Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S Gujarat Narmada Valley Fertilizers ... on 25 August, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT - I
Appeal No.ST/11487/2014 (Application No.ST/EH-12384/2014)
Arising out of: OIO No.VAD-EXCUS-002-COM-032-13-14, dt.30.12.13.
Passed by: Commissioner of Central Excise & Customs, Vadodara
For approval and signature:
Mr.M.V. Ravindran, Honble Member (Judicial)
Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s Gujarat Narmada Valley Fertilizers & Chemicals Ltd
Respondent:
CCE Vadodara
Represented by:
For Assessee: Shri Prakash Shah, Adv.
For Revenue: Shri S.K. Mall, Addl.Commissioner (AR)
CORAM:
MR.M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL)
MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL)
Date of Hearing:16.07.14
Date of Decision:25.08.14
Order No.A/11535/2014, dt.25.08.2014
Per: M.V. Ravindran
1. This appeal is directed against Order-in-Original No. VAD-EXCUS-002-COM-032-13-14, dt.30.12.13.
2. It is seen that the appellants have also filed an application for out of turn hearing which is listed today. Since we have taken up the appeal itself for disposal today and the matter was heard on 9.7.2014, the early hearing application filed by the appellant is dismissed as infructuous.
3. The relevant facts that arise for consideration are that the appellant herein is engaged in manufacture of fertilizers falling under Chapter 28/29 of Central Excise Tariff Act. They are also Service Tax payers and have obtained the Service Tax registration for providing taxable services like Consulting Engineers, Business Auxiliary Service, On line Information & Data, Test, Inspection & Certification, Goods Transport Operator, Manpower Recruitment Agency, Commercial Training & Coaching, Renting of Immovable Property services etc and are also availing CENVAT Credit facility under the CENVAT Credit Rules, 2004. The appellant herein had quoted in the tenders floated by Ministry of Chemicals & Fertilizers for receiving, bagging, standardization and distribution of imported urea in various states/ union territories during the year 2007-2008. Based upon the tender which was filed by the appellant, Govt. of India through Ministry of Chemicals & Fertilizers (hereinafter referred to as MOCF) awarded the contract to the appellant. Department was of the view that the appellant is required to pay the Service Tax on the amount received by them from MOCF against handling charges of High Sea Sales imported urea on an understanding that the amount received by the appellant were reimbursement for providing taxable services by handling imported urea which involves handling of vessels, unloading, loading, unpacking and repacking of the cargo which tantamount to handling and distribution of urea; show cause notice was issued to the appellant directing them to show cause as to why Service Tax liability for the period 2007-2008 to 2009-2010 (upto May 2010) and January 2012 be not demanded from them with interest and penalties be not imposed on them. The appellant contested the show cause notice on merit and on limitation also. The adjudicating authority, after following the due process of law, did not agree with the contentions raised by the appellant. He held that the activity of tendering for handling of imported fertilizers would amount to services rendered by the appellant which would fall under the category of cargo handling services or Business Auxiliary Service. To come to such conclusion, the adjudicating authority relied upon the definition of cargo handling services and Business Auxiliary Service and also on the tender which was awarded to the appellant, in which it was indicated that the appellant is a handling agent for imported urea. The adjudicating authority confirmed the demand with interest and also imposed penalties.
4. The matter was heard in detail on 9.7.2014, as the arguments were inconclusive, hearing of the matter continued on 16.07.2014.
5. Ld.Counsel appearing on behalf of the appellant after giving us an overall view of the issue involved submitted that the impugned order confirming demand is incorrect in as much as MOCF invited tenders for handling of the vessels at the port for bagging, standardization and distribution of imported urea. It is his submission that general terms and conditions governing, handling, bagging, standardization and distribution are not disputed by them. He further submitted that:-
(a) MOCF, Govt. of India transferred the imported urea on ownership basis to the appellant, they were unloaded, transported, bagged and distributed according to the instructions of MOCF in various states and union territories under their own name and brand and on their account.
