Case Law Details
Venus Corporation Vs Commissioner of CGST & Central Excise (CESTAT Ahmedabad)
Facts – The appellants are cable operator and providing cable services to the subscribers on the basis of signals received from the MSO. The subscriber has not asked for any brand for providing the said services. The appellant is contending that it is eligible for small scale service provider exemption under for the period 2005-06 to 2006-07 in respect of their service i.e. Commission Agent service under Business Auxiliary Service. The appellant is a provider of services on behalf of M/s. HFCL and receiving commission from them. The appellant receiving collection under the brand/trade name of M/s. HFCL and is rendering Business Auxiliary Service to M/s. HFCL under its own name. On the other hand, the department contends that the appellant has provided service of Business Auxiliary Service to their clients and the service provided on the brand name of another person therefore the appellant are not entitled for exemption.
Conclusion- There is no dispute about the nature of service. The appellant has provided Commission Agent service to their clients. The appellant as a commission by mediates between their client and customer of the client, while providing commission agent service and does not use the brand name of the service providers for the reason that they are providing service on behalf of the client and there is no need of brand name for providing service to the same client. Therefore, the department without any basis made a bald allegation that appellant is using brand name for providing Commission Agent service.
The judgment of Maheshwari Industries (supra), was referred in the case which says –
A person may be taken to be manufacturing specified goods, bearing a brand name or trade name only if the name, mark or symbol used as such, is intended to indicate a connection in the course of trade between such specified goods and some person using such mark or name. If the use of the brand name or trade name is not intended for the purpose of indicating a connection in the course of trade between such specified goods and the person using such name or mark, then the same may not fall within the definition of the expression brand name or trade name.
Citing this judicial pronouncement, it was held that the appellants are not providing any branded services, therefore, the appellants are entitled to avail the benefit of exemption.
It was held that commission agent service provided by the appellant cannot be treated as branded service. Accordingly, the exemption notification cannot be denied. It was of the view that demand confirmed by the lower authorities denying exemption Notification is without any basis. Accordingly, the impugned order was set-aside and appeal was allowed.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the appellant are eligible for small scale service provider exemption under Notification No. 6/2005-ST for the period 2005-06 to 2006-07 in respect of their service i.e. Commission Agent service under Business Auxiliary Service. The case of the department is that the appellant has provided service of Business Auxiliary Service to their clients such as M/s. Jet Airways, M/s. Cathay Pacific Airways Limited, M/s. All Four Season Travels and M/s. Sterling Dyechem etc. The service provided on the brand name of another person therefore the appellant are not entitled for exemption Notification No. 6/2005-ST.
2. Shri Vipul Khandar, learned Chartered Accountant appearing on behalf of the appellant, at the outset submits that service of Commission Agent is on behalf of the principal, cannot be treated as branded service as for providing a Commission Agent Service there is no need of using the brand name of their client. Therefore, denial of exemption is illegal and incorrect. He placed reliance on the following judgments:-
(a) Reetika Cable vs. Commissioner of CGST, Chandigarh – 2-21 (53) GSTL 261 (Tri. Chan.)
(b) Heaven Vision vs. CCE, Chandigarh – 2020 (37) GSTL 206 (Tri. Chan.)
(c) SOTC Travels Services Pvt. Limited vs. Pr. Commissioner of C. Ex. Delhi-I – 2021 (55) GSTL 332 (Tri. Del.)
(d) Bharat Hotels Limited vs. CCE (Adjudication) – 2018 (12) GSTL 368 (Del.)
3. Shri P. Ganesan, learned Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. On careful consideration of the submissions made by both the sides and perusal of record, we find that there is no dispute about the nature of service. The appellant has provided Commission Agent service to their clients. The appellant as a commission by mediates between their client and customer of the client, while providing commission agent service and does not use the brand name of the service providers for the reason that they are providing service on behalf of the client and there is no need of brand name for providing service to the same client. Therefore, the department without any basis made a bald allegation that appellant is using brand name for providing Commission Agent service. This identical issue has been considered in the case of Reetika Cable (supra) wherein the coordinate Bench of this Tribunal has passed the following order:-
“6. We find that the said issue came up before this Tribunal in the case of M/s. Blue Star Communication, wherein this Tribunal has held as under :-
“11. On careful consideration and submission made by both sides, the following issues emerges as under :-
(a) Whether the appellants are providing branded service or not? Consequently they are entitled for exemption under Notification No. 6/2005-S.T., dated 1-3-2005 and Notification No. 33/2012-S.T., dated 20-6-2012.
