TaxTMI 
TaxTMI 
2018 (1) TMI 1052
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rules. It appeared to the department that appellants are providing services of Promotion or Marketing or Sale of Goods produced or provided by or belonging to various clients, i.e. tea factories in the auctions conducted at Coonoor, which fall under taxable service of Business Auxiliary Service (BAS). It further appeared to the department that the BAS so provided were not under the category of Commission Agent but under section 65(19)(i) of the Finance Act, 1994, namely, production or sale or marketing or sale of goods produced or provided by or belonging to the client. 3. Accordingly, show cause notices were issued to these appellants which culminated in adjudication orders confirming the demands of service tax proposed in the show cause notice with interest thereon as also imposition of penalties under various provisions of law. On appeal, the Commissioner (Appeals) confirmed the adjudication orders. Hence these appeals. 4. Today, when the matter came up for hearing ld. counsel Shri R. Parthasarathy assisted by Shri Rabeen Jayaram submitted the details of various appeals filed, period of dispute, impugned order and tax in dispute, which are reproduced below:- Appeal No.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....exemption to the Business Auxiliary Services provided by a Commission Agent . The authorities below have found that the Appellants have provided Business Auxiliary Services . That being the case, the case of the Appellants fell within the plain meaning of the exemption under Notification. The following judgments will support the stand of the Appellants. a. 2015 (40) STR 986 (Tri-Del) Brindco Sales Ltd., Vs Commissioner of Service Tax, Delhi b. 2016(43) STR 193 Tri-Mumbai) Chahabria Marketing Ltd., Vs. Commissioner of Service Tax. Mumbai 5.3 With effect from 16.6.2005, the Explanation introduced to Section 65(19) which defined Commission Agent contained also an inclusive part. The various activities of the Appellants clearly fell within the plain terms of that inclusive part and in particular sub-clause (iv) of Clause (a) of the Explanation which defined a Commission Agent . 5.4 The manufacture and marketing of Tea is regulated by the Tea (Marketing) Control Order. That Control Order makes a distinction between tea leaf on the one hand (paragraph 2(n) of the Control Order and Manufactured tea (paragraph 2(i)) made from the leaves of the Plant Camellia Sinensi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is position: a. 260 ELT 17 (SC) -Commissioner of Central Excise, Aurangabad Vs. Bajaj Auto Limited b. 27 VST 406 (CESTAT , New Delhi) Singh Brothers Vs. Commissioner of Customs & Central Excise, Indore Submissions relating to private sales (1.3.2007 to 30.6.2012):- 5.8 The modus operandi of the Appellants remained the same. The only difference was that instead of causing the sales of Tea in the Auctions, the Appellants had caused private sales of the Tea. In fact, the Order in original No. 25/2014 JC(ST) dated 30.4.2014 passed in the case of M/s. TCPL, the Appellant in ST 42608 of 2014, the Adjudicating authority has found in paragraph 10.7 that the Assessee in that case fell under the definition of Commission Agent . However, the benefit of the Notification was denied on the ground that the Tea caused to be sold by the Appellant was not an agricultural produce . The authorities below could not therefore have denied the benefit of the Exemption Notification. 5.9 The Appellant in Appeal Nos. ST/40350 of 2014 (M/s. TCPL) also claimed the benefit of non-liability in terms of Section 66 D (d) (vii) of the Act (Negative list). That benefit has been denie....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the reliance of the Commissioner (Appeals) on the judgment of the Hon'ble Supreme Court in the case of Commissioner of Sales Tax Vs. D.S. Bist to emphasize that the appellants themselves are being assessed to sales tax in respect of sales on behalf of the principal under section 2(g) of the Tea and GST Act since sales tax was suffered at the time of auction / sale by the appellants, the impugned tea cannot be considered as an agricultural produce. 6.5 The ld. AR also placed reliance on the decision of the Tribunal in the case of Container Tea and Commodities Vs. Commissioner of Central Excise, Salem 2016 (42) STR 400 (Tri. Chennai). In the said decision, the appellants therein, was acting as an agent for a number of tea estates in the marketing and sale of their tea overseas and are professional tea tasters. The Tribunal held that the appellant s activities were not only restricted to sale but includes host of other activities and hence the activities fell under BAS and not under commission agent service. The AR contends that the ratio of this decision is squarely applicable to the facts of the present appeals also. 7. Heard both sides and have gone into the records. 8.1 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the words commission agent from the service tax leviable thereon under sub-section (2) of section 66 of the said Act , the words commission agent in relation to sale or purchase of agricultural produce from the service tax leviable thereon under section 66 of the said Act shall be substituted; ii) for the Explanation, the following shall be substituted, namely:- "Explanation.