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TMI Blog2018 (1) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Rules. However, they do not merely cause the sale of goods on behalf of their clients, the tea sellers, for a consideration that is based on the quantum of the sale. They are also engaged in drawing samples, undertaking printing of catalogues, distribution of samples to their buyers and conduct of auction in accordance with the procedure laid down by the Coonoor Tea Trade Association. Upon completion of the auction, the sales consideration is received not by the sellers but by the appellants. Thereafter, the appellant themselves issue delivery orders which enables the buyers to take delivery of the tea from the warehouse. They do the billing work and collection of sale proceeds on behalf of their clients. The appellants also collect lot money not only from their clients but also from the buyers. Appellants also make advances to their clients in anticipation of receipt of goods for sale. They are also engaged in activity of collection and payment of tax namely sales tax on behalf of their clients. The appellants promote the sale of the tea produced by their clients by sending out samples to their prospective buyers advertising by way of printing and distribution of catalogues. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pursuant to licence issued under Tea (Marketing) Control Order, 2003 (herein after referred to as Control Order, 2003) and in accordance with the Coonnoor Tea Trade Association Rules. It appeared to the department that appellants are providing services of Promotion or Marketing or Sale of Goods produced or provided by or belonging to various clients, i.e. tea factories in the auctions conducted at Coonoor, which fall under taxable service of Business Auxiliary Service (BAS). It further appeared to the department that the BAS so provided were not under the category of Commission Agent but under section 65(19)(i) of the Finance Act, 1994, namely, production or sale or marketing or sale of goods produced or provided by or belonging to the client. 3. Accordingly, show cause notices were issued to these appellants which culminated in adjudication orders confirming the demands of service tax proposed in the show cause notice with interest thereon as also imposition of penalties under various provisions of law. On appeal, the Commissioner (Appeals) confirmed the adjudication orders. Hence these appeals. 4. Today, when the matter came up for hearing ld. counsel Shri R. Parthasarathy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST/40350/2015 01.04.2012 to 31.03.2013 No.232/2014 dt. 20.11.2014 passed by CCE (Appeals), Salem Service Tax of ₹ 2,41,904/- ST/42139/2017 01-04-2013 to 31-03-2014 01-04-2014 to 31-03-2015 No. 164/2017 dt. 19.7.2017 passed by CCE (Appeals), Salem Service Tax of ₹ 3,14,727/- (01-04-2013 to 31-03-2014) Service Tax of ₹ 3,02,585/- (01-04-2014 to 31-03-2015) 5.1 Ld. Advocate further made oral and written submissions which can be briefly summarized as under:- 5.2 The appellants have acted as commission agents and therefore are eligible for exemption from payment of service tax. The definition of commission agent means a person who causes sale or purchase of goods. It cannot be denied that the Appellants have caused the sale of tea. The Appellants therefore had the status of a Commission Agent. The Notification No.13/2003 granted exemption to the Business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charging tax liability under Auction Services with effect from 1.5.2006 on the very same activities. As a result, the appellants could not be exposed to any liability prior to 1.5.2006 in respect of Business Auxiliary Service. The principles laid down in the following judgments will support this stand of the Appellants. a. 19 STR 222 (Tri-Mumbai) Commissioner of Central Excise, Pune III Vs Shankar Ram Chandra Auctioneers b. 21 STR 229 (Tri-Ahmd) Needwise Advertising Pvt. Ltd., Vs. Commissioner of Service, Ahmedabad 5.7 The invocation of the extended period of limitation in appeals vide ST/311/2009, ST/312/2009, ST/313/2009, ST/314/2009 ST/610/2009 was unjustified. The authorities below have only relied upon the alleged omissions of the Appellants. Reference is made to paragraph 4 of the Order-in-Original dated 30.11.2007 passed in the case of TCPL. That is clearly inadequate for invoking the extended period of limitation. Besides, as the dispute in the present appeal involves question of interpretation of the Act and the Notification, extended period of limitation could not have been invoked. The following judgments will support this position: a. 260 ELT 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s net of charges of the appellants. 6.2 Ld. AR submits that the appellants are also engaged in activity of tea tasting, valuation of teas, and auxiliary services like billing, collection of sale proceeds on behalf of the clients. The lot money and service charges are collected by the appellants not only from their clients but also from the buyers. They are also engaged in providing collection and payment of sales tax on behalf of the clients for which they collected one paise per kg. as service charges. All these services go much beyond the scope of commission agent and are more justifiably covered under section 65(19)(i) of the Finance Act. Since appellants cannot be considered to commission agent, they will automatically go out of the ambit of exemption Notification No. 13/2003 which provides exemption for BAS provided by commission agent, in relation to agricultural produce. 6.3 The ld. AR further contended that the tea which is sold in auction by appellants is processed and manufactured tea and will therefore not fall within the definition of agricultural produce for the purpose of Notification No. 13/2003. 