BAS Service Provided to Financial & Insurance Institutions

PJ/Case Laws/2012-13/1105

BAS Service Provided to Financial & Insurance Institutions - Technical Grounds

Case: M/s Cargo Motors (Guj.) Pvt. Ltd. V/s. Commissioner of Central Excise, Vadodara

Citation: 2012-TIOL-270-CESTAT-AHM

Issue:- BAS provided to Financial & Insurance institutions – Demand not challenged before the First Appellate Authority – cannot be raised in subsequent appeal before the Tribunal.

Penalty – when decisions of Tribunal favouring assessee’s stand existed – Section 80 invokable – penalty can be waived.

Brief Facts:- Assessee is providing various services like - providing finance from various banks, insurance of the vehicles, coating/colour, incentive/labour etc. to his clients.

The Department alleged that their service fell as under the category of ‘Business Auxiliary Service’ and demanded service tax. Demand of service tax and interest thereon was confirmed.

In appeal before the Commissioner (A) appellant pleaded for setting aside the penalties imposed on them.

Now, the matter is before the Tribunal.

Appellant’s Contention:- Appellant submitted that the issue is squarely covered by the decision of the Tribunal in case of Kamal Auto Ind. Vs. CCE, Jaipur, CCE, Belgaum vs. Chadha Auto Agencies -2008-TIOL-1388- CESTAT-MAD and Silicon Honda vs. CCE, Banglore- 2007 (7)-STR 475 (Tri-Bang)= (2007-TIOL-1159-CESTAT-BANG.). Thus, the appellant submitted that this appeal should be allowed in the light of above cited judgments.

Reasoning of Judgment:- The Tribunal found that the appellant has not disputed service tax liability before the First Appellate Authority. They have pleaded against the imposition of penalties under Section 76, 77 and 78 of Finance Act, 1944 only and have conceded the issue on merits. On specific query asked from appellant, it was submitted that the assessee is unable to justify the stand taken by them before the First Appellate Authority or during hearing. That appellant has not disputed the issue on merits of service tax liability before the First Adjudicating Authority and later on taking up the issue on merits of service tax liability before the subsequent appellate authority will be incorrect position of law.

As regards the imposition of penalties, there are various decisions of the Tribunal which clearly states that services provided by the appellant such as loan from banks, amount received from banks and insurance companies for services rendered cannot be brought within the definition of ‘Business Auxiliary Service’ and thus, this is a fit case to invoke the provisions of Section 80 of the Finance Act, 1944 and penalties imposed on the appellant under Section 76, 77 and 78 are set aside on the basis of the various decisions of the Tribunal holding that the activities provided by the appellant could not have been taxed under the category ‘Business Auxiliary Service’. Impugned order modified to the extent that penalties are set aside.

Decision:- Appeal disposed of accordingly.

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PJ/Case Laws/2012-13/1105

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