TMI Blog2020 (9) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... uction shown is nothing but discount given by the exporter to the foreign buyer. As per the bank realization certificate of exporter, in appendix 22A, the amount after deduction of 11%-12.5% which was shown in column 12. Admittedly, in the entire transaction only two persons are involved, one the appellant as exporter of the goods and second the buyer of the goods. In the sale of goods, in case of service of commission agent, if involved, there has to be third person as service provider to facilitate and promote the sale of exporter to a different foreign buyer. In the present case, there is absolutely no evidence that this 11% is paid to some third person as commission. There is no contract of commission agent service with any of the commission agent, there is no person to whom payment of commission was made therefore, it is clear that no service provider i.e. foreign commission agent exists in the present case and no service was provided by any person to the appellant. In the absence of any provision of service, no service tax can be demanded. The trade discount even though in the name of commission agent was given by the appellant to the foreign buyer, by any stretch of im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, 11% commission shown in the invoice which was deducted from the invoice value is nothing but commission paid to the commission agent towards export of goods therefore, the said 11%-12.5% commission is chargeable to service tax under the head Business Auxiliary Service - Foreign Commission Agent in terms of Section 65(19) of the Finance Act, 1994 and is taxable service vide Section 65(105) (zzb) of Finance Act, 1994 read with section 66A of the said Act under reverse charge mechanism. Accordingly, show cause notices were issued and the Adjudicating Authority confirmed the demand along with penalty and interest. Therefore, the appellants filed the present appeals. The issue in all the appeals is common. 2. Shri K.I. Vyas, learned Counsel appearing through video conference on behalf of the appellants at the outset submits that they have not appointed any commission agent for promotion of sale of goods exported by them. The goods were directly exported to foreign buyers and in the export invoices on FOB/CIF value, the amount equal to 11%-12.5% was shown as deduction under the head of commission. He submits that this commission is nothing but trade discount given to the buyer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d invoking extended period will not survive as there is no malafide intention to evade payment of service tax. In his support he placed reliance on the judgment in the case of J.P.P. Mills Pvt. Limited vs. CCE, Salem 2016 (46) STR 317 (Tri. Chennai) and Texyard International vs. CCE, Trichy 2015 (40) STR 322 (Tri. Chennai). 5. Shri H.K. Jain, learned Assistant Commissioner (Authorised Representative) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that in the invoice, the appellant have clearly mentioned 11% commission therefore, the same falls under the category of Business Auxiliary Service and the same is taxable under reverse charge mechanism under Section 66A of the Finance Act, 1994. He placed reliance on the following judgments:- (a) Sulax Corporation vs. CCE, Bangalore 2003 (160) ELT 443 (Tri. Bang.) (b) CCE, Surat vs. Holy Creations Pvt. Limited 2011 (263) ELT 158 (Tri. Ahmd.) (c) Dr. Prannoy Roy vs. The Deputy Commissioner of Income Tax Ors. dated 04 May 2018 (Hon ble High Court of Delhi) (d) Olympia Paper Stationery Stores vs. Assistant Commissioner of Income Tax, ITAT 24 March 1997. 6. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice tax can be demanded. The trade discount even though in the name of commission agent was given by the appellant to the foreign buyer, by any stretch of imagination cannot be considered as commission paid towards commission agent service, hence cannot be taxable. This issue has been considered time and again by this Tribunal. In the case of Duflon Industries Pvt. Limited vs. CCE, Raigad (supra) and the Tribunal held as under : 6 . The entire issue revolves around the fact whether clearances effected by appellant on goods which exported by them to DEL is of actual sale or sale based on commission basis. If it is direct sale to DEL then appellant has case and if it is held that it is not direct sale, but the sale based on commission basis then appellant has no case. For this we have to examine the agreement dated 16-5-2001 entered between appellant and DEL. The agreement is enclosed to the appeal memorandum and on perusal of the same we find that the agreement sets out clauses about the sale of goods by appellant to DEL. The said agreement speaks of purchasing of various items from appellant by the said DEL and it also records that appellant shall allow flat deduction/commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Service. In the case of Prabhakar Marotrao Thaokar Sons vs. CCE, Nagpur 2019 (20) GSTL 294 (Tri. Mumbai), the department raised demand on discount given by manufacturer to the appellant who is a wholesale dealer while supplying goods for further distribution. The department alleged that such discount is basically sales commission and liable to service tax under the category of Business Auxiliary Service under Section 65 (105) of Finance Act, 1994. The coordinate bench at Mumbai held that the transaction between appellant and wholesale dealer is sale on principal to principal basis. The discount passed on by the manufacturer cannot be construed as commission and same is not subject matter to levy of service tax. In the present case also, identical nature of transaction involved therefore, applying the ratio of the above judgment, the commission deducted by the appellant in the present case in the invoice is nothing but a trade discount and same is not subjected to service tax. 8. The appellant made alternative submission that if at all the commission shown in the invoice is considered as service charges and the service tax payable/paid thereon is refundable to them as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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