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Judgment
These appeals have been filed by the appellant with respect to OIA No. 271-272/ST/APPL/KNP/2010 dated 20/05/2010.
Shri Ravindra Kumar Agarwal (Advocate) appeared on behalf of the appellant and argued that certain amounts were received by the appellant for
providing table space to HDFC/ICICI Banks for permitting the employees of those banks to enter their showrooms to interact with the prospective
customers who intend to buy LML Scooters, for which appellant is the Authorised Dealer. It was his case that appellant is not providing any services
under the head Business Auxiliary Services. He relied upon the case law of Pagariya Auto Center vs. CCE, Aurangabad [ (2014) 42 taxmann.com
371 (Mumbai - CESTAT) (LB).
Shri B.B. Sharma (AR) appearing on behalf of the Revenue argued that appellant has received certain commissions from the banks in lieu of
arranging loans to the customers for purchase of vehicles. It was his case that the activities undertaken by the appellant are covered under the
category of Business Auxiliary Services and are chargeable to service tax.
Heard both sides and perused the case records.
It is the case of the Revenue that appellant is providing Business Auxiliary Services to ICICI Bank and HDFC Bank for which a commission is paid
by the banks to the appellant. On the other hand, the case of the appellant is that only space is provided in their premises by the appellant to HDFC
and ICICI Banks. That the purpose of providing space to banks is only to allow the officials of these financial institutions to enter their showrooms and
canvass with the prospective buyers for arranging loans to the customers. It is also the submission of the appellant that after finalising of loans to the
customers a token amount is paid by the banks to the appellant in the shape of some incentive for allowing the bank officials to remain and use
appellant's space in their showroom. It is, therefore, the case of the appellant that they are not arranging any loans on behalf of the banks and the
amount received by them cannot be taxed as a consideration under Business Auxiliary Services.
Appellant has relied upon the case law of Pagariya Auto Center vs. CCE, Aurangabad [(2014) 42 taxmann.com 371 (Mumbai â€" CESTAT) (LB).
While deciding the issue CESTAT Larger Bench made following observations in para 8 and 11 which are reproduced below:-
The specific issue referred to this larger Bench, is, in our considered view, incoherently structured. Provision of table space by automobile dealers
to financial institutions may have several underlying purposes and may be predicated upon varieties of transactional instruments. Such a provision (of
table space) may be incidental to lease of immovable property by the automobile dealer to the bank/financial institutions or it may be an incidental
facility provided under a comprehensive agreement between the parties, whereunder the automobile dealer (under the terms of agreement between
the parties, oral or written) undertakes to provide/offer a raft of services, some or all of which may be taxable services; including BAS. Mere
provision of table space would provide no valuable input which permits identification of the character of the transaction for classification into one or
the other or not any, taxable service.
The earliest of the decisions referred before us is the decision in Silicon Honda (supra). This is a judgment of a learned single Member. We notice
that in this appeal, the assessee's challenge to the adjudication order was on the basis that the conclusion that the assessee had provided BAS was
erroneous since Revenue had concluded that the assessee had provided BAS by acting as a commission agent to a bank/financial institution and table
space was also provided to representatives of such bank/financial institution. The appeal was allowed by this Tribunal with the observation that the
adjudication order had failed to refer to any evidence as to financial institutions paying commission to the assessee for providing loan to their
customers, who are secured through the efforts of the assessee and there was no record of the assessee's efforts in having provided any such service
to the financial institutions. It was held that mere presence of the financial institutions in the assessee's premises and receiving a consideration for
lease of table space, would not amount to BAS. This judgment is therefore not an authority for a principle that all transactions between an automobile
dealer and bank/financial institutions, involving presence of such financial institutions in he premise of the dealer, would amount to BAS. There can be
no dispute that mere providing of a table space in an assessee premises would not per se amount to BAS"".
It is observed from the case records of this appeal that the facts regarding nature of services rendered by the appellant to the banks is not clear. No
statement/contract entered between the appellant and the banks has been brought on record by the Department regarding the exact nature of services
provided. Appellant has correctly relied upon the case law of Pagariya Auto Center vs. CCE, Aurangabad (supra) to the effect that mere providing of
table space will not give valuable inputs to identify as to what taxable service is rendered. There is no evidence on record in the present proceedings
that commissions paid to the appellant are with respect of facilitating loans to the prospective customers on behalf of the banks. The ratio laid down by
the Larger Bench in the case of Pagariya Auto Center vs. CCE, Aurangabad (supra) is squarely applicable to the facts of this case. Based on the
above observations and settled position of law appeal filed by the appellant is allowed with consequential relief, if any.
(Operative part of the order pronounced in the open court.)