TaxTMI 
TaxTMI 
2010 (2) TMI 650
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.... 01.07.03 to 30.06.04 32,60,994/- 32,60,994/- u/s 78 of Finance Act, 1994 (the Act), 125/- per day u/s 76 1000/- u/s 77 2 95/08 62/2007 dtd.30.10.07 16/2006 dtd. 07.06.2006 01.04.05 to 30.09.05 32,74,870/- 32,74,870/- u/s 78 150/- per day u/s 76 1000/- u/s 77 2. Facts in brief are that the Superintendent of Central Excise, Service Tax Division, Ernakulam had gathered that the appellants, a dealer in Maruti vehicles registered as an authorized service station, were also engaged in promoting the business of (i) M/s. Maruti Insurance Brokers Ltd. (MIBL) a fully owned subsidiary of M/s. Maruti Udyog Ltd. (MUL) and (ii) grant of loans to buyers of maruti vehicles by select finance companies/ banks through M/s. Maruti Finance. MIBL is an agent for issuing insurance policies of M/s. National Insurance Co. Ltd. (NIC) to buyers of maruti vehicles. MUL had institutionalized the facilitation in respect of vehicle insurance (called maruti insurance) and loans (maruti finance) by entering into agreements with NIC and banks/finance companies respectively. MIBL received commission from NIC and MUL received commission from finance companies for the business facilit....
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....MIBL and much less a taxable service under the head of Business Auxiliary Services. The service if any provided under the scheme evolved by Maruti Udyog Limited was by MIBL to the National Insurance Company and in respect of the said service National Insurance Company had already paid the service tax under Rule 2(1)(d)(iii) of the Service Tax Rules, 1994, as amended. The confirmation of the demand of service tax against the appellant was therefore wholly illegal. C. The lower authorities ought to have found that merely because MIBL had paid the appellant a share of the tax suffered commission received by it from National Insurance Company as its share of the Commission received, it could not be said that the appellant was providing any taxable service to MIBL. Insofar as the appellant was not promoting or marketing any service, which was provided by MIBL, there was no justification for holding that the appellant is liable to tax under the head of business auxiliary services. D. The lower authorities ought to have found that MIBL was floated as a company solely to formulate and provide a customized insurance package for the customers of Maruti vehicles after enteri....
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....des. 5. We have carefully considered the case records and the rival submissions. Appellants are dealers of maruti brand vehicles. MUL had floated a subsidiary company by name Maruti Insurance Brokers Ltd. which acted as an agent of National Insurance Company and provided customized maruti insurance to buyers of maruti vehicles. MIBL acted as an insurance agent for selling insurance policy of NIC to the customers of maruti vehicles; NIC paid commission to MIBL for the service (IAS) it rendered. MIBL discharged service tax on the above commission received from NIC under the heading "Insurance Auxiliary Services" (IAS). MIBL paid a commission to the dealer who sold the vehicle and facilitated sale of insurance policy to the buyer. At the dealer's end, the paper work in connection with the insurance policy would be undertaken by the dealer himself and forwarded directly to NIC. 5.1. MUL had devised a concept known as maruti finance whereby MUL would liaise with the buyers of maruti vehicles and introduce the said buyers to select finance companies for arranging loan for purchase of vehicles by such finance companies. The arrangement to this effect had been entered into between MU....
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....lity under Business Auxiliary Service. Appellant received a part of this amount, which had suffered service tax. It is argued that the appellant was not liable to pay service tax under BAS. The penalty imposed was not justified, since there was no positive act of suppression or willful misstatement justifying the invocation of the penal provision against the appellant company. We find that the impugned demands have been raised under the head BAS. The relevant part of the entry BAS reads as follows: 'Business Auxiliary Service' means any service in relation to "Promotion or marketing or sale of goods Produced by the client Provided by the client Belonging to the Client Promotion or marketing of service provided by the client (including promoting and marketing game of chance) Any customer care service provided on behalf of the client; or Procurement of goods or services, which are inputs (all goods or services that are intended for use) for the client or Production or processing of goods for or on behalf the client; or Provision of service on behalf of the client; or A service incidenta....