Tribunal modifies order, upholds service tax on financial institution commissions. Decision on 22.06.2018.

The Tribunal partially allowed the Appeal, modifying the impugned order to uphold the service tax demand on commissions from financial institutions while setting aside the remaining service tax demands. The decision was pronounced on 22.06.2018.

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Issues:
1. Challenge to Order-in-Original regarding service tax demands on certain receipts.
2. Applicability of service tax on commissions received from financial institutions.
3. Liability for service tax on rebates, discounts, and incentives received by the appellant.
4. Inclusion of consumables/spare parts value in consideration charged for servicing vehicles.
5. Reversal of cenvat credit on common input services used for trading service.

Analysis:
1. The appeal contested the Order-in-Original dated 30.04.2015, where the appellant, a dealer of Maruti cars, faced service tax demands. The Department alleged non-payment of service tax on specific receipts, leading to a Show Cause Notice. The impugned order upheld service tax demands, prompting the present Appeal.
2. The first ground for service tax demand was commissions from financial institutions. The appellant acknowledged and paid the service tax amount, leading to a penalty consideration. The Tribunal upheld the demand and interest but waived the penalty under Section 80 of the Finance Act, 1994.
3. Regarding rebates, discounts, and incentives received by the appellant, the Department claimed service tax under business auxiliary service. The appellant argued against this, citing a Tribunal decision involving Toyota Lakozy Auto Pvt. Ltd. The Tribunal analyzed the cited decision and ruled in favor of the appellant, setting aside the service tax demand on this ground.
4. The inclusion of consumables/spare parts value in the service consideration was another point of contention. The appellant contended that since VAT was already paid on these items, service tax was not applicable. Referring to a Tribunal decision in Krishna Swaroop Agarwal, the Tribunal agreed with the appellant and set aside the service tax demand related to consumables/spare parts.
5. The final issue revolved around the reversal of cenvat credit on common input services used for trading activities. The appellant reversed the entire amount of common input services for which cenvat credit was availed. Citing a decision by the Hon'ble Allahabad High Court, the Tribunal ruled in favor of the appellant, setting aside the demand for payment under Rule 6(3) of the Cenvat Credit Rules. Overall, the Tribunal modified the impugned order, upholding the service tax demand on commissions from financial institutions while setting aside the rest of the service tax demands.

Conclusion:
The Tribunal partially allowed the Appeal, modifying the impugned order to uphold the service tax demand on commissions from financial institutions while setting aside the remaining service tax demands. The decision was pronounced on 22.06.2018.

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