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Shoppers Stop Ltd Versus Commissioner of Service Tax, Mumbai-II

2017 (9) TMI 894 - CESTAT 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. - ST/401/12-MUM - A/89369/17/STB - Dated:- 4 .....

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under 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 mi .....

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deration, the 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 S .....

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le price realized 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 .....

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observed that VAT percentage is only 4% as against 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 .....

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explanation, it enlarges the scope and provides that the 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 .....

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e concessionaire. Hence security services are not provided 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 concessio .....

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siness Support Service'. 3.4 Ld. Chartered Accountant further submits 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 no .....

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paid the service tax under the category of Renting of immovable property w.e.f. 01/06/2007, 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., Vishakha .....

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l the concessionaire's product from the store of the appellant for which the appellant provides huge 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 .....

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considered the submissions made by both sides and perused the records. 6. The issue to be decided by us is that 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. 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 sellin .....

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9;. It is necessary to ascertain, what are the activities between the appellant and concessionaire that whether it is service, if yes, under 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 th .....

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and of the appellant i.e. Shoppers Stop for which the concessionaire agrees to pay a consideration either in the form of percentage of sale or minimum 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 .....

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ant indeed provision of service. The appellant's contention is that the consideration is of trading margin only but in our view the service charges for the 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 .....

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ent services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services 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 pr .....

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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. 6.3 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 .....

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me was accepted by the Revenue. In this regard, we find that appellant suo moto classified the service under Renting of immovable property service and started paying service tax, since there is no revenue 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 servi .....

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