(b) Appellants paid the price of imported urea by opening a letter of credit and MOCF transferred the ownership by endorsing the Bill of Lading in favour of the appellant.
(c) Appellant filed a Bill of Entry and cleared the goods on payment of appropriate Customs duty.
(d) Appellant quoted lumpsum rates for expenses that would be incurred by the appellant as expenses in respect of unloading and distribution of urea excluding actual port dues, inland freight charges and customs duty.
(e) MOCF in their letter dt.15.03.2013 (at Page No.229-230) clearly stated that imported urea handled and marketed by fertilizer company (like the appellant) are completely on ownership basis, as they bag urea in their own brand name and sell through their own marketing network; MOCF has no control over the activity of the appellant except to exercise power conferred under the Fertilizer (Control) Order & Fertilizer (Movement) Control Order & Essential Commodities Act, 1955.
(f) Apex Court ratio in the case of Vadilal Chemicals Ltd 2005 (192) ELT 33 as to State, which is represented by the departments, can only speak with one voice would be the ratio applicable in these cases as the Govt. of India wants the appellant to distribute imported urea at a fixed price considered by Govt. of India and amount reimbursed to the appellant for bagging, distribution etc at fixed amount as quoted by the appellant.
(g) Appellant paid VAT on the sale of urea after repacking and turn over of such transactions is shown as sale by them to the VAT authorities. It is his submission that the VAT authorities have accepted the said transaction of distribution by the appellant as a sales transaction and such sale transaction cannot be done by the appellant unless there is a purchase of urea. It is his submission that undoubtedly the demands have been raised on urea which is imported and distributed.
(h) The contention of the Revenue that urea is not transferred to the appellant and the activity undertaken by the appellant including sale thereof is on behalf of the MOCF is incorrect in the facts of this case as the transit risk after unloading the cargo till it is delivered after to various buyers, nominated by MOCF is on the appellant; any loss of urea in the transit is at the appellants cost; the lumsum rate quoted and accepted by MOCF is a final one and any excess amount spent by the appellant is not reimbursable.
(i) The lumsum reimbursement expenses given by the MOCF is not for any services but for the amount spent by the appellant in furthering the MOCF policy of delivering fertilizers at subsidized rate to the farmers.
(j) The appellant, after bagging imported urea, sell the urea to ultimate buyers under their own invoice; and Govt. of India issued an invoice for sale of imported urea to the appellant.
(k) The appellant always had an impression and an understanding that imported urea is sold to the appellant on High Sea Sales basis at an agreed price which is paid through a letter of credit and the property i.e. imported urea the possession of which is transferred to the appellant on ownership basis. It is the submission that the activity undertaken by the appellant is akin to the activity undertaken by the authorized ration shops under public distribution system of food grains. It is his submission that the shop-keeper receives the food grains at a particular price and the same is sold to a card holder at an agreed price and at an agreed quantity for which authorized ration shop gets paid from Govt. of India. It is his submission the only difference is authorized ration shops sell in retail without repacking from bulk to retail and appellant sells the goods after repacking and bagging from bulk.
(l) It is his submission that the nomenclature mentioned in the agreement and as held by the adjudicating authority as that the appellant is a handling agent, the actual nature of transaction from the contract needs to be appreciated to come to a conclusion whether the appellant is a handling agent or otherwise. It is his submission that the general terms and conditions annexed to the awarding of contract to the appellant clearly indicate that MOCF has sold the imported urea on High Sea Sales basis and the appellants are only required to submit the record of urea sold by the appellant through out India. It is his further submission that the sale and distribution of urea is also pre-determined by the MOCF and instructions are given to that extent to the appellant.
(m) It is the submission that manufacturers of urea are also required to go through the clearance of product being a fertilizer under specific rate, any amount received as subsidy from the Government to the manufacturer of urea for the difference between the MRP price and the cost of production is never added to the transaction value and no demand is made as per the clarification issued by TRU on 10.07.2014.
