Custom, Excise & Service Tax Tribunal
M/S I.B.P. Auto Service Nangal Khurad vs Cce, Chandigarh on 28 May, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Date of Hearing : 28.05.2013 ST/58 /2008 [Arising out of Order-in-Appeal No. 355/ST/APPL/LDH/2007 dated 01.11.2007 passed by the Commissioner (Appeals), Central Excise, Chandigarh] Shri Krishan Kumar, M & H Contractor of M/s I.B.P. Auto Service Nangal Khurad Appellant Vs. CCE, Chandigarh Respondent
ST/67/2008 [Arising out of Order-in-Appeal No. 336/ST/APPL/LDH/2007 dated 01.11.2007 passed by the Commissioner (Appeals), Central Excise, Chandigarh] Shri Rajinder Kumar, M & H Contractor of M/s I.B.P. Auto Service, Ghuman Kalan Appellant Vs. CCE, Chandigarh Respondent ST/68 /2008 [Arising out of Order-in-Appeal No. 339/ST/APPL/LDH/2007 dated 02.11.2007 passed by the Commissioner (Appeals), Central Excise, Chandigarh] Shri Som Nath, M & H Contractor of M/s I.B.P. Auto Service, Mansa Kalan Appellant Vs. CCE, Chandigarh Respondent ST/69 /2008 [Arising out of Order-in-Appeal No. 338/ST/APPL/LDH/2007 dated 02.11.2007 passed by the Commissioner (Appeals), Central Excise, Chandigarh] Shri Rakesh Kumar, M & H Contractor of M/s I.B.P. Auto ServiceMansa Kalan Appellant Vs. CCE, Chandigarh Respondent ST/255 /2008 [Arising out of Order-in-Appeal No. 318/ST/APPL/LDH/2007 dated 22.10.2007 passed by the Commissioner (Appeals), Central Excise, Chandigarh] Shri Sanjay Kumar, M & H Contractor of M/s IOC COCO Outlet, Kattu Appellant Vs. CCE, Chandigarh Respondent Appearance:
Ms. Rashi Sureka, Advocate - for the Appellant Shri Amresh Jain & Govind Dixit, DR - for the Respondent Coram : Honble Mr. Justice G. Raghuram, President Honble Mr. Sahab Singh, Member (Technical) FINAL ORDER NO. 56504-56508/2013 Per Sahab Singh :
These are five appeals filed by the different appellants as per details given below:
S.No. Appeal No. Service Tax Penalty Rs. Period OIA No.
and amt. (Rs.) Rs.
appellant
1. ST/58/08 74,335 500 v/s 75 7/03 335/ST/07
Sh. Krishan Kumar 1000 v/s 77 to dt. 1/11/07
100 per day 10/04
v/s 76
2. ST/67/08 91,604 500 v/s 75 7/03 336/ST/07
Sh. Rajinder Kumar 1000 v/s 77 to dt. 1/11.07
100 per day 10/04
v/s 76
3. ST/68/08 81,063 500 v/s 75 7/03 339/ST/07
Somnath Contractor 1000 v/s 77 to dt. 2.11.07
100 per day 10/04
v/s 76
4. ST/69/08 7,628 500 v/s 75 02/05 338/ST/07
Rakesh Kumar 1000 v/s 77 to dt. 2.11.07
100 per day 03/05
v/s 76
5. ST/255/08 72,247 500 v/s 75 07/03 318/ST/07
Sanjay Kumar 1000 v/s 77 to dt. 22.10.07
100 per day 12/04
v/s 76
Since issue involved in above appeal is common, these appeals are being taken up together for decision.
2. Brief facts of the case are that M/s. I.B.P Company ( I.B.P.) and IOC have set up retail outlets at the different places and have installed at those premises apparatus for storage and delivery of petroleum products and machines for air, cold water and other facilities. For running these outlets for retail sale of petroleum products and to render other services at the said premises, I.B.P/IOC have engaged the appellants as contractors. On investigation done by the department it was found that appellants have agreed to render.
-to operate the outlet for sale of petroleum products delivered by the Company.
-to maintain accounts of daily transaction and carry out connected banking activities.
-to maintain cleanliness at the outlet.
-to ensure timely indenting of the product so that sufficient stocks are maintained at the outlet.
-to arrange and provide fresh air/water/toilets etc. at the outlet and extend best customer services.
-to provide health and safety measures for the staff working in the premises.
-to maintain the apparatus in good working condition.
-to keep the outlet pollution and hazard free.
-to comply with requirements under Factory Act, Essential Commodities Act, Petroleum Act, Minimum wages Act. The Explosive Act and The Central Labour Act, etc.
-to engage security personnel and other staff required for security and operation of the outlet.
