(1.) THE applicant is engaged in manufacturing of Bright Bars falling under Chapter 72 and is under the control of Superintendent of Central Excise, Range -Shaper (Veraval). The applicant is also holding service tax registration under the category of goods transport agency. During the course of auditing of statutory record the audit party noticed that the applicant had earned some income under the head of Finance Account. The audit party, noticed that the applicant was financing to various customers of other manufacturers and was making payment on behalf of such purchasers and in turn was charging some amount. The audit party framed an opinion that the said charges are nothing but the commission received by the applicant and therefore proposed to levy service tax under the category of Business Auxiliary Services. Accordingly, the department issued show cause notice, proposing the recovery of service tax and also initiated penalty proceedings.
(2.) CONSEQUENTLY demand for service tax of Rs. 1,07,110/ - with interest was confirmed against the appellant and penalties were imposed under various sections of Finance Act, 1994.
(3.) THE learned advocate on behalf of the appellants submitted that the impugned order has travelled beyond the show cause notice and is liable to be set aside on this ground alone. Further he also submitted that the consideration received cannot be considered chargeable to service tax under the head of business auxiliary service in as much as the transaction does not relate to the purchase and sale of the material but relates to the financing of the transaction on behalf of the purchaser and the amount collected by the appellant is only interest for the finance provided. Such interest is not chargeable to service tax. He relies on the decision of the Tribunal in the case of AIA Engineering Ltd. reported in 2010 (19) S.T.R. 257 (Tri. - Ahmd.) wherein under similar circumstances, it was held that the profit made by the appellant on sale of goods cannot be turned as commission or discount. In this case also amount collected was towards interest and therefore the demand for service tax cannot be sustained.