The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld the service tax demand imposed on the assessee for technical, inspection, and certification service on the grounds of non-inclusion of statutory function.
Export Inspection Agency, the appellant assessee was a body created under Section 7 of the Export (Quality Control and Inspection) Act, 1963, and works under the administrative and technical control of the Export Inspection Council the assessee was in the field organization of the Export Council under Free Trade Agreement executed between India and foreign nation’s products, eligible for Certificate of Origin required for preferential treatment in exporting countries.
The assessee appealed against the service tax demand passed by the Commissioner (Appeals) on the services rendered by the assessee and for the imposition of a penalty.
Alok Yadav and Nilotpal Shyam, the counsels for the assessee contended that the assessee was performing the sovereign function and performing statutory duties was a creation of a statute and therefore cannot be subjected to Service Tax.
Harshvardhan, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was performing the discretionary functions which are not included in the sovereign function or statutory duty.
The Bench observed that the consideration received by the assessee for providing the Consultancy Service which admittedly was not transferred to the Government treasury. Hence this money cannot be equated with a fee collected for discharging sovereign function.
The two-member bench comprising Rachana Gupta (Judicial) and Hemambika Priya (Technical) upheld the service tax demand along with the interest imposed by the department on the assessee.
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