Summary
6.1 We have carefully considered the submissions from both sides. Normally vehicles change hands from Maruti Udyog Ltd. to the customers through the authorized dealers. The customers could have paid cash or could have arranged finance independently through any other person. If the third party has arranged the finance to the buyer of the vehicle, the services of the said third party would undoubtedly come under the business auxiliary services.
6.2. In the present case the appellant has taken additional responsibility/ functions and entered into agreements with the finance companies. The terms of agreement clearly indicate that the appellant is definitely promoting the finance scheme of the finance companies but the fact that the said promotion is limited to vehicles sold by them is not significantly relevant to consider their status.
6.3. In any sale of goods, it can be said that both the buyer and seller are beneficiaries. Similarly in relation to any service both the provider and recipient are beneficiaries. In a school, if there are no teacher/teachers no student can be taught and if there are no students there is no need for teachers. In a way they are rendering services to each other. In this case it has been stressed that the appellant is not rendering services exclusively for the finance companies as their objective is to promote their own business. Is it a case, where the appellant is rendering services to the finance companies? Is it a case, the finance company is rendering services to the appellant? Or is it a case, the appellant is rendering services to the buyer of the vehicles? The customer is interested in buying the Maruti vehicles. The appellant’s main business is selling the Maruti vehicles to their customers by positioning themselves between the manufacturer and the customer and they get a margin. The customer is also interested in getting the finance. The appellant has arranged finance to their customers by positioning themselves between the financiers and the customers. This tie up with the finance companies definitely benefits the appellant and at the same it benefits the finance companies more. If it was only to the benefit of the appellant, the finance companies should have charged services charges from the appellant. That is why the finance companies have paid service charges to the appellant. The terms of the agreement together with the fact that the appellant has been paid for the services leads to the conclusion that the appellant is rendering services in marketing rendering the services rendered by the finance companies.
6.5 In the light of the above, we hold that the decision of the authorities in holding that the appellant render business auxiliary services to the finance companies and the service charges received by them are subject to service tax is legal and proper and does not call for any interference. The demand of service tax along with interest is confirmed.
