2013 (11) TMI 1503 - AT - Service Tax

Waiver of pre-deposit - Stay application - Business Auxiliary Service - Commission remitted by the petitioner in foreign currency for facilitating export of cotton, rice, cashew and sesame claimed to be agricultural produce by the petitioner - Corporate bank guarantee - Held that - Notification No.8/2004-ST amended several earlier exemption Notifications including Notification No.13/2003-ST. Under this Notification, inter alia, Notification No.13/2003-ST was amended to introduce an additional clause in the Explanation to the earlier Notification No.13/2003-ST. The scope of the primary exemption granted was also restricted. Under the earlier Notification No.13/2003-ST, business auxiliary service provided by commission agents was exempted from the liability to tax. By Notification No.8/2004-ST, the exemption was restricted to business auxiliary service provided by commission agents in relation to sale or purchase of agricultural produce. Conclusion by the adjudicating authority that commission paid by the petitioner to its overseas agents for facilitating export of rice, sesame seeds, cashew nuts etc. is not entitled to the benefit of exemption Notification No.8/2004-ST, is unsustainable. - stay granted on this issue. Regarding demand of service tax on corporate guarantee commission - held that - Singapore corporate entity was neither a Bank nor had provided a bank guarantee. It provided a guarantee on the basis of its own resources assets to Indian banks to facilitate lending of money by Indian banks to the petitioner. This would not, in our considered view, constitute bank guarantee within the meaning of the said expression in Section 65(12) of the Act - provision of corporate guarantee clearly falls outside banking or financial services. however it would be falling under Business Support Services (BBS) - entire amount of service tax with interest directed to be deposited - stay denied

Summary

Issues:
1. Stay applications seeking tagging of the appeal and expeditious hearing.
2. Waiver of pre-deposit and stay of further proceedings regarding service tax liability.
3. Claim for exemption under Notification No.8/2004-ST for agency commission.
4. Claim for exemption under Notification No.8/2004-ST for corporate guarantee commission.

Issue 1:
The stay applications seeking tagging of the appeal and expeditious hearing were dismissed as they did not survive for adjudication due to being listed along with other applications.

Issue 2:
The petitioner sought waiver of pre-deposit and stay of further proceedings following the adjudication orders dated 31.1.2013 and 6.3.2013 regarding service tax liability. The service tax liability assessed for corporate guarantee and agency commission was specified, and the petitioner claimed benefits of exemption under Notification No.8/2004-ST for both categories of service.

Issue 3:
Regarding the agency commission paid to overseas agents for facilitating the export of agricultural produce, the petitioner claimed benefits of exemption under Notification No.8/2004-ST. The adjudicating authority denied the exemption, but the Tribunal found that the overseas agents facilitating the export of agricultural commodities fell within the scope of commission agents as defined under Notification No.13/2003-ST. The Tribunal also noted that the benefit of exemption under Notification No.8/2004-ST should apply to such services.

Issue 4:
Concerning the corporate guarantee commission remitted to a Singapore entity, the petitioner contended that the guarantee provided constituted a service falling within Banking and other Financial Services defined in Section 65(12) of the Act. The Tribunal analyzed the nature of the corporate guarantee provided by the Singapore entity and concluded that it did not fall within the definition of bank guarantee under Section 65(12) of the Act. The Tribunal granted waiver of pre-deposit and stayed further proceedings based on these analyses and conditions set for remittance within a specified timeframe.

Overall, the Tribunal granted relief to the petitioner by accepting the claims for exemption under Notification No.8/2004-ST for both agency commission and corporate guarantee commission, while also providing detailed reasoning for its decision based on legal interpretations and factual analysis presented during the proceedings.