COMMISSIONER OF C. EX. Vs. BHIMA SSK LTD.

JUDGEMENT

(1.) THE Revenue has filed this appeal.

(2.) THE facts of the case are that during the verification of the Respondents Trail Balance, it was noticed that Respondents have received a certain sum from the Bank on the account of recoveries made on their behalf from the farmers against the sugar cane supplied to them. The said amount received by the Respondents from the Bank has been shown as an income under the head "Loan Recovery Commission". It was alleged that the said activity covered under the category of 'Business Auxiliary Service'. Accordingly, a show -cause notice was issued to demand the service tax along with interest and a proposal to penalty was also made against the Respondents. The adjudicating authority confirmed the demand with interest along with the penalty under Section 78 of the Finance Act, 1994. Aggrieved from the same, the Respondents filed an appeal before the Commissioner (Appeals), who dropped the demand of interest and penalty against the Respondents. Aggrieved from the same, the Revenue is before me.

(3.) ON the other hand, the learned Advocate submits that it was their statutory obligations laid down by the Centre and State Government for recovery of the loans given to the farmers by the banks for the cultivation of sugarcane as they are member of a corporate sugar factory. He also submitted that they have not received any commission from the Bank. In fact they have obtained a letter from the Bank showing that the amount received from the Bank for collection/deduction of payment from the farmers and remitting to the Bank are only the handling charges and the Commissioner (Appeals) has rightly held in his order. Accordingly, the demand is not sustainable and impugned order is to be upheld.