2023 (12) TMI 376 - AT - Service Tax

Levy of service tax - reverse charge mechanism - business auxiliary service - payment of commission to various agents for export transactions - agricultural produce - N/N. 13/2003-ST dated 20/06/2003 - Renting of Immovable Property service - residential accommodation to their staff and officers - extended period of limitation. Levy of service tax - reverse charge mechanism - business auxiliary service - payment of commission to various agents for export transactions - agricultural produce - N/N. 13/2003-ST dated 20/06/2003 - extended period of limitation - HELD THAT - The Jute per se is being traded in the Commodity Exchange for being bought or sold. On the other hand, the Hessian Cloth manufactured by the Appellant by using this jute is a separate independent commodity which is being bought and sold for different purposes. The Hessian Cloth does not fall under the category of Agricultural Produce as per the definition given in the Explanation given in the Notification No. 13/2003-ST dated 20/06/2003 - The reliance placed by the Appellant in the case of M/S. GLENWORTH ESTATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, SALEM 2023 (5) TMI 1193 - CESTAT CHENNAI , is distinguishable and cannot be applied to the facts of the present case - The demand on account of Business Auxiliary Services is required to be confirmed on merits. The demand in respect of Business Auxiliary services confirmed by the OIO is being upheld - However, it is seen that the Appellant has been showing all the details of commission paid in their P L Account and Balance Sheet and also regularly filing their ST-3 Returns. Therefore, no case have been made out towards suppression of facts. Accordingly, the demand in respect of the extended period is liable to be set aside on account of limitation. Renting of Immovable Property service - HELD THAT - Since the amendment has been brought in with effect from 20.06.2010, the Service Tax is not leviable for the period prior to this date. The demand for the extended period is also legally not sustainable. Moreover, the Appellant claims that they can produce evidence with regard to the receipt of amounts on account of renting of immovable property for residential purposes and for commercial purposes separately, which was not clearly brought out before the Adjudicating Authority - Demand on account of Service Tax component of the rent received by them towards Renting of Immovable Property for residential purposes is fully set aside. The Adjudicating Authority should get these facts verified and quantify the demand only on account of the renting of immovable property for commercial purposes, for the normal period. Matter remanded to the Adjudicating Authority for the limited purposes and for quantifying the demand for the normal period in respect of the Business Auxiliary Services and for quantifying the demand for the normal period in respect of the Renting of Immovable Property services in respect of the rent received on account of commercial properties - appeal allowed by way of remand.

Summary

Issues involved:
The issues involved in this case are whether the Appellant is required to pay Service Tax on commission paid to agents for export transactions and on renting of immovable property services.

Commission Paid for Export Transactions:
The Appellant, engaged in manufacturing jute products, was paying commission to agents for exporting Hessian Cloth. The Central Excise Audit contended that the Appellant should pay Service Tax on a reverse charge basis for such commission. The Appellant argued that the commission paid falls under an exemption for agricultural produce as per Notification No. 13/2003-ST. They cited a case law to support their claim. The Tribunal held that Hessian Cloth is not agricultural produce and upheld the demand for Business Auxiliary Services.

Renting of Immovable Property Services:
The Audit demanded Service Tax on renting of immovable property services, including rent received from employees and commercial properties. The Appellant argued that prior to the amendment on 20/06/2010, only services "in relation to Renting of immovable property" were taxable. They cited relevant case laws to support their argument. The Tribunal found that Service Tax is not leviable for the period before the amendment and set aside the demand for the extended period. The matter was remanded to quantify the demand for the normal period in respect of renting of immovable property services for commercial purposes.

Conclusion:
The Tribunal upheld the demand for Business Auxiliary Services but set aside the demand for the extended period due to lack of suppression of facts. For renting of immovable property services, the demand for the extended period was deemed legally not sustainable. The case was remanded to quantify the demand for the normal period. The penalties were set aside, and the Adjudicating Authority was directed to complete the proceedings within four months from the date of the Final Order.