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TMI Blog2023 (11) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... ER (JUDICIAL) AND MR. C.L MAHAR, MEMBER (TECHNICAL) Shri. P. D. Rachchh, Advocate for the Appellant Shri. Tara Prakash Deputy Commissioner (AR) for the Respondent ORDER M/s. Poojara Telecom Pvt. Ltd., Amrut Commercial Centre, Sardarnagar Main Rod, Near Astron Chowk, Rajkot (hereafter referred to as the assessee ) are engaged in providing taxable services, namely, security detective agency service, maintenance or repair service, business auxiliary service, franchise service, GTA, works contract service, information technology software service, legal consultancy service, other taxable - other than the 119 listed services and are holding Service Tax registration No. AADCP0909KST001. 2. During the course of audit, it was observed that the assessee has received various incentives on quantity of purchases/sales of mobiles and shown such amounts under separate head of income in their Balance Sheets under various heads, namely, Mobile Scheme Discount/Accessories Scheme Discount/other discount from the mobile manufacturers or their distributors. Such incentives were received by the assessee for the purchase/sale of mobiles under Exchange/Festival/Special discount, qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services intended foruse by the client;] (i) production or processing of goods for, or on behalf of, the client; (ii) provision of service on behalf of the client; or (vi) (iii) a service incidental or auxiliary to 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 activity that amounts to manufacture of excisable goods. Explanation : For 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 causes 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84143832 218651695 Service Tax 1649166 3282792 4293236 5070711 10097260 24393165 Edu. Cess 32983 65656 85865 101414 201945 487863 H.Edu.Cess 16492 32828 42932 50707 100973 243932 7. Thus, it appeared to the department that the assessee had not paid the Service Tax of Rs. 2,51,24,960/- (Rs. 2,43,93,165/- + E. Cess - Rs. 4,87,863/- + S.H.E.D. Cess- Rs. 2,43,932/-), as per objection raised vide Audit Para No. 04 of FAR L- 539/2014 - 15 dated 10-10-2014. On the other hand, it appeared that the assessee, at no point of time, had disclosed to the Department about the service provided by them in respect of Business Auxiliary Service (Incentive Income). This material fact was only unearthed during the course of Audit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the acts of contravention of the provisions of Section 68, Section 69 and Section 70 of the Finance Act, 1994 readwith Rule 4, Rule 6 and Rule 7 of the Service Tax Rules, 1994 appellant appeared liable for penal action under the provisions of Section 77 and Section 78 of the Finance Act, 1994, as amended. 12. Accordingly, a Show Cause Notice No. V.ST/AR-II- RJT/166/Commr./2014 dated 20-10-2014 was issued to the assessee, asking them to show cause as to why:- (i) Service Tax amounting to Rs. 2,51,24,960/- should not be demanded and recovered from them under the provisions of proviso to Section 73(1) of the Finance Act, 1994 read with Section 68 of the Finance Act, 1994; (ii) Interest at the appropriate rate on the amount of Service Tax as demanded in paragraph 12 (i) above, should not be demanded and recovered from them, in terms of the provisions of Section 75 of the Finance Act, 1994; (iii) Penalty should not be imposed upon them under Section 77 of the Finance Act, 1994; (iv) Penalty should not be Finance Act, 1994. prepon them under Section 78 of the 13. Matter was decided by Commissioner (Rajkot) after hearing the party. The operative portion is as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any agency relationship with distributors. 14.4 That they are not carrying out any activity for another person. They are purchasing mobile handsets and its accessories from the distributors on their own account on their own risk and stocking selling such goods which belonged to them only. Thus, in the absence of another person, the transaction cannot be treated as service under the Finance Act, 1994, prevailing at the material time. 14.5 That they did not receive incentive/discount for promoting business of either distributors or mobile manufacturers and instead, it is purely a price reduction allowed due to volume of the business dealt with by them. Therefore, such incentive/discount is not liable to Service Tax under Business Auxiliary Service 14.6 That there is no service provider/receiver relationship between them andany of their distributors or mobile manufacturers. 15. In specific, they relied upon following case law based propositions:- Sale/Target Incentives etc. is Trade Discount and Cannot be classified under Business Auxiliary Services Commissioner of Service Tax, Mumbai - I Vs. Sai Service Station Ltd. - 2014 (35) STR 625 (Tri.-Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have gone through the adversarial submissions. We find force in the arguments advanced by the appellant which are backed by various case law cited above indicating treatment of sales and target incentive. This is trade discount and cannot be classified under Business Auxiliary Service. Even this bench in the matter reported in 2016 (41) STR 974 (Tri.- Ahmd.) in the matter of AIA Engineering Ltd. Vs Commissioner of Service Tax, Ahmedabad has taken a view that if goods are purchased on outright basis then discounts cannot be treated as Business Auxiliary Service. Further, we also find that in the show cause notices issued subsequently for the period 2014-2015 and 2015-2016 for negative list period, Order In-Appeal Bearing No. RAJ-Excus-000-App-262-263 TO 2017-2018 dated 27.02.2018 was submitted to be in favour of the party on the same issue. Following paras from the order of the learned Commissioner (Appeals) are culled out for their relevance:- 9. In view of the facts of this case as discussed above, I am of the considered view that appellant has only bought and sold mobile phones and not provided any service to the manufacturers or distributors of mobile phones and no service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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