whether activity of getting commission on the trucks hired from various outsiders is taxable as business auxiliary service?

PJ/Case Law/2016-17/3343

Case:-BAFNA MOTOR TRANSPORT CO. Versus COMMISSIONER OF C. EX., PUNE-III

Citation:- 2016 (43) S.T.R. 319 (Tri. - Mumbai)

Brief facts:-This appeal is challenging the Order-in-Appeal No. PIII/VM/50/2010, dated 17-3-2010 passed by the Commissioner of Central Excise (Appeals), Pune vide which the appellate authority has upheld the confirmation of demand of Service Tax, interest thereof and the penalties imposed by the adjudicating authority.
The relevant facts that arise for consideration are appellant is engaged in the business of transportation as well as providing transportation to their clients by hiring truck/vehicles from others on commission basis. It was perceived by the lower authorities that the amount received as commission from various owners of the vehicles is liable for tax under business auxiliary services which has escaped the tax for the period 2003-04 to 2005-06. Show cause notice was issued for demand of the tax with interest and for imposition of penalties on the ground that they are liable for such tax under business auxiliary services. After following due process of law the adjudicating authority confirmed the demands raised with interest and also imposed penalties. On an appeal, the first appellate authority concurred with the view of the adjudicating authority.

Appellant’s contention:-Learned Chartered Accountant submits that the appellant acted as transport agency and was transporting the goods to and fro Bajaj Auto Limited, Waluj, Aurangabad and issued consignment notes for such transportation which indicated the tax liability to be discharged by Bajaj Auto Limited. It was further submitted that the appellant had their own fleet of trucks and whenever required used to hire trucks from various persons few of them being their own relative and used to get a small portion of the amount paid to such owners of the truck as commission and accounted the same in their accounts as commission received. It is his submission that such commission cannot be considered as a commission which would fall under the services of ‘business auxiliary services’ as they are not providing any such activity. He would then draw our attention to the consignment notes issued and submits that the consignment notes are issued for the transportation of the goods by their own vehicle as well as on the vehicles which were hired by them from various individuals.

Respondent’s contention:-Learned departmental representative, on the other hand, reiterates the findings of the lower authorities and submits that the activities of the appellant comes under the purview of ‘commission agent’ as defined under ‘business auxiliary service’.

Reasoning of judgment:- Hon’ble judges have considered the submissions made by both the sides and perused the records.
On perusal of the records they find that the appellant herein is functioning as a motor transport company and needs to be considered as a ‘Goods Transport Agency’. It is also a fact that the appellant herein has issued the goods consignment notes in respect of the transportation of the goods to and fro of M/s. Bajaj Auto Limited who are their main customer for transportation. They also find that the said consignment notes issued by the appellant indicates consignor and consignee name very clearly and that the service tax liability needs to be discharged either one of them. In the case in hand, it is the claim that the Service Tax liability on such transportation of goods to and fro Bajaj Auto Limited is discharged by M/s. Bajaj Auto Limited, being one of the persons required to discharge the Service Tax liability under reverse charge. The findings of the lower authorities that the activity of getting commission on the trucks hired from various outsiders would fall under the category of ‘commission agent’ for provision or receipt of service for a consideration is incorrect for more than one reason as the final service rendered by the appellant to M/s. Bajaj Auto Limited is ‘Goods Transport Agency’. It is not disputed by the lower authorities as the appellant is issuing goods consignment note. The activity if it is taxed under a particular head any amount received towards such activity, in their considered view cannot be considered again under ‘business auxiliary service’ as the appellant is not providing any service in relation to business auxiliary service.
In view of the foregoing they hold that the impugned order is unsustainable and liable to be set aside and they do so.

Decision:- Appeal allowed.

Comment:- The analogy of the case is that Appellant is functioning as a motor transport company and issued the goods consignment notes in respect of transportation of goods to and from of M/s. Bajaj Auto Limited, who are their main customer for transportation. The consignment notes indicate consignor and consignee name very clearly and Service Tax liability needs to be discharged by either one of them. Findings of lower authorities that activity of getting commission on the trucks hired from various outsiders would fall under the category of ‘Commission Agent’ for provision or receipt of service for a consideration is incorrect. If any Activity is taxed under a particular head any amount received towards such activity, cannot be considered again under ‘business auxiliary service’ as appellant is not providing any service in relation to business auxiliary service.

Prepared by:- Monika Tak

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PJ/Case Law/2016-17/3343

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