TaxTMI 
TaxTMI 
2019 (2) TMI 26
X X X X Extracts X X X X
X X X X Extracts X X X X
....p of the Service Tax Commissionerate, Chennai, during the audit of accounts of the assessee, noticed that the assessee had received amount towards dealer commission and had not discharged service tax on the same. The Department was of the view that the amount so received would fall under the category of Business Auxiliary Services (BAS) and that appellant is liable to pay service tax on the commission received. 3.2 After due process of law, the Original Authority confirmed the demand, interest and imposed penalties. Appeal No. ST/470/2009 is filed by assessee against the Order passed by Commissioner who confirmed demand, interest and penalty under Section 78 of the Finance Act, 1994. The Commissioner dropped the proposal to impose penalty under Section 76 ibid against which Department has filed Appeal No. ST/41507/2013. Appeal No. ST/41507/2013 arises out of the Order passed by Commissioner (Appeals) who upheld the Order passed by the adjudicating authority confirming demand, interest and penalties for the period from April 2008 to June 2009. Hence, these appeals. 4.1 On behalf of the assessee, Ld. Counsel Shri. V. S. Manoj appeared and argued the matter. He submitted that the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is not for promotion of the business of the vehicle dealer. He argued that the Commissioner (Appeals) in Order-in-Appeal No. 148/2013 dated 21.02.2013 has rightly analysed the facts and held that the activity does not fall under the definition of BAS. 4.5 The appellant is engaged in rendering Banking or other Financial Services only. The collection of interest falls under this category and appellant is discharging the service tax on this amount. When the appellant has discharged service tax on the interest collected on vehicle loans under the category of Banking or other Financial Services, the Department cannot vivisect the transaction of lending activity to fall partly under BAS for the commission/discount received. The discount received, if at all, does not come from the client (borrower) but is offered by the dealer. The discount is not a commission and therefore, not chargeable to service tax. 4.6 He also argued on the ground of limitation. The Department does not have a case that the appellant has not reflected the discount received in their accounts. The appellant has not discharged service tax only under the bona fide belief that the discount received by them is not subje....
X X X X Extracts X X X X
X X X X Extracts X X X X
....registered under this category. They are discharging service tax under this category. They have entered into an understanding with the vehicle dealers and by such understanding, when the assessee/Bank disburses loan to the borrower, a small amount is retained by the assessee. The assessee contends that this is merely a discount and not a commission or consideration for services. The Department contends that the amount received is commission paid for services rendered under BAS. The amount is reflected in the assessee's financial statements as dealership commission. The question is whether the amount received attains the character of consideration and also whether the activity falls under BAS. 9. In the present case, when a vehicle is purchased by a customer, he approaches the assessee/Bank for the purpose of availing loan. The vehicle is a collateral security for disbursing the loan and mostly hypothecated with the bank. The cheque is issued in the name of the dealer which is one of the main reasons that the Department has alleged that the activity of the appellant is to promote the business of the dealer. It can be reasonably understood that when the loan is in the nature of a ve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ude any activity that amounts to manufacture of excisable goods]. [Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) "commission agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services; [(b) "excisable goods" has the meaning assigned to it in clause (d) of section 2 of the Central Excise Act, 1944 (1 of 1944); (c) "manufacture" has the meaning assigned to it in clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944)]" 10.2 The Show Cause Notice alleges that the services would fall under Sub-clause (i) of the above definition. The said Sub-Clause states that only when the service is promotion, marketing or sale o....