TaxTMI 
TaxTMI 
2024 (7) TMI 1314
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.... metric tonne for the services provided in connection with the supply of imported non-coking steam coal to various NTPC power stations in addition to the value of goods. It was alleged by the department that during the period from 2005-06 to 2006-07, the appellant had not paid Service Tax on the amount of 'commission' received from NTPC. 1.2. It was also observed that the appellant had entered into an agreement with M/s. Shree Ganesh Jewellery House Private Limited (hereinafter referred to as 'SGJHPL') for promotion of export of gold jewellery manufactured by SGJHPL. It was alleged that the appellant has retained 1.5% of the CIF value of such exports as their 'commission' and not paid service tax on the said amount. 1.3. The appellant had also entered into agreements with M/s. Howrah Mills Co. Limited, M/s. Ambo Agro Products, M/s. Ganesh Trading Co., etc., for procurement of Raw Jute, Hydrogenated Vegetable Oil (HVO), Edible Oil / Crude Palm Oil, etc., for the said clients. The appellant had collected certain charges from these clients as per the respective agreements. However, it was observed that the appellant had not paid Service Tax on these charges recei....
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....nd is not a 'commission' liable to Service Tax under the category of 'Business Auxiliary Service'. 5.1. The appellant contends that they have paid VAT and CST wherever applicable; the transaction is in the nature of principal-to-principal in a sale governed by the Sale of Goods Act and not an activity in the nature of rendering of service. Accordingly, the appellant contends that the demand confirmed in the impugned order is not sustainable. 5.2. In support of their contention, the appellant relied upon the following decisions: - (i) Orion Appliances Ltd. v. Commissioner of Service Tax, Ahmedabad [2010 (19) S.T.R. 205 (Tri. - Ahmd.)]; (ii) Gulf Oil Corporation Ltd. v. Commissioner of Central Excise, Vapi [2014 (33) S.T.R. 298 (Tri. - Ahmd.)] (iii) Commissioner of Service Tax, Delhi v. Quick Heal Technologies Ltd. [2022 (63) G.S.T.L. 385 (S.C.)] 5.3. The appellant also submits that the demand in this case has been raised by invoking the extended period of limitation. They submit that extended period is not invokable in this case as they have not suppressed any information from the Department. They have mentioned all the sale detail....
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....igned by Buyer as importer. .... 12. Since, the entire transaction is arranged by the Buyer. STC will not be responsible for any quantity/quality/shortage or any other claims whatsoever, against the goods. All statutory records/requirements shall be maintained/met by the Buyer. All claims to be settled by the buyer directly with the foreign seller. 13. It is agreed unconditionally by the Buyer that they shall bear all expenses, taxes etc. in connexion with the execution of this contract and they shall always keep STC indemnified from all claims, cost, risks and liabilities in respect of this contract." 8.2. Similarly, some of the terms and conditions of the agreement between M/s. State Trading Corporation of India Ltd. and NTPC for import of coal are reproduced below: - "3. QUANTITY: STC shall import 1.90 Million Metric Tons of Coal for NTPC during the currency of the Agreement. STC shall arrange vessels in suitable sizes to deliver a total quantity of 1.90 Million MT of Coal over a period of 4 months starting from November, 2005. The shipment schedule shall be 5.0 Lac MT (approx) per month for various power stations of NTPC,....
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....duced below: - "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 Explanation - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, "service in relation to promotion or marketing of service provided by the client includes any service provided in relation to promotion or marketing of games of chance, organised, conducted or promoted by the client, in whatever form or by whatever name called, whether or not conducted online, including lottery, lotto, bingo; (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 Explanation - For the removal of doubts, it is hereby declared that for the purposes of this sub- clause, "inputs" means all goods or services intended for use by the client; (v) production or processing of goods for, or on behalf of the client, or (vi) provision of service on behalf of the client....
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....has been affirmed by the Hon'ble Apex Court as reported in 2003 (154) E.L.T. A266 (S.C.). The relevant paragraphs of the said decision of the Tribunal is reproduced below:- "5. We have heard the submissions of the ld. DR. We have perused the written submissions. We have also perused the evidence on record and perused the case law cited and relied upon by the appellants. We note from the judgment of the Apex Court in the case of M/s. Apollo Tyres Ltd. v. CC [1997 (89) E.L.T. 7 (S.C.)] that it was observed that it was the case of Revenue that to the value mentioned in those invoices, three per cent should be added by reason of the terms of agreement. Apollo Tyres Ltd. agreed to pay General, three per cent on the FOB value as service charges. The Apex Court, in para 7 of their judgment (supra) held : '.....They provide that what the Appellants would pay to General was a commission or remuneration to be computed on the basis of 3% of the value of each of the items of equipment. These provisions show beyond any doubt that the value of the items of equipment was not enhanced thereby. We, therefore, cannot accept the reasoning of the Tribunal'. Further, the Tribunal in t....
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....red as 'trade margin' i.e., the difference between the sale price and the purchase price, are sought to be taxed as consideration for providing of 'business auxiliary services' taxable under Section 65(105)(zzb) of Finance Act, 1994. 3. The agreements pertain to M/s. Rajat Pharmacem Ltd, M/s. Essar Oil Ltd. and M/s. Pranab Agro for import of RBD palmolein, M/s. Dinadayal Commodities Pvt. Ltd. for import of silver and M/s. Mehek were among those taken up for scrutiny. 4. It is contended on behalf of the appellant that the goods are sold on 'high sea' and hence constitute a sale that precludes recouse to tax under Finance Act, 1994 on such transaction. Learned Authorised Representative contends that the terms of the contract of supply of goods are negotiated by the clients of the appellant who not only bear the responsibility to make payments but also indemnify the appellant of all costs and consequences making the appellant an agent and not an independent entity acting on its own accord. It is his contention that the decision of the Hon'ble Supreme Court in Hyderabad Industries v. Union of India [2000 (115) E.L.T. 593 (S.C.)] cited by learned Counsel would not adva....
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....llant raised the issue of limitation and contended that the demand confirmed by invoking extended period of limitation is not sustainable. In this regard, the appellant has submitted that the activities undertaken by them were nothing but trading of business and the trading transactions of the appellant had been duly effected in the Sales Tax Returns, trading account and annual account of the appellant. Thus, they submitted that there is no suppression of fact with intention to evade payment of tax on their part existing in this case. Accordingly, they have prayed for setting aside the demand confirmed by invoking the extended period of limitation. 12.1. We find that the appellant has neither taken registration for rendering 'Business Auxiliary Service' nor filed S.T.-3 Returns during the relevant period. We observe that the appellant were under the bona fide belief that the activities undertaken by them were not liable for service tax and had not collected service tax from the customers. They have paid VAT for the transactions wherever payable and disclosed all the details of VAT payment in the Sales Tax returns filed by them. This clearly establishes their bona fide credential....