TaxTMI 
TaxTMI 
2024 (8) TMI 908
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....ction 66A of the Finance Act, 1994. 2. Shri Rasesh Shah, learned Chartered Accountant appearing on behalf of the appellant at the outset submits that the appellant have not made any payment to the Commissionagent and no commission agent has provided service to the appellant under the nomenclature of commission which is deducted in the invoices raised to the buyer. Therefore this amount cannot be treated as service charge paid to any individual commission agent in foreign country therefore no service tax can be demanded. He submits that this issue is settled in various judgments. He placed reliance on the following judgments:- (a) All India Federation of Tax Practitioners vs. UOI -[2007] 10 STT 166 (SC) (b) Laxmi Exports vs. CCE&ST - In Service Tax Appeal No. 10666/2014 vide Final Order No. A/11247-11251/2020 dated 22.09.2020. (c) Aquamarine Exports vs. CCE &ST in Appeal No. ST/12941/2014 vide order dated 07.02.2022. (d) Intas Pharmaceuticals Limited vs. CST - [2009] 22 STT 230 (CESTAT Ahmd.) (e) Orbit Research Associates Pvt. Limited vs. CST - CESTAT Ahmedabad. 3. Shri Rajesh R. Kurup, learned Superintendent (AR) appearing on behal....
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....rchase between the appellant and buyer of the goods, whatever value shown in the invoice is a sale value and the deduction shown is nothing but discount given by the exporter to the foreign buyer. As per the bank realization certificate of exporter, in appendix 22A (scanned above), the amount after deduction of 11%-12.5% which was shown in column 12. The heading of column is 'commission/ discount paid to foreign buyer, agent'. In the entire enquiry, the department has not brought any tip of evidence to show that there is a commission agent exists in this transaction and any amount of commission is paid to such person. Admittedly, in the entire transaction only two persons are involved, one the appellant as exporter of the goods and second the buyer of the goods. In the sale of goods, in case of service of commission agent, if involved, there has to be third person as service provider to facilitate and promote the sale of exporter to a different foreign buyer. In the present case, there is absolutely no evidence that this 11% is paid to some third person as commission. There is no contract of commission agent service with any of the commission agent, there is no person to whom payme....
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.... agent, seems to be erratic reading of the clauses of agreement and this itself does not amount DEL has been appointed as "commission agent". The amount indicated on the invoice and recorded in the accounts as commission, in our view, will not attract tax under reverse charge mechanism. We also find strong force in the contentions raised by learned Counsel that in order to tax this account as a commission, there has to be necessarily three parties, seller, purchaser and a person who negotiates such transaction. From the records it is very clear that DEL had not negotiated purchase or sale on behalf of appellant or their customers; to our mind the deduction/commission is nothing but trade discount. In view of the factual position as ascertained from the records, we hold that the impugned orders demanding service tax under reverse charge mechanism from appellant are unsustainable and liable to be set aside." In the matter of Hindustan Petroleum Corporation Limited - 2019 (24) GSTL 569 (Tri. Del.), identical issue was decided wherein the HPCL, under an agreement for sale to retail customer purchased CNG from Indraprasth Gas Limited, the HPCL received consideration. The Tribun....
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....e Revenue as against Business Auxiliary Service is related to export of goods, the same in any case will not be taxable. For this reason also no malafide can be attributed to the appellant. Hence longer period of demand shall not be invoked. In this regard, the judgment relied upon by the appellant in the case of J.P.P. Mills Pvt. Limited vs. CCE, Salem (supra) and Texyard International vs. CCE, Trichy (supra) support their case. Therefore, the demand for the extended period is not sustainable on limitation also. 10. As per our above discussion and findings, we are of the clear view that since no service exists, the entire demand would not stand. Accordingly, the impugned orders are set-aside and the appeals are allowed with consequential relief, if any, in accordance with law." (b) In the case of Aquamarine Exports in Appeal No. ST/12941/2014 this Tribunal held as under:- 4. On careful consideration of the submissions made by both sides and perusal of the records, we find that the revenue has confirmed demand of service tax on the commission which was shown as deduction in the export invoice. The revenue has treated this commission as a commission agains....
