2017 (3) TMI 473 - AT - Service Tax

Activity of lifting, transportation and distribution of coal - handling and distribution agent - agreement entered with NCCF for carrying out above activity - whether the above activity would fall under Business Auxiliary Services or not? - Held that - payment against the orders procured from consumers was to be collected in advance alongwith service charge of NCCF and was to be deposited with NCCF before lifting the coal from collieries and that the nature of transaction was sale of coal on advance payment and that could not be termed as any service provided on behalf of NCCF. - From the clauses of the agreement, it is clear that there is no consideration flowing from NCCF to respondent-assessee that clearly means that respondent-assessee is not providing any service to NCCF - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal against the Order-in-Appeal (OIA) dated 31.08.2010 regarding service tax on the respondent-assessee for alleged business auxiliary services.

Analysis:
The appeal by Revenue is against the OIA dated 31.08.2010 concerning the respondent-assessee's liability for service tax on alleged business auxiliary services. The respondent-assessee, engaged in coal handling, transportation, and distribution, had an agreement with NCCF. Revenue contended that the respondent was providing business auxiliary services by promoting, marketing, and selling NCCF's goods. A show cause notice was issued, alleging non-payment of service tax on received commission. The Original Authority confirmed the demand, prompting the respondent to appeal before the Commissioner (Appeals). The Commissioner (Appeals) held that the nature of the transaction was the sale of coal on advance payment, not a service on behalf of NCCF, and set aside the OIA. Revenue, dissatisfied, appealed to the Tribunal.

The grounds of appeal by Revenue included the assertion that the respondent was engaged in promoting, marketing, and selling NCCF's goods. They argued that the mode of payment and commission was immaterial, whether directly received or remitted to NCCF. The respondent's counsel highlighted the agreement terms, emphasizing that service charges were paid to NCCF, not received for promoting sales. They argued that the transaction was on a principle-to-principle basis with no consideration from NCCF, hence no service was provided to NCCF.

The Tribunal found that while Revenue alleged the respondent provided services to NCCF, the Commissioner (Appeals) correctly noted that no consideration flowed from NCCF to the respondent. The agreement clauses presented showed no consideration received by the respondent from NCCF, indicating no service provided. Consequently, the Tribunal dismissed Revenue's appeal, finding no grounds to challenge the sustainability of the Order-in-Appeal. The appeal was thus dismissed, upholding the decision in favor of the respondent-assessee.