for arranging finance for its buyer
*
Normally vehicles changed hands from the manufacturer to the customers
through the authorized dealers and the customers can arrange finance
independently through any other person; if the third party has arranged the
finance to the buyer of the vehicle, the services of the said third party
would undoubtedly come under the business auxiliary services.
CESTAT, PRINCIPAL BENCH NEW DELHI
Roshan Motors Ltd.
v
CCE
STA No. 253 of 2006
November 27, 2008
RELEVANT EXTRACTS:
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6.1 We have carefully considered the submissions from both sides. Normally
vehicles change hands from Maruti Udyog Ltd. to the customers through the
authorized dealers. The customers could have paid cash or could have
arranged finance independently through any other person. If the third party
has arranged the finance to the buyer of the vehicle, the services of the
said third party would undoubtedly come under the business auxiliary
services.
6.2. In the present case the appellant has taken additional responsibility/
functions and entered into agreements with the finance companies. The terms
of agreement clearly indicate that the appellant is definitely promoting the
finance scheme of the finance companies but the fact that the said promotion
is limited to vehicles sold by them is not significantly relevant to
consider their status.
6.3. In any sale of goods, it can be said that both the buyer and seller are
beneficiaries. Similarly in relation to any service both the provider and
recipient are beneficiaries. In a school, if there are no teacher/teachers
no student can be taught and if there are no students there is no need for
teachers. In a way they are rendering services to each other. In this case
it has been stressed that the appellant is not rendering services
exclusively for the finance companies as their objective is to promote their
own business. Is it a case, where the appellant is rendering services to the
finance companies? Is it a case, the finance company is rendering services
to the appellant? Or is it a case, the appellant is rendering services to
the buyer of the vehicles? The customer is interested in buying the Maruti
vehicles. The appellant's main business is selling the Maruti vehicles to
their customers by positioning themselves between the manufacturer and the
customer and they get a margin. The customer is also interested in getting
the finance. The appellant has arranged finance to their customers by
positioning themselves between the financiers and the customers. This tie up
with the finance companies definitely benefits the appellant and at the same
it benefits the finance companies more. If it was only to the benefit of the
appellant, the finance companies should have charged services charges from
the appellant. That is why the finance companies have paid service charges
to the appellant. The terms of the agreement together with the fact that the
appellant has been paid for the services leads to the conclusion that the
appellant is rendering services in marketing rendering the services rendered
by the finance companies.
6.5 In the light of the above, we hold that the decision of the authorities
in holding that the appellant render business auxiliary services to the
finance companies and the service charges received by them are subject to
service tax is legal and proper and does not call for any interference. The
demand of service tax along with interest is confirmed.