1. The brief facts of the case are that M/s. Vasant Financial Links, (hereinafter referred to as 'assessee'/respondent) are providing certain services to ICICI Ltd./ICICI Home Finance Ltd./ICICI Bank Ltd. by acting as sourcing agent for marketing their products and sourcing customers for their products i.e. home loans and personal loans w.e.f. 24-11-2001. Department took the view that these services fall under the category of "business auxiliary service" and are liable for service tax. Assessee had neither taken registration nor were discharging any service tax liability for the said services. Accordingly, a show cause notice dated 26-6-2007 was issue
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d to appellants which culminated in an adjudication order dated 13-3-2008, wherein the original authority held that the activity rendered by assessee was classifiable under Business Auxiliary Service; that the commission/fee received by assessee to be treated as "cum-tax" value, confirmed demand of service tax liability of Rs. 10,43,402/- and education cess of Rs. 13,544/- along with interest and imposed penalties under various provisions. On appeal, the Commissioner (Appeals) vide impugned order dated 18-8-2008, held that the services i.e. impugned services fall under the category of "business support service" which came under service tax liability only from 1-5-2006, hence confirmation of service tax liability on assessee for the prior period fails. Accordingly, the order of original authority was set aside by Commissioner (Appeals). Aggrieved, department is before this forum. Today, when the matter came up for hearing, on behalf of the department, Shri Dass Thavanam, Superintendent reiterated the grounds of appeal and also made oral submissions, which can be summarised as under:
1.1 The definition of "business auxiliary service" in Section 65(19) of the Finance Act, 1994 up to 9-9-2004 also covered incidental or auxiliary service such as "evaluation of prospective customer".
1.2 Even after the definition was amended in 10-9-2004, as per sub-clause (vii), any service incidental or auxiliary but not activity specified in sub-clauses (i) to (vi), inter alia "evaluation or development of prospective customer or vendor" were also coming under the said taxable service.
1.3 Definition of "business support service" was in Section 65(104c) of the Act also includes "evaluation of prospective customers". However, such evaluation is in the holistic sense, for the entire business concern and not about particular services, whereas ICICI Ltd. have engaged the respondents for particular variety of loans i.e. home loans and personal loans, hence services carried out by respondent specifically covered only under "business auxiliary service".
2. On the other hand, on behalf of the respondent, Ld. Consultant Shri B. Seetharamayya made oral submissions which can be summarised as under:
2.1 Their activities are correctly falling under "business support service" only and since that service came into effect only from 1-5-2006, there cannot be any service tax liability on them before that period.
2.2 In their case, the period of dispute is 1-7-2003 to 31-3-2005. Ld. Consultant submitted a copy of "sourcing agent agreement" between ICICI Home Finance Limited and Shri T. Rama Krishna, Proprietor of the respondent. They have been appointed as "sourcing agent".
2.3 The nature of service provided by them to ICICI Home Finance Ltd. was very much in the nature of "Business Support Service".
2.4 Hence the order of Commissioner (Appeals) is just and fair and does not call for any interference.
3. Heard both sides and have gone through the facts. From the perusal of the show cause notice, it becomes evident that show cause notice has been issued on the grounds that the activity rendered by the assessee is covered under the category of "business auxiliary service" only and not under "business support service" and had accordingly, inter alia, proposed demand of tax liability of Rs. 11,46,097/- and Ed. Cess of Rs. 15,012/- with interest thereon. The original authority in his order dated 13-3-2008 has restricted the demand to Rs. 10,43,402/- towards service tax and Rs. 13,544/- towards Education Cess, after giving "cum-duty" benefit. However, in the order portion, it appears that the original authority has inadvertently shown the period as 1-7-2003 to 31-3-2005, instead of 1-7-2003 to 30-11-2006 for which proceedings have been initiated in the show cause notice. We further find that while the original authority and lower appellate authority have referred to agreements by the respondent with ICICI Home Loans Ltd. on 13-8-2004 and agreement dated 12-9-2006 with ICICI Bank, these agreements appear to be only for appointing the respondent as "Sourcing Agent" for "marketing" and "sourcing customers" for their products. From the extracts of the agreements reproduced in the order of the original authority, we are not able to find any requirement of assessee to do evaluation or of prospective customer or vendors. This being the case, we are unable to fathom how the lower appellate authority has taken the view that the assessee were only evaluating prospective customers with respect to their credit worthiness and process their loan applications and present them to ICICI. Based only on this premise, he has concluded that such evaluation activity has the essential character of support service of business or commerce, which became to be taxed only w.e.f. 1-5-2006; that therefore there cannot be any confirmation of service tax on the assessee under Business Auxiliary Services prior to this period. Possibly guided by the period of dispute as 1-7-2003 to 31-3-2005, as wrongly indicated in the order portion by the original authority, the Commissioner (Appeals) has then gone ahead and set aside the entire order of the original authority.
4. In the circumstances, we are of the considered opinion that it would be appropriate to remand the matter to the original authority for de novo consideration. In such de novo proceedings, the adjudicating authority will carefully analyse the scope and purpose of the agreements concerned and then arrive at a conclusion whether they are in the nature of "business auxiliary services" or "business support service" and accordingly take a decision in respect of the proposals laid out in the show cause notice. Needless to say, appellants should be given sufficient opportunity to present their case including submission of additional evidence if any. Appeal therefore allowed by way of remand