TaxTMI 
TaxTMI 
TaxTMI 
2010 (12) TMI 240
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....Pvt. Ltd. (hereinafter referred to as BNIPL) are manufacturing insulators and lightening arrestors in their factory. The said manufacturer is a joint venture between M/s. Indian Rayon & Industries Pvt. Ltd. (hereinafter referred as IRIL) and NGK Insulator Ltd., Japan for the manufacture of insulators etc. The appellant M/s. Aditya Birla Nuvo Ltd. were earlier known as M/s. Indian Rayon & Industries Ltd. 3. The appellant entered into an agreement with M/s. BNIPL for marketing of the products manufactured by them. During the period in question, the appellant did not pay any service tax but got themselves subsequently registered with the service tax department in or around Aug. 2004 and started paying service tax. Revenue with a view that the appellant should have paid service tax prior to the registration also with effect from 1-7-2003 under the category of business auxiliary services started investigations at their end. 4. Statement of Shri Pramod Bhandari, Senior Officer (Finance) of BNIPL was recorded on 4-2-2005 wherein he stated that during the period in question domestic sales were the responsibility of the appellant M/s. IRIL; that as per the agreement between ....
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....ted 20-6-2003. 9. The business auxiliary services stand defined in section 65(19) of the Finance Act, 1994 as under: "business auxiliary service" means any service in relation to,- (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation services and includes services as a commission agent, but does not include any information technology service." As is seen from the definition of business auxiliary services the same relate to promotion or marketing or sale of goods produced by their client and also covers incidental or auxiliary support service such as billing, collection, recovery of cheques, accounts and remittance, other valuation of prospective customer and public relation services. The definition also shows that the same includes services as a commission agent. However,....
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....BNIPL, invoices were raised by M/s. BNIPL and the goods were also sent directly by them to the manufacturers. Payments were accordingly made by the customers to M/s. BNIPL for such type of transactions and M/s. BNIPL paid commission to the appellant as per the provisions of clause 5 of their agreement. Further where the customers have placed order with M/s. BNIPL and goods were sent by them as per the past commitment, prior to entering into an agreement, still commission was paid by M/s. BNIPL to the appellant. It stands observed by the Commissioner in his impugned order that the so called commission earned by the appellant which as per the terms of the agreement is the difference between the sale price and the transfer price, varied from 5 per cent to 94 per cent. He further held that inasmuch as the services being provided by the appellant are for promotion, marketing and advertisement of the goods manufactured by M/s. BNIPL, they are covered by the definition of business auxiliary services and cannot be held to be commission agent services. As such by taking into account the various clauses of the agreement as also the depositions made by the various authorised persons, he concl....
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....mes and increase the market share of its product, they have agreed to enter into this agreement for the purpose of sale of these goods by JV to IRIL and for the purpose of sale, distribution, marketing and promotion by IRIL of the goods of JV in this specified territories, subject to such terms and conditions as contained in the agreement. Clause 4 of the agreement relates to obligations of the parties. According to such obligations, the appellant is required to give supply orders to their customers from time to time mentioning the details of the goods to be supplied. It also states that the goods shall be sold "ONLY" in response to supply orders by the appellant. Wherever any bidding or tender process is required for sale of the product and such bidding conditions or tender terms required the bid to be made by JV due to qualification criteria, such bids may be entered in the name of the JV and in the event of orders being placed upon them consequent to such bids/tenders the appellant shall be paid a commission which will be sum equivalent to the difference of the amount received by JV and the amount payable by IRIL to JV as the transfer price in accordance with clause 5. There is ....
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....urchase, as defined in the notification itself. Commission agent may be for one solidatory sale between the seller and the purchaser or may act repeatedly as an agent between the same seller and purchaser. He is primarily the person who causes sale or purchase of the goods and receives his commission, the quantum of which may be based on the consideration for such sale/purchase. The definition of commission agent given in the notification itself by way of an explanation, is a simple definition referring to a person who causes such sale/purchase between the seller and the buyer. For causing such sale, he may make efforts to prompt the seller's product to the buyer, in his own interest or convince the seller to sell the goods to the buyer for a particular consideration. These are, no doubt, incidental services which he may require to give as a commission agent. However the various clauses of the agreement, which stand dealt with by us in the preceding paragraph clearly indicate that the services being provided by the appellant are not simple services of sale and purchase of the goods. The agreement is a specific agreement requiring the appellant to promote their product by way of und....
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....s decisions referred supra related to more or less identical services being provided by the assessees wherein the same were held to be commission agent services thus giving strength to the appellants bona fide belief that the services provided by them were commission agent services. 19. The above plea of the appellants stands rejected by the Commissioner on the sole ground that mere failure on the part of the assessee to file the return under section 70 and to disclose wholly truly all material facts required for verification of the assessment under section 71 was sufficient to invoke the longer period of five years and there was no necessity to prove fraud, wilful mis-statement, suppression of facts against the assessee. The appellants have not approached the revenue for clarification and it was only subsequently, when questioned, they claimed the reason for not taking registration that they were commission agents exempted under Notification No. 13/2003. 20. We do not agree with above contention of the learned adjudicating authority. Merely because the appellant did not approach the revenue for clarification and did not disclose the activities undertaken by them, by itsel....