By Puloma Dalal, Jayesh Gogri, Mandar Telang; Chartered Accountants
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Extended period cannot be invoked and penalties cannot be imposed on matters involving interpretational issues referred to the larger bench.
Facts
The Appellant is an automobile dealer. On the basis of information obtained from various banks it was observed that they were in receipt of commission on which no service tax was paid. A show cause notice was issued proposing demand of service tax along with interest and penalties on the commission received as a direct selling agent. It was argued that they have only let the financing agency to use their premises in order to promote the sale of vehicles and there is no principal agent relationship with the finance company and that they merely act as a channel between the customer and the finance company. On confirmation of demand by the adjudicating authority, the first appellate authority observed that the receipt of commission from the bank is not on the basis of space occupied in the premises but is on the basis of quantum of finance sanctioned to the customers who purchased vehicle. Therefore demand as a direct selling agent of the bank/institution was confirmed. Accordingly the present appeal is filed.
Held
The Tribunal noted that no agreement with the banks was placed on record regarding provision of any space and further the commission amount varied from month to month. Therefore undoubtedly the activity falls under the category of “business auxiliary service” for promotion and marketing of services provided by banks. However considering the fact that there was an interpretational issue and the matter was decided by the larger bench in the case of Pagariya Auto Centre vs. Commissioner of Central Excise, Aurangabad [2014-TIOL-141- CESTAT-DEL-LB, extended period is not invokable and penalties are set aside. Demand is upheld only for the normal period.
