J B Exports Vs C.C.E. & S.T. (CESTAT Ahmedabad)
CESTAT Ahmedabad held that deduction given in sales invoice being discount, even though under nomenclature of commission, cannot be treated as commission for the purpose of levy of Service Tax under ‘business Auxiliary Service’.
Facts- The appellant are engaged in export of goods to foreign buyers. While raising the invoices in the sale invoice the appellant have deducted 10%/12.5% as commission and after deduction of the said commission the amount was realized against the exports proceeds. The case of the department is that since the deduction from the invoice value was made in the nomenclature of commission. It is a commission paid to the foreign buyer and which is chargeable to Service Tax as commission agent service under ‘Business Auxiliary Service’. In appeal No.ST/11773/2016 apart from the above common issue in all the appeals, one more issue is involved i.e. whether the appellant is liable to pay service tax on the GTA service availed in respect of goods actually exported.
Conclusion- In the present case no independent sales commission agent is involved. Therefore, even though the deduction was made in the invoice under nomenclature of commission but the same is not in the nature of commission, but it is only a discount and the sales discount cannot be termed as a service charge.
Held that merely by mention of commission or any other term, whereby the deduction was given in the sale invoice, the same cannot be treated as commission for the purpose of levy of Service Tax under ‘business Auxiliary Service’. Accordingly, the demand of service tax on the commission shall not sustain.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellant are engaged in export of goods to foreign buyers. While raising the invoices in the sale invoice the appellant have deducted 10%/12.5% as commission and after deduction of the said commission the amount was realized against the exports proceeds. The case of the department is that since the deduction from the invoice value was made in the nomenclature of commission. It is a commission paid to the foreign buyer and which is chargeable to Service Tax as commission agent service under ‘Business Auxiliary Service’. In appeal No.ST/11773/2016 apart from the above common issue in all the appeals, one more issue is involved i.e. whether the appellant is liable to pay service tax on the GTA service availed in respect of goods actually exported.
2. Shri H.D. Dave, Learned Counsel appearing on behalf of the appellant submits that on the identical facts this Tribunal has passed various judgments that merely by mentioning commission in the sales invoices. It does not amount to commission chargeable to service tax, whereas, the same is sales discount, therefore, the same is not chargeable to Service Tax. As regard the service tax demand on GTA in respect of appeal No.ST/11773/2016, he submits that since the GTA service was used for export of goods, the said service even though taxable at the initial stage of availing the service but used for export of goods and eligible for exemption under Notifications 18/2009-ST & 31/2012-ST therefore, the demand is not sustainable on this ground.
2.1 Without prejudice he further submits that the demand was raised by invoking extended period. But since the appellant have been declaring commission in the sales invoices which is meant for export the same was known to the department while processing the export consignment. Therefore, there is no suppression of the fact on the part of the appellant. Hence, the demand is also not sustainable on ground of time bar. In support of his above submissions, he placed reliance on the following judgments:
