2017 (5) TMI 699 - AT - Service Tax

Appellant wins appeal as Tribunal rules commission for arranging finance not taxable business auxiliary service

Brindesh G Agrawal Versus Commissioner of Customs, Central Excise & Service Tax, Nagpur

The Tribunal ruled in favor of the appellant, determining that the amount received as commission for arranging finance/loans did not fall under taxable ... Business Auxiliary Service - activity of arranging finance/loans for various borrowers - amount received by the appellant and recorded in his books accounts as commission - whether taxable under BAS or not? - Held that: - the issue is no more res integra as this bench in the case of Fulchand Tikamchand v. Commissioner of Central Excise & Customs, Nagpur [2016 (2) TMI 772 - CESTAT MUMBAI] has considered identical issue and has held that In view of an equation that is devoid of an agency relationship with the financier and rules out the provision of a service on behalf of the borrower from whom the appellant receives consideration, the activities of the appellant are outside the ambit of “business auxiliary service” - appeal allowed - decided in favor of assessee. Issues involved:Taxability of amount received as commission under 'Business Auxiliary Service'.Analysis:The appeal was directed against an Order-in-Appeal passed by the Commissioner of Central Excise & Customs, Nagpur. The issue in question was whether the amount received as commission by the appellant for arranging finance/loans for borrowers should be considered taxable under 'Business Auxiliary Service'. The Revenue contended that the amount received by the appellant was taxable, while the appellant argued that it was merely brokerage for arranging loans. The Tribunal referred to a previous case and held that the appellant did not meet the criteria to be classified as a commission agent under Section 65(19) of the Finance Act, 1994. The Tribunal noted that the appellant did not have an agency relationship with the financier or the borrower, and the consideration received was not connected to the sale of a product or service. As a result, the activities of the appellant were deemed to be outside the scope of 'business auxiliary service'.The Tribunal found that the issue was conclusively settled in favor of the appellant based on the precedent cited. Therefore, the impugned order was set aside, and the appeal was allowed with any consequential relief. The operative part of the decision was pronounced in court, setting aside the impugned order and allowing the appeal.