Department felt these services fell under the category of Business Auxiliary Service (BAS) (as defined prior to 10.9.04). Accordingly Show Causes Notice were issued to the appellants demanding service tax under BAS along with interest and also proposing penalties on the appellants. These Show Cause Notice were confirmed by the original authority. Appellants preferred appeals before Commissioner (Appeal) who vide impugned orders mentioned above rejected these appeals confirming tax, penalties as stated above in para 1 Appellants have challenged these orders in the present appeal.
3. Heard Ld. Advocate Ms. Rashi surekha at length. She submits that appellants have already paid the service tax along with interest on commissions received by them from I.B.P/IOC. Appellants charges include the payment received from I.B.P/IOC on account of commission, Tea/Coffee/consumable, salary of employees. Similarly Gensets expenses, Bank Charges, Electricity Charges, are reimbursable by the I.B.P/IOC and are borne out by the appellant on behalf of the I.B.P/IOC. She further submits that I.B.P/IOC also pays for handling losses on of the loss of the product to the appellant. The department is demanding service tax on all these charges which is against the provision of Section 67 of Finance Act. She further points out Commission Agent under BAS is exempted from service tax under Notification 13/2003 ST dt. 20.06.03. She submits Show Cause Notices are also hit by time limitation and there is no case of imposition of penalty on the appellants. She relied upon judgment of Delhi High Court in case of Intercontinental Consultants & Technocrats Pvt. Ltd.
4. Ld. Shri A Jain Additional Commissioner submits that appellants have entered into agreement with M/s I.B.P/IOC for maintenance and handling of Retail outlets and as per agreement these M & H Contractors appellants were not only also getting Commission on sale of goods but also providing various services as listed in Show Cause Notice to the customers on behalf of the I.B.P/IOC. He submits that as per agreement appellant are required to make sincere efforts to increase the sales which amounts to promotion of sales. Appellants are covered under various clauses of BAS and are more than Commission Agents and therefore they are not eligible for Notification 13/2003. As regards, time limitation he submits that figures of amount received by the appellants were provided by I.B.P/IOC and not by the appellants and therefore extended period has rightly been invoked in his case.
4. After hearing both sides we find that service tax has been demanded from the appellants under category of Business Auxiliary Service (BAS) under Section 65 (19) of the Finance Act.
As per Section 65 of the Finance Act 1994 (As it stood prior to its amendment on 10.09.2004), 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 provider 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 or cheques, accounts and remittance, evaluation of prospective customer and public relation services.
and includes services as a commission agent, but does not include any information technology service.
The scope of the services has been further expanded with effect from 10.09.2004 so as provided the following definition of Business Auxiliary Services.
(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 *[Explanation-For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, inputs means all goods or services intended for use by the client,;]
(v) *[production or processing of goods for, or on behalf of, the client;]
(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.
*[Explanation-For the removal of doubts, it is hereby declared that for the purposes of this clause,-
(a) commission agent means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person-
(i) deals with goods or services or documents of title to such goods or services; or
(ii) collects payment of sale price of such goods or services; or
(iii) guarantees for collection or payment for such goods or services; or
(iv) undertakes any activities relating to such sale or purchase of such goods or services;
(b) information technology service means any service in relation to designing, developing or maintaining of computer software, or computerised data processing or system networking, or any other service primarily in relation to operation of computer system;]
5. Appellants contention is that expenses incurred by the appellants on behalf of I.B.P/IOC like Tea/Coffee/Consumable salary of employees, handling losses generator set expenditure, Bank Charges, Electricity Charges, are reimbursed by the I.B.P/IOC and therefore not liable to service tax. We find that as per Section 67 of the Act, value of any taxable service shall be gross amount charged by the service provider for such service provided or to be provided. It does not provide for any deduction from the gross value for providing the service. We therefore do not agree with contention of the appellants that no service tax is payable on reimbursable expenses borne by the appellants and accordingly reject the same.
6. Appellant have also contended that they are Commission Agent and are exempted for levy of Service Tax under Notification 13/2003 dated 20.06.2013. We find that this exemption is applicable to Commission Agent only. But on going through agreement entered into by the appellants with I.B.P/IOC we find that appellants are providing various services to the appellants and are covered under Clause (i), (iii) & (iv) of the definition of Business Auxiliary Service apart from being Commission Agent. Therefore we are of the view that benefit of Notification 13/2003 has rightly been denied to them.
7. We find the plea of time bar was not raised by the appellant before lower authority. We also note that figures for various charges received by them was given by I.B.P/IOC and not by the appellant. Moreover appellant did not pay service tax and did not file any return. As such extended period is applicable to fact of this case and accordingly penalty is also impossible on the appellants.
8. Appellants relied on the decision of Delhi High Court in case of Intercontinental Consultants & Technocrats Pvt. Ltd. 2013 (29) STR 9 (Del.). We find that in this case Court was examining the vires of Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006. In the appeals before as period involved is prior to 2006 and as such ratio of the decision is not applicable to present case.
9. In view of the above, we reject the appeals.
(Justice G. Raghuram) President (Sahab Singh) Member (Technical) Neha 2