Bayer Crop Science Ltd. Vs Commissioner (CESTAT Kolkata)
Summary: The appellant, M/s. Bayer Crop Science Ltd., had been given an order to supply hybrid seeds to West Bengal State Seed Corporation Ltd. (WBSSCL). The appellant’s offer price for the hybrid seeds was Rs.275/- / 271/- per Kg. It appointed commission agent M/s. Gopal Fertilizer to procure the seeds on its behalf and supply them to WBSSCL, for which the commission agent was paid Rs.45/- per Kg. The commission agent raised bills charging Service Tax of Rs.2,41,947/-.
The appellant subsequently came to know that since the commission agent was rendering service under Business Auxiliary Service in respect of agricultural seeds, Service Tax was not payable. It therefore filed a refund claim for Rs.2,41,947/-. The lower authorities agreed that Service Tax was not required to be paid on the Business Auxiliary Service rendered by the commission agent since the service related to procurement of agricultural seeds. However, the refund was rejected on the ground that the appellant had not established that the principle of unjust enrichment was inapplicable.
Before the Tribunal, the appellant relied upon its letter dated 31.07.2013 concerning the pricing arrangement and submitted that it was not rendering any service to WBSSCL. According to the appellant, it was selling hybrid seeds on an outright sale basis at Rs.275/- / 271/- per Kg. and had engaged M/s. Gopal Fertilizers as commission agent by paying commission of Rs.45/- per Kg. The appellant submitted that only the service rendered by the commission agent could be classifiable as Business Auxiliary Service and, even then, Service Tax was not payable because the commission agent was dealing with agricultural produce. Since the appellant’s own activity was a sale, the question of passing on any Service Tax element to the buyer would not arise.
