TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 1468
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....t Packard India Sales (P) Ltd (for short "HP") for products like commercial desktop PCs, servers, notebook computers including spares, accessories and peripherals. The agreement between HP and the respondents contained details relating to products, Services, HP list price, Discounts, Volume, Warranty, Installation, Software license terms, other obligations and services that were made available to the distributors/resellers through HP Asia Pacific Partnership Portal, a HP website of the internet available only to registered users. It was seen that net sale price for re-sellers was arrived at after deducting discounts and rebates, etc. The discount so deducted and allowed to distributors included 1% additional discount given to volume distributors for providing reseller sell-through reports as inventory reports on weekly basis to HP. 2. From the foregoing it appeared that respondents as distributors were receiving 1% volume discount on the total turnover made, in respect of HP Products and that this was not a trade or sales discount but a commission for providing HP with strategic market information to enable them to maximize the sales of HP products wherever required. The departmen....
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....r in the assessable value of the excisable goods manufactured by M/s.HP. In the said case, the Hon'ble Tribunal held that the reports sent by the dealers, are in the nature of market intelligence, which did not benefit the dealers, but are benefiting HP exclusively in effectively moving his products in the marketing chain vis-à-vis the competitors and the 1% discount is not a discount and only a remuneration in the nature of commission and therefore liable to be included in the assessable value. This decision was upheld by the Hon'ble Supreme Court [2004 (167) ELT A137(S.C.)]. That therefore, the adjudicating authority ought to have held that the activities carried out by the respondent is not a discount, but commission charged to service tax. 4. The Ld.Counsel Shri C.Manickam, Shri Ajay Kumar Gupta, Advocate & Shri D.Senthil Nathan, Consultant appeared and argued for the respondents. It is submitted by Shri C.Manickam, Ld.Advocate that as per the terms and conditions of the agreement entered by the respondent with M/s.HP, the respondent was entitled for 30% of the trade discount and out of this, 1% discount was given to volume distributors for providing reseller sell on th....
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....... ... (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods. Explanation.- For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) "commission agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision on receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; 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 ....
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....d or produced, under the provisions of the Central Excise Act, 1944, as amended. For the purpose of working out the duty of excise chargeable on any excisable goods, as per Section 4 of the Central Excise Act, inter alia, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. 6.5 For the removal of doubts, Explanation to Section 4 (1) declares that that the price-cum duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, following directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. 6.6 For the purpose of Section 4 ibid, "transaction value" is defi....
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....ent managers, travel agents etc." The above interpretation was further amplified and reiterated by the Hon'ble Apex Court in their judgement in the case of Association of Leasing & Financial Service Companies Vs UOI - 2010 (20) STR 417 (SC) wherein it was inter alia held as under : ".....service tax is an economic concept based on the principle of equivalence in a sense that consumption of goods and consumption of services are similar as they both satisfy human needs. Today with the technological advancement there is a very thin line which divides a "sale" from "service". That, applying the principle of equivalence, there is no difference between production or manufacture of saleable goods and production of marketable/saleable services in the form of an activity undertaken by the service provider for consideration, which correspondingly stands consumed by the service receiver. It is this principle of equivalence which is inbuilt into the concept of service tax under the Finance Act, 1994. That service tax is, therefore, a tax on an activity. That, service tax is a value added tax. The value addition is on account of the activity which provides value addition, for example, an acti....
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....e effective from 1.7.2012, "any process amounting to manufacture or production of goods" is also falling under one of the Negative list of Services under Section 66D (f) of the Finance Act, 1994 as amended. 6.13 As far back as 26.03.2001, a show cause notice had been issued to M/s.Hewlett Packard proposing to include the very same 1% commission amount, which is the subject matter in this appeal, as part of the assessable value for levy of Central Excise duty. The adjudicating Commissioner therein had concluded that 1% commission amount was not eligible deduction and Central Excise duty was to be paid on the said component. This decision was upheld by the Tribunal as mentioned above vide their decision on 09.05.2003 reported in 2003 (162) ELT 399 (Tri.-Bang.) and subsequently affirmed by the Hon'ble Apex Court on 06.02.2004 [2004 (167) ELT A137 (SC)]. The department should have taken precautionary measures to issue periodical SCNs on the very same issue from time to time pending final decision in the matter. This being the case, we are unable to fathom the how and why of the department having taken a stand contrary to that settled by the Hon'ble Apex Court on 06.02.2004 and deemed ....