(n) In the present case, the transaction is not of providing the service but a clear transaction of purchase and sale of urea between MOCF and the appellant and the cargo i.e. imported urea was not handled by the appellant on behalf of the Govt. of India.
(o) The appellant is demonstrating the transaction between them and the Govt. of India and of sale and purchase of 27,500 MTs of urea imported vide MV KEE LUNG.
(p) It is the submission that in any event, the appellant would not have rendered Business Auxiliary Service to MOCF as MOCF is not in business and the appellant do not provide any auxiliary services to the main business carried on by MOCF.
(q) It is his submission that in case of C.S.S. Software Enterprises Ltd 2008 (10) STR 367 (Tri-Bang), Bajrang Infotech Systems Pvt.Ltd. & CMC Ltd 2007 (7) STR 702 (T), the Tribunal has held that any services provided to a State in performing its sovereign function cannot be brought under the tax net. He would submit that the ratio would directly apply since as per the Fertilizer Control Act and Essential Commodity Act, the Govt. of India through MOCF is regulating distribution of imported urea which is providing sovereign function.
(r) It is his further submission that reliance placed by the ld.SDR on the Apex Courts judgment in the case of Bharat Sanchar Nigam Ltd 2006 (2) STR 161 (SC) is completely out of context as the said judgment dealt with a situation whether the value of SIM card is subjected to sales tax or subjected to Service Tax and reliance placed by ld.SDR on Para 80 does not apply to the commercial transaction as is in this case. It is his submission the doctrine as laid down by Apex Court is that the subject which in one aspect and for one purpose falls within the power of particular legislature may in another aspect and for another purpose falls within another legislative power and this aspect is a doctrine clearly applicable to the legislative power.
6. Ld.SDR, on the other hand, would submit as under:-
i) The actual transaction in reality in this case is of the nature of handling and distribution of imported urea which includes incidental transfer of ownership of urea. The actual transaction being in the nature of handling and distribution of imported urea, it would obviously attract Service Tax as has been held by Apex Court in the case of Bharat Sanchar Nigam Ltd (supra). He would submit that in Para 43 of the said judgment, the Apex Court has clearly held that the test for deciding whether contract falls into one category or the other is to as what is the substance of contract, which for want of better quote they called it as dominating nature test.
ii) On careful reading of the contract awarded to the various fertilizer companies, it is evident that the whole contractual arrangement is for handling and distribution of imported urea and so called transfer of ownership to the appellant is only a means of facilitating dominant object of handling and distribution of imported urea by GNFC and on behalf of MOCF.
iii) If it is a simple case of purchase and sale of urea by GNFC, then there is no need for Govt. of India to invite tenders for appointment of handling and distribution agent as per the elaborate clauses made out in the contract.
iv) MOCF does not have an administrative and commercial infrastructure to import and sell urea by itself, hence MOCF designed its mechanism of appointing and hiring services of handling and distribution agency.
v) On reading 2 articles of the contract between the appellant and MOCF, it is very clear that the appellant is appointed as an handling agent and the contract itself is named as handling contract; the entire gamut of contractual terms in the said contract nowhere gives an impression that the contract is specifically for sale of urea by MOCF to the appellant; opening paragraph of the tender document inviting bids from various marketing fertilizer entities also indicate that the tenders are invited for handling of vessels at the port, bagging, standardization and distribution of the imported urea; the payment terms also clearly reveal that MOCF pays appellant only for the amount bid by them for bagging and handling contract for which a letter of credit is required to be opened by the appellant; reimbursement of port dues, freight, Customs duty etc as mentioned specifically in the contract shows that transfer of ownership is only to facilitate clearance of imported urea; it is also to be noted that if the appellant is owner or an importer, he need not get reimbursement for the expenses incurred by them like port charges, freight, customs duty etc; right from the calling of tenders and till it is awarded, it is very clear that the said tender is for handling and distributing of imported urea; the contract also provides for imposition of liquidated damages on GNFC for misuse/wrong handling of imported urea which would indicate that the sellers cannot possess the right of imposing liquidated damages; appellant is acting as a handling agent as he is required to submit quarterly returns about the quantity sold, balance stock etc; that the appellant as a handling agent is responsible for efficient and quick discharge of urea from the vessel and made responsible for quantities, quality, efficiency of the operation.
