2017 (2) TMI 1046 - AT - Service Tax

Commission paid to C&F Agents - demand on the ground that the respondent has discharged service tax in the normal course only in respect of a part of the commission paid to the C & F Agent, M/s. BPL - condonation of delay - Held that - in the initial stages of levy of service tax on C & F Agent service, there was occasion for a lot of uncertainty. Under the circumstances, it is difficult to hold that the respondent did not pay the service tax, as a result of wilful suppression to evade payment of service tax - the invocation of extended period under the proviso to section 73 is not justified in the present case - Since the SCN in the present case has been issued on 13.6.2001 covering the demand for the period 16.7.1997 to 31.3.1998, the demand is time barred - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Challenge to Order-in-Appeal regarding service tax on consignment agency basis.
2. Interpretation of agreements between companies for marketing goods.
3. Tax liability on commission paid to consignment agent.
4. Reliance on Tribunal's decision in Mahavir Generics case.
5. Applicability of extended period under section 73 for service tax demand.

Analysis:
1. The appeal filed by Revenue contested the Order-in-Appeal dated 14.7.2004, challenging the service tax demand amounting to ?1,28,98,156/- against the respondent for commission paid to a consignment agent, M/s. BPL. The department alleged that all payments to M/s. BPL were for C & F Agent services, leading to the demand for service tax.

2. The Commissioner (A) set aside the demand, relying on a Tribunal decision in the case of Mahavir Generics. This decision highlighted that unless services can be treated as those of a clearing and forwarding agent to a client, the service cannot be taxed under the Finance Act, 1994. The appellant argued that the Mahavir Generics decision was overruled by the Karnataka High Court, justifying the challenge to the impugned order.

3. The dispute revolved around the period from July 1997 to March 1998, with the demand issued in June 2001. The respondent claimed that service tax on C & F agency service was already paid, while the department insisted on the outstanding amount. The Tribunal noted the historical context of service tax on C & F Agent service, highlighting the confusion and changes in levies over time.

4. The Tribunal found that the demand was time-barred, as the show-cause notice was issued beyond the extended period under section 73. Due to the uncertainty surrounding the levy of service tax on C & F Agent service and the retrospective amendments, the Tribunal upheld the impugned order, dismissing the Revenue appeal.

In conclusion, the judgment focused on the interpretation of agreements, historical tax liabilities, and the applicability of extended periods for service tax demands, ultimately ruling in favor of the respondent based on the specific circumstances and legal precedents.