TMI Blog2023 (2) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ement by and between the appellant and the concerned sub-contractor purely for undertaking by the sub-contractor for the execution of the entire work under the respective tender, adhering to all such terms and conditions as were imposed upon the appellant by virtue of his agreement with the said employer. The perusal of few such agreements, as found on record, reveals that the sub-contractor was also made liable to compensate the appellant for any loss or damage to which the appellant might be held liable to the employer/tender agency on account of failure or improper execution of the work by the subcontractor and on account of not abiding by any terms and conditions of the agreement with the employer. The sub-contractor was not the service recipient of the appellant as such cannot be called as his client. He rather was been engaged by the appellant as his agent pursuant to the duly executed agreement where all profits and even all losses accruing to the appellant on any account pursuant to his agreement with the employer/tender agency were to be inculcated by the sub-contractor. In such circumstances, the arrangements between the appellant and the appointed sub-contractor canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors. Department formed an opinion that the commission was liable to be paid as tax under Business Auxiliary Services . Accordingly, vide Show Cause Notice No. 16/159/2010 dated 22.04.2010 the aforesaid amount of Rs. 4,96,416/- was proposed to be recovered as service tax along with proportionate interest and the appropriate penalties. The said proposal was confirmed initially by the Original Adjudicating Authority vide Order-in- Original No.49/2011 dated 27.05.2011. The appeal thereof has been rejected vide impugned order under challenge. Being aggrieved appellant is before this Tribunal. 2. We have heard Shri Venkat Prasad, CA Learned Counsel for the Appellant and Shri S. Hanuma Prasad, AR for the Respondent. 3. Learned Counsel for the appellant has submitted that the appellant being the civil contractor is dealing in site formation, mining and construction pursuant to tenders which get floated by various departments of various states and mining companies in the country and is being awarded back to back contract in appellant s favour. Subsequent thereto the appellant used to enter into a contract with others like Shri G. Venkat Reddy, Guntur, Shri G. Krishan Reddy, Guntur, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Business Auxiliary Services is to be seen. Section 65(19) of Finance Act defines Business Auxiliary Service as follows: Business Auxiliary Service means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or [ Explanation - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, service in relation to promotion or marketing of service provided by the client includes any service provided in relation to promotion or marketing of games of change, organised, conducted or promoted by the client, in whatever form or by whatever name called, whether or not conducted online, including lottery, lotto, bingo;] (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or [ Explanation - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, inputs means all goods or services intended for use by the client;] (v) production or processing of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the sub-contractor was not the service recipient of the appellant as such cannot be called as his client. He rather was been engaged by the appellant as his agent pursuant to the duly executed agreement where all profits and even all losses accruing to the appellant on any account pursuant to his agreement with the employer/tender agency were to be inculcated by the sub-contractor. In such circumstances, the arrangements between the appellant and the appointed sub-contractor cannot be called as an activity of the appellant meant to promote or market the service provided by the sub-contractor. Hence engagement of sub-contractor in the given circumstances cannot be called as the Business Auxiliary Service being provided to the subcontractor by the appellant. Arrangement is rather the outsourcing, some of the appellant s work to some other person under an agreement. No doubt the appellant was getting 2% of the value involved in the contract as their commission. However, the appellant only was deducing said amount of commission for himself and was making payment to the subcontractor in whose favour the execution of work was outsourced by the appellant. Hence, we hold that no servic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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