Appeal Dismissed Upholding Service Tax Liability

The appeal challenging the service tax demand for the sale of insurance products was dismissed by the Tribunal. The appellant's argument of double taxation was rejected, citing previous decisions supporting the tax liability. The Tribunal upheld the demand of service tax based on precedents and interpretations, dropping the penalty due to the issue involving interpretation. The appeal was disposed of in favor of confirming the service tax liability but dropping the penalties.

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Issues:
Appeal against rejection of appellant's appeal by Commissioner(Appeals) regarding liability to pay service tax under 'Business Auxiliary Service' (BAS) for sale of insurance products.

Analysis:
The appeal challenged an order confirming demand of service tax for the period 01/04/2005 to 31/09/2005 and 01/10/2005 to 31/03/2006, along with penalties, due to activities related to sale of insurance products. The appellant received remuneration from Maruthi Insurance Brokers Ltd. (MIBL) and Maruthi Udyog Ltd., leading to the issuance of show-cause notices. The appellant argued that the service tax had already been paid by MIBL/MUL, and thus, they should not be liable for double taxation. The appellant cited a previous decision in their favor, Popular Vehicles & Services Ltd. Vs. CCE, which was upheld by the Hon'ble High Court of Kerala. The appellant contended that the service provided by them did not fall under BAS, as they were not promoting services provided by MIBL.

The learned AR defended the order, relying on various tribunal decisions that held similar services under BAS. The AR highlighted cases like City Honda vs. CCE, Competent Automobiles Co. Ltd. Vs. CST, CST, Mumbai Vs. Jaybharat Automobiles Ltd., and Pagariya Auto Center Vs. CCE, to support the contention that the services in question were covered under BAS. The AR also pointed out that the High Court of Kerala dismissed the appeal on jurisdictional grounds, not on the merits of the case. The AR emphasized that subsequent tribunal decisions upheld the liability of service tax for similar services.

The Tribunal, in a similar case, AVG Motors Ltd., confirmed the demand of service tax but dropped the penalties, citing precedents like Ved Automotives vs. CCE, Kanpur, CST, Mumbai vs. Jaybharat Automobiles Ltd., and TVS Motor Co. Ltd. vs. CCE, Chennai. The Tribunal reiterated that the appellants were promoting or marketing services covered under BAS, as defined in the Finance Act, 1994. The Tribunal referred to Circular No.87/05/2006-ST, clarifying that service tax was payable on the gross amount received by the dealer from financial companies. Following the precedents and interpretations, the Tribunal upheld the demand of service tax but dropped the penalty, as the issue involved interpretation. The appeal was disposed of accordingly.

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