vi) There is a clear cut restriction that the appellant as an handling agent, is not permitted to sublet handling operation awarded to them and GNFC is not free to dispose of the urea as it leases to them which would mean that Govt. of India has not sold the goods imported urea to the appellant.
vii) He would draw our attention to Paragraph No.80 of the judgment of Apex Court in the case of Bharat Sanchar Nigam Limited and submit that even if there is an element of sale involved, the transaction price for sale is a value of fertilizers based on the full issue price; another transaction between the appellant and Govt. of India for which the consideration is lumsum amount bid by the appellant for bagging the handling the contract is the amount which would fall under the category of services rendered by the appellant and Service Tax liability arises.
7. We have considered the submissions made at length by both sides and perused the records.
8. On perusal of the records, it transpires that the entire issue is regarding Service Tax liability on the appellant as to the amount received by them from Govt. of India through MOCF for handling and distribution of imported urea.
9. At the outset, we would like to record the undisputed fact that urea is imported by Govt. of India and is being distributed at subsidized price to the farmers in order to further the policy of Govt. of India and also to meet the provisions of Food Control Act and Essential Commodities Act read with the fertilizer policy of Govt. of India. It is not disputed that Govt. of India imports urea from Saudi Arabia. Govt. of India floats tender for unloading, bagging, standardization and distribution of this imported urea for which bid is made by various fertilizers marketing companies. It is also undisputed that the Bill of Lading of goods imported are endorsed in the name of the appellant herein and the appellant herein files Bill of Entry as an importer and discharges the Customs duty as is assessed.
10. In order to ascertain the actual transaction between the appellant and the Govt. of India, we take up a random example of import of urea by Govt. of India through MV KEE LUNG. Govt. of India invited tenders for the distribution of imported bulk urea for the period 2007-2008 from the port of Mundra. Undoubtedly the said tender document indicates that Govt. of India is desirous of handling and distribution of imported bulk urea. Though, the wordings of the said tender indicate that Govt. of India wants to appoint a handling and distribution agent, we find that actually entire transaction is of sale and purchase of urea from the following documents. It is seen from the records available that the Govt. of India has imported 27,500 MTs of imported urea for which the appellant herein was required to open a letter of credit (LOC). The details are as follows:-
Gujarat Narmada Valley
Fertilizers Company Limited
(An ISO 14001 & OHSAS 18001 Company)
--------------------------------------------------------------------------------------------------------
P.O.Narmadanagar 392 015, Dist: Bharuch, Gujarat India Ph (02642) 247001, 247002 Website www.gnfc.in SAO(AMG)/KEE LUNG/2009-10 29th June, 2009 The Director (Accounts) Department of Fertilizers Ministry of Chemicals & Fertilizers Government of India New Delhi Sub: L/C for MV KEE LUNG Imp. Urea 27500.000 MT ROZY Port Dear Sir, Enclosed please find herewith copy of L/C for MV KEE LUNG. The details of the same are as under:
Name of Vessel : KEE LUNG Port : ROZY ETA : 01.07.2009.
L/C No. : 1314ILCIS0001209 Date : 29.06.2009 Amount : 7,32,83,790.00 This is for your reference and record please.
Thanking you, Yours faithfully, For G.N.F.C. Ltd.
Sd/-
N.G. Chaudhari Sr.Marketing Manager Encl: a/a CC: Shri K.N. Jaggi, CMM GNFC New Delhi.
