2018 (4) TMI 1395 - AT - Service Tax

Classification of services - appellant received magnesium sulphate from M/s. Annai Chemicals, Mettur and Calcined Magnesite from M/s. Ramakrishna Mines, Salem and sold the same to customers and received commission from their principals - whether classifiable under or under BAS? - Held that - The appellants have been appointed as consignment commission sales agent on behalf of their principal. It is clearly mentioned as Commission Sales Agent in the agreement and not as Clearing and Forwarding Agent - on the commission received the appellant has been discharging Service Tax under BAS with effect from 9-7-2004 when such commission agent activities became taxable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of activities under 'Clearing & Forwarding Agent Services' for taxation purposes.

Analysis:
The appellants, engaged in trading of Limestone and minerals, were registered under 'Business Auxiliary Service' from 2004. They received products from suppliers and sold them to customers, earning commission. The tax department alleged their activities fell under 'Clearing & Forwarding Agent Services' taxable from 2001. A show cause notice was issued for the period 2001-2005 on commission received. The original authority confirmed the demand, imposing penalties. The Commissioner (Appeals) upheld this decision.

The appellant's counsel argued they were commission agents, not Clearing & Forwarding Agents, citing the Commission Sales Agreement. They registered under BAS when commission agent services became taxable in 2004. The department claimed their activities were previously under Clearing & Forwarding Agents, demanding tax retrospectively. The counsel contended that since they paid tax on commissions under BAS from 2004, taxing the same under Clearing & Forwarding Agents for earlier years was incorrect.

After reviewing the agreement, the Tribunal found the appellants were appointed as 'Commission Sales Agents,' not 'Clearing & Forwarding Agents.' The activities specified in the agreement were sales-related, not related to clearing or forwarding. The appellants had paid Service Tax under BAS from 2004 when commission agent services became taxable. Therefore, the Tribunal agreed with the appellant's argument, ruling the demand for the period 2001-2005 under Clearing & Forwarding Agent Services was invalid.

Consequently, the impugned order was set aside, and the appeal was allowed, granting any consequential relief.