By TIOL News Service

MUMBAI, APRIL 08, 2016: THE appellant, during the period July 2003 to 08 July 04 is alleged to have been engaged in marketing and selling of Indian Made Foreign Liquor (IMFL) for BDA Ltd. It is the case of the Revenue that in lieu of services rendered by appellant they were eligible for commission which was paid on per case basis of IMFL sold. The services which are rendered by the appellant to BDA Ltd. were in furtherance of contract/agreement entered in 1992 in which appellant had been appointed by BDA Ltd. for marketing services and for consultancy to effectively promote the sale of IMFL/Beer belonging to BDA Ltd.

A service tax demand on the said income received as commission under the category of Business Auxiliary Services came to be issued and the same was confirmed along with penalties and interest.

In appeal before the CESTAT, the appellant submitted that -

+ Though the amounts received are actually accounted as commission but were for the higher sales effected by appellant- they were entitled to consideration on per case sale of IMFL/Beer.

+ Notification No. 13/03-ST grants exemption in respect of services rendered by the commission agents.

+ Denial of said exemption by the adjudicating authority is only on the ground that the appellant is doing more than the commission agent's work. It is the submission that doing additional work as commission agent cannot deny the exemption available to the appellant.

+ Alternate submission is that having discharged the said service tax liability, provisions of Section 73(3) of FA, 1994 will be attracted and no notice was required to be issued and they pray for setting aside the impugned order.

The AR submitted that the tax liability has been correctly arrived at and in support cites the decisions in Aditya Birla Nuvo Ltd. - 2011-TIOL-353-CESTAT-AHMand CCE, Raipur v. Raj Wines - 2012-TIOL-661-CESTAT-DEL.

The Bench inter alia observed -

"..Commissioner has denied the benefit of exemption on the ground that the activities performed by the appellant were much wider than that of a ‘commission agent' as defined in the Notification. He has observed that though the commission was fixed with reference to the quantity of goods actually sold, the activities of the appellant were not confined to sale only but covered various other services starting from arranging the production of goods by engaging bottlers/distillers upto collection of sale proceeds. The Commissioner proceeds on the premise that the benefit of the exemption is available to a ‘Commission agent' who provides services ‘only' in respect of sale or purchase of goods. In our view, this is an incorrect reading of the Notification as the exemption under this Notification applies to all Business auxiliary services provided by a ‘commission agent', and not merely to the services selling or purchasing goods on behalf of the client. No doubt a ‘commission agent' as defined under this Notification is a person who provides service in relation to purchase or sale of goods, this is only for defining the eligibility criterion and is relevant only for determining whether or not an assessee claiming the benefit of this Notification is a ‘commission agent' or not. Once it is held that the assessee is a ‘commission agent' by virtue of being engaged in the activity of causing sale or purchase, the benefit of this Notification will cover all business auxiliary services rendered by such a ‘commission agent'…."

The order was set aside and the appeal was allowed with consequential relief.

(See 2016-TIOL-834-CESTAT-MUM)