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2014 (8) TMI 821 - AT - Service TaxTrading activity or service activity - appellant had quoted in the tenders floated by Ministry of Chemicals & Fertilizers for receiving, bagging, standardization and distribution of imported urea - cargo handling services or Business Auxiliary Service - Held that:- It transpires that the entire issue is regarding Service Tax liability on the appellant as to the amount received by them from Govt. of India through MOCF for handling and distribution of imported urea - urea is imported by Govt. of India and is being distributed at subsidized price to the farmers in order to further the policy of Govt. of India and also to meet the provisions of Food Control Act and Essential Commodities Act read with the fertilizer policy of Govt. of India. It is not disputed that Govt. of India imports urea from Saudi Arabia. Govt. of India floats tender for unloading, bagging, standardization and distribution of this imported urea for which bid is made by various fertilizers marketing companies. It is also undisputed that the Bill of Lading of goods imported are endorsed in the name of the appellant herein and the appellant herein files Bill of Entry as an importer and discharges the Customs duty as is assessed. Undoubtedly the tender document indicates that Govt. of India is desirous of handling and distribution of imported bulk urea. Though, the wordings of the said tender indicate that Govt. of India wants to appoint a handling and distribution agent, we find that actually entire transaction is of sale and purchase of urea from the following documents. It is seen from the records available that the Govt. of India has imported 27,500 MTs of imported urea for which the appellant herein was required to open a letter of credit (LOC). In the case of ration shop, the authorized ration shops purchases the food grains from the Govt. of India and stores in his godown. Subsequently, the said food grains are distributed to various ration card holders at a price predetermined by the Government. The authorized ration shops pays in advance to the Govt. of India for the food grains which is allotted for public distribution system. The authorized ration shops also engaged in an similar activity Govt. of India which though not identical can be equated to the activity undertaken by this appellant. In our considered view, the said activity cannot be considered as services as the authorized ration shop owners purchases the food grain before distributing the same to the ration card holders. Though the tender documents indicates about the appointment of a handling agent, the invoices issued by Govt. of India for sale of imported prilled urea to the appellant and subsequent clearances made by the appellant to the consumers of fertilizers would also indicate that appointment of handling agent is misnomer, as entire transaction is of purchase and sale of imported urea. - Decided in favour of assessee.
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