Custom, Excise & Service Tax Tribunal
Jolly Motors vs Ahmedabad-Ii on 6 May, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
AHMEDABAD
REGIONAL BENCH, COURT NO. 1
SERVICE TAX APPEAL NO. 12964 OF 2018
[Arising out of OIA-AHM-EXCUS-002-APP-51-18-19 dated 27/08/2018 passed by
Commissioner (Appeals), Central Excise, Service Tax, AHMEDABAD]
JOLLY MOTORS .....Appellant
1-2, Gitanjali Complex, Nr Darpan Six Road, Navrangpura,
Ahmedabad, Gujarat
Vs.
C.C.E.-AHMEDABAD-II ......Respondent
Custom House... First Floor,Old High Court Road, Navrangpura,Ahmedabad,Gujarat-380009 Appearance:
Shri Vipul Khandhar, Chartered Accountant for the Appellant Shri Himanshu P Shrimali, Superintendent (AR) for the Respondent CORAM:
HON'BLE MR. SOMESH ARORA, MEMBER ( JUDICIAL ) HON'BLE MR. SATENDRA VIKRAM SINGH, MEMBER ( TECHNICAL ) FINAL ORDER NO._10321 /2025_ Date of Hearing :22.04.2025 Date of Decision :06.05.2025 SOMESH ARORA This is a second round of litigation and the period involved is from 2003-2004 to 2005-2006. As per the department, service rendered by appellant was covered under Business Auxiliary Service (BAS) which came into existent w.e.f 1.7.2003. However, the appellant contended that the service involved is "Business Support Service" which came into existence from 01.04.2008. The appellant was engaged in purchase and sale of old and used cars on commission basis and were also appointed as DSA for M/s. Kotak Mahindra Primus Ltd & HDFC Bank Ltd for arranging the finance from their own sides. The show cause notice was issued in this case on 19.10.2006. The said show cause notice was decided by the adjudicating authority vide order dated 09.05.2018 wherein, he confirmed the Service Tax upon appellant under "Business Auxiliary Service". He also ordered for recovery of interest and imposed penalty upon them. Aggrieved by the above order, the appellant filed appeal before Commissioner (Appeals), Ahmedabad who vide order dated 11.09.2018 upheld the decision of the adjudicating authority. Hence the present appeal.
2. During first remand by this Bench of the Tribunal, the matter was remanded on as decision in the case of Pagariya Auto Center Vs. Commissioner of Central Excise-Aurangabad as reported in 2014 (33) S.T.R 506 (Tri-LB) had become available. It was the appellant's contention that since legal issue was decided by the Larger Bench, hence, there was strong case on limitation and their appeal deserved to be allowed. This Tribunal while dealing with the matter Vide Order No. A/10852/2016 dated 02.09.2016 directed as follows:-
Para 4. "On careful consideration of the arguments of both the sides and perusal of the records, it is observed that the issue was in dispute during the relevant period and there were decisions of the Tribunal in favour during the relevant period. The Board Circular dated 06.11.2016 also states that the issue was in dispute during the previous period. Prima facie, we find there were reasons for the appellant to have had a bonafide belief that service tax was not chargeable for the said commission during the said period. However, this issue of limitation appears to have not been agitated/examined by the lower authorities. Hence, the matter has to be sent back to the original adjudicating authority for a decision on this aspect, after examining the facts of the case and hearing the appellants. We make it clear that we are not expressing any opinion and the adjudicating authority is expected to take an unbiased impartial decision."
2.1 In pursuance of the direction through the impugned order, the learned Commissioner (Appeals) while holding that the service deserved to be classified under Business Auxiliary Service held on limitations as follows:
Para 11. "As regard [ii] above, the adjudicating authority has contended that due to specific intelligence, the activities of the appellant came to light of the department that they were appointed as DSA. Thus, the act of the appellant amount to suppression of fact to evade payment of service tax and extended period is correctly invoked in this case. In the statement the proprietor Shri Suresh Vishandas Ramani has categorically stated that " their above mentioned service provided to their customer was covered under the scope of the provisions Under sub-clause (ii) of the clause 19 of the section 65 of the Finance Act 1944 and as such activity is taxable activity with effect from 01.07.2003 under the category of the Business Auxiliary Service. From the above statement of the proprietor, it is crystal clear that there were no such "bona fide belief" as claimed by the appellant and they were in fact aware of the taxability of their service. Therefore, it is very clear that their claim of "bona fide belief that service was not chargeable is a mis- statement and afterthought, In view of this, extended period is applicable.
