CESTAT, SZB, BANGALORE

CCE

Versus

Chadha Auto Agencies

Appeal No. ST/14/2007
Decided on 07-05-2008
 

Scope of Business Auxiliary Service rendered by an Assessee engaged in sales and services of two-wheelers Order: Commission/Incentive received by automobile dealers for arranging vehicle finance from financers does not fall within the term "Business Auxiliary Service."

ORDER

1. The Revenue is aggrieved with the Order-in-Appeal No. 299/2006-CE dated 17.10.2006 by which the Commissioner (Appeals) has set aside the Order-in-Original No. 35/2006 dated 10.07.2006. The Assessee is registered and engaged in sales and services of two-wheelers. They also arrange loan from various financial institutions/banks for Hire Purchase and thus promoting/marketing of the products/ services of the financial institutions/ banks for which they are getting a consideration called pay-out/incentive/ commission from the financial institution/banks. The Revenue proceeded to consider the activities fall within the category of "Business Auxiliary Services". The Commissioner (Appeals) after due examination held that there is no evidence to confirm that remuneration received by the Assessee are in the nature of rent or payment for business support services. The Department did not establish unequivocally that "Business Auxiliary Service" has been provided before confirming the demand. The Commissioner (Appeals) in the impugned order has given a clear finding that the Assessee has provided office space, furniture etc. to bank/financial institutions to sell their own products. Therefore, the Commissioner has held that the activity comes under the category of "Business Support Service' which came under Service Tax net only in 2006. This is challenged by the Revenue in the appeal. 2. The learned Counsel submits that the banks/financial institutions were rendering loan to the customers who purchase two wheelers and the amount of remuneration received by the Assessee was not in nature of rent and it is in the nature of commission, which has been accounted in their ledger account as 'Commissions'. The learned Counsel submits that the issue was examined in an identical case by this Bench in case of Silicon Honda vs. Commissioner of Central Excise (Appeals-III) Bangalore [2007 (82) RLT 232 (CESTAT-Ban.)-2007(7) S.T.R. 475 (Tri-Bang.)] and the issue was decided in the Assessee's favour. He submits that the Commissioner's (Appeals) finding that the Revenue has failed to discharge the burden cannot be distracted. He also relies on the Apex Court judgment rendered in the case of Commissioner of Central Excise, Bangalore vs. Brindavan Beverages (P) Ltd [2007 (81) RLT221 (SC)-2007 (213) E.L.T. 487 (S.C.)]. 3. The learned DR distinguishes the case laws referred to by the learned Counsel. 4. On a careful consideration of the submissions made by both the sides, I find that this Bench has examined the very issue in case of Silicon Honda vs. Commissioner of Central Excise, Bangalore [2007 (82) RLT 232 (CESTAT-Ban.) = 2007 (7) S.T.R. 475(Tri. -Bang.)]. After a detailed examination of the matter, it has been held that the activity does not come within the ambit of "Business Auxiliary Services". The paragraphs 1 to 4 of the said order are reproduced hereinbelow – i)  "This appeal arises from Order-in-Appeal No.103/2005 dated 21.10.2005. The financial institutions have taken a space from the Appellant. The financial institutions also provide financial assistance to the customers of the Appellants to purchase motor vehicles. The Revenue wants to bring this activity under the "Business Auxiliary Services". The Commissioner (Appeals) has upheld such levy.   ii)  The Respondents are not present and hence, matter is taken up on merits. They submit it in grounds of appeal that for providing table space on lease to the financial institutions cannot be brought within the ambit of "Business Auxiliary Services". Appellants are independently carrying on the activity of servicing of motor vehicles. Merely because the bank is assisting them in loan to their customers that by itself cannot be considered to becoming within the ambit of "Business Auxiliary Services". They have also submitted that the expression 'Commission Agent' has not been defined in the Finance Act. However the Notification No. 13/2003 dated 20.6.2003 read with Notification No. 8/2004 dated 9.7.2004 grants exemption from payment of Service Tax in respect of Commission Agents subject to certain conditions. It is submitted that the expression "Commission Agent" in this Notification is defined to mean "a person who causes sale or purchase of goods, on behalf of any another person for a consideration, which is based on the quantum of such sale or purchase". It is submitted that the appellant does not cause sale or purchase of services on behalf of another person for a consideration. They do not promote or market the services of the financial institutions nor does the appellant induce its prospective customers to avail finance from any specific financial institutions. Therefore, their activity cannot be brought under the service tax. It is also submitted that financial institutions are not promoting or marketing the products of the appellants. It is also submitted that financial corporation are not obliged to promote their business through the appellant. Therefore, their activity cannot be brought within the ambit of "Business Auxiliary Services", as Service Tax on such services would be payable on the gross amount received by the service provider. It is submitted that in the instant case, the financial corporation does not receive any consideration from the appellant but on the other hand financial institution pays remuneration for occupying the table space at appellants' premises.   iii)  The learned JDR submitted that financial institutions have been paying remuneration to the appellants for having occupied the table space in the appellants' premises. The appellant is also assisting in promoting the business of the financial institution in so far as providing loan to the customers of the appellants.   iv)  I have perused the impugned order and the grounds of appeal, nowhere in the impugned order, the Commissioner (A) has referred to any evidence of financial institutions giving commission to the appellants for providing/loan to their customers, who are brought through the appellants. The appellants have denied having promoted the business of financial institutions. They have stated that they are paid by the financial institutions for occupying the table space at the appellants' premises. This portion of the evidence is not contradicted. Therefore, mere fact of financial institutions being provided with space by the appellant and the appellant receiving some money for that lease of table space cannot be brought within the definition of "Business Auxiliary Services". There is no merit in the impugned order and the same is set aside by allowing the appeal." The ratio of the above order clearly applies to the facts of the case. Respectfully following the same, I do not find any merit in the appeal. The Revenue's appeal is dismissed.