TMI Blog2023 (7) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses of the aforesaid contract dated 15.04.2007 executed between Super Almas Trading and M/s. Sidh Designers Pvt. Ltd. that M/s. Sidh Designers, as seller, had agreed to sell the goods to Super Almas Trading, which has been described as the buyer, after deduction of expenses incurred by the buyer. Mere use of the word commission in the clause dealing with terms of payment would not mean that commission was paid by the seller. There is no third person who can be said to be acting an agent and the goods were undoubtedly sold on a principal to principal basis. What was actually deducted from the payment to be made by the buyer was the expenses incurred by the overseas buyer and not commission. The Commissioner, therefore, committed no error in concluding that commission was not paid by the foreign entity to the respondents. What was necessary was an examination of the terms of the contract and it was immaterial whether the contract was placed by the respondents during the course of investigation or in the reply filed to the show cause notices, for nothing turns on this, unless it was established by the department that the contract did not exist at all. The Commissioner w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner in the matter of M/s. Sidh Designers Pvt. Ltd.: 37. Now, in order to arrive at the classification of the activities undertaken by the alleged overseas commission agents , it is necessary to go through the relevant contracts . It is on record that the assessee with their defence reply has also submitted copies of contracts dated ....................... entered into SUPER ALMAS TRADING LLC. DUBAI, U.A.E. ***** 38. I find that in the aforesaid contract M/S SUPER ALMAS TRADING LLC. DUBAI, U.A.E. has been referred as Buyer and not as Commission agent . Further, under clause Subject of contract Seller and Buyer both have been required to sell buy goods on C F terms with the condition that ownership of the goods will remain with the seller till the same are delivered to the buyer/consignee after Customs clearance at the destination . The prices for the goods delivered have been fixed in US dollars inclusive of cost of packing, tare and marking. As per clause terms of payment the buyer has been required to do following post clearance activities in relation to the goods exported by the assessee:- ***** 39. I find from the aforesaid contract tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner decided the matter infavour of the respondent, for refund of the amount deposited by the respondents under protest. The refund applications were rejected as being barred by limitation under section 11B of the Central Excise Act, 1944 [the Excise Act]. The Writ Petitions were allowed by the Delhi High Court for the reason that the amount, of which refund was sought, had been deposited under protest during adjudicating proceedings and was required to be refunded as the duty was illegally collected. The relevant portion of the order passed by the Delhi High Court is reproduced below: 2. The petitioner claims a direction to the respondents for refund and for quashing of an order dated 15.09.2014 rejecting its refund applications. 3. The brief facts are that the petitioners engage in readymade garment export and allied business and are duly registered under the provisions of Service Tax. On 21.06.2012, the search proceedings were conducted based upon an allegation that they had evaded duty and did not pay the duty in respect of commission paid to overseas agents. This search resulted in show cause notice dated 19.10.2012. The petitioners apparently deposited certain amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant within eight weeks along with interest. Further, the Hon ble High Court observed that the adjudication order is an exhaustive one and categorically rules that against all transactions which were stated to be taxed could not have fallen within the ambit of service tax . Thus, it is evident that Hon ble Delhi High Court upholds the impugned order on merit. When it is so, then we find no reason to interfere with the impugned order. 5. By following the ratio laid down by the Hon ble Delhi High Court, we decline to interfere with the impugned order. The same is hereby sustained along with the reasons mentioned therein. 6. In the result, all the appeals filed by the department are dismissed. Cross-objections are also disposed of. (emphasis supplied) 7. The Department filed an appeal before the Supreme Court against the order of the Tribunal and the Supreme Court by judgment and order dated 26.07.2019 allowed the Civil Appeals filed by the Department. The matter was remitted to the Tribunal for reconsideration of the appeals on merits and in accordance with law, uninfluenced by any of the observation made by the High Court. The relevant portion of the order p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same could not have been said to have been incurred on post shipment activities; (iii) The Commissioner gravely erred in holding that since the statement dated 24.09.2012 of Sahdev Gupta had been retracted on 25.09.2012 by means of an affidavit, a copy of which had also been submitted to the investigating agency on the very next day i.e. 25.09.2012, the said statement dated 24.09.2012 had no evidentiary value; (iv) The Commissioner failed to appreciate that the statement dated 24.09.2012 of Sahdev Gupta was duly corroborated by sufficient documentary evidence and that the retraction was a mere afterthought to avoid due discharge of service tax liability and consequential penal provisions; and (v) The Commissioner failed to appreciate that the respondent company had itself accepted its service tax liability as a commission agent under reserve charge mechanism in writing on 01.08.2012. 