Service classification for bank-related work depends on the true nature of activities, with recovery agent service limited by normal limitation.

Services involving verification, investigation and collection-related work for banks were not promotion or marketing of the bank's business and therefore did not fall within Business Auxiliary Service; the classification under that head was unsustainable. Activities such as collecting recoveries, cheques, payments and instalments, and conducting field investigation for a bank, were treated as Recovery Agent Service because they related to recovery of sums due. The demand was, however, confined to the normal limitation period, as no suppression or equivalent ground for extended limitation was shown. Accordingly, the Business Auxiliary Service demand was deleted and the Recovery Agent Service demand survived only within limitation.

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Issues: (i) Whether the services rendered to the banks were classifiable under Business Auxiliary Service or were outside that category and relatable to banking and financial services; (ii) Whether the services relating to recovery of dues from borrowers constituted Recovery Agent Service and, if so, whether the demand was sustainable beyond the normal period in the absence of suppression.

Issue (i): Whether the services rendered to the banks were classifiable under Business Auxiliary Service or were outside that category and relatable to banking and financial services.

Analysis: The agreements and the nature of work showed that the appellant was engaged in verification, investigation, collection-related functions and similar activities for the banks. These activities did not amount to promotion or marketing of the bank's business and did not fit within the stated limbs of Business Auxiliary Service. The services were instead connected with banking and financial activities.

Conclusion: The classification under Business Auxiliary Service was not sustainable and the demand to that extent was set aside in favour of the assessee.

Issue (ii): Whether the services relating to recovery of dues from borrowers constituted Recovery Agent Service and, if so, whether the demand was sustainable beyond the normal period in the absence of suppression.

Analysis: The activities of collecting recoveries, cheques, payments, instalments and conducting field investigation for the bank fell within the scope of recovery agent service as the services were rendered to a banking entity in relation to recovery of sums due. However, there was no evidence or reason recorded to establish suppression or other grounds for extending limitation, while the show cause notice was issued much later than the relevant period.

Conclusion: The recovery agent service demand was upheld only for the normal period and the demand beyond limitation was not sustained.

Final Conclusion: The appeal succeeded to the extent that the Business Auxiliary Service demand was deleted, while the recovery agent service demand was retained only within the permissible limitation period.

Ratio Decidendi: Service classification depends on the true nature of the activity, and a demand beyond the normal limitation period cannot be sustained in the absence of proved suppression or equivalent grounds.

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