2017 (12) TMI 1381 - AT - Service Tax

Business Auxiliary Services - activities in connection with receipt, storage, sale and sale promotion of the goods manufactured and sold by their principal - N/N. 13/2003-ST - Held that - the appellants are engaged del credere agent and are causing sale of goods received from the principal. The amount paid to the appellant is linked with the sales quantum. The same is pre-determined as per the agreement - appellants are eligible for exemption as commission agent under N/N. 13/2003-ST. - similar issue decided in the case of Premier Enterprises Versus Commissioner of Central Excise, Hyderabad 2009 (3) TMI 123 - CESTAT, BANGALORE , where it was held that Once they are held to be commission agents, they will be entitled for exemption under N/N. 13/2003-ST during the relevant period - benefit of notification allowed. Valuation - includibility - reimbursable expenses - Held that - It is clear that the various expenditure which were claimed on actual basis to be reimbursed by M/s United Breweries Ltd. are in effect reimbursable expenditures which are incurred on behalf of the principal. These are in terms of pre-arrangement with the principal. It is clear such expenditure which are on behalf of the principal in accordance with agreement which are reimbursed on actual basis without any mark up are not to be included in the assessable value - there is no justification to tax the reimbursable expenditures which are based on pre-arrangements with the principal and are received on actual basis. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availability of exemption under Notification No. 13/2003-ST for the appellant.
2. Valuation of taxable services after the withdrawal of Notification No. 13/2003-ST.

Analysis:

Issue 1: Availability of exemption under Notification No. 13/2003-ST for the appellant:
The case involved a dispute regarding the tax liability of the appellant for activities related to the receipt, storage, sale, and promotion of goods under Business Auxiliary Service. The appellant claimed exemption under Notification No. 13/2003-ST as a commission agent during the relevant period. The Revenue contended that the appellant was not merely a commission agent but a del credere agent, thus not eligible for the exemption. The Tribunal referred to similar cases and held that the appellant, being a del credere agent causing the sale of goods, was eligible for the exemption under Notification No. 13/2003-ST. The Tribunal's decision was supported by previous rulings in the appellant's favor.

Issue 2: Valuation of taxable services after the withdrawal of Notification No. 13/2003-ST:
Regarding the valuation of taxable services after the withdrawal of the notification, the appellant argued that certain expenditures were reimbursable in nature and should not be included in the assessable value. The Tribunal examined the agreement terms and concluded that the reimbursable expenditures, incurred on behalf of the principal and reimbursed on an actual basis without any mark up, should not be included in the taxable value. The Tribunal cited relevant decisions from the Hon'ble Delhi High Court and the Hon'ble Madras High Court to support its ruling. Consequently, the Tribunal found no merit in the impugned order, set it aside, and allowed the appeal based on the analysis and discussions presented.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both parties, legal interpretations, and the final decision rendered by the Tribunal.