COMMISSIONER OF C. EX Vs. KATHURIA FINANCIAL SERVICES

JUDGEMENT

(1.) REVENUE has filed this appeal. The brief facts of the case are that M/s. Kathuria Financial Services, SCO No. 153, Chhoti Baradari, Patiala (hereinafter referred to as the Respondents), claiming to be working with ICICI bank for evaluation of prospective customers, providing assistance to the customers on behalf of the ICICI bank and sourcing of the credit documents and other necessary papers required by ICICI bank for sanctioning loans, are registered under the category of Business Auxiliary Service (BAS) and have been filing ST -3 Returns. It is alleged that they did not discharge the service tax liability on the commission received from the said bank for providing the said services during the period 10 -9 -2004 to 15 -6 -2005. Accordingly, a Show Cause Notice dated 12 -6 -2007 was issued by Central Excise Division Patiala demanding, Service Tax amounting to Rs. 1,76,771/ - invoking the extended period alleging willful misstatement and suppression of facts. The adjudicating authority confirmed the said demand and imposed penalty of an equal amount under Section 76 of the Finance Act, 1944 while no penalty under Section 78 was imposed by invoking Section 80 of the Act ibid. The Commissioner (Appeals) vide Order -in -Appeal No. 587/CE/Chandigarh/2008, dated 25 -11 -2008 dropped the demand and set aside the penalty holding that the nature of service provided by them to ICICI's bank as Direct Sales Agent amounts to making "provision of service for the said bank" since they were arranging and evaluating the customers for the bank which was to provide loans and consequently the Commissioner (Appeals) held that they were eligible for exemption under Notification No. , dated 10 -9 -2004 during the said period. In the grounds of appeal, the Revenue has essentially contended that:

(2.) IN their memorandum of cross -objections the Respondents have argued that:

(3.) THE Respondents have admitted that they were evaluating prospective customers for ICICI Bank under the said agreement. There was no contract between the customers so evaluated and the Respondents. Indeed, such evaluation is required by the bank for sanctioning loans and this job the bank entrusted to the Respondents for which the Respondents received payment.