Commodity income cannot be taxed as Business Auxiliary Service without proof of commission-based taxable service.

Commodity income could not be treated as commission for trading of goods or taxed as Business Auxiliary Service absent documentary proof of any taxable service element. The Department relied on assumption rather than evidence and failed to show that the receipts were commission for causing sale or purchase of goods. The audited accounts reflected commodity income, but the record did not establish that it was linked to commission-based activity. The absence of actual delivery in commodity transactions did not, by itself, convert trading receipts into service income. The Service Tax demand was therefore not sustainable, and the dropping of the demand was upheld for the assessee.

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Issues: Whether the amount shown as commodity income could be treated as commission earned on trading of goods and subjected to Service Tax under the category of Business Auxiliary Service.

Analysis: The Department did not produce documentary evidence to show that the amount represented commission for causing sale or purchase of goods or for providing any taxable service. The findings accepted that commodity income was reflected in the audited accounts and that the demand was founded on assumption rather than proof. The legal test applied was whether there was material to establish a service element and whether the income could legitimately be linked to commission-based activity. The conclusion also noted that not every trading activity necessarily attracts VAT and that the absence of actual delivery in commodity transactions did not by itself convert the receipts into taxable service income.

Conclusion: The demand of Service Tax under Business Auxiliary Service was not sustainable and the dropping of the demand was upheld in favour of the assessee.

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