2013 (8) TMI 51 - AT - Service Tax

Service tax liability on the ground that appellant being Commission Agent of IOCL - Contracts entered with IOCL indicates the same as Job Contract. Appellants submits that he purchases and causes sale of goods and hence cannot be considered as a Commission Agent, falling within the definition of Business Auxiliary Services enshrined in Section 65 (19) of the Finance Act, 1994 Held that - There is nothing on record, to come to a conclusion that appellants have been purchasing and selling the goods - In the Job Contract, it is directed that the appellants herein shall maintain pump in a particular way for sale of the goods and, or ask for supplies as and when requirement arises. Arguments that services rendered by the appellants would not fall under the category of Business Auxiliary Services, is debatable one and needs deeper consideration - Appellants have not made out a prima-facie strong case for the waiver of pre-deposit of the amounts involved. Accordingly, directed appellants, M/s. Jaysukh Dayani to deposit Rs. 3,00,000/- (Rupees three lakhs only) and Shri M/s. Vilesh Premji Thacker to deposit Rs. 2,00,000/- (Rupees two lakhs only) within eight weeks.

Summary

Issues:
1. Whether the appellants are liable to pay service tax as Commission Agents?
2. Whether the appellants' services fall under the category of Business Auxiliary Services?
3. Whether the appellants have made out a strong case for the waiver of pre-deposit?

Analysis:
1. The appellants contested the lower authorities' decision confirming service tax liability, interest, and penalties under the Finance Act, 1994, arguing that they are not Commission Agents but engage in job contracts with M/s. IOCL for purchasing and selling goods. The counsel highlighted that the contracts with IOCL specify job contracts, not commission agency relationships. The appellants maintained that any payable amounts should be borne by IOCL, not them.

2. The Departmental Representative argued that the appellants' services qualify as Business Auxiliary Services as they act as Commission Agents based on the definition provided in the Finance Act, 1994. The DR emphasized that the amounts received by the appellants from IOCL, even if termed as remuneration, are taxable due to their classification as Commission Agents under Business Auxiliary Services.

3. The Tribunal examined the submissions and found the appellants' claim of purchasing and selling IOCL's products unsubstantiated. While acknowledging the debatable nature of the argument, the Tribunal noted that the contracts with IOCL outline job contract roles, directing the maintenance of pumps for goods sale. The Tribunal concluded that a deeper consideration of the service nature is required during the final appeal disposal.

4. As the appellants failed to establish a prima facie strong case for the waiver of pre-deposit, the Tribunal directed M/s. Jaysukh Dayani to deposit Rs. 3,00,000 and M/s. Vilesh Premji Thacker to deposit Rs. 2,00,000 within eight weeks. Compliance was to be reported by a specified date, with recovery stayed until appeal disposal, subject to compliance verification by the Deputy Registrar.

This judgment highlights the importance of contractual terms in determining service tax liability and the need for a strong case to warrant a waiver of pre-deposit in tax matters before the Appellate Tribunal.