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....ervice of commission agent, if involved, there has to be third person as service provider to facilitate and promote the sale of exporter to a different foreign buyer. In the present case, there is absolutely no evidence that this 11% is paid to some third person as commission. There is no contract of commission agent service with any of the commission agent, there is no person to whom payment of commission was made therefore, it is clear that no service provider i.e. foreign commission agent exists in the present case and no service was provided by any person to the appellant. In the absence of any provision of service, no service tax can be demanded. The trade discount even though in the name of commission agent was given by the appellant to the foreign buyer, by any stretch of imagination cannot be considered as commission paid towards commission agent service, hence cannot be taxable. This issue has been considered time and again by this Tribunal. In the case of Duflon Industries Pvt. Limited v. CCE, Raigad (supra) and the Tribunal held as under : 6. The entire issue revolves around the fact whether clearances effected by appellant on goods which exported by them to DEL....
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....ding service tax under reverse charge mechanism from appellant are unsustainable and liable to be set aside." In the matter of Hindustan Petroleum Corporation Limited - 2019 (24) G.S.T.L. 569 (Tri. - Del.), identical issue was decided wherein the HPCL, under an agreement for sale to retail customer purchased CNG from Indraprasth Gas Limited, the HPCL received consideration. The Tribunal held that the said consideration is in the nature of discount as agreement between HPCL and IGL is not on principal to agent basis but on principal to principal basis therefore, HPCL is not liable to service tax under the head of Business Auxiliary Service. In the case of PrabhakarMarotraoThaokar& Sons v. CCE, Nagpur - 2019 (20) G.S.T.L. 294 (Tri. - Mumbai), the department raised demand on discount given by manufacturer to the appellant who is a wholesale dealer while supplying goods for further distribution. The department alleged that such discount is basically sales commission and liable to service tax under the category of Business Auxiliary Service under Section 65(105) of Finance Act, 1994. The Coordinate Bench at Mumbai held that the transaction between appellant and wholesale dealer....
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.... the appellants are not receiving any commission from M/s. MGL. Therefore, it cannot be presumed that appellants are rendering any service to MGL. Moreover, the case law relied upon by the counsel in the case of Bhagyanagar Gas Ltd. (supra) also supports the cases in hand, wherein this Tribunal held that mere mention in the agreement the trade margin as commission on which VAT/ST has been paid would not evidence the fact of rendering service. The contention of the Ld. AR that the private parties are paying Service Tax under the category of Business Auxiliary Service on the same activity, therefore, the appellants are required to pay Service Tax is not acceptable as in the case of private parties, the invoices on the customers were raised by M/s. MGL directly and the private parties are receiving commission and there is no transaction on principal to principal basis." 8. We further find that as per the agreement, relationship between the parties had been defined in Clause 14.2 of the agreement, which is reproduced as under :- "14.2 During the term of this agreement, IOCL shall not hold itself out as an agent of IGL. It is clearly understood that this agreement is o....
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....s clearly of sale. In the invoice the manufacturer has charged 20% VAT the transaction is clearly at arms length hence sale transaction on principal to principal basis. From the invoice, it is also observed that a trade discount was passed on by the manufacturer to the appellant. As per this undisputed fact once, the transaction is of sale there is no relationship of service provider and service recipient between the manufacturer and the buyer (the present appellant). Accordingly, the discount passed on by the manufacturer to the appellant cannot be construed as a commission and the same is not the subject matter of levy of service tax. It is further seen that the appellant also, after purchase of goods from the manufacturer further sold to various traders. A copy of the sale invoice issued by the appellant is scanned below : From the above invoice it can be seen that it is clearly a sale invoice under which the appellant also paid the VAT. This shows that the transaction from the manufacturer to the appellant and subsequent from appellant to the individual traders are clearly sale transactions. Hence no service is involved. As per the above facts, we are of the clear view....
