Business Auxiliary Service exemption for services to financial institutions upheld as branded services exclusion did not apply

Services rendered to financial institutions were treated as Business Auxiliary Service and thus taxable under that category, but they were not treated as branded services because the service provider was serving the institutions themselves and was not using their brand. The exemption under Notification No. 06/2005-ST was therefore held available, and the matter was remanded for grant of the exemption and re-determination of service tax liability.

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Issues: Whether the services rendered to financial institutions by the service provider were liable to service tax as Business Auxiliary Service and, if so, whether they were excluded from exemption as branded services under Notification No. 06/2005-ST dated 01/03/2005.

Analysis: The services were held to fall within the scope of Business Auxiliary Service and were otherwise taxable under that category. However, the services were rendered to the financial institutions themselves, so the question of the service provider using the brand of those institutions did not arise. On that basis, the services were not treated as branded services, and the exemption under Notification No. 06/2005-ST dated 01/03/2005 was held to be available.

Conclusion: The exemption was held admissible and the matter was remanded to the Original Adjudicating Authority for grant of the exemption and re-determination of service tax liability.

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