2019 (2) TMI 490 - AT - Service Tax

Car dealer wins service tax dispute with financial entities, Tribunal rules extended limitation period doesn't apply.

M/s. Rohan Motors Versus CCE, Delhi-II

The appellant, an authorized car dealer, was in a dispute regarding the liability to pay service tax for providing services to financial entities to ... Liability of service tax - activities of providing table space or services to financial companies /bank/institutions so as to facilitate loans to the prospective buyers of cars as the appellant is a dealer/retailer of cars and other automobiles - Held that:- The issue herein was finally settled by the Larger Bench of this Tribunal in the case of Pagariya Auto Centre Vs. CCE, Aurangabad [2014 (2) TMI 98 - CESTAT NEW DELHI (LB)], wherein it has been held that no uniform principle emerges as would guide determination of whether a particular transaction involving an interface between an automobile dealer and bank or financial institution would per se amount to BAS. The identification of the transaction and its appropriate classification as the taxable BAS or otherwise must clearly depend upon a careful analysis of the relevant transactional documents. Only such scrutiny and analysis would ensure rational classification of the transaction. Extended period of limitation - Held that:- The definition of “BAS” was substituted by Finance Act, 2004 w.e.f. 10.09.2004. The appellant has admittedly paid the service tax on the concerned activities w.e.f. 10.09.2004. Thus, there is no deliberate default on the part of the appellant and in this view of the matter, the extended period of limitation is not applicable. Appeal allowed - decided in favor of appellant. Issues involved: Liability to pay service tax on providing table space or services to financial companies/banks/institutions to facilitate loans for car buyers.Analysis:The appeal addressed the issue of whether the appellant is liable to pay service tax for providing table space or services to financial entities to facilitate loans for car buyers. The appellant, an authorized dealer of a car manufacturer, engaged in selling cars purchased from the manufacturer to customers. The manufacturer's subsidiary entered agreements with banks and financial institutions to expand car sales and promote banking services in India. The subsidiary received commissions from these financial entities and shared a portion with authorized dealers like the appellant for providing services on its behalf. The dispute arose when a show cause notice was issued demanding service tax for a period between July 2003 and December 2004. The appellant contended that the extended period of limitation did not apply as they had paid service tax from September 10, 2004, onwards, showing no deliberate default.The Tribunal referred to a previous case, Pagariya Auto Centre Vs. CCE, Aurangabad, where it was established that the classification of a transaction as Business Auxiliary Service (BAS) depended on a careful analysis of transactional documents. If the documents indicated substantial activity falling within the definition of BAS, then BAS was deemed to be provided. However, if the activity was limited to providing space and amenities for financial representatives without significant additional services, it might not constitute BAS. The Tribunal concluded that the extended period of limitation was not applicable in the present case, as the appellant had paid service tax from the date the definition of BAS was amended in 2004. Therefore, there was no deliberate default on the appellant's part. Consequently, the impugned order was set aside, and the appeal was allowed, granting the appellant consequential benefits as per the law.In summary, the judgment clarified the liability of the appellant to pay service tax for providing services to financial entities to facilitate car loans. It highlighted the importance of analyzing transactional documents to determine if the activities fell within the definition of BAS. The decision favored the appellant, ruling out the application of the extended period of limitation due to the absence of deliberate default in paying service tax post the amendment in 2004.