Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  GST registration cancellation without reasons amounts to ‘Economic Death’ of business: Supreme Court. *  No GST refund if appeal before GSTAT is filed late: Gujarat High Court. *  Mere upload of GST notice on portal not valid service, appeal limitation won’t start: Punjab & Haryana High Court. *  Taxpayer can’t be penalised for missing notices hidden under ‘Additional Notices/Orders’: Calcutta High Court allows fresh adjudication. *  State tax officer can’t issue GST SCN beyond CBIC-assigned jurisdiction: Bombay High Court stays recovery proceedings. *  Earlier 7.5% Pre-Deposit must count towards mandatory 10% for Appeal: Uttarakhand high court quashes CESTAT Order. *  Third Parties can’t challenge GST Advance Rulings merely due to financial impact: Karnataka HC *  GST SCN generated using AI tool quashed: Punjab & Haryana High Court *  Bank Attachment Quashed as Madras HC Quashes GST Order Issued Against Deceased Person *  ITC Blocking Order for Failure to Record ‘Reason to Believe’ U/R 86A Quashed: Allahabad High Court *  Govt Extends GSTAT Appeal Filing Deadline From 30 June to July 31, 2026 *  GST Demand on RWA Stayed: Allahabad High Court Questions Taxability of Electricity Distribution to Flat Owners *  CBIC Clarifies Jurisdiction After GST Registration Transfer: Earlier Proceedings Remain Valid, New Officer to Continue Action *  GST authorities’ certification not mandatory for reimbursement, but tax payment must be proven: Karnataka HC *  Contractor can’t seek gst reimbursement through writ when contract has arbitration clause: Karnataka HC *  Unsigned Order Is No Order in Law: AP HC Quashes GST Assessment Order for Want of Officer’s Signature *  Customs Can’t Levy Rs. 1.36 Crore Cost Recovery Charges Without Proof of Full-Day Officer Deployment: CESTAT  *  12% IGST Payable On Imported Dialysis Machine Parts: CESTAT *  Bombay High Court Admits Challenge to GST Limitation Extension Notifications; Grants Protection Against Coercive Recovery *  Criminal Case Can’t Run Parallel to GST Proceedings on Same Facts: Allahabad High Court *  Allahabad High Court Stays GST Detention Order; Directs Release of Vehicle and Goods on Deposit of Rs. 1.44 Lakh *  Service Tax Can’t Be Levied on Loss-Making Contracts: Gujarat High Court *  GSTN Mandates Ship-to GSTIN in e-Invoice and e-Way Bill APIs; Introduces Voluntary e-Way Bill Closure Facility from August 1, 2026 *  GST Appeal Can’t Be Rejected as Time-Barred When Taxpayer Was Pursuing Rectification Remedy: Telangana High Court *  Absence of E-Way Bill and Transport Documents Justifies Customs Seizure U/s 110: Gauhati HC *  Madras High Court Upholds GST Late Fee and Penalty for Non-Filing of Annual Return, Dismisses Challenge  *  GST Records, Purchase Documents Sufficient to Discharge Burden Under Customs Act: CESTAT Orders Release of 3.65 Kg Gold  *  No Sugar Cess Payable on Sugar Exported Out of India: CESTAT *  Road Construction Services Exempt and SCN Time-Barred: CESTAT Quashes Service Tax Demand Based Solely on Form 26AS  *  ITC Freeze Upheld After GST Dept Find Suppliers Were Allegedly Fake Bill-Trading Entities: Madras HC 
Subject News *  Input service benefits can’t be denied: CESTAT allows export refund despite MMTC acting as Canalising agency. *  No service tax demand without proof of service of SCN: CESTAT. *  Service tax demand quashed as dept. fails to prove service of SCN: CESTAT *  GST : Mere allegation of inadequate consideration of reply not enough to invoke writ jurisdiction: Delhi High Court *  Onerous conditions imposed for provisional release of seized imported goods shouldn’t amount to virtual denial of relief: CESTAT. *  GST SCN without alleging fraud cannot invoke sec. 74: Karnataka High Court quashes adjudication order. *  Extended Limitation Can’t Be Invoked Merely on Form 26AS Data: CESTAT *  Revenue-Sharing with Restaurants Not Taxable as Business Support Service: CESTAT *  R. 6(3) Option Can’t Be Forced on Taxpayer; CESTAT Quashes Rs. 12.36 Crore CENVAT Credit Demand *  Excise Duty | Power Consumption Alone Can’t Prove Clandestine Manufacture: Karnataka High Court *  Madras High Court Examines DGGI’s Authority to Issue GST Penalty Orders Under Section 122, Adds DGGI as Party *  Proceedings under omitted r. 96(10) can’t survive without saving clause: andhra pradesh high court quashes gst refund recovery *  Excise duty power consumption alone can’t prove clandestine manufacture: karnataka high court *  Madras high court rules GST show cause notices must disclose grounds for invoking extended limitation *  Court Can’t Direct Extension GST Return Deadlines or Waive Interest and Penalties: Karnataka High Court *  GST Notifications Can’t Go Beyond GST Council Recommendations: Madras High Court Quashes SCN on Branded Pulses *  Appeal Can’t Be Dismissed for Delay When Dept’s Own Order Mis-states Limitation Period: CESTAT *  No Evidence of KYC or Due Diligence Breach By Customs Broker: CESTAT Quashes Licence Revocation in Export Overvaluation Case *  Glucometers Are Chemical Analysis Instruments Classifiable Under Tariff Heading 9027: CESTAT *  Validity of Post-GST Service Tax Proceedings Upheld: Gujarat High Court Dismisses Challenge to S. 73 SCN *  Rectified GST Refund Applications Can’t Be Rejected as Time-Barred If Original Refund Claim Was Filed Within Limitation: Gujarat HC *  Service Tax Refund Can’t Be Denied as Time-Barred When Levy Itself Is Unconstitutional: Gujarat High Court *  Same Officer Can’t Act As Auditor & Adjudicator: Karnataka High Court *  Karnataka High Court Condones 324-Day Delay, Revives Customs Appeal in Jewellery Pilferage Case  *  Madras High Court Quashes GST Assessment Order Passed Ex Parte Despite Prior ITC Reversal; Lifts Bank Attachment *  Tobacco Process Doesn’t Amount to Manufacturing: Madras High Court Quashes Rs. 1.32 Crore Compensation Cess Demand  *  Recovery Notice Unsustainable After Voluntary Reversal of Unutilised Credit: CESTAT  *  GST | ‘System Generated’ SCN Without Officer Details Invalid: Allahabad HC  *  Electronic Records Without Statutory Certification Requirements Can’t Justify Undervaluation Allegations: CESTAT *  Madras High Court Stays GST Order, Finds Prima Facie Merit in Plea Against S. 74 Proceedings Based on S. 73 Intimation  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2751

