the Revenue's contentions and the evidence on record. The reliance on the statement of Shri Brij Mohan, authorized by the appellant, played a crucial role in determining the nature of services provided and the tax liability associated with them.

4. Given the clear statement by Shri Brij Mohan and the absence of contrary evidence, the Tribunal found that the commission/incentive received was for services related to granting loans, not for providing accommodation or space. Relying on established judicial precedents, the Tribunal allowed the appeal and set aside the orders-in-appeal, thereby overturning the earlier decision confirming the service tax demands.

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