Janata Sahakari Bank Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI

COURT No. I

Appeal No. ST/40/10

(Arising out of Order-in-Appeal No. P-III/VM/216/2009 dated 12.10.2009 passed by Commissioner of Central Excise (Appeals), Pune III)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

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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?

Janata Sahakari Bank Ltd. Appellant Vs.

Commissioner of Central Excise, Pune III Respondent

Appearance:

Shri Vidhyadhar Apte, Advocate for appellant Shri R.K. Das, Deputy Commissioner (AR) for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

Date of Hearing: 16.04.2015 Date of Decision: 16.04.2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against No. P-III/VM/216/2009 dated 12.10.2009.

2. The issue involved in this case is that appellant is engaged in providing services under the category of Banking and other Financial Services. During scrutiny of the records by the departmental officers, it was observed that appellant had received commission amounting to Rs.8,35,348/- during the period April 2004 to September 2007 for disbursement of Govt. teachers salary. Revenue authorities entertained a belief that the said commission which is received by the appellant was covered under the category of Business Auxiliary Services. A show-cause notice was issued for the demand of service tax liability along with interest and also proposing for imposition of penalties. Adjudicating authority after following due process of law confirmed the demand with interest and imposed penalties under Section 78 of the Finance Act, 1994. The first appellate authority did not agree with the contentions raised by the appellant in their appeal before him and upheld the order.

3. Heard both sides and perused all the records.

4. It is the case of the appellant that the amount received by them would not cover under the definition of commission by any stretch of imagination as also the amounts which was disbursed by the appellant is the salary of the Government teachers. It is his submission that though they have disbursed the salary of the Govt. teachers on behalf of Zilha Parishad, the said activity is not a service undertaken by the appellant as commission agent.

5. Learned Departmental Representative would reiterate the findings of the lower authorities.

6. On considering the submissions made by both sides, we find that the lower authorities were error in holding that appellant would fall under the category of commission agent and the amount received by them from the Government of Maharashtra through Zilha Parishad as service charges for disbursement of salaries of Govt. teachers cannot be considered as commission received though it may be entered in the records of the appellant as commission received. In order to appreciate the correct legal position, it is required to look into the definition of commission agent as per Financial Year 2005 which is as under:-

The Finance Act, 2005 has inserted an explanation below Section 65(19), so as to clarify that Commission agent means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of service for a consideration and includes any person while acting on behalf of another person 

(a) deals with goods or services or documents of title to such goods or services or

(b) collects payment of sale price of such goods or services; or

(c) Guarantees for collection or payment for such goods or services; or

(d) undertakes any activities relating to such sale or purchase of such goods or service.

7. It may be seen from the reproduced definition the commission agent is defined as a person who while acting on behalf of other person undertakes the activity as mentioned herein above para (a) to (d). None of the above activities as indicated herein above is undertaken by the appellant as disbursement of salaries to the Govt. teachers would not fall in any of the activity, sale or purchase of goods or service. In our considered view, an amount received as a consideration for disbursement of salaries to the Govt. teachers on direction of Zillha Parishad can never be an activity covered under the definition of Business Auxiliary Service and more so it cannot be termed as an amount received by the appellant as commission agent. In view of the facts and circumstances of this case, we hold that the impugned order is unsustainable and liable to be set aside and we do so.

9. Impugned order is set aside and the appeal is allowed. (Dictated in Court)

(P.S. Pruthi) Member (Technical) (M.V. Ravindran) Member (Judicial)

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