Federal Bank Ltd. Vs Commissioner of Central Excise (CESTAT Bangalore)
Profit Margin on Imported Gold Not Taxable as No Consignment Agent Service Was Rendered; Imported Gold Profit Margin Escapes Service Tax Because No Consideration Was Received for Services; CESTAT Sets Aside Tax Demand Because Sale of Consignment Gold Did Not Constitute Agent Service; No Service Tax on Gold Trading Margin Because Bank Was Not Acting as Clearing and Forwarding Agent.
The appellant, a banking company, imported gold bullion on a consignment basis in terms of RBI Master Circular No. 7/2011-12 dated 01.07.2011. The imported gold remained in the bank’s vaults and was sold at a later stage. After such sales, the supplier was settled, and the difference between the sale price and the import price was retained by the bank as profit margin.
The Revenue treated this profit margin as “commission” received for providing Consignment Agent Services and, accordingly, confirmed service tax demand along with interest and penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
The appellant contended that the trading margin earned from the sale of imported gold could not be subjected to service tax by treating it as consideration for consignment agent services. It argued that its activities did not fall within the definition of Clearing and Forwarding Services and relied upon earlier Tribunal decisions.
