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TMI Blog2013 (8) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the adjudication order. 2. The appellant a Government of Rajasthan Undertaking, registered under the Companies Act, 1956 is entrusted by the State Government with the business of purchase of IMFL and Beer (liquor) from manufacturers, transport of liquor to various depots of the appellant and for further sale thereon to various licensees (i.e. with the wholesale trade in liquor), with a view to regulate supply of liquor through conferring the exclusive privilege of purchase and sale in the wholesale thereof upon the appellant. As a consequence of the monopoly assumed by the State Government in this area and confirment of the privilege on the appellant, it is mandatory for all manufacturers/distilleries/suppliers to sell liquor in the State only through the canalising agency, namely the appellant. 3. In the admitted factual scenario the appellant is not registered as a service tax provider; had not filed returns of service tax; nor had remitted service tax. 4. Intelligence gathered by Revenue revealed that the appellant collected a commission of Rs . 45,06,33,440/- during the period 01.02.2005 to 31.08.2007 but failed to remit service tax amounting to Rs.5 ,21,25,843 /-. Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r provided by or belonging to the client; and (b) a service incidental or auxiliary to any activity specified in sub-sections (i) to (vi), such as billing, issue or collection or recovery of cheques , payments, maintenance of accounts or remittance, inventory management, evaluation or development of prospective customers or vendors, public relation services, management or supervision and including service as a commission agent but excluding any activity that amounts to manufacture of excisable goods; (B) Section 65 (106) (zzb) enacts that any service provided or to be provided to a client by any person in relation to BAS, is a taxable service. 6. Revenue assumed and the adjudicating authority proceeded on the basis that the appellant had provided BAS, a taxable service to the manufacturers / distilleries. As already noticed the claim of the appellant is that since it had purchased liquor from manufacturers or distilleries and had thus become the owner of the liquor, if any service was provided it was service to itself and not to another and thus no service tax liability arises. 7. It is necessary in the circumstances to analyses relevant provisions of the terms and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant may advance, either wholly or in part, duties paid or to be paid by the manufacturer to the Government and would from time to time determine the interest payable on amounts so advanced which shall be paid by the manufacturer; and that the appellant shall also be entitled to deduct such advances, the interest due or other dues, from any amounts due to the manufacturer; (j) Clause 6.2 which is particularly relevant stipulates that payment for the liquor delivered (less the amount advanced) shall be made only after the disposal of liquor, and is subject to any periodicity that may be specified by the appellant. (k) Clause 7 set out provisions relating to storage of the liquor delivered by the manufacturer to the appellant. Under this clause the appellant is required to store the liquor delivered for distribution for a period of 90 days without charging any storage fee. If the liquor is not disposed of within the period, the appellant would levy the specified demurrage charges by deducting the same from any payment due to the manufacturer. Clause 7.2 authorises the appellant to dispose of liquor lying unsold for 120 days and that the difference betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to the sale of goods produced by the distilleries. 10. Appellant has relied on decisions of this Tribunal already referred to. These decisions therefore require analysis. (i) In Karnataka State Beverages Corpn. Ltd. the appellant therein was engaged in the activity of purchase of liquor under a license issued by the State. Revenue proceeded against the Karnataka Corporation for non remittance of service tax for the taxable service of "storage and warehousing". The adjudicating authority ruled in favour of Revenue and confirmed the liability to service tax besides interest and penalties. The Karnataka Corporation thereupon approached this Tribunal. The Tribunal allowed the appeal recording a factual conclusion that the Karnataka Corporation had purchased the liquor from the suppliers. The Tribunal held that a clause in the agreement, between the Karnataka Corporation and the concerned distillery pertaining to demurrage charges leviable by the Karnataka Corporation (similar to a clause in this case) could not be considered as a charge collected for a storage of goods, since once the Corporation purchases the goods, ownership no longer vests with the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds are not sold by the petitioners to the Corporation at the threshold, in fact these are supplied for onward sale at the retail outlets to the actual consumers. In this process, various services are rendered. Thus, it cannot be said that the service charges as demanded by the Corporation are wholly arbitrary." The Tribunal in its judgment also noted that the adjudication authority had; relied on the statement of a Senior Executive of the Kerala Corporation and a counter affidavit filed in the Supreme Court on behalf of the Kerala Corporation (in an appeal against the judgment of the Kerala High Court), wherein it was contended on behalf of the Kerala Corporation that it receives the liquor not as a buyer, but as a consignee and receives and hold the goods as an agent of the supplier and that the property of the goods does not pass to the Corporation; the sale in respect of the goods is not affected when the goods are received at the sale godown of the Corporation; that there is no sale in favour of the Corporation at the threshold; and further that the property in the goods continues in the manufacturers / distilleries. The Tribunal noticed that the adjudicating authority had conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the appellant was never the owner of the liquor nor had title in the liquor supplied to it. It was merely acting as the consignee of the goods belonging to the supplier/distilleries. Within the framework of the agreements, considered in the context of the taxable BAS, as defined in Sections 65 (19) read with 65(105) (zzb) of the Act, the conclusion is uncontestable that the appellant was rendering the taxable BAS since the appellant was clearly marketing and providing services in relation to sale of goods (IMFL , Beer etc.) produced / belonging to the distilleries. 13. The alternative contention urged on behalf of the appellant that proceedings initiated by the Revenue are barred by limitation and that invocation of the extended period of limitation, under the proviso to Section 73(1) of the Act is unsustainable, does not also commend our acceptance. The appellant under the several terms and conditions of the agreement with manufacturers of liquor had clearly not inhered ownership of the liquor. It was merely providing services in relation to the sale of liquor to the distilleries which continue to have title to the liquor, though under a regulated regime covered by provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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