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2019 (7) TMI 1784 - AT - Service TaxBusiness Auxiliary Services - Appellant engaged in rendering services to their clients in connection with sale and purchase of goods produced by the clients for which they earn commission, apart from manufacturing business - eligibility for benefit under N/N. 13/2003 - Exemption denied on the sole ground that the appellant would be paid commission for the services rendered and that in the agreement, it has not been mentioned that the appellant has been appointed as commission agent - HELD THAT - The Ld. Commissioner has committed a serious error in denying the exemption. The agreements entered by the appellant, in substance, is for procuring orders on behalf of the clients for which the appellant would be paid commission to be calculated at the rate on sales amount. It is, therefore, not in dispute that the appellant has to cause sale of products on behalf of the client. Mere fact that in the subject agreements, the appellant has not been specifically addressed as commission agent will not dis-entitle the appellant from availing the benefit of exemption provided in the notification. Reliance can be placed in the case of CHAHABRIA MARKETING LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBAI 2016 (3) TMI 1050 - CESTAT MUMBAI where it was held that Once it is held that the assessee is a commission agent by virtue of being engaged in the activity of causing sale or purchase for a consideration which is linked to the quantum of sale or purchase, the benefit of this Notification will cover all business auxiliary services rendered by such a commission agent . The impugned demand of service tax, interest and penalty cannot sustain and hence, the same are set aside - Appeal allowed - decided in favor of appellant.
Issues:
1. Whether the appellant is legally eligible for exemption from payment of service tax under Notification no. 13/2003. Analysis: The appellant, engaged in manufacturing ferro/silicone manganese, also renders services to clients earning commission. The Department claimed service tax on the commission income under "Business Auxiliary Services." The appellant contended exemption under Notification no. 13/2003 was applicable during the period in question, citing agreements and past Tribunal decisions in their favor. The Department argued the exemption was only for commission agents dealing with goods, not services. The Tribunal reviewed the agreements and found the appellant acted as a commission agent, causing sales for clients, entitling them to the exemption. The Tribunal referenced past cases to support this interpretation, ultimately setting aside the demand for service tax, interest, and penalty. The key issue revolved around the eligibility of the appellant for service tax exemption under Notification no. 13/2003. The Tribunal analyzed the definition of a "commission agent" under the notification, emphasizing causing sale or purchase of goods for another person. The agreements and activities of the appellant were scrutinized to determine if they qualified as a commission agent. The Tribunal found that despite not being explicitly labeled as a commission agent, the appellant's role in procuring orders and causing sales for clients aligned with the definition, warranting exemption from service tax. The Tribunal highlighted the erroneous denial of exemption by the Ld. Commissioner, emphasizing that the appellant's activities as a commission agent were not limited to just sales or purchases but encompassed various services. The Tribunal clarified that the exemption applied to all business auxiliary services provided by a commission agent, not solely limited to sale or purchase activities. Citing precedents, the Tribunal reiterated that once an entity qualifies as a commission agent, all related services fall under the exemption, regardless of the specific nature of those services. The Tribunal's detailed analysis of the appellant's role and the provisions of the notification led to the conclusion that the demand for service tax, interest, and penalty was unsustainable, resulting in the appeal being allowed with consequential relief as per law.
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