By TIOL News Service

MUMBAI, JUNE 18, 2018: THE facts of the case are that the appellant are working as Direct Selling Agents (DSA) for marketing of auto loan products of HDFC Bank for which the appellant received commission/incentive to the extent of 5% of the loan amount.

The case of the department is that the service rendered by the appellant to the bank is covered under the category of "Business Auxiliary Services" and attracts Service Tax. And that the appellant have wrongly availed the exemption Notification No. 14/2004-ST dated 10.09.2004 which exempts the commission agents causing sale of goods and not the commission agents of/for service providers.

SCNdated 08.10.2007 was issued demanding Service Tax on such commission/incentives received from the bank for the period 10.07.2003 to 31.03.2006.

The adjudicating authority confirmed the demand and imposed penalties u/ss77 & 78 of the FA, 1994 and this demand was upheld by the Commissioner (Appeals).

The appellant is before the CESTAT.

After considering the submissions made by the appellant on the merits of the case as well as on the ground of limitation and the rebuttal of the same by the AR, the Bench noted that the case can be decided on the basis of limitation without going into the merits of the case.

The CESTATobserved that there was reasonable confusion about the category of service, whether the said service of the appellant falls under "Business Auxiliary Services" or “Business Support Services”.

Inasmuch as the Tribunal held -

“…The issue has been dealt by Board in the Circular no. 87/05/2006-ST dated 06.11.2006, wherein it was clarified that the service provided by HDFC Bank is classifiable as "Business Auxiliary Services" and liable to payment of Service Tax. Since there was a contrary decision the matter reached to the Larger Bench in the case of Pagariya Auto Center - 2014-TIOL-141-CESTAT-DEL-LB. In the said Larger Bench judgment the issue is settled. In this undisputed fact it cannot be said that the appellant had any malafide intention or any suppression on their part. The appellant's entire service provided to HDFC Bank and all the transactions are recorded in Books of account of appellant as well as in the Books of HDFC Bank. The demand was raised on the basis of such recorded transaction in Books of account, therefore, it cannot be said that the appellant has suppressed any material fact with intention to evade payment of Service Tax.”

After extracting at length the decisions in the following cases-

a) Addis Marketing 2016-TIOL-2621-CESTAT-MUM

b) Bridgestone Financial Services 2007-TIOL-810-CESTAT-BANG

c) Roshan Motors Ltd. 2009-TIOL-76-CESTAT-DEL

d) City Motors & Financial Services 2012-TIOL-578-CESTAT-DEL

e) South City Motors Ltd. 2011-TIOL-1792-CESTAT-DEL

f) Brij Motors Pvt. Ltd. 2011-TIOL-1992-CESTAT-DEL

g) Gemini Mobiles Pvt. Ltd. 2015-TIOL-1567-CESTAT-ALL

wherein the Tribunal had categorically held that the extended period of limitation cannot be invoked, the CESTAT concluded that that the nature of service, transactions and facts are absolutely identical to the instant case, therefore, the ratio of the above judgments is directly applicable.

Taking note of the fact that in the present case the period involved was 10.07.2003 to 31.03.2006 and the show-cause notice was issued on 08.10.2007, the Tribunal held that the entire demand is hit by limitation.

Accordingly, the impugned order was set aside and the appeal was allowed.

(See 2018-TIOL-1873-CESTAT-MUM)