MANU/CE/0501/2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Final Order No. ST/A/699/2012-Cus. (PB) and Misc. Order No. ST/166/2011(PB) in Application Nos. ST/Stay/578, 526-527, 2175, 1504, 1538/2010 and ST/COD/75, 77-81, 84-86, 93/2010 in Appeal Nos. ST/311, 285, 14, 423, 10 & 20/2009 and 520, 206, 244, 230, 107, 274-278, 298, 300, 314-317, 321-323, 359, 296-297, 1085, 802, 810, 388, 1019, 380-381/2010 and 833-837, 652 & 240-241/2008
Decided On: 21.11.2012
Appellants: Paul Merchants Ltd. Vs. Respondent: Commissioner of C. Ex., Chandigarh
Hon'ble Judges/Coram:
D.N. Panda, Member (J), Mathew John, Member (T) and Rakesh Kumar ORDER
Mathew John, Member (T)
1. In this proceeding 10 COD applications, 6 stay applications and 42 appeals are being decided. Out of these 42 appeals 15 are filed by assessees where the main issue is decided against the assessees and 27 by Department where the main issue was decided against the department. The facts and issues involved are common except that the facts and issues relating to M/s. Paul Merchants Ltd. (hereinafter referred to as "PML") are slightly different from that of others because PML is a main agent to Western Union Network Ltd. (hereinafter referred to as "Western Union") and others are sub-agents to PML or to other main agents of Western Union similarly placed as PML.
Appeal No. ST-311/2009 filed by PML
The dispute relates to the period 1-7-2003 to 30-6-2007.
2. PML entered into an agreement with M/s. Western Union Network Ltd., Ireland a company engaged in money transfer from persons located in one country to persons located in any country. PML was executing part of the activities, in territory assigned to PML in India, necessary for Western Union to carry out its business. The contract entered into between the two parties deals with remittances from persons abroad to persons located in India as well as remittances from persons located in India to persons located outside India. However it is affirmed by PML that they have not done any business of the latter type because such business requires permissions from RBI which they have not got. So it is asserted that the dispute before the Tribunal is in relation to remittance from persons abroad to persons in India. This statement is not contradicted by Revenue. In this business the person located abroad approaches any of the offices of the Western Union or its agents and give money to be remitted to a person in India. The office abroad charges the person abroad commission for remitting money to India. They convert the foreign exchange into Indian rupees and pay the recipient in India following a system to ensure the identity of the person to whom the money is delivered. No charges are levied from the recipient of money in India. PML gets their remuneration from Western Union by sharing the commission collected from the person abroad. They also make some profits due to changes in exchange rate between the date of receipt of money abroad and date of delivery of equivalent Indian rupees in India. However this profit is subject to the risk of loss if the exchange rate changes adversely for the Western Union and its agents.
3. PML does some promotional activities like advertising, organizing promotional programs, distributing promotional material etc. The amount incurred by PML for promotional activities was reimbursed by Western Union to the extent of Rs. 1,02,08,980/- during the relevant period. On this amount received Service Tax amounting to Rs. 11,69,838/- is demanded.
4. PML appointed sub-agents within the territories allotted to them to establish a large number of outlets in the area to make it easy for the recipient in India to get the money easily without much travel and hassles. PML compensates these sub-agents by sharing the commission received by them from Western Union which commission itself is received from the person located abroad remitting the money to India.
5. The crucial question is whether PML should pay Service Tax amounting to Rs. 3,23,72,254/- on the commission amounting to Rs. 28,10,71,565/- received by them in this business during the period 1-7-2003 to 30-6-2007. A Show Cause Notice issued by the Directorate General of Anti-evasion alleging that Service Tax is to be paid on such commission and re-imbursements has been adjudicated by the impugned order confirming tax demand of Rs. 3,35,42,092/- against........