2023 (7) TMI 543 - AT - Service Tax

Collection of Service tax from clients - appellant acting as an agent - service tax so collected not deposited to Revenue - Service Tax collected on behalf of Principals - Steamer Agency Commission - HELD THAT - The Tribunal finds that the appellant was acting as an agent and once he charged the Service Tax and collected the same from their clients, such amount should have been properly remitted to the exchequer. Instead they claim that they have given back the Service Tax so collected to the Principal, which is not backed by any evidence. The fact of retaining Rs 15,75,182/- till 2014, goes against their submission. Even otherwise, the practice adopted by the appellant is erroneous and contravenes the provisions of Section 73A(2) (3). Therefore, the appeal is liable to be dismissed in respect of confirmed demand of Rs 38,53,951/-. The Appeal stands dismissed to this extent. Levy of Service Tax - Business Auxiliary Service - demand of tax on trading profit - it is claimed that out of the total amount of Rs 2,59,25,007/- being shown as commission, the actual commission amount is only Rs 15,75,182/- and the balance amount of Rs 2,70,46,820/- is on account of trading profits made by them - Steamer Agent Services or not - HELD THAT - The issue should be remanded to the Adjudicating Authority to enable the appellant to file their documentary evidence on both the above issues. The Adjudicating Authority will follow the principles of natural justice and take in to account all the documentary evidence provided by the appellant. Since the matter pertains to 2004-05 to 2009-10, the Adjudicating Authority is directed to complete the proceedings within four months from the date of communication of this order. Appeal disposed off.

Summary

Issues involved:
The issues involved in the judgment are:
1. Service Tax collected on behalf of Principals
2. Steamer Agency Commission

Issue 1: Service Tax collected on behalf of Principals
The appellant claimed they were subagents of the principal and remitted the entire amount collected, including Service Tax, back to the principals. However, it was revealed that a significant amount of Service Tax collected was not remitted to the principal but shown as 'payable'. The Adjudicating Authority confirmed the demand citing non-remittance and lack of evidence of payment to the Revenue by the principal. The Tribunal found the appellant's practice erroneous, holding that the appeal is liable to be dismissed for the confirmed demand of Rs 38,53,951/-.

Issue 2: Steamer Agency Commission
Regarding the confirmed demand of Rs 31,18,142/- for Business Auxiliary Service, the appellant argued that a portion of the amount was trading profit and not for services provided. They also contended that the service rendered fell under Steamer Agent Services, not Business Auxiliary Services. However, the appellant failed to provide documentary evidence to support these claims. The Tribunal remanded this issue to the Adjudicating Authority for the appellant to submit documentary evidence. The Adjudicating Authority was directed to complete the proceedings within four months from the date of communication of the order for the period of 2004-05 to 2009-10.

In conclusion, the appeal was disposed of with the first issue being dismissed for the confirmed demand related to Service Tax collected on behalf of Principals, and the second issue being remanded for further proceedings based on the submission of documentary evidence by the appellant.