Service tax collected on behalf of principals upheld; commission and trading profit dispute remanded for fresh evidence-based examination.

CESTAT Hyderabad held that service tax collected on behalf of principals but not supported by evidence of remittance fell within the statutory obligation under section 73A(2) and section 73A(3) of the Finance Act, 1994, so the confirmed demand on that amount was sustained. As to the business auxiliary service commission and alleged trading profit component, the Tribunal found that the appellant had not produced documentary evidence before it on whether the receipts represented trading profit or steamer agent activity, and remanded that part to the adjudicating authority for fresh examination after permitting evidence to be placed on record. The demand was therefore upheld in part and remanded in part.

---

---

Issues: (i) Whether the demand confirmed on the amount of service tax collected on behalf of principals was sustainable under section 73A(2) and section 73A(3) of the Finance Act, 1994. (ii) Whether the confirmed demand on the business auxiliary service commission / trading profit component required reconsideration on the basis of documentary evidence.

Issue (i): Whether the demand confirmed on the amount of service tax collected on behalf of principals was sustainable under section 73A(2) and section 73A(3) of the Finance Act, 1994.

Analysis: The appellant claimed that the tax collected from clients was remitted to the principals, but no supporting evidence was produced. The retained amount remained reflected as payable for a substantial period, and the collection of service tax without proper remittance was held to be contrary to the statutory obligation under section 73A(2) and section 73A(3).

Conclusion: The confirmed demand on this issue was sustained and the appeal was dismissed to that extent, against the assessee.

Issue (ii): Whether the confirmed demand on the business auxiliary service commission / trading profit component required reconsideration on the basis of documentary evidence.

Analysis: The appellant sought to distinguish part of the receipts as trading profit arising from sale of cargo space and also contended that the activity was not business auxiliary service but steamer agent service. Since the appellant was unable to produce documentary evidence before the Tribunal on these points, the matter was considered fit for fresh examination by the adjudicating authority. Natural justice required an opportunity to place the evidence on record.

Conclusion: The issue was remanded to the adjudicating authority for reconsideration after allowing the appellant to produce evidence, against the Revenue.

Final Conclusion: The demand relating to service tax collected on behalf of principals was upheld, while the dispute concerning the commission and trading profit component was sent back for fresh adjudication on evidence.

---