2010 (3) TMI 335 - HC - Service Tax

C & F agent verus Del Credere Agent - Commissioner confirmed the order of levying of service tax on the respondent in regard to service rendered by Del Credere Agent Held that - Del Credere Agent is not liable to pay service tax in respect of the service rendered by it prior to 16-6-2005. Therefore we have to answer the question of law against the revenue and in favour of the assessee

Summary

Issues:
1. Challenge to the order passed by the Customs Excise and Service Tax Appellate Tribunal
2. Dispute regarding service tax payment by the respondent as a Del Credere Agent
3. Determination of whether the respondent is liable to pay service tax as a Del Credere Agent

Analysis:
The High Court of Karnataka heard an appeal challenging the order passed by the Customs Excise and Service Tax Appellate Tribunal regarding the payment of service tax by the respondent as a Del Credere Agent. The respondent, rendering services to Indian Petrochemicals Corporation Ltd., was involved in two agreements - one as a C&F Agent and the other as a Del Credere Agent. The dispute arose from the non-payment of service tax by the respondent for services provided as a Del Credere Agent from 1-9-1999 to 31-12-2002. The Deputy Commissioner of Central Excise issued a notice demanding the service tax payment, leading to an order against the respondent, which was upheld by the Commissioner of Central Excise (Appeals). The respondent then appealed to the Cestat, which ruled in favor of the respondent, stating that a Del Credere Agent is not liable to pay service tax.

In the present case, the main legal issue was whether the respondent qualified as a Del Credere Agent and, if so, whether they were obligated to pay service tax for the services provided. The High Court referenced a previous judgment in a similar case involving M/s. Sreenidhi Polymers (P) Ltd., where it was established that a Del Credere Agent is not liable to pay service tax for services rendered before 16-6-2005. Consequently, the High Court ruled in favor of the respondent, following the precedent set in the aforementioned case. The Court dismissed the appeal, affirming that the respondent, acting as a Del Credere Agent, was not liable to pay service tax for the services provided to Indian Petrochemicals Corporation Ltd.

In conclusion, the High Court of Karnataka upheld the decision of the Cestat and ruled in favor of the respondent, determining that as a Del Credere Agent, they were not liable to pay service tax for the services rendered. The judgment highlighted the legal precedent set in a previous case, providing clarity on the tax liability of Del Credere Agents for services provided within a specified timeframe.