9911796707
TMI Blog2009 (4) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... ss also; that on the above ground, the Demand Notice dated 17-4-2007 was issued for contravention of Sections 69, 66, 68, and 67 of the Finance Act, 1994 (hereinafter referred to as the Act), inasmuch as the appellant failed to get registration under the category of "Business Auxiliary Service", failed to determine, assess and pay service tax during the said period and failed to file prescribed return; that accordingly, the appellant was asked to show cause as to why the service tax amounting to Rs. 6,01,478/- should not be demanded under Section 73 read with Section 68, penalty should not be imposed under Sections 76, 78 and 77 of the Act and interest, should not be recovered under Section 75 of the Act; that on adjudication, the adjudicating authority confirmed the duty along with interest raised in the SCN and imposed equal penalty under Section 78, penalty of Rs. 100/- per day payable from the due date till the date of payment under Section 76, and further imposed penalty of Rs. 1,000/- under Section 77 holding that the contention of the appellant that they received only 'compensation' and not as 'commission' is not acceptable inasmuch as nowhere it is mentioned in the agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en place directly between M/s. Copeland, USA and the Indian customers; (e) that in view of the Apex Court decision reported in 1979 (116) ITR-1 that substance of the transaction would prevail over the form and that nomenclature of a transaction is not determinative of the nature of a transaction. Since the appellant has not played any role in direct sales transactions of M/s. Copeland, USA, the amount received cannot be treated as commission; (f) that no evidence has been adduced by the Joint Commissioner to prove that the said amount is received for 'after-sale services' to be provided by the appellant to the Indian customers; (g) that they are not at all providing any after-sale service in respect of the goods which were sold directly by M/s. Copeland, USA; (h) that in the appellant's own case covering the earlier period, the OIO No. STR/STC/80/2007, dated 26-10-2007 confirming the duty of Rs. 3,44,460/- has been set aside by the Commissioner (Appeals) vide his OIA No. PII/PAP/131/2008, dated 22-7-2008 holding that the amount received by the appellant from M/s. Copeland, USA for the financial year 2004-05, though is described as commission, still is not the commission receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he records of PH carefully. After waiving pre-deposit, I proceed to take the main petition itself for decision. The appellant was received with a Demand Notice alleging that the appellant failed to take registration and pay service tax on the amount received from M/s. Copeland, USA towards the direct sale to Indian customers by M/s. Copeland, USA. In other words, there is no dispute regarding the fact that the appellant received Rs. 58,96,835/- representing 3% commission during April, 2005 to March, 2006 for the goods directly sold to the Indian customers by M/s. Copeland, USA. From records, it reveals that the appellant entered into an agreement on 8-4-1996 with M/s. Copeland, USA to purchase the goods of M/s. Copeland, USA and sell the same in India and earn commission on a fixed percentage. From the records further it reveals that in addition to earning commission for selling the goods of M/s. Copeland, USA in India, the appellant also received the above 3% commission, which is allegedly paid by M/s. Copeland, USA for the goods directly, sold to the Indian customers. The Demand Notice alleges that the appellant failed to register and failed to pay service tax on the amount of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s such as, installation, commissioning etc. and thus, he has concluded that the appellant has received commission only for promoting sales and also for carrying out after-sale service activities on the goods directly sold by M/s. Copeland, USA. Whereas, the appellant claims that they have not played any role in direct sales effected by M/s. Copeland, USA to the Indian customers and also has not undertaken any after-sale service activities; that the word used as 'commission' for receiving the commission should not be a conclusive proof and only the nature of transaction should determine the activities of the appellant to bring under service tax net. In view of contradictory stand, it is imperative on my part to see the definition available for 'commission agent' given under 'Business Auxiliary Service' during the material period. The period involved in this case is from April, 2005 to March, 2006. 4.2 The definition for 'Business Auxiliary Service' given under Section 65(19) effective from 16-6-2005 and as amended in 2006, is reproduced as under : "business auxiliary service' means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r supervision. To bring the 'commission agent' under Business Auxiliary services, the commission agent should deal with goods or services or documents of title to such goods or services or collects payment of sale price of such goods or services; or guarantees for collection or payment for such goods or services; or undertakes any activities relating to such sale or purchase of such goods or services [(i) to (iv) of explanation for 'commissioner agent']. 4.4 In the instant case, it has come on record that the appellant did not deal with the goods or services. Besides, nothing was brought on record the appellant has undertaken 'after sale services' pertain to the goods sold by M/s. Copeland, USA to Indian customers. In view of the above, the commission received by the appellant as compensation on account of direct sales to Indian customers by M/s. Copeland, USA cannot be brought under Business Auxiliary service. The findings of the lower adjudicating authority are based on assumption as could be seen from the findings i.e. "Had the assessee not entered into this agreement, they would not have received the commission." This ultimately proves that the commission is received for sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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