The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that no service tax for ‘Business Auxiliary Services’ on consideration towards commission on sub-contracts.
The appellant in the resent matter is Sushee Infra Pvt Ltd.
The present appeal has been filed to assail the order vide which the demand of Rs. 4 lakhs (as a liability towards providing Business Auxiliary Services) was confirmed by Original Adjudicating Authority. The appellant is engaged in providing services of site formation and clearance and also for services of transport of goods by road, renting of immovable property and that of mining.
During the audit of their records the Department observed that the appellant had received certain consideration towards commission on sub-contracts under the head “other income” during the period from October 2004 to November, 2006 for the work executed on back to back basis through their sub-contractors.
Department formed an opinion that the commission was liable to be paid as tax under ‘Business Auxiliary Services’. Accordingly, vide Show Cause Notice the aforesaid amount of Rs. 4,96,416/- was proposed to be recovered as service tax along with proportionate interest and the appropriate penalties.
The said proposal was confirmed initially by the Original Adjudicating and the appeal thereof has been rejected vide impugned order under challenge. Being aggrieved appellant is before the Tribunal.
The Counsel for the appellant vehemently contended the appellant was not in any way rendering Business Auxiliary Services for promoting or marketing the services provided by the sub-contractor. The proposal of payment of service tax on the said ground and confirmation thereof is therefore prayed to be set aside.
The Bench comprising PV Subba Rao, Technical Member and Dr Rachna Gupta, Judicial Member observed that “the appellant only was deducing said amount of commission for himself and was making payment to the subcontractor in whose favour the execution of work was outsourced by the appellant. Hence, we hold that no service tax can be charged from the appellant under the head ‘Business Auxiliary Services’.”
The Bench relied on the earlier decision of the Bench in the case of M/s Dwaraka Constructions v. Commr. Of Customs & Central Excise.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
