TaxTMI 
TaxTMI 
2025 (9) TMI 400
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.... (ii) I confirm the demand of Interest on the Service Tax liability of Rs.88,70,256/- (Rupees Eighty Eight Lacs Seventy thousand Two Hundred Fifty Six only) under the provisions of Section 75 of the Finance Act, 1994. (iii) I also Impose a penalty amounting to Rs.88,70,256/- (Rupees Eighty Eight Lacs Seventy thousand Two Hundred Fifty Six only) under Section 78 of the Finance Act, 1994 upon the party. (iv) I also impose a penalty of Rs. 10,000/- under the provisions of Section 77 of the Finance Act, 1994." 2.1 The Appellant is having Service Tax Registration for services falling under the category of GTA & Business Support Services provided to their customers as defined in Section 65 (105) (zzp) and Section 65 (105) (zzzq) of the Finance Act, 1994. 2.2 During the course of audit it was observed that Appellant had provided commission to foreign party during the period from 2009-10 to 2012-13. On inquiry and investigation it was observed that services provided by the foreign companies to the Appellant were covered under the category of 'Business Auxiliary Services' and Appellant was required to pay service tax in respect of these services received on reverse c....
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.... Section 65(19) of the Finance Act, 1994. Not only the Show Cause Notice but even the order of the Lower Authority does not point to a specific sub-clause. It is a settled law that for making a demand under this category specific clause is to be pointed out. Reliance is placed on following case laws:- • United Telecom Ltd., 2011 (22) STR 571 (Tri-Bang); • Hindalco Industries Ltd., 2009 (248) ELT 391 (Tri-Del); • Balaji Enterprises [2019 SCC OnLine CESTAT 6251]; • Syniverse Mobile Solutions Pvt Ltd. [2023 (6) TMI 463 - CESTAT HYDERABAD]. • National Organic & Chemical Industries Limited [1999 (113) ELT 912 (Tri-Del)] • CMA CGM Global (India) Private Limited [2016 (41) STR 292 (Tri-Mum)] • The services provided by the Appellant Company to the Appellant were in nature of transportation and distribution of the printed books supplied by them under a contract with the Government of Ethiopia. This service work could not have been classified under the category of 'Business Auxiliary Service' as the foreign company did not act as a commission agent for the sale of goods for services provided by them. R....
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.... • Reliance Industries Ltd. in Civil Appeal No. 6033 of 2009 & 5714 of 2011 -Supreme Court dated 04.07.2023. • Cosmic Dye Chemical [1995 (75) ELT 721 (SC)] • HMM Limited [1995 (76) ELT 497 (SC)] • Chemicals & Fibres of India Limited [1988 (33) ELT 551(Tri-Del)] • Ispat Industries Limited [2006 (199) ELT 509 (Tri-Mum)] • NIRC Limited [2007 (209) ELT 22 (Tri-Del)] 3.3 Authorized Representative reiterates the finding recorded in the impugned order. 4.1 We have considered the impugned order alongwith the submissions made in the appeal and during the course of argument. 4.2 The impugned order records as follows:- "5........................The core issue to be decided before me is whether the appellant is liable to pay service tax of Rs. 88,70,256/- during the impugned period under the proviso to section 73(1) of the Finance Act, 1994 on the alleged service category "Business Auxilliary Service", 5.1 From the facts of the case, I observe that the appellant was engaged in the business of manufacturing/printing books and registered for "Business Support Services" and "Goods Transport Agency Services"....
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....-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent. but does not include any activity that amounts to manufacture of excisable goods. Explanation. For the removal of doubts, it is hereby declared that for the purposes of this clause, (a) "commission agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person- (i) deals with goods or services or documents of title to such goods or services, or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services: In view of the above definition and the nature of services ren....
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.... place of provision shall be the location of the provider of service. In the light of the above discussion, in the instant case, it gets established that the appellant is the service receiver and location of the service receiver is well within the taxable territory of India by way of its place of business fixed establishment and permanent address. Hence appellant is liable to pay the service tax during the impugned period. 5.4 The appellant further argued that the issuance of SCN was improper, for being merely based on internal audit report as no further investigation was carried out so as to first see the veracity of the audit observations and then to make out a prima-facie case against the appellant. I find that the plea taken by the appellant is not sustainable on the ground when the audit of records is conducted by the audit team in the premises of any unit, necessary investigation is automatically involved on the basis of which the audited unit either pays/debits the disputed amount or disagrees with the audit for which necessary proceedings to recover the government dues, are carried out and SCNs are issued. Moreover, Audit is the investigative wing of the d....