Whether Verification of information furnished by loan seekers on behalf of customer is taxable or not?

Case:-CREDENTIALS Versus  COMMISSIONER OF CENTRAL EXCISE, PUNE-III
 
Citation:-2015 (37) S.T.R. 235 (Tri. - Mumbai)
 
Brief facts:-The appellants are in appeals against the impugned orders wherein Service Tax liability has been confirmed against the appellants under the category of Business Auxiliary Service for the period July, 2002 to March, 2006.
As the issue involved in all the appeals are common therefore, all the appeals are disposed of by a common order.
Brief facts of the case are that the appellants are providing service namely verification of information given by the customers applying for the Credit Cards, Home Loans or Auto Loans etc. The said activities have been outsourced to them by various banks. The appellants are registered under the category of Business Auxiliary Services and paying Service Tax on the said activities except for the services provided to ICICI Bank and IDBI Bank. Revenue was of the view that as the appellants are not paying Service Tax on the services mentioned here-in-above provided to ICICI Bank and IDBI Bank therefore, they are required to pay Service Tax during the impugned period for the services provided to ICICI Bank and IDBI Bank. Show cause notices were issued to the appellants. Demands were adjudicated and confirmed along with interest and penalties. Aggrieved by the said order, the appellants are before tribunal.
 
Appellant’s contention:-The learned Advocate appearing on behalf of the appellants submits that the activity undertaken by the appellants falls under the category of “Business Support Service” which came into effect on 1-5-2006. Therefore, the appellants are not required to pay Service Tax under the category of “Business Auxiliary Service” prior to May, 2006. In the circumstance, he prays that the impugned order be set aside.
 
