Karnataka High Court
The Commissioner Of Service Tax vs M/S Sreenidhi Polymers (P) Ltd on 5 March, 2010
Bench: K.L.Manjunath, B.V.Nagarathna
IN THE HIGH COURT OF KARNATAKA AT BANGAEORE
DATED THIS THE 5* DAY OF MARCH, zoifiadg
PRESENT
THE HON'BLE M.JUSEICE_K.LlMAfi$fiNATH'g C
AND '~« »
THE HON'ELE MRS. JUsTIcE*3.V;NAGARATRfiAc
c.E.A.RO}26/2005
BETWEEN:
1 THE cOMMIssIONER.OE SERVICE TAX
SERVICE TAX cOMIssIONERATE*.*
BANGALORE 27.""~Jj V52, 1,_*
.""«7' * £~' *_'7:.i»AppELLANT
(By Sri : g;v CHAfifiRRSHEKARA REDDY,ADV.)
1 Mrs SREENI§HI*EO1YMERS (P) LTD
NO 1674 AVIEASH MANSION, IST FLOOR
,.1sT CROSSJLAL EAGH ROAD,
.{,BANGALORE,70,
"ir:'H """ " RESPONDENT
=,*;By-sr;;*g_s RAVISHANKAR,ADV.) _ This ;CEA filed u/S.35G of the Central Excise Act, 1944 arising out of order dated nC«25~02e2005 passed in Appeal NO.128/04 in Order f;NO:388/O5, praying that this HOn'ble Court may @be_pleased to:
direct the Appellate Tribunal to refer the E"', question of law amended section 35G(1) of the Central Excise Act, 1944 which is stated at para--8 and set--aside the Final Order in Appeal No.l28/04 in Order 160.388/05 and decide the question Of law accordingly, in the interest of justice and equity.
f/I contends that service rendered by the assessee falls under the category of Del Credere Agent and therefore the assessee is not liable tol pay the tax. He further' ¢og£éfia5'.thg:' amendment to Finance Act was brought;in thex year 2005 which hash come finto_fforceW$withf effect from 16.5g§O0§;"fWhe¢§in hthe< service rendered by a Del dredage agent has also been included under business auailiarv service. In view of "the dfifiéndment' uhich has come into force with effect from 16¢d.2005 holding a Del Credere Agent iaaliable to be taxed under the service Tax.Act_e Therefore, taking us through
-. theé definition _____ ,of Del Credere Agent and i_'a@endmentybrought into the Finance Act, in the year* Zfifififi? contends that in view of the j inclusion of the service of a Del Credre Agent .fas a Auxiliary service, it goes without saying ' 'that the Del Credere Agent was excluded from Ax payment of service Tax prior to the amendment. He further contends that the service rendered by the assessee to the IPCL £3"
is more in the nature of an indemnifier as the assessee as to indemnify to the value of the goods sold by the IPCL to its customers andW that the assessee shall ~ensure Vthel proper repayment of the value of the goods_sol§nhy the IPCL to its customers.d y Therefore; hed contends that the act of--the respondent cannot be treated as a"C'i§??FVlAgent. In the circumstances he re§uests{the:CQurt to dismiss the appeal} _i,fi
7. Hayinde'heard_.the counsel for the parties{" we haye to look into the meaning of the _-pe1 '"'c,§~;.ec1;:-r.-._§- 'Agent. In Black's Law
-mpictionaryy 6a; Edition, dddd Del Credere Agent 'Mfieans an agreement by which a factor, when he sells_>goeds on credit for an additional 'W_"commission (called a 'del credere commission') dguaranties the solvency of the purchaser and d"uHhis performance of the contract. Such a vfactor is called a 'del credere agent'. He is a mere surety, liable to his principal only in case the purchaser makes default. Agent who §$/.
. _ ,?a._x
(a) 'commission agent' means any person who acts on behalf of another person and 'causes sale or purchase of goods, or proyisionl or receipt of services, for a considerationf*andW includes any person who, while" aCting_ on"
behalf of another person f
(i) deals with goodslt or services "Ȣr, documents of title to such ;goods or_* services; or
(ii) collects payment of"sale price of such goods or services; org, v
(iii) guarantees ,for,'collection° or payment for such goods or services; or
(iv) undertakes .agy. activities relating to such sale or purchase of such goods or awservicésa '"v "
Whereunder 'the vservice rendered by a Del Credere hgent~ has Tbeen. brought into service xr*10f?e§mbined reading of the definition of 'V C in Ft agent under the Finance Act under ®%section 65(25) and the meaning of Del Credere l Agent and the amendment brought into in the "year 2005, whereunder Del Credere Agent is also included would clearly establishes that prior to the amendment, the service rendered fly =«._..« Ff) by a Del Credere Agent had been excluded from service tax. Therefore, we are of the jfiew that since the respondent~assessee=nas-notiafich & f Agent for IPCL as it"'"w--:--1s 5a .3Z)"e3;'4_CVVre}fieVir=ei Agent the respondent ~assesseeJispnot,iiahleu to 'pay service tax as *ordered'.byg flfie""Asstth Commissioner of Centra;~Excise.
11. Accoprdingiyi View that a similar mistake has aleo been committed by the Commissi¢ner'.}Appea1s% and further we are of is justified in distingnishingmfi$$g@§finition of Clearing and Forwarding Agent anfl the Del Credere Agent and igingviewgoffthe agreement entered into between IACL and respondent--assessee and the nature of "'* "service rendered to IPCL by the respondent, we hare_fof the view that the assessee is not A" "liable for payment of service tax.
12. Accordingly, the question of law framed in this appeal is answered against the revenue and in favour of the assessee, Accordingly, the appeal is dismissed.