TMI Blog2021 (5) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... ies was one of seller and buyer on principal to principal basis. Analysis of the documents referred to in the adjudication order to be done - HELD THAT:- The adjudicating authority has not read the document as a whole but instead gave undue emphasis to certain individual clauses occurring in the agreement - the finding of the authority that the relationship between the parties is not on principal to principal basis is clearly unreasonable. All the decisions were actually brought to the notice of the adjudicating authority. The adjudicating authority has chosen to disregard them on the ground that the revenue has filed appeal before the Supreme Court questioning some of the decisions. It is admitted that no interim order has been granted by the Supreme Court. It is well settled that merely because a matter is pending before the higher forum, such pendency will not take away the precedential value of the appealed decision. The adjudicating authority ought to have followed the Tribunal decisions which clearly support the stand of the petitioner. The aforesaid Tribunal decisions were binding on the authority. Petition allowed. - W.P.(MD)No.4252 of 2021 And W.M.P.(MD)No.344 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. Thirdly, the contention of the petitioner is that they are having only principal to principal relationship with the various manufacturers is not correct. According to the respondents, the activity of the petitioner would fall within Section 66E(e) of the Finance Act. 6.The learned Senior counsel appearing for the petitioner drew my attention to a very recent Judgment of the Division Bench of Madras High Court rendered in W.A.No. 493 of 2021 dated 18.02.2021 (Mahindra Mahindra Ltd., V. The Joint Commissioner (CT) Appeals, Chennai and another) . In the said Judgment, the Hon'ble Judges have set out the parameters for interference under Article 226 of the Constitution of India by bypassing the appeal remedy. One of the parameters is that if perversity is writ large or if there is unreasonableness or unfairness in the action taken by the authority, then, the Writ Court can interfere. The learned Senior counsel would strongly contend that the case on hand would clearly fall within those parameters. He also took me through the relevant clauses in the dealership agreements and contended that the core activity of the petitioner is to engage in sales of the goods sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise requires,- (44) service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely, (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Explanation 1 . - For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,- (A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds anypost in pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authority does not contest the genuineness of these documents. The authority has only gone by some of the clauses in the dealership agreement. For instance, the dealer has undertaken that the entries in the business document will guide the business processes, operational targets and performance goals. The business document would be treated as part and parcel of the dealership agreement and failure on the part of the dealer to fulfill any of the terms and conditions prescribed in the business document will be treated as non-performance. The learned Senior counsel would strongly contend that merely because the petitioner is called upon to conduct his business in a certain ambience would not by itself amount to rendering of service to the manufacturers. He would repeatedly draw my attention to the fact that for maintaining certain standards of business operations, no separate consideration is paid by the manufacturers to the petitioner. It is only when the petitioner has reached certain sales targets, the manufacturer on his own disburses trade discount to the petitioner by way of credit notes. The dealership agreement does not contain any clause regarding trade discount. 13.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curring in the agreement. Therefore, I come to the conclusion that the finding of the authority that the relationship between the parties is not on principal to principal basis is clearly unreasonable. 17.The learned Senior counsel drew my attention to the decisions of the various Benches of the Customs Excise and Service Tax Appellate Tribunal (CESTAT), namely, (2018) 66 GST 398 (Prabhakar Marotrao Thaokar Sons vs. Commissioner of Central Excise, Nagpur and 2019 (24) G.S.T.L. 569 (Tr.-Del) (Hindustan Petroleun Corporation Ltd., vs. Commissioner of Central Excise, Delhi-II), for the proposition that where the sale transaction is on principal to principal basis, merely because a discount was passed by the manufacturer to the assessee, that may not be construed as commission and therefore, it cannot be the subject matter of levy of service tax. 18.All these decisions were actually brought to the notice of the adjudicating authority. The adjudicating authority has chosen to disregard them on the ground that the revenue has filed appeal before the Supreme Court questioning some of the decisions. It is admitted that no interim order has been granted by the Supreme Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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