2019 (2) TMI 1853 - AT - Service Tax

Business Auxiliary Services - incentives received in lieu of sale of Computer and it's allied products from various companies manufacturing the said products - HELD THAT - The proceedings initiated through earlier Show Cause Notice dated 20.10.2014 culminated into passing of Order-in-Appeal No. 232-ST/APPL/LKO/2018 dated 27.03.2018. In the said Order-in-Appeal, ld. Commissioner (Appeals) has held that the appellant was a dealer in electronic goods manufactured by various companies like APPLE, ACER and that the appellant purchased the goods from National Distributor of said Manufacturers and resold the same in the market and that all the Incentives, Commissions Discounts received by the appellant were based on volume of sale effected by the appellant and therefore, the said consideration was in respect of sale and purchase transaction and therefore, there was no ground to charge Service Tax on the said Incentives. The statement of demand dated 18.04.2016 was based on the grounds stated in the earlier Show Cause Notice dated 20.10.2014 and the said grounds were found to be unsustainable by ld. Commissioner (Appeals) in said Order-in-Appeal dated 27.03.2018 - there are no merits in the present order-in-appeal - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
- Whether the incentives received by the appellant are subject to service tax as consideration for providing Business Auxiliary Service.

Analysis:
The judgment revolves around the issue of whether the incentives received by the appellant for trading computers and allied products are liable for service tax under the category of Business Auxiliary Service. The Revenue contended that the incentives received by the appellant were in exchange for providing Business Auxiliary Service, leading to a demand of service tax amounting to ?40,16,011/- for the period from 2009-10 to 2013-14. Subsequently, a statement dated 18.04.2016 was issued for the period 2014-15, raising a demand of ?12,13,087/- based on the same grounds as the earlier Show Cause Notice. The Order-in-Appeal dated 27.03.2018 concluded that the incentives received were related to the sale and purchase transactions of electronic goods, and hence, not subject to service tax. The subsequent impugned Order-in-Appeal dated 28.03.2018 upheld the confirmation of service tax for the financial year 2014-15. However, the Tribunal found that the grounds for the demand in the statement dated 18.04.2016 were already deemed unsustainable in the earlier Order-in-Appeal dated 27.03.2018. Consequently, the Tribunal set aside the impugned Order-in-Appeal dated 28.03.2018 and allowed the appeal, ruling in favor of the appellant.

This judgment highlights the importance of correctly categorizing transactions to determine the applicability of service tax. It emphasizes the need for a clear nexus between the received incentives and the nature of the transactions conducted by the appellant. The Tribunal's decision underscores the significance of prior legal determinations in subsequent proceedings and the necessity for consistency in applying tax laws to avoid erroneous demands. Ultimately, the judgment serves as a reminder of the critical role of factual analysis and legal interpretation in resolving disputes related to tax liabilities.