2017 (1) TMI 976 - AT - Service Tax

Appellant's Tax Liability Upheld for Commission on Underwriting Services

The Tribunal upheld the tax liability of the appellant for commission received for underwriting services, rejecting their argument for classification ... Classification of services - amounts received as commission by the appellant for underwriting services rendered - whether classified as Underwriting Services or as Banking and Other Financial Services? - time bar - Held that: - the activity of 'Underwriting' is now settled by the, Tribunal against the appellant in the case Jubilant Life Sciences Ltd v. Commissioner of Central Excise, Noida [2013 (5) TMI 393 - CESTAT NEW DELHI] as taxable - services classifiable under the head Underwriting Services and is taxable. Extended period of limitation - Held that: - extended period can be Invoked as the activity was not brought to the Notice of the authorities - there is nothing to substantiate the claim of the appellant that they were under a bona fide belief that the activities undertaken by them were not taxable. Appeal dismissed - decided against assessee. Issues Involved:Taxability of commission received for underwriting services rendered, classification under 'Underwriting Services' or 'Merchant Banking Services', applicability of service tax, invocation of extended period for demand, intention to evade tax.Analysis:1. Taxability of Commission Received: The central issue in this case revolves around the taxability of the amounts received as commission by the appellant for underwriting services rendered. The appellant argued that the activity should be classified under 'Merchant Banking Services' rather than 'Underwriting Services' and that they were not liable to service tax until August 2012 as they were not functioning as a merchant banker during the relevant period.2. Classification Dispute: The appellant contended that the amounts received as commission were for arranging the issue of equity shares through private placements, falling under 'Merchant Banking Services,' and not 'Underwriting Services.' However, the Tribunal cited the case of Jubilant Life Sciences Ltd v. Commissioner of Central Excise, Noida, where it was established that the activity of 'Underwriting' is taxable. The Tribunal ruled against the appellant based on the precedent set in the Jubilant Life Sciences Ltd case.3. Invocation of Extended Period: The issue of the extended period for demand arose due to the appellant's failure to bring the activity to the notice of the authorities. The adjudicating authority and the first appellate authority both held that the extended period could be invoked as the activity was not disclosed. The appellant's claim of a bona fide belief regarding the non-taxability of the activity was not substantiated, leading to the rejection of their assertion and the acceptance of the extended period for demand.4. Final Decision: After considering the arguments and reviewing the case laws and records, the Tribunal concluded that the impugned order was legal and devoid of any infirmity. Consequently, the appeal was rejected, affirming the tax liability of the appellant for the commission received for underwriting services rendered.In conclusion, the judgment clarified the taxability of commission received for underwriting services, emphasized the importance of proper classification under relevant service categories, and upheld the invocation of the extended period for demand in cases where activities were not disclosed to the authorities.