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2023 (4) TMI 505 - AT - Service TaxLevy of service tax - Business Auxiliary Service - appellant entered into an agreement with M/s Neelachal Ispat Nigam Limited (NINL) for marketing and sale of the products of NINL during the material period - HELD THAT - It is the fact on record that the appellant is receiving commission agent at the rate of 3% of the sale value of goods sold by NINL and the Notification No.13/2003-ST dated 20.06.2003, clearly spelt that the commission agent means, a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase . As the appellant is getting his commission at the rate of 3% of the sale amount effected by that on behalf of NINL. In that circumstances, the appellant is entitled for benefit of Notification No.13/2003-ST dated 20.06.2003. The appellant is not liable to pay service tax during the period 01.07.2003 to 08.07.2004 - there are no merit in the impugned order demanding service tax amounting to Rs.62,11,908/- - no penalty is imposable on the appellant in the facts and circumstances of the case. Appeal allowed.
Issues involved:
The issue involved in this case is the demand of service tax from the appellant under the category of "Business Auxiliary Service" in terms of Section 65 (19) (1) of the Finance Act, 1994. Summary: Issue 1: Liability to pay service tax under "Business Auxiliary Service" The appellant, a Public Sector Undertaking engaged in trading activity, entered into an agreement with another entity for marketing and sale of products. The appellant believed they were not liable to pay service tax as they considered the activity to be sale and purchase of goods on a principal-to-principal basis. However, legal advice suggested that the appellant, acting as a commission agent, was liable to pay service tax. The appellant registered for service tax and made payments accordingly. A show-cause notice was issued demanding service tax for a specified period, which the appellant contested. The appellant argued that they were not covered under the relevant clause of the Finance Act as they were purely a commission agent, exempted from service tax as per Notification No.13/2003-ST. The appellant's counsel referenced a CBEC Circular to support their position. On the other hand, the Revenue argued that the appellant was engaged in promotion or marketing activities, making them liable to pay service tax. After considering the submissions, it was found that the appellant was indeed acting as a commission agent, receiving a percentage of the sale value as commission. As per the notification and definition of a commission agent, the appellant was entitled to the exemption from service tax for the specified period. Therefore, the Tribunal held that the appellant was not liable to pay service tax during the period in question, and the impugned order demanding service tax was dismissed. No penalty was imposed on the appellant. The appeal was allowed in favor of the appellant with consequential relief, if any. *(Pronounced in the open court on 13.04.2023)*
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