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Indian Oil Corporation Ltd V/S Commissioner of Central Excise and Service Tax

    Service Tax Appeal No. 50786 of 2014 (Arising out of Order-in-Appeal No. 83(RDN)ST/JPR-II/2013 dated 15.02.2013 Passed by the Commissioner (Appeals) Central Excise, Jaipur-II) and Final Order No. 56887/2017

    Decided On, 26 September 2017

    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi

    By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA
    By, PRESIDENT AND THE HONORABLE JUSTICE: B. RAVICHANDRAN
    By, MEMBER

    For Petitioner: Shreya Dahiya, Advocate And For Respondents: Ranjan Khanna, DR



Judgment Text


1. The assessee-Appellant is in appeal against the Order-in-Appeal No. 83(RDN)ST/JPR-II/2013 dated 15.02.2013 passed by the Commissioner (Appeals) Central Excise, Jaipur-II. The assessee-Appellants were put to Service Tax liability under the category of "Business Auxiliary Services" for the period April 2009 to September 2009. The Reven

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ue held that, while clearing oil products, the assessee-Appellants were collecting equalized freight as a part of consideration. As they were availing the services of GTA for transporting oil products in terms of Service Tax provisions, they are liable to pay the Service Tax under reverse charge basis on such GTA services. The assessee-Appellants were discharging the Service Tax on GTA services on actual basis. There were instances when the equalized freight did not tally with the actual freight on which Service Tax was paid by the assessee-Appellants. On this basis, on the excess amount of equalized freight, the Revenue proceeded against the assessee-Appellants to demand Service Tax treating that excess amount as commission to be taxed under "Business Auxiliary Services?. The learned counsel appearing for the assessee-Appellants contested the impugned order on the ground that they were selling their products to the customers on principal to principal basis and discharged the duty liability as per the transaction value. Equalized freight for Central Excise purposes is admitted as per law. For Service Tax on GTA, they were availing actual freight which is also admitted by law. The difference cannot be considered as a sales commission to be taxed under the "Business Auxiliary Services?, since they were not rendering service on behalf of anybody.

2. The learned DR for the Revenue reiterated the findings of the impugned order.

3. We have heard both sides and perused the material available on record. We note that the facts of above case are not in dispute. We find no justification to hold the freight element, which is collected on equalized basis from the customers for sale of the petroleum products, under the category of "Business Auxiliary Service" on the ground that the said equalized freight is in excess of the actual freight that is suffered by the assessee-Appellants. For "Business Auxiliary Services? there should be a service rendered by the assessee-Appellants on behalf of another person. The impugned order justifies the tax liability on the ground that the assessee-Appellants have rendered services on behalf of oil marketing companies. We find that the said conclusion is without any basis. The Tribunal in the case of Bharat Petroleum Corpn. Ltd. vs CCE, Mumbai-I: 2014 (36) STR 433 (Tri.-Mumbai), has held that, the transaction in oil products is on principal to principal basis. There is no commission component that has been received by the oil marketing companies in the sale transaction. In the facts of the present case, we find no evidence that the assessee-Appellants have received any amount attributable to commission on the sale of oil products. The amount received by them is, admittedly, towards equalized freight which cannot be disputed. The equalized freight is arrived at based on the freight incurred over a period of time. On careful consideration of the impugned order and the grounds of appeal, we find that the impugned order is without any merit. Accordingly, the same is set aside and the appeal is allowed
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