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ST - Since borrower does not have either product or service to place in market, services not falling under BAS: CESTAT

By TIOL News Service

MUMBAI, FEB 23, 2017: THE lower authorities confirmed the demand of service tax with interest and imposed penalties by recording a finding that the appellant had rendered the services of Business Auxiliary service; the basis of these findings is that the appellant in the course of his business introduced a financier to a borrower and received commission for the same which is taxable.

The appellant is before the CESTAT.

The Bench observed that -

+ Lower authorities have misconstrued the provisions of the definition of "Business Auxiliary Service" during the period 2005-06 and 2009-10, the period of dispute in this case.

+ The amounts received by appellant cannot be construed as a commission for rendering the services under Business Auxiliary Service as he is not rendering any services which would attract the provisions.

+ The issue is now squarely covered by the order of this Bench in the case of Fulch and Tikamchand - 2016-TIOL-502-CESTAT-MUM where it is held -

ST - Appellant receives commission from the borrower who does not have either a product or a service to place in the market - Consideration is, thus, not connected with the sale of a product or service - Appellant, therefore, does not find fitment in section 65(19)(vii) of FA, 1994 as provider of ‘Business auxiliary service' - Appeal allowed: CESTAT [para 4, 8, 9, 10 ]

The impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-565-CESTAT-MUM)


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