Tribunal rules in favor of appellant, determining trade discount not subject to tax, grants exemption for GTA service.

The Tribunal ruled in favor of the appellant, finding that the deduction labeled as commission in the sales invoices for exported goods was actually a trade discount and not subject to Service Tax. Additionally, the Tribunal held that the appellant was not liable to pay service tax on the GTA service used for exporting goods, as it qualified for exemption. The Tribunal also determined that the demand raised by invoking the extended period was not valid, as there was no suppression of facts by the appellant. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief.

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Issues Involved:
1. Whether the deduction shown as commission in the sales invoice is chargeable to Service Tax under 'Business Auxiliary Service'.
2. Whether the appellant is liable to pay service tax on the GTA service availed in respect of goods actually exported.
3. Whether the demand is sustainable on the ground of limitation.

Summary:

1. Commission in Sales Invoice:
The appellant deducted 10%/12.5% as commission in their sales invoices for exported goods. The department contended that this deduction is a commission paid to foreign buyers and is chargeable to Service Tax under 'Business Auxiliary Service' as per Section 66A read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994. The Tribunal found that the deduction labeled as commission is actually a trade discount given during the sale of goods. There was no third-party commission agent involved, thus no commission agent service was provided. The Tribunal referenced multiple judgments, including Laxmi Exports and Duflon Industries Pvt. Ltd., which supported the view that such deductions are trade discounts, not commission charges, and hence not subject to Service Tax.

2. Service Tax on GTA for Exported Goods:
In appeal No. ST/11773/2016, the issue was whether the appellant is liable to pay service tax on the GTA service availed for exporting goods. The appellant argued that since the GTA service was used for export, it is eligible for exemption under Notifications 18/2009-ST and 31/2012-ST. The Tribunal agreed that the service tax demand on GTA is not sustainable as the service was used for export, making it eligible for exemption.

3. Limitation and Extended Period:
The appellant contended that the demand was raised by invoking the extended period, but since the commission was declared in the sales invoices and known to the department, there was no suppression of facts. The Tribunal agreed, noting that the appellant had been transparent in their documentation and the transactions were verified during export processing. The Tribunal cited judgments such as J.P.P. Mills Pvt. Limited and Texyard International, supporting the appellant's case that there was no suppression of facts, and thus, the extended period for demand is not applicable. Additionally, the Tribunal noted that even if the service tax was applicable, it would be revenue-neutral as the appellant could claim Cenvat credit.

Conclusion:
The Tribunal set aside the impugned orders, ruling that the demand for service tax on the commission and GTA services is not sustainable. The appeals were allowed with consequential relief.

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