Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2024 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (5) TMI 564 - CESTAT NEW DELHINature of activity - sale or service - Business Auxiliary Service or not - appellant is engaged in promotion, marketing and sale of goods belonging to CIL or the transaction between the appellant and CIL is one of sale/purchase? - HELD THAT:- In BHARAT PETROLEUM CORPN. LTD AND HINDUSTAN PETROLEUM CORPN. LTD VERSUS COMMISSIONER OF SERVICE TAX [2014 (7) TMI 159 - CESTAT MUMBAI], the Tribunal considered the issue in identical situation where the BPCL and HPCL being public sector undertaking were engaged in marketing of petroleum products. They purchased the compressed natural gas (CNG) from Mahanagar Gas Limited and sold the same to their dealers. The revenue took the view that services rendered by the appellant to MGL are in relation to marketing of the goods of MGL and, therefore, constitutes service under BAS. In similar situation in CCE, MUMBAI-V VERSUS MAHANAGAR GAS LTD. [2018 (6) TMI 1297 - SC ORDER], the controversy related to was that CNG purchased by oil marketing companies (OMCs) from MGL is a transaction of sale/purchase and not for providing of any service by OMS to MGL. Considering the various clauses of the agreement, it was held that those are not agency agreements but are for sale purchase of CNG on principal-to-principal basis for which MGL paid VAT on sale of CNG and OMCs also paid VAT on re-sale of CNG. Under sub clause (i) of section 65(19) promotion, marketing or selling the goods of the client is taxable as business auxiliary service, only if the service provider is acting as an agent of the client, however, the appellant is not acting as an agent of the coal companies but is purchasing coal from the coal companies for reselling further to the coal consumers - the relationship of the appellant with the coal companies was on principle to principal basis and there was no element of service which could be taxed under the category of business auxiliary service. Fixed remuneration of 5% on the base price of coal charged by the appellant from the coal companies as service charge and the limitation that the appellant cannot charge any price higher than 105% of the base coal price - HELD THAT:- As can be seen from the Coal Policy the appellant is selling coal at such price whereby he is getting a profit margin of 5% on the base price. The resale price has been fixed by an agreement between the parties. Whatever is charged by the coal companies for coal, the appellant is adding 5% margin money and collecting the sale price from the consumers and is paying the sales tax on the entire amount received from the end consumers, therefore the revenue cannot charge any service tax. Having decided the issue that the transaction is one of sale/purchase on principal-to-principal basis and the coal companies as well as the appellant is discharging the liability of sales tax/VAT, there is no element of service involved, the appellant cannot be saddled with the liabltity of service tax, it is not necessary to go into the other issues as they do not survive. The impugned order, therefore, deserves to be set aside - Appeal allowed.
|