2013 (10) TMI 1446

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....nd not the gross commission paid by the banks. 2. The respondents are commission Agent/Direct Selling Agent (DSA) for marketing of auto loan products of various banks. The respondents are arranging loan facility for buyers of motor vehicle. In view of the activity undertaken by the respondents, they were held to be liable to pay Service Tax under the category of 'Business Auxiliary Service'. In the present appeal there is no dispute regarding the taxability of service. The only issue is whether the respondents are liable to pay Service Tax on the net amount received or the gross amount paid by the bank. 3. During negotiations, the DSA (respondents) discounts the commission by way of subvention to the banks as per the commerc....

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....an erroneous footing that, a bank cannot avail of 'Business Auxiliary Services' as a client. From the nature of agreements on record including the franchisee agreement in the third appeal, it is clear that the assessees were, under an agreement with the bank had undertaken to provide service in relation to promotion or marketing of the 'Banking and Financial Services' provided by the banks. The banks were providing services under the category 'Banking and Other Financial Services' falling in Clause (12) of Section 65. In relation to those services, the respondent-assessees were providing services for promotion or marketing of the banking and other financial services provided by the banks. The banks were, therefore, their clients being recip....

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.... taking the credit for entire TDS including the amount deducted on account of payments directly made to the customers. Therefore, this is an arrangement where the appellant decided to get the benefit of deduction of TDS for the whole amount for income-tax purpose but to pay Service Tax only on the amount net of subvention. Thus there is a inherent contradiction in the stand that is being taken by the appellant before the two tax authorities. The arrangement made for the purpose of reducing incidence of income-tax is not a subject matter of these proceedings. 5. We are of the view that the amount paid by the bank for the services rendered by the appellant and reflected as receipts in the books of accounts of the appellant, should be ....