Custom, Excise & Service Tax Tribunal
Messrs Nova Petrochemicals Limited vs Service Tax - Ahmedabad on 31 July, 2019
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
West Zonal Bench, Ahmedabad
Regional Bench-Court No. 01
Service Tax Appeal no.239of 2010-DB
(Arising out of OIOno. STC/01/COMMR/AHD/2010 dated 25/01/2010, and passed by
Commissioner of Service Tax- - AHMEDABAD)
M/s Nova Petrochemicals Ltd. -Appellant
Vs.
Commissioner of Service Tax
- Ahmedabad -Respondent
APPEARANCE:
Shri PM Dave, Advocate for the Appellant Shri SK Shukla, Authorized Representative CORAM:
HON'BLE MEMBER (JUDICIAL) , MR SK MOHANTY HON'BLE MEMBER (TECHNICAL), MR C J MATHEW FINAL ORDER No. A/11403/2019 Date of Hearing : 01/04/2019 DATE OF DECISION:31/07/2019 PER: CJ MATHEW Proceedings that were initiated against the appellant, M/s Nova Petrochemicals Ltd, arising from their trading activities for the period from 2003-04 to 2006-2007, culminated in order for recovery of tax liability of Rs. 2,76,10,000 onconsideration of Rs. 372.76 lakhs received as 'commission agent'that had not been included for tax under section 65(105)(zb) of Finance Act, 1994.
2. According to Learned Counsel for the appellant, the demand pertains to the finding of taxability consequent upon modification of 2 ST/239/2010-SM exemption in notification no. 13/2003-ST dated 20th June, 2003 which had initially excluded the consideration received as 'commission agent' from the ambit of tax upto 7th July, 2004. Learned Counsel also contends that the show cause notice dated 6th April, 2009 does not contain any justification for invoking the extended period of limitation in the face of a catena of decisions of the Tribunal which held that, where an assessee could reasonably be inferred to entertain the belief that activities was not taxable, the ingredients for such invoking could not be said to exist. Reliance was place on Bhilosa Industries Pvt Ltd v. Commissionerof Central Excise, Vapi [2015 (317) ELT 283 (Tri-Ahd)]andHoogly Infrastructure Pvt Ltd v. Commissioner of CentralExcise, Kolkata-III [2015 (329) ELT 142 (Tri- Kolkata)].
3. He further submits that the proceeding had originated from an erroneous interpretation of the said notification no. 13/2003-ST dated 20th June 2003 which had been clarified subsequently by decisions of the Tribunal in Brindco Sales Ltd v. Commissionerof Service Tax, Delhi [2015 (40) STR 986 (Tri- Del)]that was followed in Sify Technologies Ltd v. Commissioner of Service Tax, Chennai [2018-TIOL-659-CESTAT-Mad]and in Chabaria Marketing Ltd v. Commissioner of Service Tax, Mumbai[2016 (43) STR 193 (Tri- Mumbai)]. That of the Tribunal in Commissionerof Central Excise, Allahabad v.Chandan Chemicals [2007 (7) STR 578 (Del)]was also cited.
4. Learned Authorised Representative contends that the decisions relied upon on behalf of the appellant would not apply to the facts and circumstances of the present dispute. It is further contended that 3 ST/239/2010-SM those decisions were handed down in the context of trading of goods along with certain other services which, though bundled, were sought to be disaggregated by tax authorities to fasten the tax liability.
5. Considering the rival submissions and the various judicial decisions, it would be appropriate to extract the relevant provisions of the exemption notification, viz.
"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.' It is seen from a plain reading of the above that, while the definition of 'commission agent' is of particular relevance to sale or purchase of goods on behalf of another person, the exemption is not restricted to the specific enumeration therein but to every activity of a 'commission agent'. It would, therefore, appear, from a harmonious construction of the definition and the exemption notification, including the eligibility, that any 'commission agent', who deals in goods is not required to pay tax on any of the activities enumerated under section 65(19) of the Finance Act, 1994. The impugned order- in-original no. STC/01/Commr/AHD/2010 dated 25th January 2010 of Commissioner of Service Tax, Ahmedabad has sought to deny the entire consideration from the benefit of the tax exemption. The interpretation by adjudicating authority would have been acceptable had 'business auxiliary service' provided as a 'commission agent' was contained in the notification instead of 'by a commission agent.' This 4 ST/239/2010-SM not being so, the alternative, as interpreted by us, is the only harmonious construction.
6. For the reason so cited, we find that the impugned order must be set aside and the appeal allowed.
( Pronounced in open court on 31/07/2019) (C J Mathew) Member (Technical) (SKMohanty) Member (Judicial) Diksha