2018 (3) TMI 696 - AT - Service Tax

Tribunal remands case for accurate service tax calculation, rejects circular argument. Discrepancies noted.

M/s ACE Financial Services Versus C. Ex And Service Tax, Delhi-III

The Tribunal allowed the appeal, remanding the case for accurate quantification of service tax demand and penalties. The appellant's argument based on a ... Business Auxiliary Services - activity of promoting the business of banks - CBEC Circular No. 87/05/06-ST dated 06.11.06 - Held that: - Admittedly, in this case, the appellant are introducing the clients for providing loans from the banks and for that appellant is receiving the commission/incentive. In that circumstances, the activity undertaken by the appellant is appropriately classifiable under business auxiliary services for promoting business of banks, therefore, they are liable to pay service tax. The figures have taken for calculation of demand on the basis of bank’s statement of the appellant and as per the bank’s statement, there are certain entries which do not pertain to the commission to the appellant - the matter needs correct quantification of demand be recovered from the appellant - appeal allowed by way of remand. Issues:Appeal against demand of service tax under Business Auxiliary Services for promoting banks' business. Interpretation of CBEC Circular No. 87/05/06-ST. Calculation error in determining service tax liability.Analysis:The appellant appealed against the confirmation of demand for service tax under Business Auxiliary Services related to promoting banks' business. The appellant introduced clients to banks for finance and received commission, which was not taxed. A show cause notice was issued invoking the extended period of limitation, leading to confirmation of service tax demand, interest, and penalties. The appellant contended that they were not liable for service tax based on CBEC Circular No. 87/05/06-ST and highlighted a calculation error in determining the total amount of services provided.The appellant's consultant argued that the nature of service provided raised doubts about service tax liability, citing the circular. The appellant also claimed a calculation error in the total service amount. The respondent supported the impugned order's findings and agreed to remand the matter if a calculation error was found. The Tribunal heard both parties and examined the submissions.The Tribunal found that the appellant's appeal was based on the belief that they were not liable for service tax as per the circular. However, the Tribunal determined that the circular did not apply to the current case since the appellant introduced clients for loans, receiving commission, which fell under business auxiliary services for promoting banks' business, making them liable for service tax. The Tribunal noted discrepancies in the calculation of demand based on the bank's statement and ordered a remand to quantify the correct demand and penalties.In conclusion, the Tribunal allowed the appeal by remanding the matter back to the adjudicating authority for accurate quantification of demand and penalties, setting aside the impugned order.