2012 (6) TMI 192 - AT - Service Tax

Commission received from an up country person - receipt in foreign exchange on 28.05.2004 - Held that - It is evident from advice received from BOB that foreign exchange has been converted and credited in the appellant s account in Indian currency. If the amount is received by the appellant from an up country person and has to be treated as commission, the moment it is received from convertible foreign exchange, it goes out of the purview of service tax liability during the relevant period in question. We find that up to July 2004, any amount received, which is as a commission either in Indian rupees or in foreign exchange, was exempted from the levy of service tax. Order set aside - Decided in favor of assessee.

Summary

Issues:
- Stay application for waiver of pre-deposit of service tax and penalty amount
- Tax liability on commission received in foreign exchange

Analysis:
1. The appellant filed a stay application seeking waiver of pre-deposit of an amount towards service tax and penalty. The adjudicating authority and the first appellate authority confirmed the amount, considering it as commission liable for service tax under Business Auxiliary Services category.

2. The Tribunal found that the issue involved was narrow and could be disposed of at that stage. After allowing the application for waiver, the Tribunal proceeded with the final disposal of the appeal.

3. Upon reviewing the submissions and evidence, it was revealed that the appellant received an amount in foreign exchange from a supplier of goods situated up country. The evidence included advice from the Bank of Baroda regarding payment from Danske Bank, Denmark. The Tribunal noted that any commission received in convertible foreign exchange, whether in Indian rupees or foreign currency, was exempt from service tax liability until July 2004.

4. The Tribunal observed that the first appellate authority did not properly consider the evidence of payments in foreign exchange. As the amount received by the appellant in foreign exchange was to be treated as commission, it was outside the purview of service tax liability during the relevant period. Therefore, the impugned order was found to be not in accordance with the law and was set aside.

5. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The judgment was dictated and pronounced in court by the Tribunal.