Lakshay International Pvt. Limited Vs Commissioner of Central Excise (CESTAT Chandigarh)
CESTAT Chandigarh held that Chartered Accountant certificate was provided for quantification of tax, however, the said certificate was not discussed. It is settled law that certificates given by Experts in the respective fields cannot be ignored without cogent reasons.
Facts- The appellants, M/s Lakshya International Private Limited (ST/537/2011) and M/s G.D. Tools and Forgings (ST/538/2011) are engaged in manufacture and exports of leather tool bags and polyester bags.
Both the appellants have been paying the overseas commission at an agreed percentage of business generated by them to their overseas commission agents who helped them to find customers abroad. It appeared to the Department that the appellants were rendering “Business Auxiliary Service” as per Section 65(19) as a commission agent; as the commission agents are located outside India, the appellants, as receivers of the service are liable to pay service tax under Reverse Charge Mechanism in terms of Rule 2 (1) (d) (iv) of the Service Tax Rules, 1994 w.e.f. 09.07.2007 in terms of Notification No.13/2003-ST dated 20.06.2003 as amended.
Conclusion- Coming to the quantification of the duty, we find that the appellants have produced Chartered Accountant certificates regarding the commissions paid to overseas agents for the period before and after 18.04.2006. We find that the lower authorities have simply relied on the figures proposed in the show cause notice and have not discussed at all the Chartered Accountant certificates. They have not also contradicted the said certificates. We are of the considered opinion that certificates given by Experts in the respective fields cannot be ignored without cogent reasons. Therefore, we find that the duty has been correctly paid by the appellants.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The appellants, M/s Lakshya International Private Limited (ST/537/2011) and M/s G.D. Tools and Forgings (ST/538/2011) are engaged in manufacture and exports of leather tool bags and polyester bags. Both the appellants have been paying the overseas commission at an agreed percentage of business generated by them to their overseas commission agents who helped them to find customers abroad. It appeared to the Department, in case of M/s Lakshya International Private Limited (ST/537/2011), that the appellants were rendering “Business Auxiliary Service” as per Section 65(19) as a commission agent; as the commission agents are located outside India, the appellants, as receivers of the service are liable to pay service tax under Reverse Charge Mechanism in terms of Rule 2 (1) (d) (iv) of the Service Tax Rules, 1994 w.e.f. 09.07.2007 in terms of Notification No.13/2003-ST dated 20.06.2003 as amended. A show cause notice dated 06.04.2009 was issued demanding service tax of Rs.3,30,394/- along with interest; seeking to impose penalties and seeking to appropriate service tax of Rs.1,65,814/- deposited by the appellants on 15.01.2009. The Deputy Commissioner vide order dated 31.05.2010 confirmed the service tax of Rs.2,96,387/-. On appeals filed by the appellants and the Department (for not imposing penalty under both Sections 76 & 78), Commissioner (Appeals) set aside the demand of Rs.85,516/- for the period 09.07.2004 to 17.04.2006; confirmed service tax of Rs.210871/-, for the period 18.04.2006 to 20.12.2008; upheld the penalties imposed under Section 77; reduce the penalty imposed under Section 78 to Rs.210871/- and upheld penalty imposed under Section 76. Hence, this appeal.
2. In the case of M/s G.D. Tools and Forgings (ST/538/2011), show cause notice dated 09.04.2009was issued seeking to confirm service tax of Rs.2,45,408/- along with interest; seeking to appropriate the service tax of Rs.1,23,534/- paid by the appellants on 07.11.2008 and 24.11.2008; proposing to impose penalties under Sections 76, 77 & 78. The Original Authority vide order dated 15.06.2010 set aside service tax demand of Rs.24,794/-; confirmed service tax demand of Rs.2,20,834/- for the period 09.07.2004 to 30.09.2008; imposed equal penalty under Section 78 and penalty of Rs.1000 per day under Section 77 and refrained from imposing penalty under Section 76. On appeals filed by the appellant and the Department (for not imposing penalty under both Sections 76 & 78), Commissioner (Appeals) set aside the demand of service tax of Rs.1,12,100/- for the period 09.07.2004 to 17.04.2006; confirmed balance service tax of Rs.1,08,790/- for the period 18.04.2006 to 30.09.2008; upheld the penalty under Section 77 and reduce the penalty under Section 78 to Rs.1,08,790/-
3. Shri Sudhir Malhotra, learned counsel, submits that the issue involved in both the appeals is identical and therefore, the same may be heard and decided together. Accordingly, both the appeals have been heard together and have been taken up for decision.
4. Shri Sudhir Malhotra takes us through the provisions of Statute pertaining to leviability of service tax on commission agent and puts forth his arguments as follows:
