For Approval And Signature vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. I Application No. ST/Extn/92581 & 92549/13-Mum Appeal No. ST/150 & 650/11-Mum (Arising out of Order-in-Appeal No.GOA/CEX/GSK/117/2010 dated 03.12.2010 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals), Goa).

For approval and signature: Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the :No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? M/s. Indian Hotels Co. Ltd. Appellant Vs. Commissioner of Central Excise, Respondent Goa

Appearance:

Ms. Aparna H. Advocate. for appellant Shri S.R. Nair, E.O. (AR) for respondent CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Decision : 15/07/2015 Date of Hearing : 15/07/2015

ORDER NO Per: M.V. Ravindran:

1. This appeal is directed against order-in-appeal no. GOA/CAS/GSK/117/2010 dated 3.12.2010.

2. The issue involved in this case is whether the appellant is required to discharge service tax liability under the Business Auxiliary Service for the commission received by them from M/S Thomas Cook for the purpose of restricted money changing business in their premises. It is seen that as per an agreement dated 02.11.2005, Thomas Cook appointed appellant for carrying out restricted money change business in the hotel premises and foreign exchange was surrendered to M/s Thomas Cook and appellant used to get an amount as an incentive. Both the lower authorities held that the activity of receiving an amount from Thomas cook would be covered under the service tax net, as commission received is chargeable to tax under Business Auxiliary Services.

3. Learned counsel would take us through the order-in-original, the impugned order and the agreement entered by the appellant with the said M/s Thomas Cook. It is her submission that the period involved in this case is 2006  07 to 2008  09. She would submit that the appellant is in the hospitality industry and as required under the law needs to cater to the foreign tourist, it is mandatory to have the money exchange out let in the premises. It is her submission that as per RBI Guide lines; appellant they could not engage in money exchange and has to do so under autharisation from the approved money exchangers. It is her submission that as per the agreement with the Thomas Cook, they were to be paid an amount in Indian rupees against the foreign exchange collected by them from the tourists. The said Indian rupees were received by them from Thomas cook as per the agreement; it is the submission that such activity of the appellant is nothing but purchase and sale of foreign exchange and an amount received by them an incentive from Thomas Cook is nothing but discount and hence not taxable under business auxiliary services. It is her submission that subsequently, the law provided to discharge of service tax liability on this activity from 16/05/2008 by the amendment to the banking and other financial services. She would submit that the amounts received from Thomas Cook as discount and relies upon the judgment of the Tribunal in the case of Euro RSCG advertising- 2007 (27) STR 277. She would also refer to the definition of Business Auxiliary Service and submit that activities under taken by the appellant would not fall under this category of services. It is her submission that the appellant is not in the business of money exchange and the activity of money exchange is incidental to the main activity of hospitality industry, hence it would not be taxable under service tax liability. It is her submission that appellant has already discharged the service tax liability and interest thereof. On limitation, it is her submission that appellant, could have entertained a bona-fide belief that they were are not in the business of money exchange but that being incidental to the main activity no service tax liability arises. Hence the demands which have been raised beyond the extended period of limitation are liable to be set aside.

4. Learned departmental representative on the other hand relied upon the same agreement and submits that the agreement clearly indicates that the appellant is acting as an agent and gets commission for such activity, though they are reorded as incentive. It is his submissions that documents not indicate that appellant has purchased and sold the foreign exchange which they collected from tourist who was staying in their hotel. It is his submission that both the lower authorities confirmed the service tax liability along with the interest and imposed penalties. It is the submission that since the appellant did not indicate the amounts received by them as commission and on investigation it was noticed that amounts were received, extended period has been correctly invoked.

5. We have considered the submissions made by both sides and perused the records. On perusal of the agreement entered by the appellant with Thomas Cook India Ltd. we find that this agreement is termed as an agency agreement and the appellants are appointed as an agent. The duties which have been cast upon the appellant are very clear that they should surrender the amounts collected in foreign exchange to M/s Thomas cook India Ltd. and in turn Thomas Cook will pay the appellant the amount equivalent in Indian rupees on the date of transaction and appellant will also get incentive on Indian rupee transaction, as per agreement. We find that the activity as is in transaction of the appellant would be covered under the category Business Auxiliary services, as the appellant is acting as agent of Thomas Cook, and it is very clear from the closure of agreement that appellant has been given restricted money exchange agency by Thomas Cook India Ltd. (from the authorization they have received for engaging in money exchange).

6. The point of the learned counsel that they are mandated to only exchange the money on a authorization from Thomas Cook is requirement on the Law, we find that this submission may not carry the case of the appellant any further, in as much that, undisputedly appellant are acting as an agent of Thomas Cook India Ltd. We find that appellant has no case on merits.

7. On limitation, we find that appellant has a case in their favor in as much, on holistic reading of the agreement entered into, indicates that appellant could have had a bona-fide belief that they are not liable to service tax under the category of Business Auxiliary Services. The service tax liability was first indicated by the officers of audit team. We find that the appellant has taken the point of limitation before the lower authorities but both the authorities did not record any finding, which leads to inference that the challenge on limitation is accepted. We also find that the appellant could not be faulted for any bona-fide belief that the amount received as incentive is taxable under the Business Auxiliary Services. On limitation, we hold that the entire demands raised by the show cause notice dated 17.07.2009 is hit by limitation, and the same cannot be invoked for demanding service tax liability beyond the period of limitation.

8. In view of the forgoing, we allow the appeals filed by the appellant on limitation only. The appeals are allowed on limitation and with consequential relief if any.

9. Miscellaneous applications for extension of stay are also disposed of.

(Dictated in Court)

(Raju) Member (Technical) Akp (M.V. Ravindran) Member (Judicial)

Appeal No. ST/150 & 650/11-Mum