Hon’ble Apex court in the case of P.C.PAulose vs. Commissioner of Central Excise & Customs, reported in. In that case the appellant was collecting entry fee at the airport on behalf of Airport Authority of India in terms of a licence agreement entered into between the appellant and the Airport Authority of India Ltd. The issue before the court was whether this activity would amount to a taxable service and the apex court held that the activity would get covered under section 65 clause 105 (zzm) of the Finance Act, 1994.
If intermediary service is subservient to the original transaction, mere break of the original transaction in transit does not bring out a different transaction. It may be stated that nature, character and terms of a contract decides incidence of tax of intermediate transaction. If the character of the service provided by intermediary in transit is GTA without the original transaction coming to an end, the service provided by an intermediary may not be construed to be a different transaction. But all intermediate transactions may not necessary be characterized as original transaction unless and until both transactions are integrally and indispensably related or connected to each other.
There is no clear finding whether the entire tax demanded falls in the category of tax collected from the customers but not deposited with the Government. We notice that provisions of Section 12D of Central Excise Act read with Section 83 of Finance Act, 1992 has not been invoked in the show cause notice or in the order in original. Further no attempt has been made by the Revenue to demarcate the value corresponding to erection of structures which was not taxable prior to 1.5.06. Such Information is very crucial for passing a legal and proper order in this case.
Brief facts arising for consideration of the case are that the appellant M/s Tata AIG Life Insurance Co. Ltd. are holders of service tax registration under the category of Insurance auxiliary services. The service rendered by insurance agents is covered under the category of insurance auxiliary services. However, the liability to pay service tax on such services is on the recipient of the services, which are the insurance companies who engage the agents as per the provisions of rule 2(1)(d)(iii) of the Service Tax Rules, 1994. It was observed that the appellant had utilized input service tax credit in respect of service tax on insurance auxiliary services. The department was of the view that since the appellant is only a recipient of the service and is not providing any output service, they cannot utilize any input service tax credit for payment of service tax on Insurance auxiliary service.
Assessees have made out a strong prima facie case on the ground that, although they were charging management fees from the bank who lend/advance money to the SHGs, they were a non-profit making organization as no profit or income or profit was paid or transferred to their members directly or indirectly by way of dividend or bonus. This view finds support from the decision of the Tribunal in M/s. Institute of Banking Personnel Selection Vs CST, Mumbai [2007 (8) STR 529].
The issue involved in the matter is whether the trade discount amounts received by the appellant to be treated as commission and taxable under the Business Auxiliary Service or not. The liability in that regard is essentially to be decided on the basis of the provisions of law comprised under the service tax statute. Besides the provisions of the said rules which are brought to our notice rather than disclosing principal to principal relationship between the publisher of the newspaper and the appellants, overall reading of the said rules disclose certain disciplinary control by the Newspaper Society over the appellants as far as it relates to advertising services are concerned which would, prima-facie, disclose the trade discount to be in the nature of commission to the agents.
Explanation to Rule 6(1) of the Service Tax Rules provide that for removal of doubt, it is clarified that in case the value of taxable service is received before providing of the said service, then the service tax is required to be paid on the value of the service, then the service tax is required to be paid on the value of the service attributable for the relevant month or quarter as the case may be. Ld. Chartered Accountant for the appellants has also drawn our attention to the fact that the said explanation ceased to be on the statute book from 12 th September, 2007.
The assessee did not file ST-3 returns declaring the correct taxable value as prescribed. We find that the Joint Commissioner had held that the assessee was not liable to pay service tax on demurrage and handling charges with respect to export cargo/baggage in appellants’ own case. The Commissioner has refrained from confirming the demand for extended period. The circumstances clearly show that the appellant had not attempted to evade service tax due. Moreover, the liabilities confirmed followed interpretation of provisions which could also accommodate the view held by the appellants.
Plea of the assessee that while making the payment wrong service tax code relating to erection, installation and commissioning, indicated merits to be considered and having regards to facts of the case and Board’s Circular No. 58/7/2003-ST, dated 20.05.03 issued from F.No.l59/2/2003-CX-4 and therefore adjustment of payment in the correct account code are allowed. If so, the Board’s circular dated 20.05.03 (referred supra) as a payment should be admissible. .
After carefully considering the submissions made by both the sides we find that it is an admitted fact by both the sides that the construction of road does not require payment of service tax. The Revenue’s only appeal is that construction of driveway cannot be equated with the construction of road in as much as such driveway was not for public utility purpose but the same was in connection with the petrol pump owned by the owner.