6.4 The ld. AR reiterated the reliance of the Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No.13/2003-ST which also exempted such persons from the ambit of Business Auxiliary Service as follows:- In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 or 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the business auxiliary services provided by a commission agent from the service tax leviable thereon under sub-section (2) of section 66 of the said Act. Explanation.- For the purposes of this notification, commission agent means a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase. This notification shall come into force on the 1st day of July,2003. 8.3 Notification No. 13/2003-ST was amended with effect from 9.7.2004 vide Notification No. 8/2004-ST specifically to expand exemption to commission agent services in relation to sale and purchase of agricultural produce. The relevant portion of the exemption is as follows:- In the said notification,- (i) in the preamble, for the words commission agent from the service tax leviable thereon under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, And includes services as a commission agent, but does not include any information technology service and any activity that amounts to manufacture within the meaning of clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944). [Explanation.- For the removal of doubts, it is hereby declared that for the purposes of this clause,- (a) commission agent means any person who acts on behalf of another person and cause sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person- (i) Deals with goods or services or documents of title to such goods or services; or (ii) Collects payment of sale price of such goods or services; or (iii) Guarantees for collection or payment for such goods or services; or (iv) Undertakes any activities relating to such sale or pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the tea. b) Upon receipt of the AWR Form, the Appellants drew samples from the Warehouse as contemplated by Appendix A of the Rules. c) Thereafter, the Appellants undertook the printing of catalogues. This was in accordance with the Rules 1 and 2 of Part II of the Rules. d) The Appellants also undertook the distribution of samples of tea to the buyers in accordance with Rule 2 contained in Part II of the Rules. e) Thereupon, the Appellants as agents conducted the auction in accordance with Part III of the Rules which contained conditions of sale by auction. f) Upon completion of the auction sales and after receipt of the sales consideration from the buyers, the Appellants issued delivery orders in order to enable the successful bidders in the auction to secure position of the Tea purchased by them from the Warehouse in which the sellers had stored their Tea. This was in accordance with Rule 3 of Para IV of the rules. Para IV contained general post sales condition. 8.9 The appellants, no doubt are called brokers in terms of the Coonoor Tea Trade Association Rules. However, they do not merely cause the sale of goods on behalf of their clients, the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ambit of section 65(19)(i) of the Act. 8.10 Appellants have also made an alternative contention that their activities would fall under the category of auction of property service only with effect from 1.5.2006, when the services provided in relation to auction of property was brought to tax for the first time by section 65(7a) by section 65(105) (zzzr) of the Act; that however the existing category of Business Auxiliary Service as defined under section 65(19) stood unamended; that consequently introduction of a separate category of auction services meant that the same was not covered by the category of Business Auxiliary Service ; that as a result, the appellant could not be exposed to any liability prior to 1.5.2006. To weigh this contention, it is useful to study the definition of Auction of Property under section 65(7a), introduced with effect from 1.5.2006 by the Finance Act, 2006 as follows:- auction of property includes calling the auction or providing a facility, advertising or illustrating services, pre-auction price estimates, short-term storage services, repair or restoration services in relation to auction of property . The taxable service relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es sale or purchase of goods on behalf of the principal company for a consideration which is normally governed by an agreement between the principal and the agent. Whereas, in this present case, we find that, as already explained in the above paragraphs, appellant s activities are not only restricted to sale, but includes host of other activities including assisting in the system of grading and standardization of tea for the purpose of export and also deals with details such as colour, taste, quality and quantity for export of tea and are professional tea taster. They also monitor the shipment of the goods and verify shipment documents, port regulations and other formalities for export of tea. Therefore, we find that the above activities do not fall within the meaning of commission agent. Accordingly, we hold that the appellant s activities are rightly covered under the category of BAS other than commission agent. Therefore, the question of appellant claiming tea as agricultural produce, which is applicable for only commission agent and not applicable to the appellant-assessee s case. Accordingly, we hold that the demand along with interest is liable to be upheld. 8. The citat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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