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Issues:
Taxability of services provided by Commission Agents prior to 14-5-2003 under the Finance Act, 1994. Analysis: The appellants had two units manufacturing cotton yarn and availed the services of Commission Agents during the disputed period. The Department issued show cause notices demanding service tax on the commission paid by the appellants, which were contested. The argument presented was that Commission Agent's services were not taxable before 14-5-2003, as clarified in a Board's Circular distinguishing them from Consignment Agents. The amendments to the Finance Act, 1994 by the Finance Act, 2000 and 2003 were also highlighted to support the non-taxability of services rendered by Commission Agents during the dispute period. The Consultant emphasized that the services provided by the appellants' agents were different from those of Clearing and Forwarding Agents or Consignment Agents. The argument was supported by referring to the Board's Circular and relevant legal provisions. On the other hand, the Respondent relied on Trade Notices and judicial decisions to assert that the services availed by the appellants were directly or indirectly connected with clearing and forwarding operations, making them taxable under the definition of Clearing and Forwarding Agents. After considering the submissions, the judgment focused on determining whether the services provided by the appellants' agents were those of Commission Agents or Consignment Agents. It was established that the agents were not physically handling the goods but were involved in identifying customers, collecting purchase orders, and earning commission. Consequently, it was concluded that the services were of Commission Agents falling under Business Auxiliary Services, taxable only from 14-5-2003. Therefore, the demand for service tax on the appellants was set aside, leading to the vacation of imposed penalties. In conclusion, the judgment clarified the taxability of services provided by Commission Agents before 14-5-2003 under the Finance Act, 1994, emphasizing the distinction between Commission Agents and Clearing and Forwarding Agents. The decision was based on a thorough analysis of legal provisions, circulars, and judicial interpretations to determine the correct tax treatment of the services availed by the appellants during the disputed period.
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