10. Shri G.K. Sarkar and Shri Prakash Shah, learned counsel appearing for the respondents, however, supported the orders passed by the Commissioner and submitted that they do not call for any interference. Learned counsel submitted that doubts raised by the Department to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VALUE OF THE CONTRACT : Prices for the goods to be delivered under the present contract are fixed in U.S. Dollars and include Port dues, Terminal Handling Charges, Line D.O Charges, Demurrage, Legalization expenses and Government Dues etc. Total value of the Contact is in U.S. Dollars US$ is according to Addendums. TERMS OF PAYMENT :- Payments for the goods to be delivered under the present contract will be made by the Buyer in USD through Bank, after deduction commission for service/expenses incurred by the Buyer on account of:- 1. Port dues, Terminal Handling Charges, Line D.O. Charges, Demurrage, Legalization Expenses Government Dues (excluding Customs Duty, if any) etc. 2. Charges paid to local service providers from whom Buyers will be procuring services in respect of CHA, Clearing and Forwarding services, monitoring of shipments and other related expenses. However, the above said expenses as per costing of the Buyer will remain between 12-14%. Therefore, it is agreed that the buyer can reduce the total Invoice value by 12.5%. Payments will be effected by the Buyer's Bank against presentation by the Seller to the bank of the following documents:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the buyer, is an agent and it appears that the use of the word commission in the Terms of Payment clause has caused confusion. A conjoint reading of all the clauses of the agreement leaves no manner of doubt that it is the overseas expenses incurred by the buyer that have to be deducted from the payment to be made by the buyer to the seller and this is limited to 12.5% of the invoice value. Wrong use of the word commission in the contract, particularly when the said amount has also been referred to as expenses in the same contract will not mean that commission has been paid by the seller. 15. This is what was observed by the Supreme Court in Moped India and the relevant portion of the judgment is reproduced below: 6. ***** Now it is true that this amount allowed to the dealers has been referred to in the agreement as commission but the label given by the parties cannot be determinative because it is, for the court to decide whether the amount is trade discount or not, whatever be the name given to it. If we look at the terms of the agreement, it is clear that the agreement was between the appellants and the dealers on principal to principal basis. The claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on basis then appellant has no case. For this we have to examine the agreement dated 16-5-2001 entered between appellant and DEL. The agreement is enclosed to the appeal memorandum and on perusal of the same we find that the agreement sets out clauses about the sale of goods by appellant to DEL. The said agreement speaks of purchasing of various items from appellant by the said DEL and it also records that appellant shall allow flat deduction/commission of 8% on the invoice value to DEL. We perused the invoice raised by appellant to DEL and find that the invoice is for the sale of the goods and 8% commission is indicated as has been given on the total invoice value. It is also seen invoice value has been reduced by 8% shown as commission, is against the sale of the goods to DEL. We agree with the contentions raised by learned Counsel that the purchaser of the goods cannot be considered as a commission agent as the deduction/commission is for the goods sold. There is nothing on record to show that the said DEL was appointed as commission agent for the sale of the goods of the appellant to third parties. It may be that DEL might purchase the goods from the appellant and sells ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n only two persons are involved, one the appellant as exporter of the goods and second the buyer of the goods. In the sale of goods, in case of service of commission agent, if involved, there has to be third person as service provider to facilitate and promote the sale of exporter to a different foreign buyer. In the present case, there is absolutely no evidence that this 11% is paid to some third person as commission. There is no contract of commission agent service with any of the commission agent, there is no person to whom payment of commission was made therefore, it is clear that no service provider i.e. foreign commission agent exists in the present case and no service was provided by any person to the appellant. In the absence of any provision of service, no service tax can be demanded. The trade discount even though in the name of commission agent was given by the appellant to the foreign buyer, by any stretch of imagination cannot be considered as commission paid towards commission agent service, hence cannot be taxable. ***** (emphasis supplied) 18. Recently in Aquamarine Exports , after placing reliance upon the decision of the Tribunal in Laxmi Exports , a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit the amount of Rs. 2,00,00,000/- online.. The DCCEI officers pressurized to make online payment and under pressure Rs. 2,00,00,000/- (40 Lakhs for each Company / Firms) have been deposited on 11.08.2012 and 16.08.2012. Thereafter my statement has been recorded by the officers of DGCEI on 24.09.2012 and I have been threatened with dire consequences if I do not write my statement according to them. Having no alternative I had to succumb to their pressure and give statement as dictated. I have been made to write that I am liable to pay Service Tax against exports made during 2007-08 to 2012 being commission given to the buyers and also I have been forced to write that though in the documents it shows the overseas parties as my buyer but I was forced to write them as my commission agents. I reaffirm that all my export sales were principle to principle sales and there is no commission agent involve in our contract. It's a directly buyer-seller agreement so I am not liable to pay any service tax on my export sales commission paid to overseas buyers. This part of my statement was not allowed by the department to be mentioned in my statement recorded by them on 24.09.2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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