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.... country of Dast Nat WE (KOS) :4379.500 :UNITED ARAB EMIRATES No. of Cers. : 1 Rotation No. : 29338 Mature of Cargo Rotation Date : C Marks and Nos .: BEBAD CON NOS. 7510 TO 7604 : 21/02/2011 PORKI BANK ACC:25950400000033 US! Kaiver No/Date: POR VALUE (IHR) 1 R2153886.25 ID. Code : 0202595 DEK (ENR) : 20.00 P Bank a/c No : I.P.s. Code : INVOICE DETAILS Invoice 1/1 Inv.val : 2168137.50 FOR VAI 48450.00 :2163886.25 THR Inv.no. :LE/XXP/129/2010-1 Inv DE Kat. of con :16/03/2011 $ RCF PCurr (1mv) : 180 Exp Contract No: Exchange rate : 1.00 (USD) - 44.750 (IHR) RALA Currency 0.00 Insurance 0.00 95.00 Freight: 0.00 0.00 5329.55 0.50 Other Deductions: 0.00 Packing Charges: Mature of payment :DA Period of Payment: 180' Buyer Nane & Address W/E. SINDIAN STAR GENERAL TRADING LL. C. MAIP ROAD. DRIRA P.O.BOX : 42659 ( Page 2 of 3 ) Document 2 159 INVOICE XMI EXPORTS RBI Code No. Invoice No & Date. LE/EXP/129/2010-11 Dt. 16.03.2011 IE Code No. 5205014059 42, 1ST FLOOR, ASHIRWAD IND.CO-OP. SOC. LTD. BHESTAN, ....
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....IX - 22 A BANK CERTIFICATE OF EXPORT AND REALISATION to The Joint Director General of Foreign Trade, 6TH Floor, Resham Bhavan, Lai Drawaja , SURAT.I/We M/s. Lexml Export 12. IST Floor, Ashirwad Ind. Co-Op Soc. Ltd. Bhestan, Surat-395 023. (Name and Address of the Exporters) hereby declare that we have forwarded a documentry Export bill to Bank of Baroda, International Business Branch, Surat (Name and Address of the Bank Le, Branch and City) for Collection/Negotiation/Purchase as per particulars given hereunder. TORM NO.1 ORIGINAL [1 ] Involve No. : LE/EXP/129/2010-11 . 3 | Export Promotion Copy of S/Bill duly autheticated by the Customs No. : [ 2 ] Invoice Date : [5] Description of goods as given in the Customs authenticated Shipping Bill : 16-03-11 9481723 [4]3/Bill Date : 17-03-11 DYED AND/OR PRINTED FABRICS MADE FROM 100% POLYESTER FILAMENT YARN/TEXTURISED YARN, WITH OR WITHOUT EMBROIDERY AND/OR WITH OR WITHOUT METALISED YARN. [ 6 ] Bill of Lading/Post Parcul Receipt/Airway Bill No .: GLSMUM11030582 [7]B/L. Date : 23-03-11 8 ] Destination of goods Country Name : DUBAI [9] [ 10] [ 11] [ 12] [ 13 ] [ 14 ] Bill Amount CIF/C&F/FOB i....
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....14 above with reference to following documents :- ( 1.) Bill of Lading /PP receipt/ Airway Bill. 630 21/6/1 Su ( ii.) Insurance Policy/Cover/Insurance Receipt . oyept where consignment has been o vent against confirmed irrevocable letter of credit or exporta made against the evegummicel indin/EXIM BankLine of Credit of Se exports made under Deferred Payment/Suppliers Line of Credit Contract backed by tiCOC Cover. An endorsement to that effect needs to be endorsed in BRC. 2 FOB actually realised and date of realization of export proceeds are to be so Applicable only in respect ofSURBANK OF BARODA 3. We have also verifled the date of Export is 4.Shumtoicertif dirifwe have certified the amount of the commission paid as declared shove by the exporter to the foreign buy ?? 5329.50 (in figure and words) with G.R. Forms and found to be correct). SEQuen MANAGER INTERNATIONAL BUSINESS BRANCH, SURAT (Signature of the Bankers) Full Address of the Bankers BANK OF BARODA. International Bussiness Branch, Opp. Gandhiamurti Bhavan Kanxnidhi Complex, Nanpura, Surat-395001 Owyjarat, lodia Note :++ 1. Bank can isque a consolidated certificate(consignmentwise) for more....