Commission agent exemption for order-procurement services applied where the contractual substance matched the statutory definition.

Commission-based procurement of sale orders was treated as business auxiliary service eligible for exemption under Notification No. 13/2003-ST where the arrangement showed the appellant acted on a representative basis to procure sale indents and purchase orders for consideration linked to sales. The absence of the express label "commission agent" in the agreement was held immaterial because the substance of the arrangement satisfied the statutory description. On that basis, the exemption was available and the service tax, interest, and penalty demand could not be sustained.

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Issues: Whether the appellant was entitled to exemption from service tax under Notification No. 13/2003-ST dated 20.06.2003 on commission income earned for procuring orders on behalf of clients.

Analysis: The notification exempted business auxiliary services provided by a commission agent, defined as a person who causes sale or purchase of goods on behalf of another for consideration linked to the quantum of sale or purchase. The agreements showed that the appellant was appointed on a representative basis to procure sale indents and purchase orders and was to be paid commission calculated as a percentage of sales. The absence of the specific label "commission agent" in the agreement was held to be immaterial, since the substance of the arrangement satisfied the statutory description of a commission agent. Once that eligibility criterion was met, the exemption applied to the business auxiliary services rendered by such an agent.

Conclusion: The appellant was entitled to the exemption, and the demand of service tax, interest, and penalty could not be sustained.

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