2009 (1) TMI 33 - AT - Service Tax

Respondents are engaged in the collection of pathological samples from the patient for testing - Revenue submits that respondents spend 10% commission for market development which is clearly a promotion or marketing service covered under sub-clause (i) and (ii) of the definition of Business Auxiliary Service - it is seen that the commission related to 10% is for development of market related to the respondent own benefit therefore appeal filed by the Revenue is rejected

Summary

Issues: Appeal against service tax demand under 'Business Auxiliary Service' category for collection of pathological samples.

Analysis:
1. Background: The appeal was filed against the order passed by the Commissioner (Appeals), Indore, regarding the demand of service tax on the respondents engaged in collecting pathological samples for testing by a company.

2. Legal Precedents: The Commissioner (Appeals) based the order on the Tribunal's decision in the case of Dr. Lal Path Lab Pvt. Ltd. vs. C.C.E., Ludhiana, which was upheld by the Punjab & Haryana High Court. This decision established that collection centers forwarding samples for testing do not fall under Business Auxiliary Services.

3. Arguments: The Revenue contended that the respondents spending 10% commission for market development constitutes a promotional service falling under Business Auxiliary Service. They highlighted that this fact was not presented before the Tribunal in the Dr. Lal Path Lab case.

4. Commissioner's Decision: The Commissioner (Appeals) considered the dispute related to service tax demand for collecting samples and sending them to the testing company. The appellants argued that the deducted amount was their margin, not commission, and they operated on a principal-to-principal basis, not as agents of the testing company.

5. Judgment: The Tribunal upheld the Commissioner's decision, noting that the commission was for the market development related to the respondent's benefit. Since the respondents were party to the Dr. Lal Path Lab case, where a similar issue was decided in their favor, the Tribunal rejected the Revenue's appeal.

6. Conclusion: The Tribunal found no grounds to interfere with the Commissioner's order, emphasizing the consistency with the earlier legal precedents and the nature of the commission as a market development expense for the respondent's benefit.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues, arguments presented, relevant legal precedents, and the final decision rendered by the Appellate Tribunal CESTAT NEW DELHI.