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July 2016

[2016-TIOL-1299-CESTAT-MUM] Commissioner of Central Excise, Aurangabad vs. Ratnaprabha Motors

By Puloma Dalal
Jayesh Gogri
Mandar Telang
Chartered Accountants
Reading Time 1 mins
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Services provided by automobile dealers to financial institutions was decided only upon issuance of Circular No. 87/06/2006-ST dated 06/11/2006. Therefore demands prior to the said date cannot be confirmed.

Facts
The Assessee receives commission from various financial institutions for introducing customers seeking loans/finances to such banks/NBFCs. The First Appellate Authority confirmed the demand only from 06/11/2006. Further the demand pertaining to sharing of profit was also set aside as such an arrangement was not liable to service tax. The Revenue appealed only against the demands set aside for the period prior to 06/11/2006.

Held
The Tribunal noted the observations of the First Appellate Authority wherein it has been provided that the classification of service was finally decided by the Board vide Circular dated 06/11/2006 as Business Auxiliary Service. Therefore extended period and penalties under section 78 of the Finance Act, 1994 are liable to be set aside. Reliance was placed on the decision of the Apex Court in the case of M/s. Jaiprakash Ind. Ltd. [2002-TIOL- 633-SC-CX] and Suchitra Components [2008 (11) STR 430 SC] to hold that extended period is not invokable.

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