TMI Blog2023 (10) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... extended the discount to the buyer. The commission shall be chargeable to the Service Tax only in case, if there is a third party who has independently provided the commission agent service in relation to sales promotion and related service. In the present case no independent sales commission agent is involved. This Tribunal has taken a consistent view that merely by mention of commission or any other term, whereby the deduction was given in the sale invoice, the same cannot be treated as commission for the purpose of levy of Service Tax under business Auxiliary Service . Accordingly, the demand of service tax on the commission shall not sustain. Time Limitation - HELD THAT:- Since this sale is for export of goods obviously the departmental officers have verified the transaction at the time of export for various reason of refund/ drawback or any other export incentive. Accordingly, the entire fact about the commission being shown deduction in the sales invoice was very much in the knowledge of the department. The appellant being registered manufacturer with Central Excise having filed their regular return to the department, there is absolutely no suppression of fact of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for export of goods and eligible for exemption under Notifications 18/2009-ST 31/2012-ST therefore, the demand is not sustainable on this ground. 2.1 Without prejudice he further submits that the demand was raised by invoking extended period. But since the appellant have been declaring commission in the sales invoices which is meant for export the same was known to the department while processing the export consignment. Therefore, there is no suppression of the fact on the part of the appellant. Hence, the demand is also not sustainable on ground of time bar. In support of his above submissions, he placed reliance on the following judgments: Laxmi Exports Vs. CCE 2021 (44) GSTL 284 (T) Aquamarine Exports Vs. CCE ST 2022 (2) TMI 361 CESTAT Duflon Industries Pvt. Ltd. Vs. CCE 2017 (47) STR 335 (T) Hindustan Petroleum Corporation Ltd. Vs. CCE 2019 (24) GSTL 569 (T) Prabhakar Marotrao Thaokar Sons Vs. CCE 2019 (20) GSTL 294 (T) Balaji Enterprises Vs. CCE 2020 (33) GSTL 97 (T) CCE Vs. Swapnil Asnodkar 2018 (10) GSTL 479 (T) United Telecoms Ltd. Vs. CST 2011 (22) STR 571 (T) Wanbury Ltd. Vs. CCE 2019 (21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Service Tax only in case, if there is a third party who has independently provided the commission agent service in relation to sales promotion and related service. In the present case no independent sales commission agent is involved. Therefore, even though the deduction was made in the invoice under nomenclature of commission but the same is not in the nature of commission, but it is only a discount and the sales discount cannot be termed as a service charge. This issue has been considered in various judgments by this Tribunal some of the judgments are reproduced below: In the case of Laxmi Exports (Supra) this Tribunal on the absolutely identical issue decided matter as under: 6. We have heard both sides and perused the record. The issue involved is that whether there is any commission paid by the appellant to Commission Agent in relation to export of their goods exists and whether that commission is liable to service tax under the head Business Auxiliary Service. In this regard, we carefully gone through the export documents such as shipping bills, export invoice of appellant, bank realization certificate. The sample copies of all the three documents are scan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther 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/commission of 8% on the invoice value to DEL. We perused the invoice raised by appellant to DEL and find that the invoice is for the sale of the goods and 8% commission is indicated as has been given on the total invoice value. It is also seen invoice value has been reduced by 8% shown as commission, is against the sale of the goods to DEL. We agree with the contentions raised by Learned Counsel that the purchaser of the goods cannot be considered as a commission agent as the deduction/co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 per Notification Nos. 41/2007-S.T., dated 6-10-2007 and 18/2009-S.T., dated 7-7-2009 even though some procedural lapse, if any, has occurred in the present case. Since we have already decided that the amount of 11%-12.5% shown as deduction in the invoice is not towards any service charges but it is in the nature of trade discount, there is no question of involving exemption of Notifications 41/2007-S.T., dated 6-10-2007 and 18/2009-S.T., dated 7-7-2009. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is for the sale of the goods and 8% commission is indicated as has been given on the total invoice value. It is also seen invoice value has been reduced by 8% shown as commission, is against the sale of the goods to DEL. We agree with the contentions raised by learned Counsel that the purchaser of the goods cannot be considered as a commission agent as the deduction/commission is for the goods sold. There is nothing on record to show that the said DEL was appointed as commission agent for the sale of the goods of the appellant to third parties. It may be that DEL might purchase the goods from the appellant and sells the same in Europe. The reliance placed by learned DR and adjudicating authority on the clause of agreement that DEL shall increase the market share of appellant s products to conclude that DEL was a commission agent, seems to be erratic reading of the clauses of 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 Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng VAT but these goods are sold by the appellant to customers on RSP fixed at Rs.102/- per kg., that does not mean that the appellants are receiving commission of Rs. 2/- from MGL. In fact the appellants are also paying VAT on Rs. 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 rendering service. The contention of the Ld. AR that the private parties are paying Service Tax under the category of Business Auxiliary Service on the same activity, therefore, the appellants are required to pay Service Tax is not acceptable as in the case of private parties, the invoices on the customers were raised by M/s. MGL directly and the private parties are receiving commission and there is no transaction on principal to principal basis. 8. We further find that as per the agreement, relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p 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 buyer (the present appellant). Accordingly, the discount passed on by the manufacturer to the appellant cannot be construed as a commission and the same is not the subject matter of levy of service tax. It is further seen that the appellant also, after purchase of goods from the manufacturer further sold to various traders. A copy of the sale invoice issued by the appellant is scanned below : From the above invoice it can be seen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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