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Shoppers Stop Ltd Versus Commissioner of Service Tax, Mumbai

Business Support Service - case of the revenue is that under the concession agreement, the appellant provided various facility in relation to commerce to the concessionaire which fall under the category of Business Support Service - whether the service provided by the appellant to the concessionaire is classifiable as Business Support Service and liable for service tax during the relevant period or otherwise? - Held that: - As per the plain reading of the definition, it can be seen that any serv .....

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herefore the service of the appellant clearly covered in the first clause of the definition of support services of business or commerce. The scope of this service is not limited but very wide. In our view any service which support the operation of business and commerce of the client covers under the business support services, if it is not specified under the specific classification. - As regard consideration, from the concession agreement, it can be seen that the consideration is either in t .....

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filed any ST-3 returns declaring the service of Business Support Service, therefore department was completely kept in dark about the provision of service under the category of Business Support Service, therefore there is clear suppression of facts on the part of the appellant, extended period was correctly invoked - penalties imposed are also legal and correct, which do not require any interference. - Appeal dismissed - decided against appellant. - Appeal No. ST/401/12-MUM - Dated:- 4-9-201 .....

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the brand of Shoppers Stop where goods of various brands, varieties, descriptions, etc. are sold. They grant concessions to various concessionaires who are the brand name owners of the goods so sold in the appellant s stores. Those concessionaires are authorised by the appellant to display, demonstrate and sale of the products from the said retail stores operated by SSL. The consideration for the concession is received by the appellant as a percentage of the goods sold subject to a minimum guar .....

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appellant is liable to pay the service tax. Accordingly a show cause notice dated 22.10.2009 was issued to the appellant for the period 01.05.2006 to 31.05.2007 demanding service tax of ₹ 3,44,45,034/- alongwith interest thereon and proposing penalties under the provisions of Finance Act, 1994. The show cause notice was culminated into an Adjudication Order, whereby the service rendered by the appellant to the concessionaires was held to be classified under Business Support Service and con .....

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zed from the ultimate customer. The Commissioner in the order observed that in the whole process of trading of goods, the appellant is acting as a cash collecting agent without bearing any responsibility or undertaking and activity. Therefore the services are taxable under the category of Business Support Services . This contention is not correct as mere acting as a collecting agent cannot be classified as Business Support Servcies . The appellant also relies upon the judgment in the case of M/s .....

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ainst the service tax rate of 12% therefore it is beneficial for the appellant to pay VAT. This observation is not correct as merely by payment of service tax from 1/6/2007 considering the service as Renting of immovable property , the fact of transaction being in the nature of trading of goods will not change. Observation of 4% VAT rate is also incorrect as percentage is not fixed at 4% but the percentage on various products varies. In some of the product the VAT rate is 12.5%. therefore the ap .....

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infrastructure support services shall include providing offices alongwith utilities, lounge, reception, secretarial services, internet, telecom facilities, pantry and security services. The Commissioner incorrectly narrates that the facilities provided by the appellant on the submissions that- a) The appellant do not provide any reception with competent person to handle message. b) No internet facilities are provided to the concessionaire. The telephone facitlity is provided on payment basis. c) .....

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by the appellant. d) The show cause notice does not allege that the facility of lounge, secretarial services or pantry is provided by the appellant. e) The order incorrectly concludes that the appellants are monitoring the quality of merchandise, range of products, sales staff, etc. The loyalty program, first citizen reward points, etc are carried out by the appellant in general for its own product as well as the product of the concessionaire. Hence no marketing support is provided by the appel .....

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ubmits that the appellant started paying service tax under the category of Renting of immovable property w.e.f. 01/06/2007 which has been accepted by the department. The same service for the past period can not be classified under different category i.e. Business Support Service . When revenue accepted the same service under the category of Renting of immovable property which was not taxable before 01/06/2007, tax can not be levied under new category. The appellant rely upon the judgments in the .....

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7, this substantiates bonafide belief that service tax was not payable under the category of Business Support Services . The demand is also time barred. In support of the above submissions, the appellant also relies upon the following judgments: (i) Siddeshwari Cotton Mills (P) Ltd. Vs. Union Of India And Anr[1989 (39) ELT 498 (SC)] (ii) Srinivasa Transports Vs. Commr. Of C. Ex. & S.T., Vishakhapatnam-I [2014 (34) STR 765 (Tri.-Bang)] (iii) Fine Switchgears Vs. Commissioner of Central Excise .....

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ge infrastructure support for commerce of the concessionaire. Therefore the service is clearly of Business Support Service and not of renting of immovable property. The consideration of such service is either by way of a minimum guarantee amount or as a percentage of the value of the goods sold which clearly indicates that there is no renting of any space. Merely because the appellant paid service tax w.e.f. 01/06/2007 under the category of Renting of immovable property, it can not be held that .....

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e service provided by the appellant to the concessionaire is classifiable as Business Support Service and liable for service tax during the relevant period or otherwise. The claim of the appellant is that they are engaged in trading of the goods. They contended that as per the agreement with the concessionaire they are purchasing goods from concessionaire and selling the same to the ultimate customers in their stores and the consideration is in the form of discount given by the concessionaire to .....

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which category. For this, the concession agreement is vital. For better understanding we reproduce below the relevant clauses of the said agreement between the appellant and one of the concessionaires i.e. M/s. Luxor Writing Instrument Pvt. Ltd.: From reading of the various clauses of the agreement and it s terms & conditions, it is observed that the appellant is maintaining complete business infrastructure under the brand name of Shoppers Stop wherein the concessionaire was given right to d .....

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nimum guaranteed amount. It is also fact that the appellant does not make payment of so called sale of the goods by the concessionaire to the appellant immediately at the time of sale of the goods to the customer. The amount is retained for more than a month and thereafter the amount, after deduction of the appellant s consideration, is paid to the concessionaire. The appellant have practically no role in the sale of the goods except making documents such as invoice. The concessionaire only disp .....

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he facilities provided by the appellant given a colour of trading margin. When the activity is in the nature of service, though the manner of consideration is in different form, it will be treated as indirect consideration towards the said service. 6.2 As regard the question whether service provided by the appellant falls under Business Support Service or otherwise, we reproduce the definition of the Business Support Service prevailing during the material time as under: "Support Services of .....

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ices and other transaction processing. As per the plain reading of the definition, it can be seen that any service provided in relation to business or commerce is a support service of business or commerce . In the present case the concessionaire is solely engaged in the commerce i.e. sale of their goods in the premises of the appellant. The appellant provides their branded store duly air-conditioned, with adequate ambience, lighting, common security, various sales schemes to attract the customer .....

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.3 As regard consideration, from the concession agreement, it can be seen that the consideration is either in the form of percentage of sale or if the total amount, as per the percentage does not meet to the minimum guaranteed amount then irrespective of percentage the fixed minimum guaranteed amount is charged by the appellant from the concessionaire. This further establish that the arrangement is not of sale-purchase of goods between concessionaire and the appellant but of service. 6.4 There i .....

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impact, no dispute arose from either side. In the present case the question of classification was raised by the Revenue by issuing show cause notice, question has to be answered as per the prevailing statutory provisions, therefore merely because the appellant from 1-6-2007 classified the service under Renting of immovable property service and department has not raised any objection, cannot become a law to construe that service involved in the present case is of Renting of immovable property ser .....

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