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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/Case Laws/2012-13/1385

Whether commission received by automobile dealers on providing table desks to banks leviable to service tax?

Case:- SHUBHYAN MOTORS PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, PUNE III
 
Citation:- 2010-TIOL-1034-CESTAT-MUM

Brief Facts: -The facts of the case are that the appellant is a dealer of automobiles for Hero Honda and Tata Motors. They were having tie up with various banks like ICICI, HDFC, Bajaj Finance or other financial institutions through whom they help to arrange finance for their customers. For that, they receive some commission from these banks. The allegation against the appellant is that the activity taken over by the appellant by helping in financial assistance to the buyers through financial institution is classifiable under Business Auxiliary Services as defined under section 65(19) of Chapter V of the Finance Act, 1994. A show-cause notice was issued demanding service tax, interest and proposing penalties under sections 76, 77 and 78 of the Finance Act, 1994. The show-cause notice adjudicated and the demand was confirmed along with interest and various penalties also imposed. Aggrieved by the same the appellant is before the Commissioner.
 
Appellant’s Contention: -  The learned counsel appearing on behalf of the appellant submitted that they are not indulged in promoting and marketing the business of the bank but they have simply helped these finance institutions by providing table space to provide finance assistance to their customers for which they were getting some money. In fact the appellant has provided table space to these financial institutions to launch of their prospective buyers of their vehicles. Against that providing of space the appellant receives some amount as cash. Hence, the demands are not sustainable under the category of Business Auxiliary Services. To support his contention the appellant relied on the case of Silicon Honda vs. CCE, Bangalore – 2007(7)STR 475(Tri-Bang.)= (2007-TIOL-1159-CESTAT-BANG).
 
Respondent’s Contention: -  On the other hand learned DR submitted that at the time of investigation the appellant admitted their liability and paid service tax and the contention that they provided the facility of table space to the financial institution is an afterthought. There is no written agreement between the appellant and the financial institutions with regard to the lease of table space to them. Moreover, he relied on the Board's Circular no. 87/05/2006-ST dated 6.11.2006 and submitted that the activity taken over by the appellant is squarely covered under Business Auxiliary services and the lower appellate authority has rightly confirmed the demand and the appeal is liable to be rejected.
 
Reasoning of Judgment: -On careful examination of the submissions made by both the sides, Commissioner found that the facts in the impugned case are identical to the facts of Silicon Honda (supra) which the learned DR fairly agreed. In Silicon Honda case the Tribunal has observed as under:-
 
“nowhere in the impugned order 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 appellant’s 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.”
 
In this case also, the appellant had provided table space to the financial institutions for which they were getting some money from them. Hence, the issue involved in this case is squarely covered by the decision of Silicon Honda (supra) wherein it was held that the activity for providing the table space to the financial institutions cannot be brought within the definition of “Business Auxiliary Service”. Hence, in this case also, the activity taken over by the appellant is not a “Business Auxiliary Service”. Hence the demands are not sustainable.
 
Decision: -The impugned order is set aside and the appeal is allowed with consequential relief.
 
Comment:- This case covers the controversy regarding charging of amount received by the automobile dealers from banks and insurance companies for providing table space in their premises to service tax under BAS. There is a lot of litigation on the matter due to divergent views taken by the Tribunals. However, the same should not be covered under BAS as the automobile dealers are not pursuing their customers to take finance from specified banks rather they are merely providing convenience to their customers.

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