2016 (11) TMI 488 - AT - Service Tax

Whether the appellant has provided commission agent services, during the relevant period which were exempted vide notification number 13/03-ST dated 20.06.2003 or they have provided Business Auxiliary Services which would be liable to tax? - Held that - the appellate authority is not disputing the fact that the appellant is satisfying condition (ii) and (iii) of the above definition but has not held the appellant to be Commission agent because he only informs the principal about the customers and his principal himself enters into a contract with the customers. In our views, such a distinction made by Commissioner (A) does not advance the revenue s case. Admittedly, the customer is brought to the principal by the appellant and the commission is paid to the appellant only when the sale / purchase is materialized. Whether negotiation is done by the principal or by the appellant will not have any effect on the fact of getting commission only on the finalization of the sale / purchase. We find that an identical situation was considered by the Tribunal in the case of Commissioner of Central Excise Vadodara Vs. M A Menon & Co. 2008 (11) TMI 109 - CESTAT, AHMEDABAD wherein the Tribunal held that in as much as the assessee was primarily engaged in the sale activity and gets his commission only when the sale materializes he has to be held as commission agent. As much as the assessee gets the commission only when the product stands purchased by the Customer, they have to be held as commission agent, irrespective of the fact that for procuring such orders from the buyers they were doing marketing survey also - the appellant is only a commission agent. If that be so, the benefit of notification number 13/03 dated 20.06.2003 would be available to them - appeal allowed - decided in favor of appellant.

Summary

Issues:
Determining whether the appellant provided commission agent services exempted under a specific notification or Business Auxiliary Services subject to tax.

Analysis:
The dispute in the appeal revolves around whether the appellant provided commission agent services, exempted under notification number 13/03-ST dated 20.06.2003, or Business Auxiliary Services liable to tax. The appellant had an agreement with a company for exporting medical products, where they secured orders from customers and received a commission upon finalizing sales. The Revenue argued that these activities promoted the company's business, falling under Business Auxiliary Services, leading to demand confirmation by the authorities.

The agreement specified a commission based on the value of goods exported, payable only upon successful sales. The Commissioner (A) analyzed the scope of a commission agent, noting specific conditions required for such classification. While the appellant met some conditions, the Commissioner concluded they were not a commission agent as they did not directly cause sales on behalf of the company. Instead, the appellant provided support services covered under Business Auxiliary Services during the relevant period.

The appellate authority disagreed with the Commissioner's distinction, emphasizing that the appellant's role in bringing customers to the company and receiving commission upon sale finalization aligned with a commission agent's functions. Citing precedents, the Tribunal highlighted cases where similar situations led to the classification of the service provider as a commission agent, despite additional activities like marketing surveys.

Ultimately, the Tribunal determined that the appellant qualified as a commission agent, making them eligible for the exemption under the notification. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, granting them consequential relief.

In conclusion, the judgment clarified the distinction between commission agent services and Business Auxiliary Services, emphasizing the criteria for classification and relying on precedents to support the decision in favor of the appellant as a commission agent entitled to exemption under the relevant notification.