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2015 (11) TMI 223 - AT - Service TaxBenefit of exemption Notification No. 13/2003-ST dated 20.6.2003 - Commission Agent service - Held that - commission was paid on principal to principal and case to case basis, depending upon various factors and quantum of commission is depending on such sale or purchase by the customer from the principal. It is categorically stated that they received commission only on sale of materials and payment is received from the customer. Notification No. 13/2003-ST extended the exemption to Business Auxiliary Services provided by a Commission Agent from service tax leviable thereon, under Section 66(2) of the Finance Act, 1994. Explanation to the said notification clarifies that Commission Agent is one who causes sale or purchase of goods on behalf of another person for a consideration, which is based on the quantum of such sale or purchase. - Respondent was already registered with the Service Tax authorities and availing the benefit of exemption notification 13/2003-ST and therefore, it was within the knowledge of the Respondent that this exemption notification was amended by Notification No. 08/2004-ST dated 09.7.2004. It is noted that they have started paying service tax from 10.09.2004 but there is no reason as to why they were not paying service tax from 09.7.2004. We have also noticed that respondent had not filed monthly ST-3 returns during the period 01.7.2003 to 09.09.2004. The adjudicating authority observed that Respondent suppressed the material fact regarding receipt of Commission regarding the services provided by them, in our view, it is sufficient to construe suppression of fact with intent to evade payment of tax. Hence, extended period of limitation would be invoked - demand of service tax alongwith interest for the period 09.7.2004 to 09.09.2004 is upheld - Decided in favour of Revenue.
Issues:
1. Appeal against the order of the Commissioner (Appeals) by the Revenue. 2. Eligibility for exemption under Notification No. 13/2003-ST. 3. Demand of service tax for the period from 01.7.2003 to 09.09.2004. 4. Interpretation of the activities carried out by the Respondent. 5. Application of the extended period of limitation for the demand of service tax. Issue 1: Appeal against the order of the Commissioner (Appeals) by the Revenue: The Revenue filed an appeal against the order of the Commissioner (Appeals) where the adjudication order was set aside. The Revenue contested that the Respondent's activities were mainly promotional and not covered under the exemption notification, valid until 08.07.2004. The Revenue argued that the demand of service tax for the period 09.07.2004 to 09.09.2004 should be upheld. Issue 2: Eligibility for exemption under Notification No. 13/2003-ST: The Respondent, registered as a Commission Agent, claimed exemption under Notification No. 13/2003-ST for the period 01.7.2003 to 08.7.2004. The Tribunal found that the Respondent's commission was based on the sale of goods, meeting the criteria of a Commission Agent as per the notification. Issue 3: Demand of service tax for the period from 01.7.2003 to 09.09.2004: The Respondent's activities were primarily as a Commission Agent for products like yarn and textile machinery. The Tribunal noted that the commission received was directly linked to the sale of materials, fulfilling the conditions for exemption under the notification. Issue 4: Interpretation of the activities carried out by the Respondent: The Revenue argued that the Respondent's activities extended beyond those of a Commission Agent, including sales promotional activities and other services. However, the Tribunal found that the Respondent's main role was that of a Commission Agent, and other activities were incidental. Issue 5: Application of the extended period of limitation for the demand of service tax: Regarding the demand of service tax for the period from 09.7.2004 to 09.09.2004, the Tribunal invoked the extended period of limitation. The Respondent's failure to pay service tax from 09.7.2004 despite being aware of the amendment to the exemption notification led to the imposition of penalties under Section 78 of the Finance Act, 1994. In conclusion, the Tribunal upheld the Commissioner (Appeals)'s order granting exemption under Notification No. 13/2003-ST for the specified period and upheld the demand of service tax with interest for the subsequent period due to the Respondent's failure to pay service tax despite being aware of the amendment to the exemption notification.
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