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TRADING OF GOODS IS NOT A TAXABLE SERVICE

Service Tax - By: - Dr. Sanjiv Agarwal - Dated:- 17-10-2015 Last Replied Date:- 1-12-2015 - Trading of Goods , it being a sale and not a service. Conceptually, if a transaction is a sale, it is not a service and vice versa. The above entry in negative list refers to the activity of trading of goods. Thus the check has to be two-fold - (l) the activity should be of trading and (2) trading should be of goods. Meaning of Trade / Trading Trade is the transfer of ownership of goods and services from .....

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er professional business users, or to other wholesalers and related subordinated services. According to Encarta English (North America) Dictionary, trading means buying & selling the activity of buying and selling, or sometimes bartering, goods. According to Webster s New World Dictionary & Thesaurus, trading means buying & selling of commodities or bartering of goods, commerce. Trading is not defined either in Central Excise Act, 1944 or the Finance Act, 1994. In common parlance, ac .....

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or the goods purchased. Meaning of Goods Goods as defined under clause (25) of Section 65B of the Act means as follows - goods means every kind of movable property other than actionable claim and money; and includes securities, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. ln essence, trading of goods has been brought within the scope of Negative List of services due to following two reasons: Ser .....

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ority of law to levy tax on a subject which is included in List II of Seventh Schedule of the Constitution of India. However, Tribunal has held that trading of goods cannot be considered as a service or an exempted service in relation to issues involving Cenvat credit on input services. In Orion Appliances Ltd. v. CST, Ahmedabad (2010) 5 TMI 85 (Cestat, Ahmedabad), it was held that since trading activity is nothing but purchase and sales and is covered sale tax law, it may not be appropriate to .....

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ll not be available. The definition of service excludes - (i) any activity that constitutes only a transfer in title of - (a) goods, or (b) immovable property by way of sale, gift or in any other manner. (ii) any transfer, delivery or supply or goods which is deemed to be sale in terms of Clause (29A) of Article 366 of Constitution of India. The activities of a commission agent or a clearing or forwarding agent which includes a consignment agent who sells the goods on behalf of another person/pr .....

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goods. Forward contracts would be covered under trading of goods as these are contracts which involve transfer of title in goods on a future date at a pre-determined price. In commodity futures actual delivery of goods does not normally take place and the purchaser under futures contract normally offset all obligations or closes out by selling an equal quantity of goods of the same description under another contract for delivery on the same date. There are, therefore, two contracts of sale/purc .....

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use the goods given by X to Y in exchange for a consideration as it is transfer of right to use goods. This is specifically liable to VAT. There is no service involved in same. In Ace Caldery s Ltd. v. CCE, Bhopal 2012 (5) TMI 62 - CESTAT, NEW DELHI, pre-deposit was waived where purchase and sale of goods was involved. There are many cases where the brand name owners get goods manufactured by job workers with their brand name, purchase the goods from the job workers and sell the goods to the co .....

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duction of documents on materials, where ownership had been transferred to customer; however, it amounted to supply of services when it involved services such as advice and adapting, modifying and altering original according to customer s wishes, which were prominent in relation to supply of goods and which constituted an aim in themselves for recipient. In Welcome Trust Ltd. v. Commissioner of Custom & Excise (2013) 38 STT 33 (ECJ), it was held that investment activities consisting of acqui .....

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