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Chahabria Marketing Ltd. Versus Commissioner of Service Tax Mumbai

2016 (3) TMI 1050 - CESTAT MUMBAI

Eligibility for exemption from Service tax in terms of Notification No.13/2003-ST dated 20.06.2003 - Notification exempts from payment of Service Tax the “Business auxiliary services” provided by a “commission agent” - Engaged in marketing and selling of Indian Made Foreign Liquor (IMFL) for BDA LTD. - Consideration which the appellant was to receive for such services was linked to the quantum of goods actually sold - Commissioner denied the benefit of exemption on the ground that the activities .....

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t the common parlance meaning of the said expression or its meaning in the VAT Laws. A letter dated 23.03.2000 addressed to the Appellant by BDA Ltd., shows that the appellant's service charges were fixed with reference to the quantum of products marketed by it. The debit advice annexed to the appeal shows that the consideration received was always linked to the quantum of sales effected. This evidence seems to lend support to the contentions of the appellant and in the absence of any specific f .....

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s, it would remain entitled to the benefit of exemption. - Decided in favour of appellant with consequential relief - Appeal No. ST/389/12 - Final Order No. A/86650/2016-WZB/STB - Dated:- 6-1-2016 - MR. M.V. RAVINDRAN, MEMBER (JUDICIAL) AND MR. C.J. MATHEW, MEMBER (TECHNICAL) For the Petitioner : Shri Vipin Kumar Jain, Advocate For the Respondent : Shri D. Nagvenkar, Addl. Commr (AR) ORDER PER: M.V. RAVINDRAN This appeal is directed against order-in-original No. 56/M-I/2011-12 dated 21.03.2012. .....

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ich appellant has been appointed by BDA Ltd., for marketing services and for consultancy to effectively promote the sale of IMFL/Beer belonging to BDA Ltd. On examination and outcome of an inquiry conducted by the Officers of Preventive Section, Mumbai I Commissionerate, it was noticed that appellant had received an income as commission on which service tax liability arises under the category of Business Auxiliary Service as per the Section 65(105)(zzb) of the Finance Act, 1994. Show-cause notic .....

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us through various clauses of Manufacturing Agreement entered by them during the period in question. He would draw our attention to the specific clauses and submit that the appellant had in fact, did not promote any goods produced or provided or belonging to the clients. It is the submission that substance of the agreement was not appreciated by the adjudicating authority and though the amounts received are actually accounted as commission but were for the higher sales effected by appellant, the .....

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nd has not considered it in a holistic manner. It is the further submission that the Notification No.13/03-ST grants exemption in respect of services rendered by the commission agents. Assuming that the appellant had rendered the services of commission agents, the appellant satisfy the pre-requisite for being a commission agent in terms of Notification 13/03-ST while the denial of said exemption Notification by the adjudicating authority is only on the ground that the appellant is doing more tha .....

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not amount services. Alternate submission is that having discharged the said service tax liability, provisions of Section 73(3) will be attracted and no notice was required to be issued and the learned Counsel prays to set aside the impugned order. 4. Learned D.R. on the other hand, drawing our attention to the very same agreement submits that the agreement specifically requires the appellant herein to undertake the marketing activity. It is his submission that the commission agent does not unde .....

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the judgement of the Tribunal in the case of CCE, Raipur v. Raj Wines - 2012 (28) STR 46 (Tri. Del) may also be considered. 5. We have considered the submissions made at length by both sides and perused the records. 6. The short issue involved in this appeal is whether the services rendered by the appellant to BDA Ltd., during the period July, 2003 to 08.07.2004 were eligible for exemption from Service Tax in terms of Notification No.13/2003-ST dated 20.06.2003. The said Notification exempts fr .....

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than that of a commission agent as defined in the Notification. He has observed that though the commission was fixed with reference to the quantity of goods actually sold, the activities of the appellant were not confined to sale only but covered various other services starting from arranging the production of goods by engaging bottlers/distillers upto collection of sale proceeds. The Commissioner proceeds on the premise that the benefit of the exemption is available to a commission agent who .....

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ligibility criterion and is relevant only for determining whether or not an assesse claiming the benefit of this Notification is a commission agent or not. Once it is held that the assessee is a commission agent by virtue of being engaged in the activity of causing sale or purchase for a consideration which is linked to the quantum of sale or purchase, the benefit of this Notification will cover all business auxiliary services rendered by such a commission agent. The activities which are c .....

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vi) Provision of service on behalf of the client; or (vii) A service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent but does not include any information technology service and an .....

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f the client or production of goods on behalf of the client or provision of service on behalf of the client or any incidental or auxiliary service such as billing, issue or collection or recovery or cheques, payments, maintenance of accounts and remittance, including inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision etc. 6.3 The other services, apart from the services of actually selling goods, which the appella .....

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exempt under the Notification. 6.4 The Commissioner in Para 36 of the impugned order does not dispute that the appellant was engaged in the activity of selling IMFL/Beer for BDA Ltd. The Commissioner also does not dispute that the consideration which the appellant was to receive for such services was linked to the quantum of goods actually sold. Thus, the twin requirement of the definition of commission agent viz., that the agent should cause sale or purchase of goods on behalf of another per .....

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T.R. 158 (Tri. Bang.) was dealing with a somewhat similar situation where an assessee claiming to be a commission agent within the meaning of the same Notification, was not only causing sale of liquor but also performing many other activities of promoting or marketing of goods. The Revenue had denied the benefit of Notification No.13/2003-ST dated 26.03.2003 by holding that the assessee therein was performing activities which were wider in scope than actually causing sale of liquor. The Tribunal .....

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case of Premier Enterprise cited supra was distinguished. We do not find this decision to be of any relevance to the present case as this decision was rendered in the context of some peculiar facts prevailing in that case viz that the consideration received by the assesse therein was not really linked to the quantum of sales effected as is the requirement of the Notification, but was really a trading margin being retained by the said assessee by claiming it as a commission. The Tribunal, in Para .....

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.2003exempts all services covered under the Business auxiliary services as has been urged before us in the present case, was never canvassed or dealt with in that case. 6.7 Another decision cited by the Ld. Representative of the revenue is the case of Raj Wines (supra) wherein the benefit of exemption was denied on the ground that the consideration received by the assessee in that case was not merely based on the volume of sales. The Tribunal, in Para 12, rightly observed that such an arrangem .....

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g distillers/bottlers on behalf of BDA Ltd., no such activity of arranging appointment of distillers/bottlers between the appellant and the BDA Ltd., was actually carried out during the period July, 2003 to 08.07.2004 for which demand has been raised in the present case. It was submitted that that all the 16 bottlers appointed by the appellant on behalf of BDA Ltd., a fact cited in the order of the Commissioner, were appointed long ago and not during the 1year period to which the demand relates. .....

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