11. It can be seen from the above reproduced LOC which has been opened by the appellant, they have paid an amount to Govt. of India for the purchase of 27,500 MTs of imported urea by MV KEE LUNG. The transaction of imported urea from MV KEE LUNG is a sale transaction for the appellant is evident from the invoice raised by the Govt. of India Ministry of Chemicals & Fertilizers which is reproduced:-
No.3.14.12/09-FA/Urea Government of India Ministry of Chemicals & Fertilizers Department of Fertilizers Fertilizer Accounts Wing Room No.513, 5th Floor, Udyog Bhawan, New Delhi dated 11.08.2009 INVOICE NO 1 Against L/C No.1314ILCIS0001209 dated 29.06.2009 along with amendment dated 7.7.09 as established by GNVFC, BHARUCH, GUJARAT on BANK OF BARODA, BHARUCH, presented at Bank of Baroda, Safdarjung Enclave Branch, New Delhi and payable at State Bank of Patiala, Shastri Bhawan, New Delhi in favour of Ministry of Chemicals & Fertilizers, Department of Fertilizers, New Delhi.
1. Name of Vessel .. MV KEE LUNG
2. Commodity .. PRILLED UREA
3. Date of completion of discharge .. 20.07.2009
4. Due date of encashment of LC .. 18.08.2009
5. Quantity as per Bill of Lading .. 27500 Mtrs
6. Total cost of PIP value @ Rs.4650/- PMT .. 127875000/-
7. Less: 90% Inland freight & handling Charges + 95% Customs duty. .. 5,50,98,108/-
8. Net amount payable. .. 7,27,76,892/-
(Rupees Seven Crore Twenty Seven Lakh, Seventy Six Thousand, Eight Hundred & Ninety Two only) CERTIFIED THAT
1. The above particulars are correct and the amount claimed represents the dues payable to Govt.
2. Fertilizer vessel MV KEE LUNG completed final discharge of Cargo on 20.07.2009 at ROZY port.
Sd/-
(N.S. MALHOTRA) Dy.Director of Accounts Tel.no.23063771
12. It can be seen from above reproduced invoice No.1 dt.11.08.2009, that Govt. of India has sold the prilled urea to the appellant at the total cost minus the freight and handing charges and collected the net amount by way of LOC as is reproduced hereinabove. This entire transaction talks about the sale of prilled urea by Govt. of India to the appellant.
13. Subsequent to such transaction, the appellant unloaded the urea and after bagging and standardizing the same, cleared the said urea to various dealers for the purpose of distribution of the said urea. It is seen from the reconciliation statement which is produced by the appellant in respect of the imports made by MV KEELUG, there is a shortage of 123 MTs after accounting for entire clearances made by them to various dealers in Gujarat and Maharashtra. This quantity of 123 MTs of imported urea has been accounted by the appellant as handling loss for which there is nothing on record to indicate that the Govt. of India has reimbursed them. This would indicate that the transaction of unloading imported urea, bagging and distribution of the same by the appellant is nothing but sale and purchase transaction, if the argument of ld.SDR has to be accepted that the appellant was a handling agent, then the loss 123 MTs of imported urea as imported by MV KEE LUNG would be to the account of Govt. of India. The adjudicating authority as well as the show cause notice has not brought on record any evidence to indicate the losses that take place during the handling of imported urea is to the account of Govt. of India. If the losses are borne by the appellant, while unloading, bagging and distribution of imported urea, then we are unable to understand as how these activities and transactions can be considered as services rendered by the appellant to Govt. of India.
