9911796707
TMI Blog2025 (2) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... charter of other vessels from the charges levied upon their customers. From the facts and circumstances narrated in the impugned order, it would appear that M/s Shipping Corporation of India Ltd offered vessels on charter to various oil companies for lifting of crude from outside India to be delivered for refining in India. The agreements with these entities stipulates that, in the event of non-availability of vessels of M/s Shipping Corporation India Ltd, the charterer was responsible for provisioning with other vessel owners to be made available for cargo of the oil companies. It is reported that, as per commercial practice, owners of such vessels offered 'commissions' to the appellant as well as 'brokerage and commission' to other agents with the netted amount to be committed to them. It is also on record that, prior to 1st July 2012, 'freight charges' were not taxable and that, thereafter, exclude from tax through the negative list in section 66D of Finance Act, 1994. The dispute is thus, limited to the retained portion of the freight collected from the oil companies which jurisdictional tax authorities contended to commission received by the appellant herein for acting as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services procured from abroad and those rendered outside India. Location of provider of taxable service was upon determination as 'intermediary' with the dilution in the said Rules was deemed to be taxable territory. 5. According to Learned Counsel for the appellant, 'address commission' is merely 'trade discount' inasmuch as it is a component of the agreement between appellant and owners of the vessels chartered by the appellant. He placed reliance on the decision of the Hon'ble Supreme Court in Coromandel Fertilisers Ltd v. Union of India and others [1984 (17) ELT 607(SC)] and Hindustan Gas & Industries Ltd v. Collector of Central Excise [1991 (54) ELT 383 (Tribunal)]. It was further contended that the appellant was never an 'agent' of the oil companies for providing the service which happened to be exempted or excluded and reliance was placed on the decision of the Hon'ble High Court of Delhi in Poona Bottling Co Ltd and another v. Union of India and others [1981 (8) ELT 389 (Del.)] which was affirmed by the Hon'ble Supreme Court. It was also contended that 'commission' deployed in 'narration' in 'books of accounts' had no bearing on determination of taxability for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de oil' is not in dispute. It is common ground that the freight charged for such activity was either exempted from tax or excluded for taxability in the respective tax regimes before and after 1st July 2012. It is also incontrovertible that the dispute is limited to the rendering of contracted service in the absence of their own vessels and deployment of alternative vessels. The limited question to be determined is taxability arising as 'agents' or 'intermediary' on behalf of the oil companies or taxability arising on consideration paid by vessel owners engaged by the appellant herein. The taxability of the latter prior to 1st July 2012 was held by the impugned order to be in conformity with section 65(105)(zzb) of Finance Act, 1994 read with section 65(19) of Finance Act, 1994 and to be in conformity with section 66B of Finance Act, 1994 read with section 65B(44) of Finance Act, 1994 and section 66C of Finance Act, 1994. 8. The essence of 'business auxiliary service' which is the intended target of tax, is the presence of a provider of service between a service/product belonging to one and required by another. The retained amount has been sought to be taxed by the fitment of car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to such sale or purchase of such goods or services' adduced to conclude that appellant is 'commission agent' has not tested conformity with section 65(105)(zzb) of Finance Act, 1994 either. 9. Insofar as taxability on 'intermediary' for the period after 1st July 2012 is concerned, the very same terms and conditions of contracts had been cited as sufficing to conclude that service had been provided to oil companies by vessel owners through the agency of the appellant. 10. It is consideration paid by the oil companies to the appellant that has been segregated - to exclude that which subsisted in contract of vessel owners with appellant as payable while not excluding the amount retained - which is the basis of the demand. The test of taxability is lacking. Contextually, 'intermediary' is relevant only for determining 'taxable territory' under Place of Provision of Service Rules, 2012 inasmuch it was such amount which the notice proposed as subject to tax liability. The appellant as well as the oil companies are located in the territory of India with consequential location of the 'provider of service', which, in this case, is the appellant would render the tax liability to ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'main service' on own account, could not have been contextually explicated. The appellant-assessee may not be factually incorrect in submitting that no consideration is received by them from the only other entity in the domestic territory, viz., travel agents and that they are in receipt of consideration for provision of service to an overseas entity. However, the consequent proposition that this factual portrayal excludes the receipts from the purview of service tax is, in our view, unexceptionable only in the erstwhile tax regime in which the enumeration of legislative intent to tax identified services implied a cluster of discrete activities with each evaluated for coverage on its own steam. In the new paradigm, every activity, save for specific exclusions, that involve a 'provider' and 'consideration', is 'service' but the absence of description, and, that too, qualified with 'any other person' therein, eliminates borderlines segregating each service. That absence is a deliberate consequence of superfluity of the extent of activities or 'service' in the general scheme of taxation and, conversely, where description is warranted, the span of activity is to be inferred from, 'cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is established that they are not covered by rule 9 of Place of Provision of Service Rules, 2012. We turn to that aspect now. 22. The activity of an 'intermediary' is not envisaged as any less of 'service' than contemplated by section 65B(44) of Finance Act, 1994 and this is evident from its definition in rule 2(f) of Place of Provision of Service Rules, 2012. While 'main service' on own account, implying adequate autonomy to negotiate 'consideration' to be passed on in the value chain to the next 'provider' and onwards until the sum of consideration is recovered in entirety from the ultimate consumer, is also no more and no less than 'service', the antithesis thereof, characterized by divesting of such autonomy and to be inferred from the nature of the 'consideration', will relegate the corresponding activity to that of 'intermediary' which is subordinate to a 'main service' on own account within which it is rendered. By designating of the activity of 'intermediary' as 'service' but not on its own account to be distinguished by provision of 'main service' on own account, it would appear that while being 'provider' - one of the two essential determinants of 'service' - the 'consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
