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Em Pee Motors provided BAS services — Promoted vehicle loans provided by ICICI — Commission received for the same — Out of commission received, appellant distributed incentives to customers opting for loan (subventions). Books of account reflected total of receipts against which payment is shown — This procedure followed due to inconvenience caused to banks as then they would have to issue TDS certificates to every customer — Credit of total amount claimed by appellant — However, service tax paid only on amount net of subventions — Held — Procedure followed to pay less tax — Service tax payable on gross amount.
Facts:
The appellant acted as an agent for ICICI bank and provided BAS services by promoting vehicle loan given by ICICI bank. Bank paid commission for the same. Out of the said commission, the appellant gave incentives to the customers for opting for the said loan scheme; this incentive is known as subvention. The appellant paid service tax on the amount net of subvention. The appellant argued that banks directly paid the incentive to the customers and the appellant never received the same. They contended that it was unjustified to pay service tax on the amount they never received. At the same time, banks did not issue TDS certificates to the customers opting for loans, rather issued it to the appellant. As a consequence of which the appellant could claim credit of the total amount from the Income-tax authority and paid service tax on the amount net of subvention.
Held:
Mere fact that the appellant chose to make payment out of the gross receipts cannot alter the gross amount received by them. It was held that service tax has to be paid on the gross amount received and reflected in the books. Hence, the order of the lower authorities was upheld.
