2013 (8) TMI 857 - AT - Service Tax

Business Auxiliary service (BAS) - import as well as export of these items on behalf of various traders/merchants - sale of goods on high sea basis - mark-up ranging from 1% to 1.5% of the value of the goods - The Revenue was of the view that the applicants are rendering services of import and export to the customers and, therefore, they are liable to Service Tax under the category of Business Auxiliary Services . - Held that - The transaction was one of the Sale and Service Tax liability was not - Following INDIAN OIL CORPORATION LTD Versus COMMISSIONER OF CENTRAL EXCISE, GOA 2012 (2) TMI 319 - CESTAT, MUMBAI - From perusal of the import documents as well as invoices it was evident that the transaction was one of trading or sale - The mark-up/trade margin charged by the appellant was also subject to customs duty as part of the transaction value - there was no reason why the same part of the transaction value should be taken out of the customs transaction and subjected to Service Tax under the guise of Business Auxiliary Services - The Board s Circular dated 11.05.2004 also clarified that the customs duty liability was to be discharged on the value inclusive of trade margin in the case of High Seas Sales transaction - pre-deposit of the dues was waived adjudged against the appellant and stay recovery thereof during the pendency of the appeal stay granted. Condonation of Delay - The delay occurred due to fact that the appellant was directed to file separate appeals instead of a composite appeal which was filed in time - Considering the reason stated as satisfactory the COD application was allowed.

Summary

Issues:
Miscellaneous application for additional grounds and documents, COD application for delay condonation, Stay applications against Order-in-Original, Service Tax liability on trading transaction.

Miscellaneous Application and COD Application:
The appellant filed a miscellaneous application for additional grounds and documents related to the sales transaction, which can only be considered at the final hearing. A COD application was also submitted to condone a 26-day delay due to filing separate appeals instead of a composite one. The COD application was allowed based on the satisfactory reason provided.

Background and Service Tax Liability:
The appellant, a trading corporation, imports and exports various commodities on behalf of traders. The Revenue alleged Service Tax liability under "Business Auxiliary Services" on the mark-up charged by the appellant on goods sold to customers. Service Tax demands of approximately Rs.16.54 crores were confirmed. The appellant contended that their transactions were simple trading, not services, and relied on a Circular clarifying customs valuation rules.

Appellant's Arguments:
The appellant argued that their transactions were on a principal-to-principal basis, involving simple trading where mark-ups were already included in customs duty. They referenced a Circular stating that trade margin is part of the taxable value for customs duty assessment. They also cited a Tribunal decision in a similar case where Service Tax liability was not attracted.

Revenue's Contention and Tribunal's Decision:
The Revenue argued that the appellant's transactions included a service element as they procured goods on behalf of clients. However, the Tribunal analyzed import documents and invoices, concluding that the transactions were sales/trading. The Tribunal noted that the trade margin was subject to customs duty, hence not liable for Service Tax under Business Auxiliary Services. Relying on a previous decision, the Tribunal granted a waiver from pre-deposit of the confirmed dues and stayed the recovery during the appeal's pendency.

This judgment clarifies the distinction between trading transactions and services for determining Service Tax liability under Business Auxiliary Services, emphasizing the inclusion of trade margin in customs duty valuation. The Tribunal's decision aligns with precedent, granting relief to the appellant based on the nature of their transactions and relevant circulars.