14. Yet another document which needs to be considered by us for coming to conclusion is the invoice raised by the appellant for the clearance of urea from their premises, which is as under:-
FOR AGRICULTURE USE ONLY Invoicing Office:
GNFC Limited 303, GNFC Infotower, Sarkhej Gandhinagar Highway, Bodakdev, Ahmedabad Gujarat 380 054 India Region Office:
M/s GNFC - Ahmedabad 303, GNFC Infotower, Sarkhej Gandhinagar Highway, Bodakdev, Ahmedabad Gujarat 380 054 India GJ RAJ 01 P49 189 7500128487 dt.02.07.2009 Immediate Payment 02.07.2009 Kuvadva National Traders Uttar Gujarat Fert.Dealers Association C/o Ghanshyam Seeds, Near Circle, At & Post: Vijapur, Dist: Mehsana PO Box 000000 Vijapur Gujarat India VAT TIN No:24040600441 01.07.02 UREAH50S MDA/2DO 8100812182 02.07.2009 ROZI PORT 02.07.2009 FOR MP UREA 50 KG HDPE STANDARD Basic Price Dealers Margin Sale Taxable Amount VAT-Value Added Tax Additional VAT 340 17,000 4,830.00
-180.00 4,650.00 4.00 % 1.00 % 82,110.00
-3,060.00 79,050.00 3,162.00 790.50 Eighty Three Thousand Two Hundred & Fifty Paise only 83,002.50 Gujarat The supply of Urea, NP20:20:0, CAN, SSP, MOP, DAP and other fertilizers covered by this invoice, is FOR USE AS MANURE for Fertilization of soils and increasing productivity of crops. This diversion of this material for any other purpose is an offence under the Fertilizer (Control) Order, 1985, the Customs Act, 1962 and other relevant statues and orders as in force from time to time. The buyer undertakes that the fertilizer supplied to him as manure will be used as manure and if re-sold, the re-sale will be for use as manure, and accepts full liability without demur for all costs, damages, losses that may be sustained by Government of India and/or GNFC Ltd., in the event of diversion of the fertilizers for any other purpose by the buyer, their agents and/or sub dealers.
24210100259 01.07.2002 24710100259 10.01.1980 VAT TIN No: 24210100259/01.07.02 FOR AGRICULTURE USE ONLY Invoicing Office:
M/s GNFC Limited E/7 / HIG-453 (FIRST FLOOR) AREA COLONY BHOPAL Madhya Pradesh 462016 INDIA Region Office:
M/s GNFC - Bhopal E/7 / HIG-453 (FIRST FLOOR) AREA COLONY BHOPAL (Madhya Pradesh) BHOPAL 462016 INDIA MP DEW 01 C04 710 7503012783 dt.28.07.2009 PAYMENT DUE ON 28TH DAY 27.08.2009 SANJAY TRADING COMPANY M/s SANJAY TRADING COMPANY 94, VIJAY ROAD DEWAS DEWAS Madhya Pradesh INDIA VAT TIN No: 23522302508 IUREAH50S MDA/WDO 8100818448 28.07.2009 GNFC-DEWAS PVT 28.07.2009 IMP UREA 50 KG HDPE STANDARD Basic Price Dealers Margin Sale Taxable Amount VAT-Value Added Tax 400 20.000 4,830.00
-180.00 4,650.00 4.00 % 96,600
-3,600 93,000 3,720 Ninety Six Thousand Seven Hundred Twenty Rupees only 96,720 Madhya Pradesh The supply of Urea, NP20:20:0, CAN, SSP, MOP, DAP and other fertilizers covered by this invoice, is FOR USE AS MANURE for Fertilization of soils and increasing productivity of crops. This diversion of this material for any other purpose is an offence under the Fertilizer (Control) Order, 1985, the Customs Act, 1962 and other relevant statues and orders as in force from time to time. The buyer undertakes that the fertilizer supplied to him as manure will be used as manure and if re-sold, the re-sale will be for use as manure, and accepts full liability without demur for all costs, damages, losses that may be sustained by Government of India and/or GNFC Ltd., in the event of diversion of the fertilizers for any other purpose by the buyer, their agents and/or sub dealers.
