Whether table space provided by automobile dealer to financial institutions taxable under 'BAS’?

PJ/CASE LAW/2014-15/2515

Case:-JAIKA MOTORS LTD Vs COMMISSIONER OF CENTRAL EXCISE, NAGPUR

Citation:-2014-TIOL-2033-CESTAT-MUM

Brief facts:-The brief facts of the case are that the appellants are a dealer of motor vehicles and in the business premises the appellants provided a table space to the Banks. The appellants were receiving certain amounts where the vehicles sold by the appellant are financed by the Banks. The commission is paid by the Bank/financial companies. The case of the Revenue is that the appellants are providing business auxiliary service to the Banks/financial companies in promoting their business.

Appellant’s contention:-The appellant, relying upon the decisions of the Tribunal in the case of Silicon Honda vs CCE, Bangalore reported in 2008 13 VST 698 = 2007-TIOL-1159-CESTAT-BANGand Shubhyan Motors pvt. Ltd. vs. CCE 028 STT 282 = 2010-TIOL-1034-CESTAT-MUM, submits that mere providing a tablespace in the premises of the dealer cannot be considered as provider of business auxiliaryservice to the Banks/financial institutions. The contention is that there is no agreement with theBank for promoting their business. The appellants are interested in selling their cars andtherefore the appellants had not provided any business auxiliary service.

Respondent’s contention:-The Revenue relied upon the findings of the lower authority and submits that the appellants are receiving certain amount of commission in lieu of the finance from the Banks and the same cannot be treated as a rent for providing table space.

Reasoning of judgment:- The Hon’ble court find that the issue whether the able space provided by automobile dealer to financial institutions falls under 'business auxiliary service' or not was referred to the Larger Bench in the case of Pagariya Auto Center vs. CCE, Aurangabad in appeal No. ST/103/10 = 2014-TIOL-141- CESTAT-DEL-LB. The Larger Bench of the Tribunal, after taking into consideration the earlier decisions, held as under:-

"21. Where mere space is provided along with furniture for facilitating accommodation of representatives of financial institutions in the premises of an automobile dealer and consideration is received for that singular activity, such consideration may perhaps constitute a rent for the provision of space and associated amenities. Such restricted relationship/transaction may not amount to BAS. If on the other hand, the transactional documents and other evidence on record indicates a substantial activity falling within the contours of any of the integers of the definition of BAS, spelt out in Section 65 (19), then it would be legitimate to conclude that BAS is provided."

In the present case, they find that the Revenue had not produced any evidence by way of agreement or any guidelines from the Bank or financial institutions for the basis of giving commission to the appellants. In absence of such evidence, it cannot be said that the appellants provided any business auxiliary service to the Bank or financial institution. In view of the above, the impugned order is set aside and the appeal is allowed.

Decision:- Appeal allowed.

Comment:- The crux of the case is that as there is no evidence by way of agreement or any guidelines from the bank or financial institutions for the basis of giving commission to the automobile dealers, it cannot be said that the automobile dealers promote the business of such financial institutions.

Prepared by:- Monika Tak

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PJ/CASE LAW/2014-15/2515

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