By TIOL News Service

MUMBAI, JAN 03, 2019: THE appellants are engaged in the activity of providing service of overseas sale of seafood for Indian exporters.

SCN was issued alleging that the commission paid by the Indian exporters (to the appellant) for sale of their products to overseas customers fell under the category of Business Auxiliary Service and Service Tax of Rs.7,01,118/- was payable for the period 9.11.2004 to 11.5.2007 with interest and penalty.

Having failed before the Commissioner (Appeals), the appellant is before the CESTAT.

It is submitted that the overseas buyer pays the appellant either directly or includes the commission in the export price realization of the local exporter; that since the appellant had provided services to the overseas buyers, therefore, the said service is an export service and not leviable to Service Tax. Furthermore, the payment of the commission in Indian rupees by the local exporters to the appellant cannot be construed as not providing service to the overseas customers. Reliance is placed on the decision in Samit Enterprises Pvt. Ltd. 2016-TIOL-2133-CESTAT-DEL etc.

The AR countered the claim of the appellant that they were appointed by the overseas exporters for procuring, negotiating the price and supplying the seafood to them by relying upon the statements of the local exporters who stated that even though there is no formal agreement with the appellant to sell these products to overseas customers, however, the seafood was sold to the overseas buyers through the appellant and for which the appellant was paid commission.

The Bench extracted the definition of BAS and after adverting to the averments made by the exporters in their letters/statements observed thus -

"7.…from these evidences it is clear that the appellant had rendered services to the local exporters in the sale of the seafood and received commission from them. Further, since the appellant had not registered themselves with the central excise and service tax department for payment of appropriate service tax on the commission amount received from the Indian exporters and not disclosed the said facts, hence the authorities below have rightly confirmed the demand with interest invoking extended period of limitation; consequently imposition of penalties also justified…"

The case law(s) cited were distinguished and by upholding the impugned order, the appeal was dismissed.

(See 2019-TIOL-29-CESTAT-MUM)