2016 (11) TMI 1004 - AT - Service Tax

Demand u/s 65(19) of the Act - levy of tax - commission/brokerage received - Business Auxiliary Service - Held that - We find that the services rendered by the assessee are in the nature of advice given to their clients for finding the means and sources of fund of business and negotiating the arrangements of the same for use in the business of their clients. It is noteworthy that this activity is not relatable to any goods or services of the clients. Such activities will not bring the assessee within the definition of Commission Agent as given above. Consequently, the assessee cannot be held to have rendered any service under the category of BAS - reliance placed on the decision of the case of Fulchand Tikamchand Vs. CCE, Nagpur 2016 (2) TMI 772 - CESTAT MUMBAI where it was held that the appellant has acted as a broker and made available the details of financiers to potential operators. The Tribunal held that such an activity will not bring the assessee under the commission agent. Tax not leviable - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against the Order in Appeal dated 15.12.2011 passed by Commissioner (Appeals) setting aside the demand for service tax under Business Auxiliary Service.
- Determination of whether the activities of the assessee fall within the definition of a commission agent as per Section 65(105)(zzb)(Clause VII) of the Act.
- Interpretation of the definition of commission agent and its applicability to the case.
- Comparison of the activities of the assessee with the definition of commission agent.
- Analysis of relevant case laws to support the argument.

Analysis:
The appeal was filed against the Order in Appeal that set aside the demand for service tax under Business Auxiliary Service (BAS). The demand was raised based on the commission/brokerage charges received by the assessee from clients for providing discounting advice and arranging funds. The Revenue contended that the assessee acted as a commission agent and should be liable for service tax. However, the Commissioner (Appeals) held that the consideration received by the assessee was not related to the activities of a commission agent as defined under the Act.

During the hearing, the Departmental Representative supported the original authority's view, while the assessee's advocate argued that the activities did not fall within the definition of a commission agent as per Section 65(105)(zzb)(Clause VII) of the Act. The assessee also cited relevant case laws to support their position.

The definition of a commission agent includes a person who acts on behalf of another in causing the sale or purchase of goods or services, involving dealing with goods or services, collecting payments, guarantees for collection or payment, or undertaking activities related to sale or purchase. The Tribunal found that the services provided by the assessee, involving advice on finding funds and negotiating arrangements, did not relate to the goods or services of the clients, thus not meeting the criteria of a commission agent.

The Tribunal referred to the case law of Fulchand Tikamchand Vs. CCE, Nagpur, where it was held that activities similar to those of the assessee did not classify the appellant as a commission agent. The Tribunal emphasized that the consideration received by the appellant was not connected to the sale of a product or service, which is a requirement for falling under the definition of a commission agent. Therefore, the Tribunal upheld the impugned order, dismissing the Revenue's appeal.