(b) Whether the extended period of limitation is invocable or not?
(c) Whether the best judgment under Section 72 of the Finance Act, 1994 has been assessed correctly or not?
(d) Whether the appellants are liable to pay service tax on the gross value of the services provided by them or not?
(e) Whether the appellants are entitled for Cenvat credit of service tax paid by the MSO or not?
12. Whether the appellants are providing branded service or not? Consequently they are entitled for exemption under Notification No. 6/2005-S.T., dated 1-3-2005 and Notification No. 33/2012-S.T., dated 20-6-2012.
In this case, the appellants are cable operator and providing cable services to the subscribers on the basis of signals received from the MSO. The subscriber has not asked for any brand for providing the said services. In fact, the appellant is also not providing any branded service as MSO is supplying signal to the appellants which has been transmitted to the subscribers, in that circumstances, there is no relation of brand name to the ultimate customers. Therefore, we hold that the appellants are not providing any branded service to the subscribers and the said issue has been examined by the Hon’ble Apex Court in the case of RDB Industries (supra) wherein the Hon’ble Apex Court came to the occasion to examine the issue of brand name and observed as under :-
“18. It is obvious that, on the facts of these cases, what is in fact affixed to the jute bags is the name of the procurer agency in question such as the FCI, the State Government of Punjab and so on, the crop year, the name of the jute mill concerned, its BIS certification number and the statement that the food grains are manufactured in India. It is clear that all the aforesaid markings have, on the pain of penalty, to be done by the manufacturers of the jute bags, given the Jute Control Order and the requisition orders made thereunder. Obviously, such markings are made by compulsion of law, which are meant for identification, monitoring and control by Governmental agencies involved in the PDS. Neither do such markings enhance the value of the jute bags in any manner nor is it the intention of the appellants to so enhance the value of jute bags, which is necessary if Excise duty is to be imposed. This flows from the expression “…for the purpose of indicating, or so as to indicate, a connection in the course of trade between the product and some person using such name or mark…”. In the present case, the markings on the jute bags are not for the purpose of indicating a connection in the course of trade between the jute bag and some person using such name or mark. The markings are by compulsion of law only in order that Governmental Authorities involved in the PDS may identify and segregate the aforesaid jute bags. This being the case, it is obvious that there is no “brand name” involved in the facts of the present cases.
22. The facts of these cases are far from the facts in Kohinoor Elastics (supra). In Kohinoor Elastics (supra), it was found that, as a matter of fact, the customer wanted the brand name affixed on the product because he wanted the consumer to know that there is a connection between the product and him. This is very far from the facts of the present case, in that, as has been held by us above, it is clear that the markings required on the jute bags are compulsory, being required by the Jute Commissioner, and are not for the purpose of enhancing the value of the jute bags by indicating a connection in the course of trade between the aforesaid products and the manufacturer of those products.”
Further, in the case of Maheshwari Industries (supra), the Hon’ble Apex Court observed the criteria for use of brand name which is as follows :-
“(1) It must be a name or mark such as symbol, monogram, label, signature or invented word or writing;
(2) It must be used in relation to such specified goods, for the purpose of indicating a connection in the course of trade between such goods and some person using such name or mark, with or without any indication of the identity of that person; and
(3) The mere fact that the specified goods manufactured by a person bear a brand name or trade name of another manufacturer, is not sufficient to conclude that those goods are manufactured by such other manufacturer or trader.
19. Therefore, it is clear that a person may be taken to be manufacturing specified goods, bearing a brand name or trade name only if the name, mark or symbol used as such, is intended to indicate a connection in the course of trade between such specified goods and some person using such mark or name. If the use of the brand name or trade name is not intended for the purpose of indicating a connection in the course of trade between such specified goods and the person using such name or mark, then the same may not fall within the definition of the expression brand name or trade name under the Explanation under paragraph 5 of the Exemption Notification.”
