2014 (8) TMI 341 - AT - Service Tax

Tribunal confirms dealer status over commission agent, stresses evidence in tax disputes

The Tribunal upheld the Commissioner (Appeals)'s decision in favor of the respondent, determining that the respondent was a dealer and not a Commission ... Business Auxiliary services - Commission agent - Whether the respondent is to be considered as dealer or as Commission agent - Held that:- Revenue has reiterated the ground that in as much as the respondent was earning out of the concerned deals, it is to be considered as Commission agent. However, in majority of the deals Revenue has accepted that they were out-rightly purchasing and selling the goods but have contended that in some cases they have acted as commission agent. However, there is virtually no evidence on record to show that the respondent acted as commission agent. The allegation made by the Revenue is only a bald allegation without support of the evidence - Decided against Revenue. Issues:1. Whether the respondent is to be considered a dealer or a Commission agent, affecting liability to pay service tax.Analysis:The judgment revolves around the issue of determining the nature of the respondent's relationship with M/s. Punjab Alkalis and Chemicals Ltd. The primary question is whether the respondent should be classified as a dealer or a Commission agent, which has implications on the liability to pay service tax. The Commissioner (Appeals) had previously ruled in favor of the respondent, emphasizing that the respondent was engaged in the sale and purchase of goods on their own behalf. The Commissioner found that the respondent was not acting as an intermediary between the buyer and M/s. PACL, establishing a relationship of buyer and seller between the respondent and M/s. PACL. The Commissioner also noted that the respondent was paying VAT on the sale of goods, further supporting the conclusion that the respondent was not a service receiver from M/s. PACL.Moreover, the judgment highlights the lack of concrete evidence presented by the Revenue to support their claim that the respondent acted as a Commission agent in some deals. The Tribunal observed that the Revenue's allegations were merely bald assertions without substantive evidence. The Tribunal emphasized that the documentary evidence considered by the Commissioner (Appeals) remained unchallenged by the Revenue, leading to the rejection of the Revenue's appeal. The Tribunal concluded that there was no basis to interfere with the Commissioner (Appeals)'s order, ultimately rejecting the Revenue's appeal. The judgment reinforces the importance of substantiating claims with evidence in tax disputes and highlights the significance of establishing the actual nature of commercial relationships to determine tax liabilities accurately.