2011 (7) TMI 947 - AT - Service Tax

Waiver of pre-deposit - Business Auxiliary Services - Held that person who purchases and sells the goods on his own behalf and does not act on behalf of others is not commission agent - Decided in favor of the assessee

Summary

Issues:
Waiver of pre-deposit of Service Tax under the Finance Act, 1994 based on the classification of the applicant as a 'commission agent.'

Analysis:
The applicant sought waiver of pre-deposit of Service Tax amounting to Rs. 3,40,421/-, along with interest and penalty, contending that their relationship with their domestic supplier was that of a buyer and seller, operating on a principal-to-principal basis without acting on behalf of any other person in the sale or purchase of goods. The learned SDR reiterated the findings of the lower authorities.

The Tribunal examined the definition of a 'commission agent' under 'Business Auxiliary Services,' which includes any person who acts on behalf of another person and causes the sale or purchase of goods for a consideration. The definition encompasses dealing with goods or services, collecting payment, guaranteeing collection or payment, or undertaking activities related to the sale or purchase of goods. It was emphasized that a person who purchases and sells goods on their own behalf, without acting on behalf of others, does not fall under the category of a commission agent.

Consequently, the Tribunal found that the applicant had established a strong prima facie case in their favor. Therefore, the pre-deposit of Service Tax, interest, and penalties imposed under the Finance Act, 1994 were waived, and the recovery of the same was stayed during the pendency of the appeal.

This judgment highlights the importance of the specific role and relationship of a 'commission agent' in the context of Business Auxiliary Services under the Finance Act, 1994. The decision underscores the distinction between a person acting on behalf of others in the sale or purchase of goods and someone engaging in transactions on their own behalf, impacting the applicability of Service Tax and related penalties.