TaxTMI 
TaxTMI 
2013 (7) TMI 151
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....rmed being the amounts received towards income from financing of IPO and processing fees received from the Bank for the purpose of choosing a particular Bank for deposit of the IPO money. Second demand was confirmed under the category of 'Business Support Services'; amounting to Rs.3,29,410/- and penalty was confirmed under Section 78 of the Finance Act, 1994 amounting to Rs. 5.5 crores as well as Rs. 5000/-under Section 77 of the Finance Act, 1994 and interest was ordered to be levied under Section 75 of the Act towards delayed payment of Service Tax. 2. The appellant M/s JM Financial Services Pvt. Ltd. is a class I merchant banker registered with SEBI, having its registered office at Mumbai and also registered with Service Tax departme....
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....on to deposit the cheques/share application money received with the applications in favour of the issuing company, in one of the specific banks. The appellant exercises its option by choosing a particular bank for keeping the application money, pending allotment of shares as the Lead Manager, The Bank where application money is kept with, pending allotment, is under no obligation to pay any amount to any person or the appellant depositing the money with it. The payment made by the Bank to the appellant is in the nature of reward for doing business with it or an incentive for keeping the money with them temporarily. The bank with which the money is kept, benefits by way of interest on the money available for a few days, which is payable on d....
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.... Advisor for the IPO, the appellant advises their clients (prospective investors) to invest in the shares/debentures of the particular company. Some of the investors of the appellant require short term funding for applying in the Public Issue. The appellant has entered into an agreement with M/s JM Lease Consultant Pvt. Ltd., which is a company registered with the Reserve Bank of India as Non-Banking Financial Company (NBFC) having its main object of leasing investment and lending. As per the agreement, which is annexed as Annexure-B in the appeal memorandum, the appellant will recommend and forward the loan applications of its clients for investing to the said finance company. Further, the appellant stands guarantee for the due repayment o....
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....ater owner and the distributor is on revenue sharing basis, in such case, the two contracting parties act on principal-to-principal basis and one does not provide service to another. Hence, in such an arrangement, the activity is not covered under Service Tax. 6.3 Having considered the rival contentions, we are of the view that no service has been rendered by the appellant to the finance company and the activity has been done on the principal-to-principal basis. Accordingly, no Service Tax is leviable on the amount received by the appellant by way of share of income from NBFC in the activity of financing. 7. Business Support Services During the period 1.5.2006 to 31.3.2008, the appellant has recovered Rs. 3,35,866/- by way or reimb....