Service Tax
TRT-2025-
Cestat Ahmedabad
Date:-03-11-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 03 November 2023
Parties: Enbee Education Centre Pvt Limited Vs Commissioner of Central Excise & ST, Vadodara-i
Facts –
- The Appellant, Enbee Education Centre Pvt Limited, are engaged in the business of export of educational books to the subsidiary company located in USA. Payment is also received by subsidiary company from the customers located in USA. The appellant receives 85% of sale price from the subsidiary and it were booked as commission on sales (export).
- A show cause notice was issued alleging that the services received by the appellant i.e commission agent service‟ will classifiable under the category of "Business Auxiliary Services‟ and are chargeable to Service tax.
- Service tax along with interest and penalty were imposed on the appellant.
Issue –
- Whether the service tax is payable on the commission received by the appellant?
Order –
- The Tribunal observed that there is difference between the terms “consignment agent‟ and “commission agent‟. This distinction is also clarified in Board Circular No. 59/8/2003-ST dated 20.06.2003. Consignment agent is acting on behalf of the principal and deals with the movement of the goods as per the direction of the principal. On the other hand commission agent is only concerned with the procurement of orders for which he may receive the fixed amount along with some percentage amount.
- A per the agreement entered between the appellant and subsidiary company, it was found that subsidiary company is merely clearing the goods in USA and forwarding the same to the Customers of the Appellant. Thus the Subsidiary company is undertaking the activity of clearing and forwarding agent. In such a scenario, the subsidiary company who is the service provider had to be held as consignment agent rather than commission agent.
- The conclusion of the Learned Adjudicating authority that the appellant are liable to pay service tax under the taxable service “Business Auxiliary Services‟ cannot be sustained. The appeal is allowed.
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