- For the purposes of this notification,- (i) commission agent means a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase. (ii) agricultural produce means any produce resulting from cultivation or plantation, on which either no further processing is done or such processing is done by the cultivator like tending, pruning, cutting, harvesting, drying which does not alter its essential characteristics but makes it only marketable and includes all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugar cane, jaggery, raw vegetable fibres such as cotton, flax, jute, indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea but does not include manufa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or (iii) Guarantees for collection or payment for such goods or services; or (iv) Undertakes any activities relating to such sale or purchase of such goods or services; (b) information technology service means any service in relation to designing [or developing of computer software ] or system networking, or any other service primarily in relation to operation or computer systems;" 8.6 What is not disputed is that the appellants were acting as brokers and auctioneers in accordance with the rules of Connoor Tea Trade Association. Appellants are also licensed by the Tea Board and deemed to be a member of the association only as broker . 8.7 As per the investigation by the department, the appellants render the following services for their clients:- (a) They are not appointed as Commission Agents by their clients but licensed by the Tea Board and governed by the Rules framed by the Coonoor Tea Trade Association. Hence there is no principal agent relationship between the service provider and their clients. (b) They are engaged in the promotion, marketing and sale of goods provided by various clients i.e. tea factories as defined in clau....
X X X X Extracts X X X X
X X X X Extracts X X X X
....post sales condition. 8.9 The appellants, no doubt are called brokers in terms of the Coonoor Tea Trade Association Rules. However, they do not merely cause the sale of goods on behalf of their clients, the tea sellers, for a consideration that is based on the quantum of the sale. They are also engaged in drawing samples, undertaking printing of catalogues, distribution of samples to their buyers and conduct of auction in accordance with the procedure laid down by the Coonoor Tea Trade Association. Upon completion of the auction, the sales consideration is received not by the sellers but by the appellants. Thereafter, the appellant themselves issue delivery orders which enables the buyers to take delivery of the tea from the warehouse. They do the billing work and collection of sale proceeds on behalf of their clients. The appellants also collect lot money not only from their clients but also from the buyers. Appellants also make advances to their clients in anticipation of receipt of goods for sale. They are also engaged in activity of collection and payment of tax namely sales tax on behalf of their clients. The appellants promote the sale of the tea produced by their clients ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding a facility, advertising or illustrating services, pre-auction price estimates, short-term storage services, repair or restoration services in relation to auction of property". The taxable service relating to auction of property service has been defined in section 65(105)(zzzr) is as follows:- "to any person, by any other person, in relation to auction of property, movable or immovable, tangible or intangible, in any manner, but does not include auction of property under the directions or orders of a court of law or auction by the Government; [Explanation: For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, auction by the Government means the Government property being auctioned by any person acting as auctioneer] . A close reading of the above definitions, it emerges that the auction of property services is a category of services which is limited to calling an auction or providing a facility for conduct of the auctions; advertising or illustrating services, providing pre-auction price estimates, short term storage services etc. However, the activities of the appellants herein go much beyond only the conduct of an au....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng tea as agricultural produce, which is applicable for only commission agent and not applicable to the appellant-assessee s case. Accordingly, we hold that the demand along with interest is liable to be upheld. 8. The citations relied on by the appellant-assessee are not related to the present case, as they are only related to commission agents. Hence, the same are not applicable to the present case. As regards the penalty, we find that the assessee has paid the entire dues. Since, there was ambiguity in the initial period of service tax and taking into overall circumstances of the case, there was a bona fide doubt in the mind of the assessee that they are exempted as they are dealing in tea which is an agricultural produce. Accordingly, we waive the penalty under Sections 76 and 78, by invoking Section 80 of the Finance Act. Accordingly, the Revenue appeal is rejected and assessee s appeals are partly allowed in the above terms." 11. In light of the discussions above, we do not find any merit in the appeals filed by the appellants for which reason their plea to set aside demand of service tax and interest thereon fails. 12. However, on the issue of penalty, we do f....