BANK OF BARODA Vs. CCE, JAIPUR-I

JUDGEMENT

(1.) HEARD ld. Counsel Shri Archit Agarwal for the appellant and Shri Govind Dixit, ld. D.R. for the respondent/Revenue. The appeal is preferred against the order of the Commissioner (Appeals), Central Excise, Jaipur -I dated 8.7.2011. This order rejected the appellant's appeal preferred against an adjudication order dated 1.11.2010 passed by the Additional Commissioner, Central Excise Commissionerate, Jaipur -I. The appellate Commissioner confirmed the demand of service tax, interest and penalties assessed by the primary authority.

(2.) PROCEEDINGS were initiated by a Show Cause Notice dated 23.10.2009 clearly attributing/alleging that the appellant, a housing finance Company and a subsidiary of the Bank of Baroda had provided business auxiliary service, a taxable service defined in Section 65(19) of the Finance Act 1994 (the Act); had received consideration from its customers towards fee for permitting pre -closure of loans; had failed to disclose the consideration so received in its ST -3 returns; failed to remit the service tax due thereon; and thereby willfully suppressed the relevant facts and with a view to evade remittance of tax. The extended period of limitation was invoked, proposing levy of service tax, interest and penalties, for the period September 2004 to March 2009. In paragraph (1) and (3) of the Show Cause Notice the clear and unambiguous allegation is of having provided business auxiliary service. No other service is alleged to have been provided. In paragraph (5) of the Show Cause Notice, it is stated that the appellant is registered with the National Housing Bank to carry on the business of Housing Finance; that the National Housing Bank is remitting service tax on pre -payment charges collected from the appellant; and that the appellant is availing Cenvat credit on the service tax component remitted by it to the National Housing Bank.

(3.) THE discussions and findings are set out in paragraph 9 of the order. In para 9.4.2, the primary authority, contrary to the pleadings of the appellant, concludes that right from the stage of filing an application for obtaining registration and replying to the audit objection which is the basis for Show Cause Notice, it had maintained that it was rendering business auxiliary service. This is a clearly erroneous reproduction of the appellant's response to the Show Cause Notice. In its reply dated 23.11.2009 (to the Show Cause Notice), the appellant had clearly contended that pre -closure charges collected by it from customers does not amount to the taxable business auxiliary service. Additionally the appellant had contended that the service would not fall within the ambit of Banking and other Financial Services either. In its response dated 8.5.2009 to Revenue's letter dated 1.4.2009, the appellant asserted that it had provided no taxable service and clearly not business auxiliary service or even Banking or other Financial Services to any other person and therefore was not liable to service tax. That the appellant had not provided Banking or other Financial Services and the fees charged by it for pre -closure of loans would not be a taxable service, is a contention that was reiterated in the appellant's letter dated 18.8.2009 addressed to the Supdt. Service Tax, Range -II, Jaipur, as well.