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TMI Blog2024 (8) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... gn based service provider even if any arrangement of payment is there between the buyer of the goods and so called commission agent in the foreign country. For this reason, the demand of service tax on the commission shown in the invoice raised to the buyer cannot be made. Reliance placed in the case of Laxmi Exports vs. CCE ST [ 2020 (9) TMI 838 - CESTAT AHMEDABAD ] where it was held that ' since no service exists, the entire demand would not stand. Accordingly, the impugned orders are set-aside and the appeals are allowed with consequential relief, if any, in accordance with law.' Reliance placed in the case of Aquamarine Exports [ 2022 (2) TMI 361 - CESTAT AHMEDABAD ], where it was held that ' the commission deducted by the appellant in the present case in the invoice is nothing but a trade discount and same is not subjected to service tax.' Thus, the issue is no longer res-integra and settled in favour of the assessee. Accordingly the demand of service tax on the commission deducted in the sale invoice of the appellant to their foreign buyer is not chargeable to service tax. Accordingly, the impugned order is set-aside. Appeal allowed. - HON BLE MR. RAMESH NAI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not made any payment directly to any commission agent whereas deduction was provided from the total value of the bill raised to foreign buyer of the goods. In these facts, it is nothing but discount extended by the appellant to the buyer of the goods. Even though some service provider is involved there is no relationship between the appellant and any foreign based service provider as there is no direct transaction made by the appellant with any of the commission agent. It is also a fact that there is no contract between the appellant and the foreign based service provider even if any arrangement of payment is there between the buyer of the goods and so called commission agent in the foreign country. For this reason, the demand of service tax on the commission shown in the invoice raised to the buyer cannot be made. This issue was time and again considered by this Tribunal in various judgments. Some of the judgments are cited below:- (a) Laxmi Exports vs. CCE ST in Appeal No. ST/10666/2014 6. We have heard both sides and perused the record. The issue involved is that whether there is any commission paid by the appellant to Commission Agent in relation to export of their goods e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards commission agent service, hence cannot be taxable. This issue has been considered time and again by this Tribunal. In the case of Duflon Industries Pvt. Limited vs. CCE, Raigad (supra) and the Tribunal held as under : 6. The entire issue revolves around the fact whether clearances effected by appellant on goods which exported by them to DEL is of actual sale or sale based on commission basis. If it is direct sale to DEL then appellant has case and if it is held that it is not direct sale, but the sale based on commission 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods for further distribution. The department alleged that such discount is basically sales commission and liable to service tax under the category of Business Auxiliary Service under Section 65 (105) of Finance Act, 1994. The coordinate bench at Mumbai held that the transaction between appellant and wholesale dealer is sale on principal to principal basis. The discount passed on by the manufacturer cannot be construed as commission and same is not subject matter to levy of service tax. In the present case also, identical nature of transaction involved therefore, applying the ratio of the above judgment, the commission deducted by the appellant in the present case in the invoice is nothing but a trade discount and same is not subjected to service tax. 8. The appellant made alternative submission that if at all the commission shown in the invoice is considered as service charges and the service tax payable/paid thereon is refundable to them as per Notification Nos. 41/2007-ST dated 06.10.2007 and 18/2009- ST dated 07.07.2009 even though some procedural lapse, if any, has occurred in the present case. Since we have already decided that the amount of 11%-12.5% shown as deduction in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the export invoice the appellant have deducted an amount in the nomenclature of commission from the gross sale price thus, the deduction was passed on to the buyer of export goods which is nothing but a discount given to the Foreign Buyers of the goods. In the above facts we are of the view that neither any service provider exist nor was any consideration paid to any service provider. Therefore, the department s contention is baseless and not sustainable. This issue has come up time and again and the same was decided in the following judgments: LAXMI EXPORTS 2021 (44) GSTL 284 (T) 7. From the above invoice, Shipping Bill and Bank Certificate, it is seen that against the C F value shown is sales value in the invoice, the amount equivalent to 11%-12.5% was shown as deduction under the head commission and therefore, the net invoice value is the value after deduction of said 11%-12.5%. As per the invoice, 11%-12.5% commission was extended to the foreign buyer of the goods. Since there is transaction of sale and purchase between the appellant and buyer of the goods, whatever value shown in the invoice is a sale value and the deduction shown is nothing but discount given by the exporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the same in Europe. The reliance placed by Learned DR and adjudicating authority on the clause of agreement that DEL shall increase the market share of appellant s products to conclude that DEL was a commission agent, seems to be erratic reading of the clauses of agreement and this itself does not amount DEL has been appointed as commission agent . The amount indicated on the invoice and recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utset, we note that similar set of facts in respect of appellant‟s own case in Mumbai and for IOCL with IGL has been a subject matter of decisions of this Tribunal. The said decisions relied upon by the appellant are relevant to decide the present case also. In the case of IOCL (supra), the Tribunal observed as under :- 7. On careful consideration of the submissions made by both the sides, we find that on identical set of facts and on the basis of the identical agreement, a case was booked against M/s. Bharat Petroleum Corpn. Ltd. (supra), wherein this Tribunal observed as under :- 11. As per the said provisions, the service provider provides service to his client for marketing or promotion of the goods to third party. In these cases, appellants themselves are buying goods from M/s. MGL. Therefore, the question of rendering the service to the client for marketing of the goods does not arise. We further find that MGL is discharging VAT/ST liability while selling the CNG to appellants. Although the RSP is fixed but it does not mean that the profit margin shall be constituted as commission for rendering the service. On examination, it is found that all the transactions shown by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the facts are almost identical. The transaction between IGL and the appellant are on principal to principal basis. The appellant has been prohibited from holding himself as an agent of IGL. The agreement categorically states that the same is on principal to principal basis. 8. Considering the ratio of the decisions of the Tribunal referred to above, we find that service tax liability under BAS cannot be sustained against the appellant. Accordingly, the impugned orders are set aside. The appeals are allowed. PrabhakarMarotraoThaokar Sons- 2019 (20) GSTL 294 (T) 4. On careful consideration of the submissions made by both the sides and on perusal of records. We find that as per the agreement particularly the following clause : 5. The Wholesale Distributor shall sale the goods at the price as determined by the Manufacturer. It shall not charge anything extra over and above the said price. The Manufacturers shall not be responsible for any loss of goods after it leaves the factory premises. Wholesale Distributor would be the owner of the goods once same are supplied to them by the manufacturer from the factory gate and the Wholesale Distributor shall take possession of the goods f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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