Ms. Jyoti Balasundaram, Vice-President - Heard both on the application for waiver of pre-deposit of service tax, education cess and secondary & higher education cess of Rs. 57,01,833/- under the proviso to Section 73(1) together with interest under Section 75 and penalty of Rs. 60 lakhs under Section 78 of the Finance Act, 1994. The demand has been confirmed by treating the commission amount received by the assessee who are registered for banking and financial services and engaged in the business of financing commercial vehicles, cars, two wheelers etc., from vehicle dealers, as taxable under the category of "Business Auxiliary Service".

2. The assessee pays the loan amount, not to the individual borrower, but to the dealers who sell the vehicles to the borrowers and in certain cases borrower negotiates with the assessee for a revision in interest rate and the dealer grants commission to the assessee for the purpose of promoting his business. "Commission Agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person -

(i)deals with goods or services or documents of title to such goods or services ; or

(ii)collects payment of sale price of such goods or services; or

(iii)guarantees for collection or payment for such goods or services; or

(iv)undertakes any activities relating to such sale or purchase of such goods or services".

3. Prima facie, the assessee promotes and causes sale of the vehicles for the dealer which he receive a commission in return, as a consideration. The assesee also makes payment to the dealers for the vehicles. Therefore, prima facie, the service provided by the assessee would be covered by the definition of "commission agent" and prima facie is classifiable under the category of "Business Auxiliary Service". The contention of the assessee that, in order to come under the definition of the assessee that, in order to come under the definition of "commission agent", money must have been received from their client, who is the borrower, is prima facie not tenable since the assessee has acted on behalf of the borrower by dealing with the title document of the vehicle etc. and has prima facie therefore acted as ‘commission agent’ involving the borrower and the dealer. Under these circumstances, no prima facie case for total waiver has been made out. We, therefore, direct pre-deposit of Rs. 20,00,000/- (Rupees Twenty lakhs only) towards tax within a period of 8 weeks from today and on such deposit, the pre-deposit of balance amounts in dispute shall stand dispensed with and recovery thereof stayed pending the appeal. Failure to comply with this direction shall result in vacation of stay and dismissal of appeal without prior notice.

4. Compliance is to be reported on 11-7-2011.