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TMI Blog2012 (7) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... sonnel of requisite qualification and experience for the effective implementation and discharge of various obligations; (iii) to implement action plant as communicated by M/s SBL; (iv) to bear expenses necessary in effective implementation of M/s SBL's activities (v) to promote the IMFL/Beer Products manufactured by M/s SBL (vi) to monitor and report competitor's activities; (vii) to collect and send transport permits as per instructions of M/s SBL (viii) to collect and deposit payments from the Chhattisgarh State Beverages Corporation Ltd (CSBCL); (ix) to collect and send 'C' forms and excise verification certificates; (x) to provide infrastructure facilities to the staff of M/s SBL; (xi) to formulate and implement sales promotion scheme; (xii) to submit periodic sales report to M/s SBL; (xiii) to facilitate inter depot transfer and distribution of the concerned products. (xiv) To liaison with Government agencies regulating the liquor trade, Bars, Club, etc. 3. M/s Raj Wines, Raipur was providing these services to M/s SBL "since July, 2003. 4. The details of amounts received as service charges under various heads received from the aforesaid principal during the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by them. 5.3 Merchandiser Expenses - The Respondents have employed person(s) to attend to work relating to the marketing and promotion of various brands of liquor in the State of Chhattisgarh. The salary and other expenses are paid to the said person(s) by them and subsequently they claim the said amount from the manufacturer; that in this whole transaction, they receive no profit. 5.4 Fixed office/Other expenses - They are meeting various expenses such as paying loading and unloading charges, freight on behalf of the company, misc. promotion expense etc. on behalf of the manufacturer; that these actual expense are claimed by them and are reimbursed by the manufacturer; that in this whole transaction, they receive no profit; that sometimes, liquor is required to be transported from CSBC, Bilaspur and they on behalf of the company arrange the transportation, pay to the transporter and then later on claim the said amount from the company. 6. Raj Wines was not registered with Service Tax authorities and they were not paying any service tax. However they paid tax on commission income received for the period 09-07-2004 to 31-08-2006 as calculated by them amounting to Rs. 5,46,945/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 (32 of 1994), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts the business auxiliary services provided by a commission agent from the service tax leviable thereon under sub-section (2) of section 66 of the said Act. Explanation - for the purpose of this notification, 'commission agent' means a person who causes sale of purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase." 11. It is seen from letters dated 6.9.03, 22.5.03, 1.4.2004, 31.8.04 and 1.4.05 as discussed in para 4 of the impugned order that payments made by M/s SBL to the respondent was not merely based on the volume of sales. For example, the remuneration payable on the basis of letter dated 6.9.03, was as under:- "Subject: Letter of intent for sales promoter - Chattisgarh 2003-04 Further to your meetings with T.J. Venkateshwaran & subsequently with me during my visit to Raipur on 21st August 2003, we are pleased to inform that you are continuing as our Sales Promoter agent for the state of Chattisgarh during the financial year 2003-04. We are detailing below the major terms and conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of this letter is signed and returned to us at your earliest convenience. Looking forward to a long lasting association with you." 12. Some of these conditions got modified by later letters. But even under letter dated 31.8.2004, the reimbursements of expenses of the staff employed by the respondents were being given. Such a type of arrangement is clearly not covered by the definition of commission agent in Notification No.12/2003-ST. So this issue is answered in favour of the Revenue. 13. The next issue to be decided is whether expenses reimbursed are to be part of the gross value of services received. In the case of money received on account of the arrangements as stated in para 5.1, it is very clear that the amount payable is towards discounts given to the customer, as a part of the business model. This money cannot form part of the gross value of services rendered. However, expenses reimbursed as per arrangements stated in para 5.3 and para 5.4 are of a type which forms integral part of the value of service rendered. Without employing manpower the respondents could not have provided the service in question. The case laws on "reimbursable expenses" developed around expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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