TMI Blog2010 (10) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... hen specific entry was introduced - Held that: the activities rendered by the appellant would be covered only under the category of ‘business support services’ and that also with effect from 1-5-2006 when specific entry was brought into taxable services under section 65(104c) of the Finance Act, 1994 and prior to 1-5-2006, the services rendered by the appellant would not fall under the category of ‘business auxiliary services’ -The impugned order is not sustainable and liable to be set aside - The appeal is allowed with consequential relief. - 228 OF 2008 - 1300 OF 2010 - Dated:- 20-10-2010 - M.V. RAVINDRAN, P. KARTHIKEYAN, JJ. ORDER M. V. Ravindran, Judicial Member - This appeal is directed against the Order-in-Original No. 6/2008 dated 28-3-2008, passed by the Commissioner of Central Excise, Mangalore. 2. The relevant facts that arises for consideration are that M/s. Tata Motors Ltd. are engaged in the business of manufacturing and selling of commercial and passenger vehicles and chassis thereof from their works at Pune and Jamshedpur. They have their Regional Sales Offices situated all over India for the purpose of selling the vehicles and chassis. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits that the adjudicating authority has erred in understanding the nature and category of services rendered by the appellant. He submits that in fact, the services rendered by the appellant would fall under the Goods Transport Agency Services . It is the submission that the adjudicating authority has held that the appellant s activity would fall under the category of business auxiliary services , as it is directly or indirectly promoting the sale of the goods. It is the submission that the activity of the appellant is covered by the agreement entered with Tata Motors which is for Vehicles Transportation Contract . He submits that the said agreement does not discuss anything about the services to be rendered by the appellant in promotion or marketing or sale of the vehicles. It is the submission that the services rendered by the appellant would be correctly classifiable under business support service which came into service tax net with effect from 1-5-2006. It is the submission that the definition of business support service would clearly indicates that the services rendered by the appellant fall under the category of managing distribution and logistics . It is his submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces , provided they were themselves managing distribution and logistics of the motor vehicles, obviously, that is not the case here. It is the submission that the contract entered by the appellant with Tata Motors clearly prohibits them from employing sub-contractors, hence they cannot be managing the distribution and logistics. It is the submission that the provisions of section 65(19) of Finance Act, business auxiliary service and more specifically sub-clause (a) means any service in relation to promotion or marketing or sale of goods. It is the submission that the marketing generally means the performance of all business activities involved in the flow of goods and services from the point of production until they are in the hands of the ultimate consumer . It is the submission that the appellants were delivering goods from place of manufacture to the place of sale, as it is clear from the Vehicle Transportation Agreement and hence the services rendered by the appellant are squarely within the purview of business auxiliary services . It is the submission that the appellant cannot claim ignorance of law for not registering and paying tax under the category of business auxiliary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract and failure of which invite a penalty of Rs. 200 per vehicle per day. The agreement also fixed consideration to be paid by TATA Motors. The charges are fixed by TATA Motors which covers (i) fixed rate per kilometer (ii) return fare for driver (iii) Toll, Octroi paid etc. on actuals (iv) lubricating oil filled in exigencies at actuals. The entire tenor of the contract seems to be transportation of vehicles from factory premises of TATA Motors to their regional sales offices situated all over India. 9. In order to come to a conclusion as to whether services rendered by the appellants would fall under the category of business auxiliary services , the definition of business auxiliary services needs to be considered. The definition of business auxiliary services as on 1-7-2003 was 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 provided on behalf of the client; or (iv) any incidental or auxiliary support service such as billing, collectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (i) promotion or marketing or sale of goods produced or provided by or belonging to the client has not been changed even after the amendment/insertion in section 65(19). Auxiliary means a supplementary activity. It is the thrust of the show-cause notice that the activities carried out by the assessee are services rendered in relation to the sale of goods, i.e., by transporting the vehicles and chassis belonging to him to their client, M/s. Tata Motors Ltd. from their factory to their regional sales office situated all over India for the purpose of sale. In this connection, it would relevant to examine the chassis transportation contract entered into by the assessee with M/s. Tata Engineering and Locomotive Co. Ltd. It is seen from the contract that M/s. Canara Motors are required to transport vehicles manufactured by M/s. Tata Motors Ltd. from their place of manufacture to their (M/s. Tata Motors Ltd.) regional sales office. ... It can be seen from the above reproduced portion of the findings of the adjudicating authority that the entire findings are based upon the clauses in the Vehicle Transportation Contract . To our mind, the nexus between transportation of the vehicles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices and other transaction processing. Explanation. For the purposes of this clause, the expression infrastructural support services includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security; It can be seen from the above reproduced definition of support services of business or commerce , it includes a particular activity managing distribution and logistics . The activity undertaken by the appellant, in our considered view, may fall under the category of managing distribution and logistics i.e., timely and safe delivery of the vehicles to the regional sales office from the factory premises, which is nothing but distribution of finished goods to the various places of the client. The logistics is transportation of the said goods from the factory to the regional sales office. It is also seen from the records, the adjudicating authority has not accepted the contentions raised by the assessee only on the ground that none of the activity of Business support is applicable. To our mind, the definition of the service of managing distributi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the law in force at the material time. Hence we hold that the demand of duty and the imposition of penalty under the impugned order are not sustainable. Hence, we set aside the impugned order and allow the appeal. It can be seen from the above reproduced ratios, the gas and oil were transported through pipeline in the respective cases and it was brought into tax net with effect from 16-6-2005. Revenue sought tax prior to that date and that was negatived by the Bench. The ratio of the above two decisions squarely covers the issue before us. In yet another case, the Hon ble High Court of Punjab and Haryana in the case of Dr. Lal Path Lab (P.) Ltd. (supra) held that there was no doubt that merely because any incidental service was rendered by the assessee like putting across or dropping of the name of the principal company, it would not become part of the definition of business auxiliary service within the meaning of section 65(19)(ii). Coming to such a conclusion, the Hon ble High Court upheld the order of the Tribunal holding that prior to that date, the activities rendered by the assessee would not be covered under the category of business auxiliary services when spe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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