TMI Blog2022 (2) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... f export goods which is nothing but a discount given to the Foreign Buyers of the goods - neither any service provider exist nor was any consideration paid to any service provider. Therefore, the department s contention is baseless and not sustainable. From various judgments it can be seen that on the identical issue this tribunal has taken a consistent view that merely because in invoice commission is mentioned that alone is not sufficient to treat it as a commission but the same should be treated as discount only. Consequently no service exist hence no service tax can be demanded - reliance can be placed in the case of LAXMI EXPORTS AND OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT [ 2020 (9) TMI 838 - CESTAT AHMEDABAD ]. The appellant is not liable to service tax on the so called commission mentioned in the invoice of the export - appeal allowed - decided in favor of appellant. - Service Tax Appeal No.12941 of 2014 - A/10087/2022 - Dated:- 7-2-2022 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Willingdon Christian, Advocate for the Appellant Shri Dharmendra Kanjani, Superintendent (Authorized Representative) for the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, neither Section 66A of the Finance Act, 1994 nor Rule 2(d)(iv) of the Service tax Rules 1994 nor Rule 3 of the Taxation of Services (Provided from outside India and Received in India) Rules, 2006 will apply, because there is no foreign agent appointed and dealt with by the Appellant. He also submits that the present issue fully and directly covered by the Judgment of the Hon ble Tribunal in the matter of Laxmi Exports Vs CCE 2021(44) GSTL 284 (T), Duflon Industries Pvt. Ltd. Vs CCE 2017(47)STR 335 (T)., Prabhakar MarotraoThaokar Sons Vs CCE Nagpur 2019(20)G.S.T.L. 294 (Tri.- Mumbai) , Hindustan Petroleum Corporation Ltd- 2019 (24) GSTL 569(T), Textyard International 2015 (44) GSTL 284 (T) , Arvind A. Traders 2016 (44) STR 264 (T)., Wanbury Ltd 2019 (21) GSTL 154(T) and Prudential Process Mgmt. Services (I) (P) Ltd- 2016 (42) STR 764 (T) 2.1 He further submits that even if it is assumed that the Appellant is liable to pay Service tax under Section 66A, there is refund and exemption under Notification No. 41/2007-S.T. dated 06.10.2007, Notification No. 17/2009 -ST dated 07.07.2009 and Notification No. 18/2009 S.T. dated 07.07.2009 available to the Appellant. 3. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever value shown in the invoice is a sale value and the deduction shown is nothing but discount given by the exporter to the foreign buyer. As per the bank realization certificate of exporter, in Appendix 22A (scanned above), the amount after deduction of 11%-12.5% which was shown in column 12. The heading of column is commission/discount paid to foreign buyer, agent‟. In the entire enquiry, the department has not brought any tip of evidence to show that there is a commission agent exists in this transaction and any amount of commission is paid to such person. 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 saleof 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement and this itself does not amount DEL has been appointed as commission agent . The amount indicated on the invoice and recorded in the accounts as commission, in our view, will not attract tax under reverse charge mechanism. We also find strong force in the contentions raised by Learned Counsel that in order to tax this account as a commission, there has to be necessarily three parties, seller, purchaser and a person who negotiates such transaction. From the records it is very clear that DEL had not negotiated purchase or sale on behalf of appellant or their customers; to our mind the deduction/commission is nothing but trade discount. In view of the factual position as ascertained from the records, we hold that the impugned orders demanding service tax under reverse charge mechanism from appellant are unsustainable and liable to be set aside. In the matter of Hindustan Petroleum Corporation Limited - 2019 (24) G.S.T.L. 569 (Tri. - Del.), identical issue was decided wherein the HPCL, under an agreement for sale to retail customer purchased CNG from Indraprasth Gas Limited, the HPCL received consideration. The Tribunal held that the said consideration is in the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RSP is fixed but it does not mean that the profit margin shall be constituted as commission for rendering the service. On examination, it is found that all the transactions shown by the appellants are done on principal to principal basis. Moreover, the appellants are selling these CNG on payment of VAT/ST to the buyers. There is no commission component that have been received by the appellants from M/s. MGL. FOR e.g., if the appellant is receiving goods from MGL at 100/- per kg. including VAT but these goods are sold by the appellant to customers on RSP fixed at ₹ 102/- per kg., that does not mean that the appellants are receiving commission of ₹ 2/- from MGL. In fact the appellants are also paying VAT on ₹ 2/- also. It is also a fact that the appellants are not receiving any commission from M/s. MGL. Therefore, it cannot be presumed that appellants are rendering any service to MGL. Moreover, the case law relied upon by the counsel in the case of Bhagyanagar Gas Ltd. (supra) also supports the cases in hand, wherein this Tribunal held that mere mention in the agreement the trade margin as commission on which VAT/ST has been paid would not evidence the fact of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be responsible for any loss of goods after it leaves the factory premises. Wholesale Distributor would be the owner of the goods once same are supplied to them by the manufacturer from the factory gate and the Wholesale Distributor shall take possession of the goods from the factory gate and shall transport the same to its godowns at its own expenses. It is observed from the above para that after supply of goods by the manufacturer the ownership of goods is transferred to the wholesale distributor who is the appellant here. The sales invoice raised by the manufacturer is scanned below : From the agreement coupled with the above invoice it can be seen that the transaction between the manufacturer M/s. Gunaji and the appellant is clearly of sale. In the invoice the manufacturer has charged 20% VAT the transaction is clearly at arms length hence sale transaction on principal to principal basis. From the invoice, it is also observed that a trade discount was passed on by the manufacturer to the appellant. As per this undisputed fact once, the transaction is of sale there is no relationship of service provider and service recipient between the manufacturer and the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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