TIN 23284000140 BPL/I/XXXIX/1559 30.06.1981 VAT TIN No: 23284000140
15. It can be seen from the above reproduced documents that the appellant had cleared urea which is imported and bagged by them to the fertilizer dealer as their own product and has charged VAT which is applicable only when there are sale transactions. This document also proves that the appellant has been clearing the imported urea as their own product and paying the Sales Tax on the said transaction. It is common knowledge that when there is a sale, there has to be purchases, as no sale can be effected unless there is a manufacturing activity or purchasing activity. In the case in hand, the appellant has been able to convince us that the imported goods i.e. prilled urea has been purchased by them from Govt. of India and after bagging and standardising and giving their own name to the said urea, sold the same in the market, would amount to nothing but a transaction of sale and purchase of urea.
16. On his factual matrix as reproduced hereinabove, it has to be held that the activity of the appellant of unloading the fertilizers from the ship, standardizing, bagging and subsequently distributing the same cannot be construed as an activity of cargo handling services or Business Auxiliary Service. Further, we also find strong force in the contentions raised by ld.Counsel that the activity performed by the appellant is nothing but a sovereign function of Govt. of India. If the appellant is performing a sovereign function, which has to be done by Govt. of India, it is not service rendered by the appellant to Govt. of India, is the law which has been laid down by the Tribunal in the case of C.S.S. Software Enterprises Ltd, Bajrang Infotech Systems Pvt.Ltd. & CMC Ltd (supra). In these cases, the assessees therein were assisting and implementing the project of Govt. of India to issue voter identification cards by arranging to take photographs of citizens of India. In our view, the ratio in those cases can be extended to the case in hand and it has to be held that the appellant is not providing any services to the Govt. of India.
17. In yet another angle of entire issue, we find that the ld.Counsel was correct in putting before us the correct and apt example of authorized ration shop, engaged in public distribution system of food grains. In the case of ration shop, the authorized ration shops purchases the food grains from the Govt. of India and stores in his godown. Subsequently, the said food grains are distributed to various ration card holders at a price predetermined by the Government. The authorized ration shops pays in advance to the Govt. of India for the food grains which is allotted for public distribution system. The authorized ration shops also engaged in an similar activity Govt. of India which though not identical can be equated to the activity undertaken by this appellant. In our considered view, the said activity cannot be considered as services as the authorized ration shop owners purchases the food grain before distributing the same to the ration card holders.
18. As regards the claim of the ld.SDR that the tender document clearly indicate that the Govt. of India has invited tenders as handling and distribution agent, we find that though the tender documents indicates about the appointment of a handling agent, the invoices issued by Govt. of India for sale of imported prilled urea to the appellant and subsequent clearances made by the appellant to the consumers of fertilizers would also indicate that appointment of handling agent is misnomer, as entire transaction is of purchase and sale of imported urea.
19. As regards the reliance placed by ld.SDR on the judgment of Apex Court in the case of Bharat Sanchar Nigam Ltd, as rightly pointed out by the ld.Counsel, the issue therein was segregation of the value towards services and sale of SIM cards, while the issue involved in this case is totally different.
20. The ratio which has been laid down by Apex Court may not be applicable in the case in hand due to the factual matrix as has been reproduced by us hereinabove, which is nothing but purchase and sale of imported prilled urea.
21. We also find strong force in the contentions raised by ld.Counsel that the extended period invoked by the Revenue in one of the show cause notice is also incorrect as the entire activity has been conducted by the appellant is on behalf of the Govt. of India and it cannot be said that one arm i.e. Revenue Department is not aware of an activity of another arm i.e. MOCF of Govt. of India.
22. In view of the foregoing, we hold that the impugned order is unsustainable on merit as well as on limitation.
23. The impugned order is set aside and the appeal is allowed.
(Pronounced in Court on 25.08.2014)
(H.K. Thakur) (M.V. Ravindran)
Member (Technical) Member (Judicial)
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