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....entered into an agreement/contract with the Federal Democratic Republic of Ethiopia for supply of printed books. In term of this contract, Appellant was required to provide and deliver printed books at the location specified by the Government of Ethiopia in number and quantity specified. For the purpose of executing the above Appellant hired services of a foreign company for the clearance of the goods from the Port at Ethiopia and thereafter delivere them to the specified locations by the Government of Ethiopia. From the above it is quite evident that the foreign company was not engaged in the activity of purchase or sale of any goods or services provided by the Appellant in foreign territory. The payments made by the Appellant though indicated in their books of accounts to be commission paid to the foreign company was for the purpose of clearance of the goods from the Customs Port in Ethiopia and thereafter transporting them to the desired location. In our view the appellant had outsourced certain activities in relation to the agreement entered by them with the Government of Ethopia, and were making payment to the said foreign company in respect of these out-sourced activities. Th....
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.....07.2012. 4.6 We also observe that neither the Show Cause Notice nor any of the orders of the Lower Authorities specify the specific the sub-clause of Sub-Section 65 (19) of the Finance Act, 1994 for making demand under the category of 'Business Auxiliary Services'. 4.7 In view of the various decisions referred by the Appellant at the time of the hearing, we observe that without specifying the specific sub-clause classification of services under the category of 'Business Auxiliary Service' cannot be justified. 4.8 In the case of CMA CGM Global (India) Pvt. Ltd. [2016 (41) S.T.R. 292 (Tri.-Mumbai)] following has been held:- "5. We have carefully considered the submissions of both sides. We note that the show cause notice in the present case does not refer to any specific clause of the BAS Service which is reproduced below as it stood for the period upto 15-6-2005 - "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 provide....
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.... that a person may be a consignment agent as well as a commission agent. Such a person would already be covered in the category of Clearing and Forwarding agent and would be liable to pay service tax in that category." 4.10 In the case of Kulcip Medicines [2009 (14) S.T.R. 608 (P&H)] following has been observed:- "10. A perusal of the aforesaid Section shows that taxable service has been defined to mean any service provided or to be provided to a client by a 'clearing and forwarding agent in relation to clearing and forwarding operations in any manner'. If the clearing operation are separated from forwarding operations, the levy of tax would not be attracted if it only involves one of the two activities. 11. The question which falls for consideration is whether word 'and' used after the word 'clearing' but before the word 'forwarding' at two places in clause (j) be considered in a conjunctive sense or dis-injunctive sense. It appears to be fairly well settled that the context and intention of legislature are the guiding principles. In that regard reliance may be placed on the judgment of Hon'ble the Supreme Court in the case of Mazagaon Dock Ltd. v. CIT (1958) ....
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....ble territory in respect of the goods already delivered at the port in Ethiopia, the demand of service tax on reverse charge basis treating them to be import of services cannot be upheld. These services being performance based services as per the Rule 4 of Place of Provisions of Services Rules, 2012 are treated to be performed at the location where they are actually performed. Rule 4 is reproduced as under:- "RULE 4. Place of provision of performance based services. - The place of provision of following services shall be the location where the services are actually performed, namely:- (a) Services provided in respect of goods that are required to be made physically available by the recipient of service to the provider of service, or to a person acting on behalf of the provider of service, in order to provide the service: Provided that when such services are provided from a remote location by way of electronic means the place of provision shall be the location where goods are situated at the time of provision of service: Provided further that this clause shall not apply in the case of a service provided in respect of goods that are temporarily imp....
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....020 (33) G.S.T.L. 97 (Tri. - Del.) (supra) support their case. The said decisions are squarely applicable to the facts of the present case. 15. We find that department alleged that appellant are receiving the services of 'Commission Agent' from subsidiary Company. Whereas as per the appellant subsidiary company is acting as consignment cum clearing and forwarding agent. However there is difference between the terms 'consignment agent' and 'commission agent'. This distinction is also clarified in Board Circular No. 59/8/2003-ST dated 20-6-2003. The relevant portion is reproduced as below: "It may be appreciated that the nature of service provided by a Consignment agent is different than that provided by a commission agent. A consignment agent's job is to receive the goods from the principal and dispatch them on the directions of the principal, whereas a commission agent's job is to cause sale/purchase on behalf of another person. Thus, the essential difference is that a commission agent sells or purchases on behalf of the principal while consignment agent receives and dispatches the goods on behalf of a principal. It is possible that....