Custom, Excise & Service Tax Tribunal
M/S. Raja Charity Trust vs Cce. Tirunelveli on 20 January, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI ST/111/2005 (Arising out of Order-in-Appeal No. 200/2005 dated 06.10.2005 passed by the Commissioner of Central Excise, (Appeals) Chennai). M/s. Raja Charity Trust : Appellants Vs. CCE. Tirunelveli : Respondent
Appearance Shri M. Kannan, Adv., For the applicant Shri B. Balamurugan, AC (AR) For the respondent CORAM Honble Shri D.N. PANDA, Judicial Member Honble Shri R. PERIASAMI, Technical Member Date of Hearing/Decision: 20.01.2016 FINAL ORDER No. 40082 / 2016 Per: D.N. Panda Ld. Counsel specifically brings out that the activities carried out by the appellant has been extracted by the Ld. Adjudicating authority in para-2 of his order.
2. He says that a totality of the reading of the extracted part of the agreement from clause -1 to clause-12 gives a notion that the appellant had promoted the business of the Principal. He was contributory to the growth of the business of the principal procuring orders for him and also exploring potential customers and channelized the purchase orders. Such was the principal activity of the appellant. But Revenue alleged in the SCN that the appellant provided Clearing and Forwarding agent service. He explains what the scope and ambit of the taxing entry under the Section 65(105) (zzb) of Finance Act, 1994 is intend to tax C & F service was as under at the material time:
To any person by a C & F Agent in relation to clearing and forwarding operations in any manner. Ld. Counsel further submits that definition of clearing and forwarding agent is as under:-
Clearing and Forwarding Agent means any person who is engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding operation in any manner to any other person and includes a consignment agent.
3. Ld. Counsel further explains that concept of taxing agents service has been incorporated into the statute book under the taxing entry Business Auxiliary Service (BAS) w.e.f. 01.07.2003, explaining the scope thereof as under:-
Section 65(19):
Business Auxiliary Service means any service in relation to :-
i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or
(ii) promotion or marketing of service provided by the client; or
(iii) any customer care service provided on behalf of the client; or
(iv) any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer or vendor, public relation services.
and includes services as a commission agent, but does not include any information technology service.
Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, information technology service means any service in relation to designing, developing or maintaining of computer software, or computerized data, processing or system networking, or any other service primarily in relation to operation of computer systems. Section 65(19) as amended by Finance Act, 2004 with effect from 10.09.2004, reads as under :-
(19)?business auxiliary service means any service in relation to -
(i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or
(ii) Promotion or marketing of service provided by the client; or
(iii) Any customer care service provided on behalf of the client; or
(iv) Procurement of goods or services, which are inputs for the client; or
(v) Production of goods on behalf of the client; or
(vi) Provision of service on behalf of the client; or
(vii) A service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any information technology service and any activity that amounts to manufacture within the meaning of clause (f) of Section 2 of the Central Excise Act, 1944 (1 of 1944).
Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, information technology service means any service in relation to designing, developing or maintaining of computer software, or computerises data, processing or system networking, or any other service primarily in relation to operation of computer systems.
4. It is further submission of the Ld. Counsel that during the period 1.07.2003 to 8.7.2004, the service provided by an agent was not taxable by virtue of exemption granted in terms of Notification No. 13/2003-ST dated 20.06.2003 which reads as under:-
Business auxiliary services provided by commission agents Exempted In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the business auxiliary services provided by a commission agent from the service tax leviable thereon under sub-section (2) of section 66 of the said Act. Explanation.- For the purposes of this notification, commission agent means a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase.
2.?This notification shall come into force on the 1st day of July, 2003.
[Notification No. 13/2003-S.T., dated 20-6-2003] Service tax Effective rates of duty for Mandap keeper, service provided by Hotels, Business auxilliary service provided by Commission agents and Tour operators Amendment to Notification Nos. 12/2001-S.T., 13/2003-S.T. and 2/2004-S.T. In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby directs that the following notifications of the Government of India in the Ministry of Finance (Department of Revenue), as specified in column (2) of the Table below, shall be amended or further amended, as the case may be, in the manner and to the extent specified in the corresponding entry in column (3) of the said Table, namely :-
Table S. No. Notification No. and date Amendments (1) (2) (3)
1.
12/2001-Service Tax, dated the 20th December, 2001 [G.S.R. 907 (E) dated the 20th December, 2001] In the said notification, for the words from the whole of the service tax leviable thereon under section 66 of the said Act, the words from so much of the service tax leviable thereon under section 66 of the said Act, as is in excess of the service tax calculated on a value which is equivalent to sixty per cent. of the gross amount charged from the client for the said taxable service shall be substituted.
2. 13/2003-Service Tax, dated the 20th June, 2003 [G.S.R. 504 (E) dated the 20th June, 2003] In the said notification,-
(i)?in the preamble, for the words commission agent from the service tax leviable thereon under sub-section (2) of section 66 of the said Act, the words commission agent in relation to sale or purchase of agricultural produce from the service tax leviable thereon under section 66 of the said Act shall be substituted;
(ii)?for the Explanation, the following shall be substituted, namely :-
Explanation. - For the purposes of this notification, -
(i) commission agent means a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase.
(ii) agricultural produce means any produce resulting from cultivation or plantation, on which either no further processing is done or such processing is done by the cultivator like tending, pruning, cutting, harvesting, drying which does not alter its essential characteristics but makes it only marketable and includes all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugar cane, jaggery, raw vegetable fibres such as cotton, flax, jute, indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea but does not include manufactured products such as sugar, edible oils, processed food and processed tobacco.
3. 2/2004-Service Tax, dated the 5th February, 2004 [G.S.R. 101(E) dated the 5th February, 2004] In the said notification, for the words ten per cent., the words forty per cent. shall be substituted.
[Notification No. 8/2004-S.T., dated 9-7-2004]
5. On the aforesaid legal premises with the factual ground enumerated in para-2 of the adjudication order, the prayer of the appellant is to bring the activities carried out by it under the scope of Business Auxiliary Service read with exemption notification to grant immunity to the appellant from taxation under that had setting aside the impugned order.
6. On the other hand, Revenue says that following the classification rule, the appellant has been brought under the scope of Clearing and Forwarding Agency service and appropriate levy has been made by the adjudications.
7. Heard both sides and perused the records.
8. Elaborate arguments made by the appellant has substance. Law is well settled that the scope of taxing entry is to be strictly construed and there is no intendment about tax. The facts and circumstances of the case warrant to bring the activity carried out by the appellant as per agreement to the scope of Business Auxiliary Service (BAS). This satisfies the principle of classification laid down in Section 66 of the Finance Act, 1994, excludes the other category of classification claimed by Revenue for the reason that the taxing entry most specifically attracts an activity shall bring that service into the same class and no other class by any remote construction. Thus, the appellants activity shall fall under the taxing entry of BAS without being taxable under the category of C & F Agents service.
9. In view of the reasons stated above, appellant succeed and the appeal is allowed.
(Dictated and pronounced in open court)
(R. PERIASAMI) (D.N. PANDA)
TECHNICAL MEMBER JUDICIAL MEMBER
BB
1