2018 (5) TMI 1129 - AT - Service Tax

Business Auxiliary Service - commission agent - liability of service tax - Held that - the appellant has rendered certain services for M/s. MKT Valves Pvt. Ltd., Hubli. They were procuring orders for sale of valves for their client and receiving commission for such activity - the activity is covered by the definition of Business Auxiliary Service during the relevant period and the appellant has acted as the commission agent of M/s. MKT Valves - demand upheld - appeal dismissed - decided against appellant.

Summary

Issues:
Classification of service under 'Business Auxiliary Service' vs. 'Business Support Service'
Applicability of exemption under Notification No. 13/2003
Time-bar for the demand of service tax

Analysis:
The appeal was against the Order-in-Appeal No. 185/2008 dated 01.10.2008 concerning the classification of services provided by the appellant for M/s MKT Valves Pvt. Ltd. The Department contended that the appellant's activities were liable for service tax under 'Business Auxiliary Service' as a 'Commission Agent'. The Commissioner (Appeals) upheld the service classification but granted exemption as a Commission Agent until 08.07.2004 under Notification No. 13/2003. The appellant challenged this decision.

During the hearing, the appellant's counsel argued that the activities did not fall under 'Business Auxiliary Service' but should be classified as 'Business Support Service' introduced under Section 65(104)(c) from 01.05.2006. The counsel also highlighted the Department's changing stance on service classification over time, previously considering it as 'Management Consultancy', raising concerns about the demand being time-barred.

After considering both sides, the Tribunal observed that the appellant procured orders for sale of valves for the client and received commission, falling under "Promotion or Marketing or Sale of goods produced or provided by or belonging to the client" as per Section 65(19)(i) of the Finance Act 1994. The Tribunal concluded that the activity constituted 'Business Auxiliary Service' during the relevant period, with the appellant acting as a commission agent. The Tribunal affirmed the Commissioner (Appeals)' decision to extend the benefit of Notification No. 13/2003 until 09.07.2004. Therefore, the appeal was dismissed, upholding the impugned order.

In conclusion, the Tribunal found the appellant's activities to be within the ambit of 'Business Auxiliary Service', rejecting the arguments for classification under 'Business Support Service' and the claim of the demand being time-barred. The decision highlighted the specific nature of the services provided and the applicability of the relevant notification for exemption, leading to the dismissal of the appeal.