In view of the above cited judicial pronouncements, we hold that the appellants are not providing any branded services, therefore, the appellants are entitled to avail the benefit of exemption Notification No. 6/2005-S.T., dated 1-3-2005 and Notification No. 33/2012-S.T., dated 20-6-2012.
(b) Whether the extended period of limitation is invocable or not?
We find that the appellants were under bona fide belief that they are not liable to pay service tax as they are entitled for benefit of exemption under Notification No. 6/2005-S.T., dated 1-3-2005 and Notification No. 33/2012-S.T., dated 20-6-2012, therefore, they did not pay service tax. Moreover, there was confusion in the industry during the relevant period whether the appellants are liable to pay service tax or the MSO liable to pay service tax on their activity, in that circumstances, the benefit of doubt goes in favour of the appellants. Therefore, we hold that the extended period is not invocable as held by the Tribunal in the case of Trans Yamuna Communication Pvt. Ltd. v. Commissioner of Service Tax, Delhi – 2017 (52) S.T.R. 31 (Tri. – Del.) wherein this Tribunal observed as under :-
“4.I have heard both the sides and perused the appeal records. As noted above, the tax liability is not in dispute. It appear that the scope of activities undertaken by the appellant is not falling under generally understood activities of cable operator who is involved in distribution of television signals to various clients. Admittedly, the television signals received from satellite is managed and handled through various layers of persons/activities till it reaches the ultimate customer. The appellant’s role is as an intermediatory and apparently there could be a bona fide belief on their part regarding the tax liability under the said category. As already noted that they are not acting as a local cable TV operator in transmitting signals to the clients. Neither they are involved in receiving satellite signals as a MSO. The Finance Act, 1994 borrows the definitions of “Cable operator” and “Cable service” from Cable Television Network (Regulation) Act, 1995. Considering scope of definition under Section 2(aa) of the said Act there is a possibility of bona fide belief for non-tax liability. Considering the ratio followed by the Tribunal in the abovementioned cases and also considering the facts of the present case, I find that it is a fit case for invoking the provision of Section 80 for waiver of penalties imposed on the appellant. Accordingly, the penalties are set aside and the appeal is allowed only to that extent.”
Therefore, no penalty is imposable on the appellants.
(c) Whether the best judgment under Section 72 of the Finance Act, 1994 has been assessed correctly or not?
In this case, it is a fact on record, the appellants were not given time of supply the data of their activity and assessment has been done on the basis of the data supplied by the MSO which is not correct, therefore, we hold that the assessment under Section 72 of the Finance Act, 1994 is not correct. In that circumstances, the impugned demand is not sustainable, but the appellants are directed to provide the data for their activity within the period of limitation to the adjudicating authority within 30 days of the communication of this order and on the basis of the data supplied by the appellants, the correct service tax liability shall be determined by the adjudicating authority. Therefore, for that purpose, the matters need to be examination at the end of the adjudicating authority.
(d )Whether the appellants are liable to pay service tax on the gross value of the services provided by them or not?
We find that in terms of Section 67 of the Finance Act, 1994, the appellants are liable to pay service tax on the gross value of subscription received by them. The said view having the support of the Hon’ble Apex Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. (supra) wherein the Hon’ble Apex Court observed as under :-
“24. In this hue, the expression ‘such’ occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing ‘such’ taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such ‘taxable service’. That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 1, 2006) or after its amendment, with effect from, May 1, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider ‘for such service’ and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service.”
Admittedly, in this case, the appellants have received subscriptions from the subscribers for providing the services, on the said amounts, the appellants are liable to pay service tax.
(e) Whether the appellants are entitled for Cenvat credit of service tax paid by the MSO or not?
We find that the out of the total amount received by the appellants, some amounts of total subscriptions, the appellants are remitting to the MSO on which the MSO is paying service tax, therefore, the signal provided by the MSO to the appellant is an input services for the appellants. Therefore, the service tax paid by the MSO is available as Cenvat credit to the appellants. In these circumstances, we hold that the appellants are entitled to avail Cenvat credit of the service tax paid by the MSO.
