ST - BAS - since appellants are providing various services to IBP Company and are covered under Clause (i), (iii) & (iv) of definition of BAS apart from being Commission Agent, benefit of Notification 13/2003 has rightly been denied: CESTAT
By TIOL News Service
NEW DELHI, AUG 01, 2013: M/S I.B.P Company and IOC have set up retail outlets at different places and have installed at those premises apparatus for storage and delivery of petroleum products and machines for air, cold water and other facilities. For running these outlets for retail sale of petroleum products and to render other services at the said premises I.B.P/IOC engaged the appellants as contractors.
The appellants agreed to render the following services -
-to operate the outlet for sale of petroleum products delivered by the Company.
-to maintain accounts of daily transaction and carry out connected banking activities.
-to maintain cleanliness at the outlet.
-to ensure timely indenting of the product so that sufficient stocks are maintained at the outlet.
-to arrange and provide fresh air/water/toilets etc. at the outlet and extend best customer services.
-to provide health and safety measures for the staff working in the premises.
-to maintain the apparatus in good working condition.
-to keep the outlet pollution and hazard free.
-to comply with requirements under Factory Act, Essential Commodities Act, Petroleum Act, Minimum wages Act. The Explosive Act and The Central Labour Act, etc.
-to engage security personnel and other staff required for security and operation of the outlet.
The Department was of the view that these services fell under the category of Business Auxiliary Service (BAS).
Accordingly proceedings were initiated for recovery of Service Tax from the five appellants for varying periods commencing from July, 2003 to March, 2005 and the demands ranged from Rs.7628/- to Rs.91,604/-.
The lower authorities confirmed the demands along with penalties and, therefore, the appellants are before the CESTAT.
It is submitted that the appellants have already paid the Service tax along with interest on commissions received by them from I.B.P/IOC. Appellant's charges include the payment received from I.B.P/IOC on account of commission, Tea/Coffee/consumable, salary of employees. Similarly Genset expenses, Bank Charges, Electricity Charges, are reimbursable by the I.B.P/IOC and are also borne by the appellant on behalf of the I.B.P/IOC. It is further submitted that I.B.P/IOC also pays for handling losses. Inasmuch as the department is demanding service tax on all these charges and which is against the provisions of Section 67 of Finance Act in view of Delhi High Court decision in case of Intercontinental Consultants & Technocrats Pvt. Ltd. (2012-TIOL-966-HC-DEL-ST). It is also submitted that Commission Agent under BAS is exempted from service tax under Notification 13/2003-ST dt. 20.06.03; that the SCNs are hit by limitation and there is no case of imposition of penalty on the appellants.
The Revenue representative submitted that the appellants have entered into agreement with M/s I.B.P/IOC for maintenance and handling of Retail outlets and as per agreement these M & H Contractors appellants were not only getting Commission on sale of goods but also providing various services to increase the sales and which amounts to promotion of sales. Since the Appellants are covered under various clauses of BAS and are more than Commission Agents they are not eligible for Notification 13/2003-ST. As regards the plea of limitation it is submitted that figures of amounts received by the appellants were provided by I.B.P/IOC and not by the appellants and, therefore, extended period has rightly been invoked.
The Bench referred to the definition of “BAS” as it stood prior to its amendment on 10.09.2004 and observed -
"5. Appellant's contention is that expenses incurred by the appellants on behalf of I.B.P/IOC like Tea/Coffee/Consumable salary of employees, handling losses generator set expenditure, Bank Charges, Electricity Charges, are reimbursed by the I.B.P/IOC and therefore not liable to service tax. We find that as per Section 67 of the Act, value of any taxable service shall be gross amount charged by the service provider for such service provided or to be provided. It does not provide for any deduction from the gross value for providing the service. We therefore do not agree with contention of the appellants that no service tax is payable on reimbursable expenses borne by the appellants and accordingly reject the same.
6. Appellants have also contended that they are Commission Agent and are exempted for levy of Service Tax under Notification 13/2003 dated 20.06.2013. We find that this exemption is applicable to Commission Agent only. But on going through agreement entered into by the appellants with I.B.P/IOC we find that appellants are providing various services to the appellants and are covered under Clause (i), (iii) & (iv) of the definition of Business Auxiliary Service apart from being Commission Agent. Therefore we are of the view that benefit of Notification 13/2003 has rightly been denied to them.
7. We find the plea of time bar was not raised by the appellant before lower authority. We also note that figures for various charges received by them was given by I.B.P/IOC and not by the appellant. Moreover appellant did not pay service tax and did not file any return. As such extended period is applicable to fact of this case and accordingly penalty is also imposable on the appellants.
8. Appellants relied on the decision of Delhi High Court in case of Intercontinental Consultants & Technocrats Pvt. Ltd. (2012-TIOL-966-HC-DEL-ST). We find that in this case Court was examining the vires of Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006. In the appeals before as period involved is prior to 2006 and as such ratio of the decision is not applicable to present case."
In fine, all the appeals were rejected.
(See 2013-TIOL-1155-CESTAT-DEL)
