2014 (2) TMI 1129 - AT - Service Tax

Tribunal rules in favor of cooperative society in Service tax dispute

M/s NATIONAL CO-OPERATIVE CONSUMERS FEDERATION OF INDIA LTD Versus COMMISSIONER OF CENTRAL EXCISE

M/s NATIONAL CO-OPERATIVE CONSUMERS FEDERATION OF INDIA LTD Versus COMMISSIONER OF CENTRAL EXCISE - 2017 (47) S.T.R. 389 (Tri. - Del.) Issues:Dispensing with the condition of pre-deposit of Service tax and penalty confirmed against the appellant for providing business auxiliary services by purchasing and selling coal to M/s. Coal India Ltd. The main issue is whether the appellant is liable to pay Service tax for the said activity.Analysis:The appellant, a cooperative society registered under the Multi State Cooperative Societies Act, 2002, entered into an agreement with Coal India Ltd. to purchase coal at a fixed price and sell it to customers at a higher price. The purchases were made on invoices from Coal India Ltd., with immediate payments made by the appellant. Sales tax was levied on these purchases. The coal was further sold to consumers at a 5% markup, with proper invoicing and sales tax payment by the appellant.The Revenue alleged that the appellant's activities constituted business auxiliary services to Coal India Ltd., leading to a demand for Service tax for the period between February 2005 and March 2009. However, the Tribunal found that the appellant was merely buying and selling coal, not providing services to Coal India Ltd. The nature of the relationship between the parties indicated a buyer-seller dynamic, not a service provider-client relationship.The Tribunal referred to a decision by the Gujarat High Court in a similar case involving stamp vendors, where buying and selling goods did not amount to providing services. This precedent supported the Tribunal's view that the appellant's activities did not fall under the category of taxable services. Additionally, other tribunal decisions cited by the Revenue were deemed irrelevant to the present case.While ruling in favor of the appellant on the merits, the Tribunal also noted that a significant portion of the demand was time-barred, having been raised after a considerable period. There was no evidence of any intentional suppression of facts by the appellant. Consequently, the Tribunal decided to dispense with the pre-deposit condition of duty and penalty, staying the recovery during the appeal process.In conclusion, the Tribunal allowed the stay petition, emphasizing that the appellant's activities did not constitute taxable services, and the demand raised was partially barred by limitation.