Service tax demand on commission from ICICI Bank time-barred; referral fees from HDFC Chubb not taxable.

The Tribunal held that the demand for service tax on commission received from ICICI Bank for business auxiliary services was time-barred due to conflicting views and ambiguity, setting it aside. Additionally, the Tribunal ruled in favor of the appellant regarding referral fees from HDFC Chubb, determining the services provided fell under Insurance Auxiliary Services, not Business Auxiliary Services, thus rejecting the service tax demand. The extended period for tax demand was deemed inapplicable due to lack of malafide intention, resulting in the appeal being allowed in favor of the appellant.

---

---

Issues:
1. Taxability of commission received from ICICI Bank.
2. Taxability of referral fees received from HDFC Chubb.
3. Invocation of extended period for tax demand.

Analysis:
1. The appellant, an authorized dealer of Hyundai Car, received commission from ICICI Bank for providing business auxiliary services related to the sale of loan products. The department demanded service tax on this commission. The appellant argued that service tax is payable only on the actual receipt amount as per Rule 6 of Service Tax Rules, 1994. The appellant also contended that conflicting judgments existed on the taxability of such commissions, leading to a reference to a Larger Bench. The Tribunal, considering the ambiguity and conflicting views, held that the demand for service tax on the commission from ICICI Bank was time-barred and set it aside.

2. The appellant received referral fees from HDFC Chubb for providing services related to the sale of General Insurance Policies. The department demanded service tax on these referral fees under Business Auxiliary Services. The appellant argued that the service provided falls under Insurance Auxiliary Services and not Business Auxiliary Services. The Tribunal agreed with the appellant, stating that the service provided by the appellant was in connection with the business of insurance of HDFC Chubb, falling under Insurance Auxiliary Services as per the Finance Act, 1994. Therefore, the demand for service tax under Business Auxiliary Services was not sustainable, and the impugned order was set aside.

3. The issue of invoking the extended period for tax demand was also addressed by the Tribunal. While the taxability of the commission from ICICI Bank was settled by a Larger Bench judgment, the Tribunal noted that there were conflicting views on the matter before the final decision. Considering the ambiguity and lack of malafide intention on the part of the appellant, the Tribunal held that the extended period could not have been invoked in this case. As a result, the demand for service tax on the commission received from ICICI Bank was set aside on the grounds of being time-barred. The appeal was allowed in favor of the appellant.

---