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2015 (5) TMI 66 - CESTAT MUMBAI

2015 (5) TMI 66 - CESTAT MUMBAI - 2015 (39) S.T.R. 475 (Tri. - Mumbai) - Demand of service tax - amount received towards cost of the packing materials - Business Auxiliary Service - Held that:- 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 a .....

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on 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 of a service rendered as a sole selling agent for the good .....

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d by the Commissioner of Central Excise (Appeals), Pune-II. 2. Vide the impugned order, the learned lower appellate authority has upheld the confirmation of service tax demand on the amount received towards cost of the packing materials as consideration for the services rendered by the appellant M/s. Rama Marketing, Kolhapur to M/s. Rajarambapu Patil Sahakari Sakhar Karkhana Ltd. (RBPSSKL), to whom they are providing the services as a sole selling agent and on the incentive received discharged s .....

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pellant 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 pro .....

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nd other raw materials which indicate payment of VAT on these transactions. Accordingly, it is pleaded that the impugned demands be set aside. 4. The learned Assistant Commissioner (AR) appearing for the Revenue, on the other hand, would submit that as per the agreement entered into between the appellant and RBPSSKL, the appellant was required to procure raw materials and submit the same to the latter and the difference in the procurement and sale price is a consideration for the services render .....

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the services rendered. This charge is quite absurd, Section 66 read with Section 67 of the Finance Act, 1994, as they stood at the relevant time, provided 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 .....

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