2013 (10) TMI 1353 - AT - Service Tax

Tribunal rules no Service Tax on debit notes for buying and selling goods

GARRISON POLYSACKS PVT. LTD. Versus COMMR. OF C. EX. & S.T., VADODARA

The Tribunal allowed the appeal, concluding that the appellant's activities constituted buying and selling goods only, and no Service Tax under Business ... Business Auxiliary Services - appellant engaged in procuring of orders, forwarding invoices and for collection of payments for HDPE/PP woven sacks on behalf of M/s. Yomica Fabrics and M/s. Muscat Polymers - whether the activities undertaken by the appellant is a buying and selling activity only or the activities undertaken amount to providing BAS services to M/s. Yomica Fabrics and M/s. Muscat Polymers on whom debit notes are raised by the appellant? Held that:- On perusal of the purchase orders and the invoices by the appellant, it is evident that they are purchasing the goods from M/s. Yomica Fabrics and M/s. Muscat polymers are subsequently selling the same to M/s. Gujarat Ambuja Cements Ltd. - appellant has only done buying and selling activity and no Service Tax under BAS is attracted with respect to debit notes raised by the appellant - appeal allowed - decided in favor of appellant. Issues:1. Whether the appellant's activities constitute Business Auxiliary Services (BAS) attracting Service Tax.2. Whether the appellant's actions of raising debit notes for procuring orders and collecting payments amount to commission or are part of buying and selling goods.3. Interpretation of purchase orders and invoices to determine if the appellant purchased goods from other entities.4. Application of relevant case laws to support the appellant's claim of engaging in buying and selling activities only.Analysis:Issue 1: The main issue in this case was whether the activities of the appellant constituted Business Auxiliary Services (BAS) subject to Service Tax. The Commissioner had held that the appellant did not purchase goods from other entities, but upon reviewing purchase orders and invoices, it was evident that the appellant did purchase goods and subsequently sold them.Issue 2: The appellant's actions of raising debit notes for procuring orders and collecting payments were contested as either commission-based services or part of a buying and selling transaction. The appellant argued that they were engaged in buying and selling activities only, supported by relevant case laws such as Pratap Singh & Sons v. Commissioner of C. Excise, Mumbai-I.Issue 3: The interpretation of purchase orders and invoices was crucial in determining whether the appellant had indeed purchased goods from other entities. The appellant's consultant presented evidence to show that goods were first purchased by the appellant and then sold to another entity, supporting the claim of engaging in buying and selling activities.Issue 4: The application of relevant case laws, including Pratap Singh & Sons v. Commissioner of C. Excise, Mumbai-I, played a significant role in supporting the appellant's argument of being involved in buying and selling activities only. The Tribunal, after considering the case laws and the evidence presented, allowed the appeal, concluding that the appellant had only engaged in buying and selling activities, and no Service Tax under BAS was attracted to the debit notes raised.In conclusion, the Tribunal allowed the appeal filed by the appellant, determining that the appellant's activities were limited to buying and selling goods, and therefore, no Service Tax under Business Auxiliary Services was applicable to the debit notes raised.