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PJ/CASE LAW/2016-17/3177

Certifying the purity of gold ornaments on commission basis, whether classified under “Technical Testing and Certification Service”.

Case-A.VANNIAPPAN Versus COMMISSIONER OF CENTRAL EXCISE, TIRUNELVELI

Citation-2016 (41) S.T.R. 865 (Tri. - Chennai)

Brief Facts- The brief facts of the case are that the appellant is a jewellery appraiser who certifies the purity and value of gold ornaments for pledging by the individuals in the bank and for this he received commission from the bank. A show cause notice was issued proposing demand of service tax of Rs. 19,134/- under the category of “Technical Testing and Certification Service”. The adjudicating authority in his order dropped the proceedings on the ground that to certify the purity and value of the gold brought to the bank for pledging do not require any technical knowledge or any technical instruments.

Appellants Contention- The applicant filed the stay petition against the order of the Commissioner (Appeals) dated 6-1-2014, for waiver of pre-deposit of service tax of Rs. 19,134/- along with interest and imposition of equivalent penalty under Section 78 of the Finance Act,1994 along with 76 and 77 penalties. Since the amount involved in this case is very meager, after dispensing with the stay petition, the appeal itself is taken for disposal with the consent of both sides.

Respondents Contention-The Revenue was in appeal before the Commissioner (Appeals) and LAA set aside the order of the adjudicating authority and confirmed the demand of service tax of Rs. 19,134/- along with interest and imposed equal penalty under Section 78 of the Finance Act, 1994. Hence, the present appeal.

Reasoning of Judgment- After hearing both the sides and on perusal of the records tribunal find that the short issue involved in this case relates to demand of service tax of Rs. 19,134/- under “Technical Testing and Certification Service”. On perusal of the SCN and the adjudication order and impugned order, they find that the adjudicating authority has dropped the proceedings on the ground that certifying purity and value of the gold for pledging in the bank does not require any technical knowledge and technical instrument. The appellant is an individual jewellery appraiser and receives commission from the bank which is clearly recorded in both the SCN and in the adjudication order. The amount received is paid by the bank as commission and not testing charges or certification charges. Prima facie, we find that service rendered by the appellant is not Technical Testing and Certification Service”. We find that the adjudicating authority has rightly held that examination of gold ornaments which is brought to the bank for pledging is for testing the purity and value of the gold. Hence, the amount received by the appellant as commission cannot be classifiable under “Technical Testing and Certification Service” and not liable for demand of service tax. Accordingly, the impugned order is set aside and the appeal is allowed.

Decision-Appeal allowed

Comment-The gist of the case is that the certification of purity and value of gold ornaments on commission basis for pledging in bank does not come under the category of ‘Technical Testing and Certification service’ because commission is received from bank and are not testing and certification charges, Therefore, such commission received by the assessee is not liable to be taxed.

Prepared By-Neelam Jain
 

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