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TMI Blog2024 (2) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... checking. If the department is of the view that Fashion Force, Tirupur is the branch office of JPS Trading, Dubai then it would be M/s. Fashion Force, Tirupur who is liable to collect and pay service tax. It cannot be said that the deductions made in the invoices raised in the name of M/s. Bon Prix, Germany is a payment made to Fashion Force, Tirupur. For these reasons, we find that the demand raised under BAS , Technical Inspection and Certification Service is without any factual or legal basis. M/s. JPS Trading, Dubai through their agent or their own office in the name of M/s. Fashion Force is carrying out quality check of the garments being exported. M/s. JPS Trading is rendering the service of a buying agent for M/s. Bon Prix, Germany. The service provider and service receiver are thus located in a non--taxable territory. There is neither any written or oral agreement between the Appellant and M/s. JPS Trading, Dubai. When M/s. JPS Trading, Dubai is a buying agent, he cannot be termed as a commission agent for the Appellant promoting export of garments. Reference made to the decision in the case of AQUAMARINE EXPORTS VERSUS C.C.E. S.T. -SURAT-I [ 2022 (2) TMI 361 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re appointed by Otto Group of which M/s. Bon Prix is a member, as their buying and sourcing agent for Middle East. M/s. Max Moda is a manufacturer in Dubai, through whom JPS Trading is sourcing the goods for Bon Prix, for the last 20 years. Since Max Moda is unable to do the entire production in Dubai due to cost factors, they are allowed to do outsourcing from India, under strict supervision from JPS Trading. Fashion Force is the Indian office of M/s. JPS Trading Company, Dubai. 2.2 M/s. OKE receives the payments from their overseas buyer M/s. Bon Prix, Germany through M/s. JPS Trading Company after deductions of the above mentioned elements i.e., bonus, inspection charges and recycling compensation by the buyer and they show only the net amount received by them in their Proft and Loss account. The above mentioned elements are paid by the exporter for the furtherance of their business, and as such are classifiable under the head Business Auxiliary Service Technical Inspection and Certification and is taxable at the recipient s end as such expenses are incurred outside the country and the provider of such services have no permanent establishment in India. It was noticed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Force, Tirupur. The allegation in the Show Cause Notice does not bring out as to who is the service provider and the service receiver. It merely states that the deductions have been made by the Appellant in the invoice in the nature of inspection charges and recycling compensation. These amounts cannot be considered as consideration for service provided by the foreign entity M/s. JPS Trading, Dubai to the Appellant. The Appellant is selling the goods to M/s. Bon Prix in Germany offering deductions in the nature of discounts during the sale. The discounts shown in the invoice cannot be equated with commission paid. The discounts are nothing but part of sale transactions and there is no service provided / received. The transaction between the appellant and M/s. Bon Prix by raising the invoice is only sale and there is no service element. M/s. JPS Trading and M/s. Bon Prix have an understanding between themselves and thus M/s. JPS Trading undertakes to conduct quality check of the garments through their agent in India viz., M/s. Fashion Force, Tirupur. The transaction between M/s. JPS Trading and M/s. Bon Prix in this regard has taken place outside India. As M/s. JPS Trading has an ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore has been correctly subjected to levy of Service Tax. The Appellant while raising the invoice on M/s. Bon Prix, Germany arrives at the price of the goods supplied, after deducting bonus, recycling compensation and inspection charges. For these services rendered by M/s. JPS Trading, Dubai to the appellant, they get paid by the appellant in the nature of bonus, recycling compensation and inspection charges. Therefore, for the services rendered by M/s. JPS Trading, Dubai through their branch office M/s. Fashion Force, Tirupur to the appellant for furtherance of business prospects, M/s. JPS Trading, Dubai gets paid by the appellant through M/s. Bon Prix, Germany. Thus, the demand raised is proper. 5. We have heard both sides and we have carefully gone through the submissions made. 6. The only issue that is to be considered in this case is whether the Appellant is liable to pay Service Tax under Business Auxiliary Service Technical Inspection and Certification or not? 7. The contention of the Appellant is that certain deductions shown in the invoices raised to M/s. Bon Prix, Germany, are only discounts in a transaction of sale. M/s. JPS Trading, Dubai arranges for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uying agent, he cannot be termed as a commission agent for the Appellant promoting export of garments. M/s. JPS Trading service is incidental to his rendering of buying agent service to M/s. Bon Prix, Germany. Whatever, the deductions shown in the export invoice of the Appellant are concerned with the sale transaction between the Appellant and M/s. Bon Prix, Germany. As such, the demand raised and penalties imposed cannot be sustained and the impugned Order--in--Appeal No. 359/2013 dated 31.10.2013 is required to be set aside, which we hereby do so. The issue is thus answered in favor of the Appellant. 9. Further, we refer to the decision in the case of M/s. Aquamarine Exports Vs. Commissioner of Central Excise Service Tax, Surat--I [2022 (2) TMI 361--CESTAT AHMEDABAD] wherein it was held that there is no commission agent exist who provided the service for export trading of the goods exported by the appellant. When no service provider is in existence it cannot be said that the appellant have received the commission agent service. Secondly, it is also fact that the appellant have not paid the commission to any person in the foreign country. Therefore, in absence of any consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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