By TIOL News Service

MUMBAI, DEC 16, 2015: THIS is a Revenue appeal.

The issue is regarding the service tax liability in respect of the commission received by the respondent-assesseefor sale of RBI bonds. The adjudicating authority has confirmed the demands raised but reduced the demand considering the amounts received as commission by the respondent-company as cum-tax amount. The respondent has already discharged the service tax liability and the interest thereof.

Be that as it may, Revenue is not happy with the extension of the cum-tax benefit by the adjudicating authority.

The AR while reiterating the grounds of appeal states that the transaction entered into by the contracting parties i.e. RBI and the respondent is on the premise that the service rendered would not be liable to ‘service tax'; the respondent failed to adduce any evidence to prove that the value of taxable service was inclusive of service tax and the original authority has incorrectly relied upon the judgment of the Tribunal in the case of Advantage Media Consultant 2008-TIOL-548-CESTAT-KOL whereas the judgment of the Supreme Court in the case of Amrit Agro Industries Ltd. 2007-TIOL-244-SC-CX is applicable and the ratio therein is that exclusion of duty element from the price will arise only if manufacturer is able to prove that the price of goods includes excise duty payable.

The respondent informed the Bench that the judgment of the Tribunal in the case of Advantage Media Consultant (supra) has been upheld by the apex Court by dismissing the Civil appeals filed by the Revenue. Reliance is also placed on Trade Notice No. 20/2002 dated 23/05/2002 issued by Delhi-II Commissionerate wherein it is clarified that the amounts recovered will be taken to constitute amounts inclusive of service tax.

The Bench, after considering the submissions, observed that the Revenue's appeal is devoid of merits.

Inasmuch as -

"…the respondent has received an amount of Rs.7,01,26,712/- as commission from Reserve Bank of India for the sale of bonds. Undoubtedly, no service tax was paid on the said amount and accordingly the conclusion reached by the adjudicating authority that the entire amount needs to be considered cum-tax amount and tax liability worked out on such value is the correct conclusion and the judgment of the Tribunal in the case of Advantage Media Consultant (supra) holds so. We reproduce the said judgment below:- x x x

7. The ratio of the said judgment has been upheld by the Hon'ble apex Court by dismissing Civil Appeal filed by the Revenue after condoning the delay which would mean that the value received for the taxable purpose needs to be considered as cum-tax amount if the service tax is not charged."

Holding that in the peculiar facts and circumstances of this case, the impugned order is correct and legal to the extent it is challenged, the Revenue appeal was rejected.

(See 2015-TIOL-2677-CESTAT-MUM)