2010 (7) TMI 194 - AT - Service Tax

Exemption under Notification No. 13/2003-S.T. - appellant were provider of service on commission basis to certain financial companies by way of collecting/forwarding prospective loanees and have been receiving commission for such service from the service receivers. Such service is taxable under Business Auxilliary Service . The appellant did not pay service tax for the period from July, 2003 to 9-9-2004. Proceedings were initiated against them. The adjudicating authority dropped all the proceedings initiated against the appellant on the ground that no tax was payable by them in view of Notification No. 13/2003-S.T., dated 20-6-2003. The adjudicating authority s order was reviewed and the learned Commissioner has confirmed the demand of Rs. 1,69,852/- after denying the benefit of the aforesaid notification. Held that appellant not covered under commission agent as per explanation in notification. Thus impugned order denying exemption sustainable.

Summary

Issues:
- Denial of benefit of Notification No. 13/2003-S.T.
- Classification of service under 'Business Auxiliary Service'
- Interpretation of 'commission agent' under the notification
- Appellant's contention regarding service provision

Analysis:
The appeal was filed against the Order-in-Revision denying the benefit of Notification No. 13/2003-S.T. and confirming a demand for service tax along with interest. The appellant, a service provider on commission basis to financial companies, did not pay service tax for a specific period. The adjudicating authority initially dropped the proceedings, citing the notification. However, the Commissioner reversed this decision, leading to the appeal.

The main contention of the appellant was that they were not service providers but were involved in activities related to the sale and purchase of goods, specifically vehicles. The Tribunal noted that the services provided by the appellant, involving collecting/forwarding prospective loanees for a commission, fell under 'Business Auxiliary Service' as defined in the Finance Act, 1994. The appellant's argument regarding completion of the sale and purchase of goods was rejected.

The Tribunal examined the Notification No. 13/2003-S.T. and the definition of 'commission agent' provided therein. It was clarified that a 'commission agent' is a person causing the sale or purchase of goods on behalf of another for consideration based on the quantity of such sale or purchase. The Tribunal determined that the appellant did not fit this definition, leading to the denial of the exemption under the notification.

In conclusion, the Tribunal upheld the Commissioner's decision to deny the benefit of the exemption under the notification. It was determined that the appellant's services did not align with the definition of a 'commission agent' as per the notification. Therefore, the appeal was dismissed, and the impugned order was upheld.