TMI Blog2015 (5) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... or manufacturer on a profit, again discharging VAT liability on the sale price. We have perused both the purchase invoices and also the sale invoices in respect of these transactions and these documents clearly shows payment of VAT /sales tax. Thus, the profit earned is in respect of a trading transaction in respect of packing materials and raw materials and has nothing to do with the activity of sole selling agent. In fact, these two transactions could have been performed by two separate entities. Merely because one entity has performed both transactions, the distinct and different nature of the transactions does not get obliterated. Therefore, the profit earned in purchase/sale transactions cannot be subject to service tax in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for RBPSSKL for the country liquor manufactured by the latter. As per the agreement, the appellant receives incentives for sale of such liquor after crossing certain threshold limits @ ₹ 5 per box on which they have discharged service tax liability. The appellant is also procuring the raw materials for RBPSSKL on which VAT liability is discharged by them at the time of purchase of the raw materials and when it is subsequently sold to M/s. RBPSSKL. On account of trading transaction undertaken, the appellant earns some profit. The case of the department is that, on the trading profit made, the appellant is liable to discharge service tax liability which has been quantified at ₹ 8,26,701/-. It is their contention that the profit ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for charge of service tax on the gross amount charged for the services rendered in respect of a taxable service. It did not provide for charging of service tax on the gross profit involved in a sale and purchase transaction. In the present case, it is seen that the appellant is undertaking two functions - one as a sole selling agent promoting the sale of the country liquor manufactured for which he receives incentives @ ₹ 5/- per box on which service tax liability is discharged. The second transaction which the appellant undertakes is procuring raw materials and packing materials for the country liquor manufacturer on which he has discharged VAT liability; thereafter, he has sold these packing materials and raw materials to the coun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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