Space provided to the financial institutions in the premises of authorized dealers of automobiles cannot be termed as “Business Auxiliary Services

PJ/Case Laws/2012-13/1222

Case: -COMMISSIONER OF C. EX., BELGAUM V/S CHADHA AUTO AGENCIES

Citation: - 2008(11) S.T.R. 643 (Tri.-Bang.)

Issue:- Space provided to the financial institutions in the premises of authorized dealers of automobiles cannot be termed as “Business Auxiliary Services”.

Brief Facts:- The assessee are 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.

Appellant’s Contention: - Nobody was present on behalf of the revenue.

Respondent’s Contention:- The respondent submits that the banks/financial institutions were rendering loan to the customers who purchase two wheelers and the amount of remuneration received by them was not in the nature of rent and it is in the nature of commission which has been accounted in their ledger account as ‘Commissions’. He further submits that the issue was examined in an identical case by this Bench in case of Silicon Honda v. Commissioner of Central Excise (Appeals-III), Bangalore [2007 (7) S.T.R. 475 (Tri. - Bang.)] and the issue was decided in the favour of assessee. 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 v. Brindavan Beverages (P) Ltd. [2007 (213) E.L.T. 487 (S.C.)].
Reasoning of Judgment: - The CESTAT held that this Bench has examined the very issue in case of Silicon Honda v. Commissioner of Central Excise, Bangalore [2007 (7) S.T.R. 475 (Tri. - Bang.)]. It has been held that the activity does not come within the ambit of “Business Auxiliary Services”. 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. The respondents are not present, and hence, matter is taken up on merits. It is submitted by them 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 be coming 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 corporation 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 corporation 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.The Commissioner (A) has not 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.

Decision: - Appeal dismissed.

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PJ/Case Laws/2012-13/1222

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