Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2014 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (12) TMI 241 - AT - Service TaxBusiness Auxiliary Services - nature of subsequent sale - Benefit of section 6(2) of CST Act - Whether the appellant is liable to be taxed under the category of Business Auxiliary Services or not for the transactions of purchasing final goods manufactured by the subsidiary company and delivered directly to their purchaser in Jharkhand - Held that:- Appellant is a manufacturer; that due to production constraints, order placed by ACC Jharkhand for supply of manufactured goods by the appellant was procured by them from their subsidiary company WSL in Karnataka; appellant placed a purchase order in the name of WSL for the finished goods to be delivered directly to ACC Jharkhand; purchase order also indicated discharge of Central Excise duty as also CST @ 4% and the goods should be delivered directly to ACC Jharkhand. WSL delivered the goods to ACC Jharkhand and raised the commercial invoices to the appellant and duty paying documents indicated appellant s name as buyer. The bone of contention between the dept and the appellant is an amount which has been offered as discount to the appellant by WSL on the transactions of sale of Grinding Media to ACC Jharkhand. ACC has issued the C-Form in the name of the appellant for the self same transactions entered by appellant with WSL. Holistically, reading of the three documents which were statutory forms required to be filed by the appellant to the state government authorities i.e., Sales Tax/VAT authorities, we find that the appellant has recorded the transactions between them and WSL as a purchase transaction and transaction between them and ACC as sales transaction for the goods delivered by WSL to ACC directly from Karnataka to Jharkhand. The entire transactions as reproduced by us herein above indicates that the said transactions is nothing but an activity of purchase and sale of the goods. Adjudicating Authority has not correctly appreciated the positions of Section 6 of the CST Act in as much as, on perusal of said section, we note it provides interstate sales transactions effected by transfer of documents of title to such goods during the movement from one state to another. In the case in hand, the goods moved from Karnataka to Jharkhand the transfer of documents took place during such movement is not in dispute. Adjudicating Authority has illustrated the transactions in Paragraph No 41 of the OIO. On perusal of such illustrative documents, we find that the WSL has raised the Excise duty paying invoice on which they have indicated discharge of CST @ 3% and invoiced the same to the appellant herein. The appellant herein has in turn invoiced the entire amount with CST to ACC and submitted C-Forms given by ACC to the VAT authorities. The VAT authorities have not disputed these transactions and has accepted that this is an interstate sales transactions though there was no movement of goods from Karnataka to Gujarat and Gujarat to Jharkhand. Activity of the appellant cannot be considered as a Business Auxiliary Services and liable for Service tax under the Finance Act, 1994. Apex Court in the case of State of Tamil Nadu vs Dharangadhara Trading Co Ltd (1988 (5) TMI 352 - Supreme Court of India) has held that benefit of section 6(2) of CST Act cannot be denied for subsequent sale made to predetermined buyer, is the ratio that will be applicable. - Decided in favour of assessee.
|