TaxTMI 
TaxTMI 
2014 (8) TMI 821
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....e Consulting Engineers, Business Auxiliary Service, On line Information & Data, Test, Inspection & Certification, Goods Transport Operator, Manpower Recruitment Agency, Commercial Training & Coaching, Renting of Immovable Property services etc. and are also availing CENVAT Credit facility under the CENVAT Credit Rules, 2004. The appellant herein had quoted in the tenders floated by Ministry of Chemicals & Fertilizers for receiving, bagging, standardization and distribution of imported urea in various states/ union territories during the year 2007-2008. Based upon the tender which was filed by the appellant, Govt. of India through Ministry of Chemicals & Fertilizers (hereinafter referred to as MOCF) awarded the contract to the appellant. Department was of the view that the appellant is required to pay the Service Tax on the amount received by them from MOCF against handling charges of High Sea Sales imported urea on an understanding that the amount received by the appellant were reimbursement for providing taxable services by handling imported urea which involves handling of vessels, unloading, loading, unpacking and repacking of the cargo which tantamount to handling and distributi....
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.... appropriate Customs duty. (d) Appellant quoted lumpsum rates for expenses that would be incurred by the appellant as expenses in respect of unloading and distribution of urea excluding actual port dues, inland freight charges and customs duty. (e) MOCF in their letter dt.15.03.2013 (at Page No.229-230) clearly stated that imported urea handled and marketed by fertilizer company (like the appellant) are completely on ownership basis, as they bag urea in their own brand name and sell through their own marketing network; MOCF has no control over the activity of the appellant except to exercise power conferred under the Fertilizer (Control) Order & Fertilizer (Movement) Control Order & Essential Commodities Act, 1955. (f) Apex Court ratio in the case of Vadilal Chemicals Ltd - 2005 (192) ELT 33 as to 'State, which is represented by the departments, can only speak with one voice' would be the ratio applicable in these cases as the Govt. of India wants the appellant to distribute imported urea at a fixed price considered by Gov....
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.... a card holder at an agreed price and at an agreed quantity for which authorized ration shop gets paid from Govt. of India. It is his submission the only difference is authorized ration shops sell in retail without repacking from bulk to retail and appellant sells the goods after repacking and bagging from bulk. (l) It is his submission that the nomenclature mentioned in the agreement and as held by the adjudicating authority as that the appellant is a handling agent, the actual nature of transaction from the contract needs to be appreciated to come to a conclusion whether the appellant is a handling agent or otherwise. It is his submission that the general terms and conditions annexed to the awarding of contract to the appellant clearly indicate that MOCF has sold the imported urea on High Sea Sales basis and the appellants are only required to submit the record of urea sold by the appellant through out India. It is his further submission that the sale and distribution of urea is also pre-determined by the MOCF and instructions are given to that extent to the appellant. &nb....
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....e subject which in one aspect and for one purpose falls within the power of particular legislature may in another aspect and for another purpose falls within another legislative power and this aspect is a doctrine clearly applicable to the legislative power. 6. Ld.SDR, on the other hand, would submit as under:- i) The actual transaction in reality in this case is of the nature of handling and distribution of imported urea which includes incidental transfer of ownership of urea. The actual transaction being in the nature of handling and distribution of imported urea, it would obviously attract Service Tax as has been held by Apex Court in the case of Bharat Sanchar Nigam Ltd (supra). He would submit that in Para 43 of the said judgment, the Apex Court has clearly held that the test for deciding whether contract falls into one category or the other is to as what is the substance of contract, which for want of better quote they called it as dominating nature test. ii) On careful reading of the contract awarded to the various fertilizer companies, it is evident that the whol....
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....ndling agent as he is required to submit quarterly returns about the quantity sold, balance stock etc; that the appellant as a handling agent is responsible for efficient and quick discharge of urea from the vessel and made responsible for quantities, quality, efficiency of the operation. vi) There is a clear cut restriction that the appellant as an handling agent, is not permitted to sublet handling operation awarded to them and GNFC is not free to dispose of the urea as it leases to them which would mean that Govt. of India has not sold the goods imported urea to the appellant. vii) He would draw our attention to Paragraph No.80 of the judgment of Apex Court in the case of Bharat Sanchar Nigam Limited and submit that even if there is an element of sale involved, the transaction price for sale is a value of fertilizers based on the full issue price; another transaction between the appellant and Govt. of India for which the consideration is lumsum amount bid by the appellant for bagging the handling the contract is the amount which would fall under the category of services rendered by ....
