GLAXO SMITH KLINE Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) THIS is an appeal arising from Order -in -Review No. 25/2006 dated 11.07.2006 by which the Assistant Commissioner's Order -in -Original, dropping the proceedings, has been reversed and Service Tax of Rs. 1,23,566/ - has been confirmed besides penalty at the rate of Rs. 200/ - per day under Section 76 and Rs. 1,000/ - under Section 77.

(2.) THE appellants were exporting pharmaceutical products. They have appointed one M/s. Cross Links as a promoting agent to market the product of the assesses in Bangladesh. The Revenue proceeded to levy Service Tax on the appellants on the ground that they have rendered service under the category of Clearing and Forwarding Agents. The appellants denied that they have carried on any activity under the Finance Act for levy of Service Tax more particularly, under the category of C and F Agents. The Assistant Commissioner gave a detailed finding accepting the assessee's plea. While doing so, he examined the activity of M/s. Cross Links, Bangladesh. The findings recorded by him in paras 9 to 12 are reproduced herein below:

(3.) THE learned Counsel submits that the situation has changed after introduction of deeming provision which was brought in the Explanation to Section 65(105) and provisions of Section 64 where the service provided outside India were also deemed to have been rendered in India while the situation was not so earlier to this period. The period in question pertains to January 2003 to November 2003 which is, earlier to the introduction of Section 65(105) and provisions of Section 64. It is the appellant's contention that the Review Order is without jurisdiction and the order passed by the Assistant Commissioner is a correct one in view of the fact that no Service Tax can be demanded under Rule 2(1)(d)(iv) of the Rules since entire services were provided outside India i.e. in Bangladesh and Service Tax is destination based consumption tax. in this regard, the Board's Circular No. 56/5/2003 -ST dated 25.04.2003 is relied. The learned Counsel also relies on the Larger Bench ruling rendered in Larson and Toubro Lid. v. CCE, Chennai 2006 (3) STR 321(Tri. -LB) which also has considered the aspect pertaining to the category of Clearing and Forwarding Agent. It has been ruled therein that mere booking orders or the principal by an agent on commission basis would not come under the C&F category. The learned Counsel submits that the proposition in the present case is also similar, as the appellants have exported the pharmaceutical goods and such action of export cannot be treated as coming under the category of C&F agents. He refers to the Chennai Telephones (BSNL) v. CCE, Chennai 2004 (169) ELT 222(Tri. -Chennai) wherein the aspect pertaining to subsequent amendments and clarifications was considered and it was ruled that it will have only prospective effect. Likewise, the ruling by this Bench in Raja Rajeshwari Intl. Polymers (P) Ltd. v. CCE, Bangalore -III is relied which held that Del Credere (Agent does not come within the ambit of C&F Agent service.