At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
By, THE HONORABLE JUSTICE: M.V. RAVINDRAN
By, MEMBER AND THE HONORABLE JUSTICE: C.J. MATHEW
For Petitioner: Aparna Hirandagi, Advocate And For Respondents: M.P. Damle, Assistant Commissioner (AR)
1. Appellant, M/s. Ichibaan Automobiles (P) Ltd., is before us challenging the order-in-original No. 454/37/V/2011/COMMR/KS/ST dated 20th December 2011 of Commissioner of Central Excise, Mumbai V which has held the assessee to be liable to tax of Rs. 94,15,180 for rendering of business auxiliary service taxable under section 65 (105) (zzb) of Finance Act, 1994, interest thereon, and penalty of like amount under section 78 of Finance Act, 1994.
2. The appellant, a dealer of cars manufactured by M/s. Honda Siel Cars Ltd., also acts as direct sales agent for various financing companies by referring customers who seek to finance their vehicles. A part of the commission earned for such referrals is sometimes surrendered to enable reduction in interest rates charged on the customer by the financier, the latter does not forgo any of the interest receivable. The show cause notice alleged that an amount of Rs. 9,59,01,534 had not been subjected to tax owing to non-inclusion of this surrendered portion in the value of gross commission received. The appellant, on the other hand, contended that it had received a commission of Rs. 6,72,49,754 on which tax had been paid and that the amount now covered in the show cause notice had never been received by them as commission. Notwithstanding this plea, the adjudicating authority upheld the liability to tax and imposed penalty leading to this appeal.
3. We have heard Learned Counsel for appellant and Learned Authorised Representative. Learned Counsel placed before us a number of decisions relating to gross value of taxable service which was the sole ground in the impugned order for confirming the recovery of short paid tax. Among the decision cited was that of the Tribunal in Toyota Lakozy Auto Pvt. Ltd. v. Commissioner of Service Tax & Central Excise, Mumbai-II/Mumbai-V [2016-TIOL-3152-CESTAT-MUM].
4. In the above cited decision, an identical dispute had been examined and we have noted that the manner in which the money flows between the various parties is critical for determining the rendering of a service, and consideration thereof, as well as the taxability of the service. Only a detailed examination of the transactions would isolate the components thereof for merging the disputed amount with the business auxiliary service rendered to financing companies. We take note that the impugned order has not done so and has merely assumed that the unaccounted amount was taxable by reference to gross value. The relevant observation in the impugned order
"8. It appeared that M/s. IAPL had been providing Business Auxiliary services from their various branches, situated at Andheri (Head office) Worli, Lower Parel and Chembur. They had obtained centralized registration No. AAAC 19959FST001 from the office of the Assistant Commissioner, Service Tax, having jurisdiction of the head office situated at Metro Estate, Kalina, CST Road, Santacruz (E), Mumbai-400 098, for all the taxable services being provided by them. From the forging facts, it appeared that M/s. IAPL had failed to arrive at the correct value of taxable services and also failed to pay corr
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ect Service Tax, resulting in to short payment of Service Tax." is ample demonstration. That uncovered gap must be bridged. 5. In line with the decision in re Toyota Lakozy Auto Pvt. Ltd., we set aside the impugned order and remand the matter back to the original authority to reconsider the matter in the light of the above observations.