By TIOL News Service

AHMEDABAD, SEPT 08, 2015: THE appellants were engaged in the business of providing various services of Sales Promotion, Marketing and After Sales and Services etc., to their clients in terms of the agreement between the parties.

The AC, CEX, Anand issued a SCN dated 1.9.2004 demanding Service Tax under the category of Business Auxiliary Services (BAS) for the period 1.7.2003 to 31.3.2004. He adverted to the agreement entered into by the assessee with M/s EIMCO Elecon (I) Ltd.

More than a month later, the premier investigating agency, DGCEI, Regional Unit, Vadodara sauntered onto the scene and issued another demand notice on 20.10.2004 proposing demand of ST under the category of "Clearing and Forwarding Agency" (C&F) Service, for the very same activity but for the period from Oct. 1999 to Jun 2004 and on the basis of the agreements of all the six clients of the appellant including the one referred to by the AC, CEX, Anand.

By an OIO dated 31.8.2006, the CCE & ST, Vadodara-I adjudicated the SCN dtd 1.9.2004 and confirmed the ST demand made under the category of BAS.He was also not interested in granting the benefit of Notification No 13/2003-ST dated 20.6.2003 as claimed by the appellant.

An appeal was filed by the assessee before the CESTAT in the same year 2006.

Interestingly, the SCN dated 20.10.2004 issued by the DGCEI was apparently forgotten when the September 2004 SCN was adjudicated. Inasmuch as the SCN had to wait for six more years to be adjudicated.

In December 2012, the CCE & ST, Vadodara-I adjudicated the SCN dated 20.10.2004 and he did the usual - confirmed the ST demand raised under the category of "Clearing and Forwarding Agents" service for the period Oct. 1999 -June 2004.

Overlapping period and two divergent classifications for the same services, nothing came in the way of adjudication.

Be that as it may, early 2013 the appellant filed an appeal against this order.

Incidentally, the appeal of year 2006 and of 2013 met each other when the matter was heard recently.

Before the CESTAT, the appellant submitted that they were rendering services to their clients as "Commission Agent" for the purpose of sale of the goods and, therefore, the classification under BAS is apt but they are entitled for exemption under notification 13/2003-ST. A plethora of case laws were cited in support.

As for the second appeal, the appellant submitted that the confirmation of demand of tax for the same period and for the same activity under the category of C&F agent cannot be sustained. Further, the demand was time barred as the earlier SCN was issued for the normal period of limitation.

The AR took pains to support the orders of the adjudicating authority and also placed before the Bench a copy of the letter No F. Anand/STC/EMICI/2014-2015/747 dtd 18.5.2015 of the Joint Commissioner, Central Excise, Customs and Service Tax, Anand, addressed to Additional Commissioner (AR), CESTAT before the Bench in which it is stated that the demand of tax for the period prior to 1.7.2003 would be classifiable under C&F Agent Service and the subsequent period would be classifiable under BAS Services which was introduced in the Service Tax net on 1.7.2003.

The appellant adverted to the statement of Shri Ramanlal Shah, Asstt. General Manger (Accounts) and drew attention to Para 5 of the same where it is stated that the appellants received the commission for the sales and after sales services, and no remuneration was paid for storing and handling of the goods.

The Bench considered the submissions made by both sides and after perusing the records observed -

"9. On perusal of the findings of the Adjudicating Authorities in both the appeals, we are unable to understand the facts of the case in so far as the activities of the appellants for the purpose of determining the classification of the Service Tax. In the first appeal, the Adjudicating Authority observed that the appellants were rendering after sales service. In the second appeal, the Adjudicating Authority observed that the appellants were rendering the service as agent of the principal for warehousing the goods, clearing and forwarding and acted as C&F agent. The Learned Advocate, during the course of hearing on behalf of the appellants submitted that they have not received any remuneration in respect of warehousing of the goods. It is difficult to accept the contention of the Learned Advocate that they have rendered the services to their clients without remuneration. In any event, both sides failed to place facts of the case in roper manner for the purpose determination of the classification of the service and to extend the benefit of exemption notification. There is no clarity on the facts of the cases in the impugned orders."

The CESTAT further noted -

"…We find that the findings of both the adjudicating authorities are contrary on facts and law of the case, which cannot be improved by letter dtd 18.5.2015 of the Joint Commissioner of Central Excise, Customs and Service Tax. In our considered view, the Adjudicating Authority should have decided both the show cause notices together and after determining the facts of the case in proper manner, the classification of the service would be decided. It should be noted that reasons are the links between the materials on which certain conclusions are based and the actual conclusions. So, both the impugned orders cannot be sustained."

Both the orders were set aside and the matter was remanded to the adjudicating authority for deciding afresh.

(See 2015-TIOL-1886-CESTAT-AHM)