TaxTMI 
TaxTMI 
2019 (6) TMI 410
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.... sale of goods belonging to their clients, is approximately classifiable as "Business Auxiliary Service" as defined under Section 65(19)(i) read with Section 65(105)(zzb) of the Chapter V of the Finance Act, 1994. 27.2) I also hold that Noticee's impugned activity of providing advice regarding business expansion, is appropriately classifiable as "Management and Business Consultancy" service as defined under Section 65(65) read with Section 65(105)(r) of the Chapter V of the Finance Act, 1994. 27.3) I confirm the demand of Service Tax amounting to Rs. 18,41,602/- (Rupees Eighteen lakh Forty-one thousand Six hundred and Two only) under the taxable category of "Business Auxiliary Service" and Rs. 65,560/- (Rupees Sixty-five thousand Five hundred and Sixty only) under the taxable category of "Management and Business Consultancy" service, totaling to Rs. 19,07,162/- (Rupees Nineteen lakh Seven thousand One hundred and Sixty-two only) under Section 73(2) of the Act. 27.4) I order for payment of interest under Section 75 of the Act, at the appropriate rates prevalent during the material period, on the delay in payment of service tax amounting to Rs. 19,07,162/- ....
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.... 10.30 507356 2012-13 2985480 0 2985480 10.30 369005 Total 1907162 2.2 Show cause also demanded interest under section 75 and proposed penalties under Section 77(1)(a) and 77(2) ibid. 2.3 The Show Cause Notice was adjudicated by the Additional Commissioner as per his order referred in para 1, supra. Aggrieved by the order, Appellants filed the appeal before Commissioner (Appeal) which has been dismissed. 2.4 Aggrieved by the order of Commissioner (Appeals) appellants are in appeal before Tribunal. 3.1 In their appeal, Appellants have assailed the impugned order stating that- i. The order ignores the fact that Show Cause Notice itself admits that they were required to assist the buyer of grey fabrics in getting it processed and that the appellant was not engaged by the buyer of the fabrics. ii. The lower authorities have failed to appreciate that they provided certain services on behalf of grey fabrics manufacturer/seller on irrelevant consideration. The processing of grey fabrics is a post sale activity and should not negate that the appellant's services are hired for providing assistan....
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....e never submitted on records that they were engaged in providing agency service to the buyers of the grey fabrics. Adjudicating authority has predetermined to reject their claim for exemption under notification No 14/2004-ST. iii. They had never claimed exemption in terms of clause 'a' of the Notification but their claim was under clause 'c' of the notification. iv. Trade Notice No 12/2004-ST dated 13.09.2004 also clarifies that "18.3 ........However the services in relation to agriculture, printing, textile processing and education would remain exempt even if provided by such service providers (refer Notification No 14/04-ST dated 10.09.2004)." v. Reliance is placed on the decision of Tribunal in case of Arvind A Traders [2016 (44) STR 264 (T-Chennai)], Texyard International [2015 (40) STR 322 (T-Chennai)]. vi. The contention raised by the authorized representative that activities undertaken by them were not in relation to textile processing is not sustainable. The decisions of Tribunal in case of Shree Ranie Gums and Chemicals Pvt Ltd [2017 (4) GSTL 340 (T-Del)] distinguishing the decision in case of Texyard International is clearly distinguish....
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....for affecting the sale of grey fabric to various customers identified by the appellant. For the purpose of affecting such sale, commission is paid by the manufacturer of grey fabric to the appellants. No service is provided by the appellant to the purchaser of the grey fabric for which any consideration is paid by the purchaser. In the present case, undisputedly the commission is paid by manufacturer of grey fabric for effecting the sale of its goods. 5.4 As per Section 65(19) of the Finance Act, 1994, "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) procurement of goods or services, which are inputs for the client; or (v) production or processing of goods for, or on behalf of the client; or (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 collec....
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....or the client; (b) production of goods on behalf of the client; (c) provision of service on behalf of the client; or (d) a service incidental or auxiliary to any activity specified in (a) to (c) above, and provided in relation to agriculture, printing, textile processing or education, from the whole of service tax leviable thereon under section 66 of the said Finance Act:" 5.7 For determining the eligibility to this exemption notification the first thing to be determined is the service provider and the client of service provider. In the present case the services of commission agent are provided by the appellant to their client i.e. grey fabric manufacturer. As a part of the service provided by the appellant to its client, customer development is part of service being provided. In the process of customer development they also arrange/ suggest a suitable process house to the customer. However this suggestion or coordination with the process house is not any independent service provided by the appellant to the customers of grey fabric. Also there is no consideration received by the appellants for these activities from the customer of grey fabrics....