Para 11.2 I further Find that Hon'ble Apex Court in the case of Jain Exports Pvt Ltd (1993 (66) ELT 537) has held that mere bona fide action cannot entitle assessee to claim full waiver of penalty, unless totality of the facts so warrant. The relevant substance of the said order is as under:
..For the foregoing reasons we are satisfied that the importers' contention that the redemption fine should be wholly waived or substantially reduced as their action in importing the goods under OGL was bona fide, is not well founded. Even if the transaction has in fact resulted in a loss (we cannot delve into it for the first time in this Court) it will not make any difference. We feel that taking cover under the earlier-orders passed in the case of M/s. Jain Shudh Vanaspati Ltd., and the letter of the STC, the importers have tried to create the impression that they were innocent victims of the subsequent interpretation put on the relevant entry, ignoring the fact that the licences were revalidated on certain terms and conditions which did not permit import except through the STC. We are, therefore, satisfied that the import under OGL was not a bonafide act. We, therefore, dismiss both the appeals as well as the writ petition with costs." [paras 11, 13].
3. Learned AR reiterated the finding by the lower authorities.
4. There has been no serious challenge before us on the point that Business Auxiliary Service is the proper classification as the activities as brought out in para 3 of the show cause notice not only included their appointment as a DAS on commission basis but also to ensure hypothecation/hire purchase in favour of Bank, RTO registration work and obtaining all papers/ documents required in the finance scheme in favour of the bank from the owner of the car/Customer. Therefore, by no sense of imagination, these services were Business Support Service only. We find that in the case of Pagariya Auto Center reported in 2014 (33) S.T.R 506 (Tri-LB), it has been observed as follows:-
Para 21. "Where mere space is provided along with furniture for facilitating accommodation of representatives of financial institutions in the premises of an automobile dealer and consideration is received for that singular activity, such consideration may perhaps constitute a rent for the provision of space and associated amenities. Such restricted relationship/transaction may not amount to BAS. If on the other hand, the transactional documents and other evidence on record indicates a substantial activity falling within the contours of any of the integers of the definition of BAS, spelt out in Section 65(19), then it would be legitimate to conclude that BAS is provided."
4.1 Applying the test laid down, we find that in the instant case, as has been brought out from the records, various documents etc. were being prepared by the appellants, they were charging commission, they were responsible for arranging finance on old cars and also were arranging various documents including RTO registration etc. Such activities cannot be stated to be a rent of any kind and it has to come within the ambit of Business Auxiliary Service .To fortify the matter against the appellants despite Larger Bench decision, the Learned Commissioner (Appeals) has correctly relied upon the statement of Shri Suresh Vishandas Ramani which clearly indicates that Clause 19 (ii) of Section 65 of the Finance Act,1994 clearly brought this kind of service within the ambit of "Business Auxiliary Service". It was also pointed out by Shri. Ramani during the course of the statement that sometimes other sub brokers also bring business to them in which case, they pay them with some commission out of the commission to be earned by them. From the show cause notice, we also analyzed that renting of space was never an issue made out in the matter as was the case before the Larger Bench. Therefore, for the kind of activities which were being performed by the appellants, there cannot be any doubt about the same not being covered under Business Auxiliary Services. Hence notion that there was confusion in their mind, despite admission by the owner of the business clearly indicates that it is a figment of imagination to take advantage of a case law which is not applicable to them, in any case in its entirety. We therefore hold that the order of Commissioner (Appeals) is sustainable both on merits as well as on the point of limitation.
5. Appeal is therefore rejected.
(Pronounced in the open Court on 06.05.2025) (SOMESH ARORA) MEMBER ( JUDICIAL ) (SATENDRA VIKRAM SINGH) MEMBER ( TECHNICAL ) Prachi