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..../KEE LUNG/2009-10 29th June, 2009 The Director (Accounts) Department of Fertilizers Ministry of Chemicals & Fertilizers Government of India New Delhi Sub: L/C for MV KEE LUNG Imp. Urea 27500.000 MT ROZY Port Dear Sir, Enclosed please find herewith copy of L/C for MV KEE LUNG. The details of the same are as under: Name of Vessel : KEE LUNG Port : ROZY ETA : 01.07.2009. L/C No. : 1314ILCIS0001209 Date : 29.06.2009 Amount : 7,32,83,790.00 This is for your reference and record please. Thanking you, Yours faithfully, For G.N.F.C. Ltd. Sd/- N.G. Chaudhari Sr.Marketing Manager Encl: a/a CC: Shri K.N. Jaggi, CMM GNFC New Delhi. 11. It can be seen from the above reproduced LOC which has been opened by the appellant, they have paid an amount to Govt. of India for the purchase of 27,500 MTs of imported urea by MV KEE LUNG. The transaction of imported urea from MV KEE LUNG is a sale transaction for the appellant is evident from the invoice raised by the Govt. of India Ministry of Chemicals & Fertilizers which is reproduced:- No.3.14.12/09-F....
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....on record to indicate that the Govt. of India has reimbursed them. This would indicate that the transaction of unloading imported urea, bagging and distribution of the same by the appellant is nothing but sale and purchase transaction, if the argument of ld.SDR has to be accepted that the appellant was a handling agent, then the loss 123 MTs of imported urea as imported by MV KEE LUNG would be to the account of Govt. of India. The adjudicating authority as well as the show cause notice has not brought on record any evidence to indicate the losses that take place during the handling of imported urea is to the account of Govt. of India. If the losses are borne by the appellant, while unloading, bagging and distribution of imported urea, then we are unable to understand as how these activities and transactions can be considered as services rendered by the appellant to Govt. of India. 14. Yet another document which needs to be considered by us for coming to conclusion is the invoice raised by the appellant for the clearance of urea from their premises, which is as under:- FOR AGRICULTURE USE ONLY Invoicing Office: GNFC Limited 303, GNFC Infotower, Sarkhej - Gandhinaga....
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....dhya Pradesh INDIA VAT TIN No: 23522302508 IUREAH50S MDA/WDO 8100818448 28.07.2009 GNFC-DEWAS PVT 28.07.2009 IMP UREA 50 KG HDPE STANDARD Basic Price Dealers Margin Sale Taxable Amount VAT-Value Added Tax 400 20.000 4,830.00 -180.00 4,650.00 4.00 % 96,600 -3,600 93,000 3,720 Ninety Six Thousand Seven Hundred Twenty Rupees only 96,720 Madhya Pradesh The supply of Urea, NP20:20:0, CAN, SSP, MOP, DAP and other fertilizers covered by this invoice, is FOR USE AS MANURE for Fertilization of soils and increasing productivity of crops. This diversion of this material for any other purpose is an offence under the Fertilizer (Control) Order, 1985, the Customs Act, 1962 and other relevant statues and orders as in force from time to time. The buyer undertakes that the fertilizer supplied to him as manure will be used as manure and if re-sold, the re-sale will be for use as manure, and accepts full liability without demur for all costs, damages, losses that may be sustained by Government of India and/or GNFC Ltd., in the event of diversion of the fertilizers for any other purpose by the buyer, their agents and/o....
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....he authorized ration shops purchases the food grains from the Govt. of India and stores in his godown. Subsequently, the said food grains are distributed to various ration card holders at a price predetermined by the Government. The authorized ration shops pays in advance to the Govt. of India for the food grains which is allotted for public distribution system. The authorized ration shops also engaged in an similar activity Govt. of India which though not identical can be equated to the activity undertaken by this appellant. In our considered view, the said activity cannot be considered as services as the authorized ration shop owners purchases the food grain before distributing the same to the ration card holders. 18. As regards the claim of the ld.SDR that the tender document clearly indicate that the Govt. of India has invited tenders as handling and distribution agent, we find that though the tender documents indicates about the appointment of a handling agent, the invoices issued by Govt. of India for sale of imported prilled urea to the appellant and subsequent clearances made by the appellant to the consumers of fertilizers would also indicate that appointment of handlin....