9911796707
TMI Blog2024 (9) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no consideration insofar as Corporate Guarantee issued by respondent on behalf of their subsidiary companies is concerned. This decision of the Tribunal was upheld by the Supreme Court [ 2023 (4) TMI 170 - SC ORDER ] - demand set aside. Taxability of service tax on profit/mark up - HELD THAT:- The issue on taxability of service tax on profit/mark up is no more res integra as the same has been decided in catena of decisions, the latest being the judgment in the case of M/s Tiger Logistics (India) Ltd., vs Commissioner of Service Tax-II, Delhi [ 2022 (2) TMI 455 - CESTAT NEW DELHI ] where it was held that ' To earn this profit, he also takes the risk of being unable to sell. In the appellant s case, if the space on the ships which it bought cannot be sold to its customers fully, or due to market conditions, or is compelled to sell at lower than purchase price, the appellant incurs loss. In a contrary situation, it gains profits. This activity is a business in itself on account of the appellant and cannot be called a service at all. Neither can the profit earned from such business be termed consideration for service.' - demand set aside. Appeal of assessee allowed. - H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present 2 appeals have been filed before the Tribunal. 3. Learned Counsel appearing for the assessee submitted as under case wise:- Service Tax Appeal No. 50068 of 2019 3.1 Learned Counsel for the appellant submitted that the impugned Order seeks to tax the services provided by the Appellant under the head Business Auxiliary Services (BAS) on the ground that it involved the procurement of goods and services, which are inputs for the client and in order to qualify a service as a BAS, a relation of agency between the provider and the recipient needs to be evidenced. He further submitted that there is not one instance of an agency relationship between the assessee-appellant and its customers. The appellant does not act on behalf of the liner or its customers; nor does it have the power to effect contractual relationship between the liner and its customer. In fact, the Appellant's customer in the first place does not have any contractual relationship with the liner and also, no invoice for provision of ocean transportation service is issued by the liner directly to the customer. The appellant himself is the principal service provider and is responsible for the execution of the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -in-Original dated 02.02.2018. No appeal was filed before Ld. Commissioner (Appeals) against the said order dated 02.02.2018 by the Department. The balance demand of Rs. 12,72,326/ has been confirmed in the impugned order and is challenged in a separate Appeal by the Respondent-assessee. Thus, the present appeal to the extent it seeks to challenge demand of Rs. 79,04,129/-is liable to be set aside. 3.6 The learned counsel also submitted that the Commissioner (Appeals) had dropped the service tax demand on notional commission for the period upto 30.06.2012 on the ground that no consideration flowed from Respondent- assessee to Neptune Orient Liner. W.e.f. 01.07.2012, provisions of Finance Act, 1994 had undergone change and only those activities which qualify as 'service' under Section 658(44) of the Act, were liable for service tax. On a perusal of the definition of service, an activity should be carried out by one person for another, and such activity shall be carried out for a consideration. Thus, the learned counsel contended that where an activity is done without any consideration, same cannot qualify as 'service' and hence cannot levy service tax. He relied on P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia would be subject to service tax when the books of accounts of the recipient is debited with regard to the receipt of the said service. In the present case, no debit had been made in the account of the appellant with regard to the corporate guarantee, nor was any commission paid. 3.8 Further, the learned counsel stated that even if service tax was leviable in the present transaction, the assessee would have been liable to discharge it under reverse charge mechanism. After such discharge, the same amount would be available to the Appellant as CENVAT credit, and hence the entire transaction is revenue neutral. In support, learned counsel relied upon the following case laws:- Jet Airways (1) Ltd. vs. CST, Mumbai 2016 (44) STR 465 affirmed by Supreme Court in 2017 (7) GSTL J35 (SC) Sarovar Hotels Pvt. Ltd. vs. CST, Mumbai 2018 (10) GSTL 72 (Tri.-Mumbai) 4. Learned Authorized Representative for the Department reiterated the ground of appeal and also submitted that in case of M/s Olam Agro India Limited [2014(33) STR 251 (Tri.-Del)], affirmed by Hon'ble High Court of Delhi [2014(33) STR (234)], has observed that Corporate Guarantee was provided by the corporate entity to facilita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court. The relevant paras of the decision of the Supreme Court is reproduced hereinafter: 3. The challenge here is to the concurrent finding in favour of the assessee recorded by the Principal Commissioner GST which was upheld by the CEST Tribunal, through the impugned order on 16.02.2022. The learned counsel would submit that this case is similar to Civil Appeal No. 428/2020 @ Diary No.42703/2019 (Commissioner of Service Tax Audit II Delhi IV Vs. M/S DLF Cyber City2 Developers Ltd.). and therefore the matter should be admitted and tagged with the pending case. 4. Responding to the above, Mr. Bharat Rai Chandani, learned counsel for the assessee on caveat would read Section 65 (12) of the Finance Act, 1994 to point out that issuance of corporate guarantee to a group company without consideration would not fall within banking and other financial services and is therefore not taxable service. He would also read Section 65B (44) of the Finance Act 1994 to point out that the definition of service would indicate that it relates to only such service which is rendered for valuable consideration. 5. The counsel would next advert to paragraph 3.1.12 of the Commissioner s order where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate guarantee to group companies without consideration would be a taxable service. In these circumstances, in view of such conclusive finding of both forums, we see no reason to admit this case basing upon the pending Civil Appeal No. 428 @ Diary No.42703/2019, particularly when it has not been demonstrated that the factual matrix of the pending case is identical to the present one. 8. In consequence, the Civil Appeal stands dismissed. 9. Pending application(s), if any, stand closed. 5.2 The issue on taxability of service tax on profit/mark up is no more res integra as the same has been decided in catena of decisions, the latest being the judgment in the case of M/s Tiger Logistics (India) Ltd., vs Commissioner of Service Tax-II, Delhi 2022(2)TMI 455-CESTAT NEW DELHI. The relevant paras of the aforesaid judgment is reproduced hereinafter:- 9. As far as the differential in ocean freight is concerned, the appellant buys space on ships from the Shipping Line and the Shipping Line issues a Master Bill of Lading in favour of the appellant. In turn, it sells the space to its customers and issues a House Bill of Lading to each of them. The first leg is the contract between the Shippin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
