TaxTMI 
TaxTMI 
2025 (8) TMI 1224
X X X X Extracts X X X X
X X X X Extracts X X X X
....was observed that the appellant had paid export commission to foreign based commission agents for their export sale for the Financial Year 2010-11 to 2014-15. Department alleged that appellants have actually received Business Auxiliary Services (taxable service) from a foreign service provider but have failed to pay the service tax under RCM. 1.3 With these observations and denying the benefit of notifications claimed by the appellant i.e. Notification No. 14/2004ST dated 10.09.2004, Notification No. 18/2009-ST dated 07.07.2009 and Notification No. 42/2012 dated 29.06.2012, the department alleged that the appellants are liable to pay service tax on the value of commission amounting to Rs.15,06,19,987/- paid for the Year 2010-11 to 2014-15. Accordingly, Show Cause Notice Bearing No. 09/2016 dated 22.03.2016 proposing the recovery of service tax on the aforesaid amount, of Rs.1,78,33,526/- along with proportionate interest has been issued. Appropriate penalties under Section 76, 77 and 78 of the Finance Act, 1994 for alleged suppression of facts and contravention of various provisions of the said act were also proposed to be imposed upon the appellant. The said propos....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the exemption threshold provided by the said notification. Hence, the findings denying the benefit of Notification No. 42/2012-ST are liable to be set aside. 3.3 With respect to exemption benefit under Notification No. 14/2004 dated 10.09.2004, it is submitted that the notification exempts the specific category of Business Auxiliary Services when provided by a commercial concern to its clients if the services are provided in relation to agriculture, printing, textile processing or education. The services being received by the appellant from the foreign commission agents is admittedly Business Auxiliary Service and appellant admittedly is engaged in textile processing. Hence the benefit of exemption of the said Notification No. 14/2004 has wrongly been denied. Learned counsel has relied upon the following decisions. (i) Texyard International Vs. Commissioner of Central Excise, Trichy, 2015 (40) S.T.R. 322 (Tri.-Chennai) (ii) Jansons Industries Limited Vs. Commissioner of Central Excise, Salem, 2023 (10) TMI 433 - CESTAT Chennai (iii) Madras Security Printers Private Limited Vs. Commissioner of Service Tax, Chennai, 2023 (4) TMI 1195- CESTAT Chennai (iv) Aviram....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aced on the following decisions: (i) Commissioner of Central Excise Vs. Angadpal Indl. P. Ltd. reported as 2015 (325) ELT 228 (SC) (ii) Saroval Hotels Pvt Ltd. Vs. CST, Mumbai 2018 (10) GSTL 72 (Tri.-Mumbai) (iii) CST, Mumbai-II Vs. Reliance Communication Ltd. 2019 (22) GSTL 203 (Tri.-Mumbai) (iv) Jet Airways (I) Ltd. Vs. Commissioner of Service Tax, Mumbai 2016 (8) TMI 989 - CESTAT Mumbai 3.6 Finally it is submitted that no mala fide can be attributed in revenue neutral situation when services received from outside India and service tax payable on reverse charge basis is available as credit. Due to the same reason, the order imposing penalty is also not sustainable. The show cause notice should not have invoked the extended period of limitation. With these submissions, the order under challenge is prayed to be set aside and appeal is prayed to be allowed. 4. While rebutting these submissions learned Departmental Representative appearing for the department, at the outset has reiterated the findings of the orders passed by departmental adjudicating authorities. It is submitted that benefit of three of the notifications (Notification No. 14/2004-ST, 18/2009-S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ile denying the appellants liability under Reverse Charge Mechanism, the appellant has claimed exemption arising out of three separate notifications. Hence to adjudicate the aforesaid question, we foremost need to peruse the respective notifications. Notification No. 14/2004-ST dated 10.09.2004 reads as follows: In exercise of the powers conferred by sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable service provided to a client by any other person in relation to the business auxiliary service, insofar as it relates to,- (a) xxxxxxxxxxxx (b) xxxxxxxxxxxx (c) xxxxxxxxxxxx (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: 5.3 The bare perusal of this notification makes it clear that the exemption is made available to the person providing Business Auxiliary Service when provided in relation to agricult....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him. (1) The exporter shall declare the amount of commission paid or Payable to the commission agent in the shipping bill or bill of export, as the case may be. (2) The exemption shall be limited to one per cent of the free on board value of export goods for which the said service has been used. (3) The exemption shall not be available on the export of canalised item, project export, or export financed under lines of credit extended by Government of India or EXIM Bank, or export made by Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary. (4) The exporter shall submit with the half yearly return after certification of the same as specified in clause (g) of the proviso- (i) the original documents showing actual payment of commission to the commission agent; and (ii) a copy of the agreement or contract entered into between the commission agent located outside India and the exporter in relation to sale of export goods, outside India: Provided ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the said one per cent shall be paid within the period specified under rule 6 of the Service Tax Rules, 1994; 5.5 The bare perusal reveals that the taxable service provided by a commission agent located outside India and received by an exporter of goods for being used in export of goods though are exempted from service tax but subject to the conditions as mentioned above. One of the such condition is that the exemption limit shall be limited to 1% of the free on board value (FOB) of export goods for which the said service has been used. The bare perusal makes it abundantly clear that exemption to the extent of 1% of so stated value only was available to the appellant. There is no denial on part of the appellant that the commission paid was in the range of 1% to 4%. This particular perusal is sufficient to hold that the condition of this notification has not been fully complied with by the appellant. The situation where the amount of service tax exceeds 1% of FOB value of export is well covered under sub clause (g) of the said notification as mentioned above. This notification was applicable up to 30.06.2012. For the subsequent period the notification is: Notification No. 42....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o,- (i) informs the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the factory or the regional office or the head office, as the case may be, in Form EXP3 appended to this notification, before availing the said exemption; (ii) is registered with an export promotion council sponsored by the Ministry of Commerce or the Ministry of Textiles, as the case may be; (iii) is a holder of Import-Export Code Number; (iv) is registered under section 69 of the said Act; (v) is liable to pay service tax under sub-section (2) of section 68 of said Act, read with item (G) of sub-clause (i) of clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules,1994, for the specified service; (b) the invoice, bill or challan, or any other document by whatever name called issued by the service provider to the exporter, on which the exporter intends to avail exemption, shall be issued in the name of the exporter. (c) the exporter availing the exemption shall file the return in Form EXP4, every six months of the financial year, within fifteen days of the complet....
X X X X Extracts X X X X
X X X X Extracts X X X X
....visions pre and post amendment has been extracted below for ready reference: Definition post 01.10.2014 (f) intermediary means a broker, and agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the main service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account; The Old Definition was as under: (f) "intermediary means a broker, an agent or any other person, by whatever name called; who, arranges or facilitates a 32 provision of a service (hereinafter called the 'main' service) between two or more person, but does not include a person who provides the main service on his account; We also observe that the place of provision of intermediary services is determined under Rule 9 of the POPS Rules, as below: Rule 9. Place of provision of specified services. - The place of provision of following services shall be the location of the service provider:- (a) Services provided by a banking company, or a financial institution, or a non-banking financial company, to account holders; (b) Online information....