The Appellants are dealers of Ford Motor vehicles and they had entered into agreements with different banks and also with Non-Banking Financial Companies to market car-loan to potential customers. For loan taken by the customers, these appellants got commission from the banks and NBFCs. The issue in this appeal is whether service tax is to be paid on such commission categorizing the activity of the Appellants as “business auxiliary service”. Definition of BAS services had been substituted wef 10.09.2004 and in substituted definition services of commission agent were expressly included and since then only assessee started paying service tax. Assessee also contended that services provided by them were taxable under Business Support Services and not under Business Auxiliary Services
In para 11 & 12 tribunal held that services provided by assesse prior to 10.09.2004 were also taxable services under Business Auxiliary Services. This matter relates to scope of the entry for “Business Auxiliary Services”. There was considerable doubt about its coverage because of the very nature of the entry. There are contrary decisions of the Tribunal in the matter. The Higher Courts have been taking the view that in such situations the extended period of time cannot be invoked for raising demand. In this case also the demand is raised beyond the time limit of one year and such demand cannot be sustained. However, demand if any, which is within the normal period of one year is sustainable. Interest is payable on such amount but no penalty is imposable.
IN THE CESTAT, PRINCIPAL BENCH, NEW DELHI
SOUTH CITY MOTORS LTD.
Versus
COMMISSIONER OF SERVICE TAX, DELHI
Final Order No. ST/602/2011(PB), dated 22-11-2011 in Appeal No. ST/493/2010
[Order per : Mathew John, Member (T)]. – The Appellants are dealers of Ford Motor vehicles and they had entered into agreements with different banks such as HDFC Bank, ICICI Bank, ABN Amro Bank, Chartered Bank and Citi Bank and also with Non-Banking Financial Companies; (NBFCs) such as Ford Credit Kotak Mahindra Ltd. to market car-loan to potential customers. For loan taken by the customers, these appellants got commission from the banks and NBFCs. The issue in this appeal is whether service tax is to be paid on such commission categorizing the activity of the Appellants as “business auxiliary service”.
2. The activities carried out by the Appellants, as stated briefly in the impugned order, are briefly as under :
