Refundable sales-officer deposit was not business support service where no independent taxable service was shown.

A refundable Field Care Plan Incentive Deposit collected at the time of appointing Sales Officers was examined for service tax liability under business support or business promotion service. The arrangement was linked to the recruitment scheme and subject to stipulated refund conditions, but the facts did not show any independent service rendered by the appellant to promote the business of the Sales Officers. The deposit was treated as part of the model for engaging persons to sell insurance policies through the appellant's business structure, not as consideration for a taxable service. On that basis, the deposit was held not taxable as business support service, and the demand and penalty were unsustainable.

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Issues: Whether the Field Care Plan Incentive Deposit collected from sales officers was liable to service tax as business support service / business promotion service.

Analysis: The dispute turned on the true character of the deposit collected from persons engaged as Sales Officers. The deposit was taken at the time of appointment, was linked to the recruitment scheme, and was returned on the stipulated conditions. The Court read the definition of support services of business or commerce under Section 65(104)(c) of the Finance Act, 1994 and held that the facts did not show any service rendered by the appellant in promoting the business of the sales officers. Instead, the arrangement reflected engagement of persons to sell insurance policies through the appellant's business model, with the deposit being refundable and not a payment for an independent taxable service.

Conclusion: The FCP deposit was not taxable as business support service. The demand and penalty could not be sustained, and the assessee succeeded.

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