9911796707
TMI Blog2024 (7) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and hence, it is equivalent to the 'commission' fixed for rendering a service. The service tax has been confirmed in this case under the category of business auxiliary service . Procurement of goods or services, which are inputs for the client, is specifically covered under sub-clause (iv) of the definition of 'business auxiliary service'. Also, 'undertaking any activity relating to sale or purchase of goods on receipt of commission' is also specifically covered under the definition of business auxiliary service - the services rendered by the appellant in connection with procurement of goods on behalf of their clients are specifically covered within the definition of business auxiliary service - the appellant is liable to pay Service Tax under the category of business auxiliary service . The appellant being a canalizing agency, the service charges collected by them have nothing to do with the transaction value of the goods. This view has been held by the Tribunal in the case of Gupta Chemicals Ltd. v. Commissioner of Customs, Jaipur [ 1999 (1) TMI 429 - CEGAT, NEW DELHI] , which has been affirmed by the Hon ble Apex Court in [ 1999 (10) TMI 752 - SUPREME ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 1.5% of the CIF value of such exports as their 'commission' and not paid service tax on the said amount. 1.3. The appellant had also entered into agreements with M/s. Howrah Mills Co. Limited, M/s. Ambo Agro Products, M/s. Ganesh Trading Co., etc., for procurement of Raw Jute, Hydrogenated Vegetable Oil (HVO), Edible Oil / Crude Palm Oil, etc., for the said clients. The appellant had collected certain charges from these clients as per the respective agreements. However, it was observed that the appellant had not paid Service Tax on these charges received from the said clients. 1.4. Accordingly, it was observed that the appellant has received service charges totally amounting to Rs.20,89,29,084/- during the period 2005-06 and 2006-07 and not paid service tax on these charges received towards rendering of taxable service namely, 'Business Auxiliary Service'. 2. The Department considered that the services of procurement of goods on behalf of their clients would fall under the purview of Business Auxiliary Service and the amount realized by the appellant was commission received in the course of providing such taxable service. Accordingly, the Department was of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .)]; (ii) Gulf Oil Corporation Ltd. v. Commissioner of Central Excise, Vapi [2014 (33) S.T.R. 298 (Tri. Ahmd.)] (iii) Commissioner of Service Tax, Delhi v. Quick Heal Technologies Ltd. [2022 (63) G.S.T.L. 385 (S.C.)] 5.3. The appellant also submits that the demand in this case has been raised by invoking the extended period of limitation. They submit that extended period is not invokable in this case as they have not suppressed any information from the Department. They have mentioned all the sale details in the Sales Tax returns filed by them; the Notice was issued beyond the normal period of one year, invoking suppression clause. 6. The Ld. Authorized Representative appearing for the Revenue submits that the appellant is a 'Canalizing Agency' engaged in importing and exporting of goods on behalf of their customers; the consideration received by the appellant is a pre-determined 'commission' as provided in the agreement itself; it is not a transaction involving sale of goods. He relied upon the decision in the case of Gupta Chemicals Ltd. v. Commissioner of Customs, Jaipur [2002 (148) E.L.T. 535 (Tri. Del.)], wherein it has been held that procurement of goods on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of coal are reproduced below: - 3. QUANTITY: STC shall import 1.90 Million Metric Tons of Coal for NTPC during the currency of the Agreement. STC shall arrange vessels in suitable sizes to deliver a total quantity of 1.90 Million MT of Coal over a period of 4 months starting from November, 2005. The shipment schedule shall be 5.0 Lac MT (approx) per month for various power stations of NTPC, which may be covered through various discharge ports in India viz. Paradeep (Orissa), Haldia (W Bengal), Visakhapatnam(Andhra Pradesh), Kakinada (Andhra Pradesh) and Mundra (Gujarat). After discussions with STC, NTPC will furnish to STC a dispatch / shipment schedule of quantity with month wise break-up proposed to be imported port-wise/ power station-wise. Such tentative Port-wise schedule shall be given immediately after signing of the agreement. The first shipment shall be shipped so as to reach Indian port within November, 2005 and the subsequent shipments as per the programme to be furnished by NTPC. .. 5. PRICE: Price of Coal shall be payable to STC based on certificate to be furnished as per clause 21 of this agreement. Price of Coal per Metric Ton will be in Indian Rupees on FOR Dest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b- clause, inputs means all goods or services intended for use by the client; (v) production or processing of goods for, or on behalf of the client, or (vi) provision of service on behalf of the client; or 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, (vii) public relation services, management or supervision, and includes services as a commission agent, but does not include 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 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced thereby. We, therefore, cannot accept the reasoning of the Tribunal . Further, the Tribunal in the case of CC, Madras v. M.G.M. International Exports Ltd. [1998 (99) E.L.T. 284 (T)] observed that the Department seeks to hold that the sale on high-seas basis was the sale in the course of international trade. Before coming to any conclusion in this regard the contract will have to be looked into; that any addition to be made in the value at which the appellants have purchased the goods will have to be considered in the background of whether the respondents transactions can be considered as in the course of international trade in terms of Section 14. This Tribunal held : Thereafter under Rule 9(4) there is a refrain namely, no addition shall be made to the price actually paid or payable in determining the value of the imported goods except as provided for in this rule. We observe this refrain in Rule 9(4) is very significant. Due regard has to be given to it while seeking additions to the price actually paid. 6. Looking to the Valuation Rules, we note that Rule 9(1)(d) provides that the basic issue for inclusion of this commission in the invoiced price is whether this is commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .)] cited by learned Counsel would not advance the cause of the appellant and that the status of the appellant as a public sector enterprise does not render it immune to invoking of the extended period as has been confirmed by the decision of the Tribunal in M/s. Rajasthan State Beverage Corporation Ltd. v. Commissioner of Central Excise, Jaipur-I [2013 (32) S.T.R. 329]. It is the further contention of learned Authorised Representative that the service charges on canalising that were held to be non-includable in the assessable value by the Tribunal in Gupta Chemicals Ltd. v. Commissioner of Customs, Jaipur [2002 (148) E.L.T. 535 (Tri.-Del.)] counters the claim of the appellant that the activity is exclusively taxable as a transaction in goods. 5. It appears from the investigations that the appellant deducts service charges of 2% on exports, bank charges and trade margin, etc. If the transactions were one of trading, the appellant would have treated the sale value of goods as receipts from which expenditures is to be deducted instead of treating them as receipts. Taken in conjunction with the admitted fact that the appellant does not, at any stage, become the owner of the goods, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tials and accordingly we hold that the extended period not invokable in this case to demand service tax. We observe that the issue involved in the present appeal is interpretative in nature. Thus, the appellant had not taken Registration and not filed S.T.-3 Returns as they were under the bona fide belief that no Service Tax was payable by them. We also observe that the appellant is a Government of India undertaking and there is merit in the submission of the appellant that they have no intention to evade payment of tax. Thus we observe that suppression of facts with intention to evade payment of tax has not been established in this case. Hence, we hold that the demand confirmed in the impugned order by invoking the extended period of limitation is not sustainable. We observe that the demand in this case has been confirmed for the period 2005-06 and 2006-07 and the Notice was issued on 22.12.2009, which is beyond the normal period of limitation of one year. Thus, we find that the entire demand confirmed in the impugned order is barred by limitation and hence not sustainable. For the same reason, no penalty is imposable on the appellant. 13. Accordingly, we set aside the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