Respondent’s contention:- On the other hand, the learned AR submits that from 1-7-2003 the activity of “Business Auxiliary Service” came into Service Tax net and as per Clause (iv) of Section 65(19) of the Finance Act, 1994, the activities and services of the appellants coming within the ambit of the Service Tax category of “Business Auxiliary Service”. Therefore, the appellants are required to pay Service Tax during the impugned period. It is further submitted that intention to evade payment is very much clear from the dealing of the appellants as they are paying Service Tax on the same services provided to other Banks except ICICI and IDBI. Therefore, extended period of limitation is also invocable in the facts of this case.
 
Reasoning of judgment:-They have gone through the Section 65(19) of the Finance Act, 1994 which defines the term “Business Auxiliary Service” during the relevant period which is reproduced hereinunder :-
“Business Auxiliary Service”
(i)         promotion or marketing or sale of goods produced or provided by or belonging to the client; or
(ii)        promotion or marketing of service provided by the client; or
(iii)       any customer care service provided on behalf of the client; or
(iv)       any incidental or auxiliary support service such as billing, collection or recovery of cheques, account and remittance, evaluation of prospective customer and public relation services,
and includes services as a commission agent, but does not include any information technology service.
Prior to 10-9-2004, the activity undertaken by the appellant clearly falls under Clause (iv) of Section 65(19) of the Finance Act, 1994. Therefore, prior to 10-9-2004, they hold that the appellant is required to pay Service Tax and the demand for Service Tax for that period is confirmed.
They also observe that with effect from 10-9-2004 the definition of “Business Auxiliary Service” was amended and as per the said definition the “Business Auxiliary Service” is exhausted and the activities undertaken by the appellants were not covered by the said definition. They have gone through the said definition also which is reproduced hereinunder :-
“business auxiliary service” means any service in relation to -
(i)         promotion or marketing or sale of goods produced or provided by or belonging to the client; or
(ii)        promotion or marketing of service provided by the client; or
(iii)       any customer care service provided on behalf of the client; or
(iv)       procurement of goods or services, which are inputs for the client; or
(v)        production or processing of goods for, or on behalf of the client; or
(vi)       provision of service on behalf of the client; or
(vii)      a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision and includes services as a commission agent (but does not include any activity that amounts to “manufacture” of excisable goods.)
As per the said definition, the activity undertaken by the appellant is not covered under clauses (i) to (vi) of Section 65(19) of the Finance Act, 1994, then they are not required to pay Service Tax on their activity. As in this case, the appellants activities does not get covered under clauses (i) to (vi) of Section 65(19). Therefore, they hold that with effect from 10-9-2004 onwards the appellants are not required to pay Service Tax. They find support to the case from the decision of this Tribunal in the case of S.R. Kalyanakrishnanv. CCE - 2008 (9)S.T.R.255 (Tri.-Bang.) wherein this Tribunal has observed that verification of information furnished by loan seekers cannot be treated as promoting their business. Therefore, such activity does not fall under “Business Auxiliary Service” but with effect from 1-5-2006, it falls under the category of “Business Support Service”. Following the precedent decision in the case of S.R. Kalyanakrishnan (supra), they hold that for the period 10-9-2004 onwards the appellants are not liable for Service Tax under the category of “Business Auxiliary Service” on their activities.
Therefore, it is concluded that the appellants are liable to pay Service Tax for the period 1-7-2003 to 9-9-2004 on the services provided to ICICI and IDBI Banks under the category of “BAS”. With these terms the appellants are directed to pay Service Tax for the said period along with interest.
They further find that as the appellants are paying Service Tax on the same activities provided to other banks therefore, they impose penalties equivalent to their Service Tax liabilities on the appellants under Section 78 of the Finance Act, 1994. They further find that as the appellants have not charged Service Tax separately from ICICI and IDBI Banks therefore, the remuneration received towards providing Service Tax shall be treated as cum-service charges.
Appeals are disposed of in the above terms.
 
Decision:-Appeals disposed off.
 
Comment:-The crux of the case is that the activity of verification of information furnished by loan seekers on behalf of ICICI and IDBI Bank, clearly falls under the definition of Business Auxiliary Service. w.e.f. 10.9.2014 this activity is not considered as Business auxiliary service.  Appellants are liable to pay Service Tax for the period 1-7-2003 to 9-9-2004 on the services provided to ICICI and IDBI Banks under the category of BAS. Appellants have not charged Service Tax separately from ICICI and IDBI Banks therefore, the remuneration received towards providing Service Tax shall be treated as cum-service tax.

Prepared by:- Monika Tak

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com