ABT LTD. Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) M /s. ABT Ltd. were found to have rendered clearing and forwarding agent's service and received commission from its client and did not pay service tax due thereon on during the period 1999 - 2000 to 2003 - 2004. After due process of law the Assistant Commissioner, Chennai - IV Division demanded service tax of Rs. 41,148/ - and interest due thereon. The Assistant Commissioner also imposed penalties under various sections of the Finance Act, 1994 including equal amount of penalty under Section 76 of the Finance Act. In the impugned order, the Commissioner (Appeals) concurred with the findings of the original authority and affirmed the demand of service tax and interest. However, he vacated the penalty imposed on the appellants following the ratio of the Tribunal's decision in ETA Engineering Ltd. v. CCE, Chennai .

(2.) THE case of the Revenue is that the appellants had received commission from Maruti Udyog Ltd. as a dealer of vehicles of Maruti Udyog Ltd. As per the agreement with Maruti Udyog Ltd., ABT receives dealer's commission for vehicles booked with Maruti Udyog Ltd. through it. ABT also arranges collection and delivery of vehicles directly sold by Maruti Udyog Ltd. under DGS&D contract in the territory assigned to it. On the commission received for this activity ABT did not pay service tax. Their claim that they had not received any commission for DGS&D sales and had only received reimbursement of incidental expenditure incurred on the basis of actuals was not accepted by the lower authorities. Moving the application for waiver of predeposit and stay of recovery, the learned Counsel for the appellants submits that what has been described as commission received by them in their proceedings was an amount reimbursed by Maruti Udyog Ltd. towards the facilitation work the appellant had undertaken for delivery of the vehicles to buyers under DGS&D contract. It is submitted that this position was explained in their reply to the Show Cause Notice. They did not arrange for despatch and transport of vehicles. In terms of the Board's Circular F. No. B.43/7/97 -TRU dated 11.7.97 a clearing and forwarding agent normally undertook various other activities also in addition to despatch of goods. In case of DGS&D sales the concerned buyers had collected the vehicles from their godown and the appellants did not undertake the activity of despatch of goods or their transport. She, therefore, claims that the appellant had not undertaken the activity of service of clearing and forwarding agent and the impugned demand was liable to be set aside. It is submitted that even if the activities undertaken by the appellant can be categorized as clearing and forwarding agent's service they did not receive any remuneration which could be taxed. The learned SDR submits that the original authority relied on a circular of Directorate General of Service Tax in arriving at the taxable value. He also submits a letter dated 11.4.2005. of M/s. ABT Ltd. which gave details of the impugned taxable value described as DGS&D sales commission received in various financial years covered by the proceedings. He submits that the appellants had received commission as clearing and forwarding agent of M/s. Maruti Udyog Ltd. in respect of vehicles sold under DGS&D contract. The impugned order deserves to be sustained.

(3.) THE learned Counsel in her rejoinder submits that the Show Cause Notice had proposed demand of an amount of Rs. 30,748/ - whereas the amount demanded is Rs. 41,148/ -. It is also submitted that the circular of Directorate General of Service Tax referred to was not supplied to the appellants.