ACE CREDIT Vs. COMMISSIONER OF CENTRAL EXCISE, MANGALORE

JUDGEMENT

(1.) THIS appeal filed by the assessee is directed against demand of Service Tax and education cess totalling to Rs. 55,362/ - for the period from 1 -7 -2003 to 31 -12 -2004 as also against the penalty imposed on them under Sections 76 to 78 of the Finance Act, 1994. The demand of Service Tax is under the head Business Auxiliary Service (BAS). The appellant got themselves registered under this head and paid Service Tax from 10 -9 -2004 and the amount so paid stands appropriated towards the above demand. The case of the appellant, which is based on the terms and conditions of their Agreements with ICICI Bank Ltd. and HDFC Bank Ltd., is that they were only providing a service on behalf of the banks (clients) to the latters customers and hence the activity was not taxable prior to 10 -9 -2004, the date on which Provision of service on behalf of the client was enacted as a part of the definition of BAS under Section 65(19) of the Act. Per contra, the case of the Revenue is that the appellant was promoting/marketing the services of the Banks and hence the activity was squarely covered by clause (ii) (promotion or marketing of service provided by the client) of Section 65(19) ibid. The clause (ii) was a part of the definition of BAS from the very beginning (1 -7 -2003) and hence, according to the Revenue, the activities of the appellant were exigible to Service Tax under clause (ii) of Section 65(19) of the Act for the entire period of the dispute (1 -7 -2003 to 31 -3 -2012). The learned counsel for the appellant and the learned Additional Commissioner (AR) put forward their respective arguments. The learned Additional Commissioner (AR) has relied the Tribunals decision in the case of Peoples Automobiles Ltd. v. Commissioner of C. Ex., Kanpur [2011 (24) S.T.R. 635 (Tri. -Del.)].

(2.) APART from merits, the plea of limitation has also raised by the learned counsel who submits that the intention of appellant to pay Service Tax under BAS from 10 -9 -2004 had been categorically stated in their application for registration and no material fact was suppressed and, therefore, the extended period of limitation was not invocable in this case. In this connection, it is further submitted that only the demand for the period from April 2004 is within the normal period of limitation. Further, it is submitted that, though in the appeal the appellant has claimed refund of the Service Tax paid for the period from 10 -9 -2004, the claim is not pressed at this state. The learned counsel has also made a fervent plea for vacating the penalties on the ground that, in the facts and circumstances of this case, the appellant is entitled to the benefit of Section 80 of the Act.

(3.) WE have perused the records and considered the submissions. The terms and conditions of the relevant Agreements show that the appellant was, in fact, using their infrastructure, staff and expertise to market products of the Banks. In both the Agreements, the appellant was referred to as Direct Sales Associate/Agent. After a study of the functions assigned to the appellant under the Agreements, we have found the name of the appellant to be befitting in the sense that the appellant was in fact, selling products of the Bank. The products of the Banks were nothing but Banking service. Therefore, ex facie, the appellant was marketing the services provided by their clients, viz. banks. In other words, their activities squarely fell within the ambit of promotion or marketing of services provided by client which function was a part of the definition of BAS since 1 -7 -2003. In the result, the liability of the appellant to pay Service Tax under the head BAS in terms of clause (ii) of the definition of this service under Section 65(19) of the Act during the entire period is undeniable. Therefore, the plea that the appellant was liable to pay Service Tax only 10 -9 -2004 in terms of clause (vi) of the definition of BAS is not acceptable. If they paid Service Tax from that date, that was a payment under the head BAS and, on the facts of the case, that payment shall be deemed to have been made in terms of clause (ii) of the definition.