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....ticee has expressly admitted that they are engaged and get paid by the Grey Fabric manufacturer and not the buyers (para 7.2 of Noticee's reply refers). It is pertinent to note here that Noticee gets paid by the Grey Fabric manufacturer for bringing him a buyer where his "sale" is materialized and not for the transaction of "fabric processing" that my take place between the buyer and the process house. It is those activities which are directed towards the benefit of the Grey Fabric manufacturer, therefore, are the primary and governing activities which give the essential character to Noticee's all above activities as a whole. 20.6) Getting buyers for the Grey Fabric manufacturer and ensuring payments, therefore, forms the essence of Noticee's activities and is the most specific description of the same. Amongst the two competing description of service viz. "promotion of sale" and "Provision of service on behalf of client", Noticee's activities are most appropriately classifiable as "Promotion of sale" in terms of the provisions of Section 65A(2)(a)&(b) of the Act." 5.9 It is also settled principle in law that exemption clauses need to be construed strictly and in case of....
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....ot used for textile processing. On careful reading of the above notification, it is evident that service tax was exempted during the relevant period for the services provided under Business Auxiliary Service if it relates to agriculture, printing, textile processing or education. The appellants are Textile manufacturer and exporters. The word "textile processing" referred in the notification is to be understood in a broader sense. The dictionary meaning of "textile processing" means sequence of operations or changes undergone and the definition of "textile" includes fabrics, fibre, yarn suitable for weaving into fabric. The exemption of service tax under BAS was allowed in relation to four industries namely agriculture, printing, textile processing and education. Therefore, the appellant being textile industry, it is covered under the category "textile processing" in the notification. 6.3 Commission paid to the overseas agents is in respect of service provided by that agent to the appellant to export its goods and thereby sales is promoted. That is an activity incidental or auxiliary to processing of textile goods and covered by Business Auxiliary Service and Clause (d) of....
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....he orders as per which the textile materials was to be manufactured and supplied hence bench concluded that the activities undertaken were incidental and auxiliary to the auxiliary to the activity of production. In the present case appellants do not provide any service in relation to textile processing to their clients and hence we do not find any support in favour of the appellants from the said decision of Tribunal. 5.13 In respect of the services, provided by the appellants under the category of "Management and Business Consultancy" services the entire defence of the appellants is that if the turnover in respect of Commission Agent services, which as per them is exempted under Notification No 14/2004-ST is excluded then their total turnover will be less then Rs. 10 Lakhs and they will be exempted under Notification No 6/2005-ST. Since we do not agree with the contention of the appellants that the services provided by them as commission agent are exempt from payment of service tax the entire defence set up for getting this demand set aside collapses. 5.14 Now coming to the issue of demand being hit by limitation. Appellants have relied upon series of case laws to argue that....
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....egal opinion as their liability towards service tax. In the absence of any such evidence, it is difficult to accept this contention. Inasmuch as the appellant did not obtain any registration nor did they follow any of the statutory procedures, the appellant had clearly suppressed the facts from the department with an intent to evade service tax. In these circumstances, the confirmation of duty demand invoking the extended period of time along with interest thereon cannot be faulted. Consequently, the appellant is also liable to penalty under the provisions of the Finance Act, 1994. In case of Kala Sagar [2015 (38) STR 1017 (T-Mum)], third member has on the matter being referred to him recorded as follows:- "14. I have considered the submissions of both sides as also the orders recorded by my two learned brothers. Extended period of limitation is invoked under the proviso to Section 73(1) of the Finance Act. The said proviso reads as under:- "PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) wilful misstatemen....
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....the similar thing would be applicable not only to the knowledge to the department but to the bona fide belief or interpretation of statute or to the revenue neutrality. All the four concepts are not mentioned in the proviso to Section 73 and, therefore, as observed by the Hon'ble High Court, import of such concept in proviso to Section 73 of the Act or the proviso thereunder would tantamount to rewriting the statutory provision and no canon of interpretation permits such an exercise by any court leave alone the statutory provision. These can at the most have in some cases impact on determining the five situations enumerated in proviso to Section 73. Even for sake of argument, if it is assumed that these are relevant, even then the appellant's arguments have no merits. The first reason quoted for bona fide belief is that Section 65(25b) is applicable to construction of new building. The word "new" or "old" is not mentioned in the said definition. In fact a plain reading of clauses (c) and (d) would clearly indicate that the said clauses are applicable to the activities being carried out by the appellant. In fact there can be no doubt for this to a layman or persons engaged in the fi....
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.... the interior decorator service. However, after the introduction of 'commercial or industrial construction service', the executory activity was specifically listed therein and this dispute vanished. The period under dispute is after the introduction of commercial or industrial construction service under which there was no difference of opinion within the department. As far as covering the activity under the Central Excise Act, 1944 is concerned, the very fact that the appellant was disputing that their activity does not amount to manufacturing furniture and hence not liable to excise duty should lead them to believe that the said activity also involves services and would get covered under Service Tax. In view of this position, I do not find any substance in the contention of the learned Advocate that the issue involved is interpretation of statute. From 2005 onwards, after the introduction of 'commercial or industrial construction service', the activities of the appellant are very specifically covered under the said provision and there can be no two opinions about the coverage of the same after 2005 whatever the difference of opinion or anything can be is for the period prior to 20....