TaxTMI 
TaxTMI 
2024 (3) TMI 73
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....of appellant: Based on a specific purchase order from customer(s) in India, the appellant raises specific order on Mercury for purchase, and the goods are supplied to the customer in India. In such cases both purchases and sales are booked in the accounts of appellant and subsequently M/s. Mercury also issues a credit note to the appellant crediting the post sale margin/discount. b. Direct sale by Mercury and only margin booked in the books of the appellant: In these cases, the customers of the appellants raise a direct purchase order on M/s. Mercury and the products are shipped directly to such customers, which is mostly in the cases where the clients have customs concessions/exemptions for direct import. Appellant being exclusive distributor for the Territory of India, is entitled for margin for this direct shipment as well (price difference between sale price in India and distributor price). c. Warranty Repairs: The appellant also undertakes free warranty repairs for the sale of products of Mercury on behalf of Mercury, for a period of 1 year. Accordingly, the appellant raises a statement of spares used and man hours spent based on which MECURY raises a 'Recipient credit tax....
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....ts maintenance including temperature and security of the facility. Hence, it is clear case of 'cold storage facility' service which do not fall under the category of 'renting of immovable property'. The observation in the impugned order that 'sea products' is not 'agriculture' but a 'pisciculture' is irrelevant in the present case, in absence of such proposal in the SCN and also considering the ordinary meaning of the term 'agriculture'. Agriculture as defined in Section 65B(3) includes rearing of all forms of animals. Management, Maintenance & Repair service (to Navy/coastal guard): 8. Here again, the demand was confirmed on the differential turnover between the books and ST-3 returns merely stating that documentary evidence was not furnished except turnover bifurcation and claim that services are rendered to Navy/coastal guards etc. Out of the total turnover of Rs.4,71,49,579 towards 'repair or maintenance' works, turnover of Rs.2,70,97,757/- was declared in ST-3 and paid appropriate service tax thereon whereas impugned SCN & OIO has deducted only turnover of Rs.2,69,70,736/-. Due to this, there was an excess demand of Rs.1,27,021/- He submitted that the balance turnover of R....
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....after the conclusion of sale (popularly known as 'post sale discount). The additional discount was accounted as 'Discount - dealer margin'). 10. He contended that, the appellant in the first instance could have got all his trade margin/discount, but to maintain the actual price of the goods and to maintain competitiveness by giving post sale discounts, the mechanism of post sale discount was adopted. Sample copies of purchase invoice, sale invoice, bill of lading, credit note of Mercury and copies of the entries in the books of accounts are enclosed in the appeal and explained during the course of hearing with the instance of a transaction: Sl.No. Description Amount 1 Purchase order based on list price 1,18,42,805 2 Sale price 1,25,47,920 3 Difference/ trade margin (2-1) 7,05,115 4 Additional discount received from M/s. Mercury (discount Dealers Margin) 11,63,877 As explained above, both trade margin and dealer margin are related to trading of goods, out of which one is difference of purchase and sale price and second is post sale discount/dealers margin. 11. He contended that issue of levy of service tax on the trade margin of the trader who tra....
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....hip firm (M/s. Esmario Export Enterprises). d. J.B. Boda - 1997 (223) ITR 271 (SC) e. Commr. Of C. Ex., Jaipur-1 Vs. National Engineering Industries Ltd. 2019 (30) G.S.T.L. 211 (Raj.) f. Bharat Re-Insurance Brokers Pvt. Ltd. Vs. Commissioner of Central Excise Customs and Service Tax, Hyderabad-II 2020 (6) TMI 259 - CESTAT HYDERABAD (Para- 11) g. Suprasesh General Insurance Services & Brokers P. Ltd. v. Commissioner2016 (41) S.T.R. 34 (Mad.) (Refer Para 43, 44, 57 and 58) h. Sun-Area Real Estate Pvt. Ltd. v. CST, Mumbai-I, 2015 (39) S.T.R. 897 (Tri. - Mum.) (Refer Para 9 & 10) The same was also clarified by the CBIC vide its Circular No. 78/52/2018- GST - Central Tax, dated 31-12-2018 under GST. The provisions of GST and service tax with respect to the condition of receiving convertible foreign exchange are similar. 14. He further contended that Impugned SCN & order clearly admitted the fact that amounts from foreign customers are received by way of adjustment against payables from India, by raising credit notes but denied the benefit of treating such adjustment as 'receipt of foreign exchange', stating that required permissions were not taken and procedure as per RBI gu....
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....td. v. Commissioner - 2016 (46) S.T.R. 59 (Tribunal); Samsung India Electronics Pvt. Ltd. Vs. Commissioner of C. Ex., Noida 2016 (42) S.T.R. 831 (Tri. - Del.). 'Extended period of limitation' & 'Penalties': 19. It is a periodical notice wherein no extended period can be invoked. Initially department had issued notice for 2008 to 2010 on the following issues a. Dealers margin b. Agency commission and c. Warranty claims The present show cause notice is issued for the period 2010-11 to 2013-14 which covers all the above three issues. It is settled legal position that extended period cannot be invoked in subsequent periodical notices. Reliance is placed on Nizam Sugar factory vs. Collector of Central Excise, A.P. 2006 (197) ELT 465 (SC). 20. Initially the appellant was under the bonafide belief, that as they are into exports, which is a non-taxable activity, no reason for disclosure of such exempted amounts in returns. Subsequently, they have started disclosing from 2012-13 with respect to repairs of vessels. It is settled legal position that once the appellant is disclosing the amounts in returns, no extended period can be invoked. 21. Appellant had no intention to evade ....
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....(Kar.) 24. On the other hand, Ld. DR reiterated the findings of the impugned order and contended that demand was mainly due to non-submission of supporting documents. Hence, the matter may be remanded. 25. Heard both sides. The perusal of SCN and OIO brings out that the main demand is under 'BAS' for the amounts received in the capacity of 'distributor' to M/s. Mercury. Both SCN & OIO while admitting that the payments were received by Appellant by way of adjustment in the running account &raising credit notes but refused to equate with receipt of 'convertible foreign exchange' solely on the ground that requisite procedure/permissions were not taken from RBI. This finding is not sustainable for the simple reason that Service tax department are not the competent authorities to adjudicate on the issues related to RBI. Law is well settled that 'set off'/adjustment against payables is to be considered as 'receipt of convertible foreign exchange and needs no reiteration as held by Hon'ble SC in J.B. Boda - 1997 (223) ITR 271 (SC) and followed in several decisions for service tax in Commr. Of C. Ex., Jaipur-1 Vs. National Engineering Industries Ltd. 2019 (30) G.S.T.L. 211 (Raj.), Bharat....