2018 (7) TMI 1115 - AT - Service Tax

Exemption for commission paid to foreign agents - benefit of N/N. 42/2012-ST dated 29/06/2012 - case of Revenue is that Since, the respondent has not complied with the conditions of N/N. 42/2012-ST, they are liable to pay service tax - Held that - In the case at hand the respondent has availed the services of foreign agents who procured Orders for export of goods and the respondent exported goods through proper channel. While exporting the goods, ARE-1 & Shipping Bill were issued & the Shipping Bill as well as Form SDF filed to Customs, mentions commission paid to foreign agents, thus condition No. 1 & 3 of N/N. 42/2012-ST are satisfied - benefit of notification cannot be denied - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the benefit of exemption under Notification No.42/2012-ST can be denied for procedural omission.
2. Whether the extended period for demand is invocable.
3. Whether penalty under Section 78 of the Finance Act, 1994 should be imposed.

Analysis:

Issue 1: Benefit of Exemption under Notification No.42/2012-ST
The case involved the export of Ayurvedic Veterinary Medicaments and Animal Feed Supplements, where foreign agents were engaged to procure orders. The Department raised concerns regarding service tax on commission paid to foreign agents. The Adjudicating Authority confirmed the demand, interest, and imposed penalties under Sections 77 and 78. However, the Commissioner (Appeals) held that the conditions of Notification No.42/2012-ST were satisfied as commission payments were declared in shipping bills. She referred to various judgments to support her decision and directed the re-quantification of demand for the normal period with the benefit of the exemption.

Issue 2: Extended Period for Demand
The Revenue contended that the extended period should be invoked due to non-compliance with Notification No.42/2012-ST. However, the Commissioner (Appeals) disagreed, stating that the extended period is not invocable as the conditions of the notification were met. The Tribunal upheld this decision, emphasizing that there was no suppression on the part of the respondent and that the extended period was not applicable.

Issue 3: Penalty under Section 78
The Revenue argued for the imposition of penalties under Section 78, citing non-compliance with the notification conditions. Conversely, the respondent's counsel maintained that as the services were provided and consumed outside India, there was no liability for service tax. The Tribunal agreed with the respondent, noting that proper documentation and compliance with notification conditions were observed, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal upheld the Commissioner (Appeals)' decision, emphasizing compliance with Notification No.42/2012-ST, the absence of suppression, and the inapplicability of the extended period for demand. The appeal of the Revenue was dismissed, and the judgment favored the respondent in this case.