10 June 2024


Judgments

Customs, Excise and Service Tax Appellate Tribunal

Aquamarine Exports Vs. C.C.E. & S.T.-Surat-I

MANU/CS/0032/2022

07.02.2022

Service Tax

In absence of any consideration paid for the alleged commission agent services, no service tax can be demanded

The Appellant are merchant exporter and engaged in export of textiles goods such as fabrics, scarves, sarees, dress materials etc. to various countries. During the course of scrutiny of Shipping bills, it is revealed that Appellant have shown the commission amount to the tune ranging from 11% to 12% paid to commission agent located outside the India.

From the scrutiny of their export invoices, it is revealed that they were deducting the said commission amount from the gross value of their export goods to arrive the net value of export. The case of the department is that, said commission shown in the shipping bills/export invoices is nothing but commission paid to the commission agent towards export of goods, therefore said commission amount is chargeable to service tax under the head "Business Auxiliary Service" in terms of Section 65(19) of the Finance Act 1994 and is taxable service vide Section 65(105)(zzb) of the Finance Act, 1994 read with Section 66A (19) of the Finance Act, 1994 read with section 66A of the said Act under Reverse Charge Mechanism. Accordingly, Show Cause Notice was issued and the adjudicating authority confirmed the demand along with penalty and interest. Therefore, the appellant filed the present appeal.

The revenue has confirmed demand of service tax on the commission which was shown as deduction in the export invoice. The revenue has treated this commission as a commission against foreign commission agent service. There is no commission agent exist who provided the service for export trading of the goods exported by the Appellant. When no service provider is in existence, it cannot be said that the Appellant have received the commission agent service. Secondly, it is also fact that the Appellant have not paid the commission to any person in the foreign country. Therefore, in absence of any consideration paid for the alleged commission agent services, no service tax can be demanded.

In the export invoice, the Appellant have deducted an amount in the nomenclature of commission from the gross sale price thus, the deduction was passed on to the buyer of export goods which is nothing but a discount given to the Foreign Buyers of the goods. Neither any service provider exist nor was any consideration paid to any service provider. Therefore, the department's contention is baseless and not sustainable. The impugned order is set aside. Appeal allowed.

Tags : Demand Confirmation Legality

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