13. In view of the above, the following order is passed :-
(a) the appellants are entitled for exemption under Notification No. 6/2005-S.T., dated 1-3-2005 and Notification No. 33/2012-S.T., dated 20-6-2012.
(b) the extended period of limitation is not invocable. Consequently, no penalty is imposable on the appellants.
(c) the appellants are liable to pay service tax on the gross value of services received by them and is entitled to avail Cenvat credit of service tax paid on the amount remitted to the MSO.
(d) The adjudicating authority shall quantify the demand for the period within the period of limitation on production of data of services provided by the appellants of cable services to the subscribers within the 30 days of receipt of this order on which the appellant shall pay the service tax if payable.”
7. Relying on the decision of this Tribunal in the case of Blue Star Communication (supra), we pass the following order :-
(a) the appellants are entitled for exemption under Notification No. 6/2005-S.T., dated 1-3-2005 and Notification No. 33/2012-S.T., dated 20-6-2012.
(b) the extended period of limitation is not invocable. Consequently, no penalty is imposable on the appellants.
(c) the appellants are liable to pay service tax on the gross value of services received by them and is entitled to avail Cenvat credit of service tax paid on the amount remitted to the MSO.
(d) The adjudicating authority shall quantify the demand for the period within the period of limitation on production of data of services provided by the appellant of cable service to the subscribers within the 30 days of receipt of this order on which the appellant shall pay the service tax, if payable along with interest.
8. Accordingly, the matter is remanded back to the Adjudicating Authority for quantification of demand as above.
9. In view of the above, the appeal is allowed by way of remand.”
From the above decision, which has relied upon Tribunal’s decisions, it is settled that in case of providing a Commission Agent servicer, is not a branded service.
5. In the case of Heaven Vision (supra) while dealing with service of Business Auxiliary Service, passed the following decision:-
“The appellant is in appeal against the impugned order wherein the benefit of exemption Notification No. 6/2005-S.T., dated.1-3-2005 has been denied to them.
2. The facts of the case are that M/s. HFCL Infotel Limited (in short M/s. HFCL) is a provider of communication services and has appointed the appellant as its direct marketing associates, local service agents and collection agents for marketing of its communication services on behalf of M/s. HFCL. The appellant is providing services to the customers of M/s. HFCL on behalf of M/s. HFCL such as jumpering at distribution point, pulling drop wire from pole to subscriber’s end, installation/maintenance of drop wiring, in house wiring and DP, installation of wire line, CorDect and CDMA telephone set, selling of the subscription of service and receiving collections thereof. The appellant is getting commission from M/s. HFCL for undertaking the above activities on behalf of M/s. HFCL. The activities of the appellant fell under the category of Business of Auxiliary Service. The appellant started rendering Business Auxiliary Service to the M/s. HFCL with effect from 1-4-2006 and availed the benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005. The same was denied to the appellant on the ground that the appellant is providing branded services, therefore, they are not entitled for exemption under Notification No. 6/2005-S.T., dated 1-3-2005.
3. Heard the appellant and considered the submissions.
4. We find that the facts are not in dispute that the appellant is a provider of services on behalf of M/s. HFCL and receiving commission from them. The appellant receiving collections under the brand/trade name of M/s. HFCL and the appellant is rendering Business Auxiliary Service to M/s. HFCL under its own name. Therefore, the appellant is not providing any branded services. In that circumstance, the benefit of exemption under Notification No. 6/2005-S.T., dated 1-3-2005 cannot be denied to the appellant. Therefore, we do not find any merits in the impugned order and the same is set aside.
5. In the result, the appeal is allowed with consequential relief, if any.”
6. From the above decisions, it can be seen that Commission Agent service provided by the appellant cannot be treated as branded service. Accordingly, the exemption Notification No. 6/2005-ST cannot be denied. We are of the view that demand confirmed by the lower authorities denying exemption Notification No. 6/2005-ST is without any basis. Accordingly, we set-aside the impugned order and allow the appeal.
(Pronounced in the open court on 02.08.2023)
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