At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
By, THE HONORABLE JUSTICE: P.R. CHANDRASEKHARAN
By, MEMBER AND THE HONORABLE JUSTICE: ANIL CHOUDHARY
For Petitioner: D.H. Nadkarni, Advocate And For Respondents: D.D. Joshi, Supdt. (AR)
1. The appeals, stay petitions and COD application are directed against Order-in-Appeal No. MISC/PVR/103/NGP/2013, dated 11-7-2013 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur wherein the appellant was directed to make a pre-deposit of Rs. 4,72,922/- along with interest on or before 29-7-2013. Initially the appellant had filed an appeal against the order dated 30
Please Login To View The Full Judgment!
-7-2013 dismissing their appeal for non-compliance. Therefore, they were directed to file appeal against the order of pre-deposit also, which caused a delay of 54 days. Since it is only on account of the direction of the Bench to file an appeal against pre-deposit order, the delay was caused. Considering the reasons stated as satisfactory, we allow the COD application. The appellant, M/s. Prabhakar Marotrao Thaokar & Sons, Nagpur is a wholesale distributor for the sale of Jarda (Chewing Tobacco) under the brand name "Sarvotkrusht Nagpuri Jarda" manufactured by M/s. Gunaji Marotrao Thaokar & Co. Nagpur. The appellant was required to buy the Jarda from the manufacturer and sell the same to various dealers and retailers. There was an agreement between the manufacturer and the appellant appointing the appellant as wholesale distributor. As per the agreement, the appellant was entitled to receive trade discount of Rs. 47.50 on sale of 1000 pudis of weight ranging from 1 gm to 10 gms and a trade discount of Rs. 90/- on sale of 1000 pudis of weight ranging from above 10 gms to 25 gms. The appellant received the goods from the manufacturer, who had discharged the excise duty liability thereon and also the VAT liability on the discounted price. The Revenue was of the view that the trade discount given by the manufacturer to the appellant is a commission paid to the appellant for the subsequent sale of the goods and therefore, the same came under the purview of Business Auxiliary Service liable to service tax. Accordingly, show-cause notices were issued and a service tax demand of Rs. 4,72,922/- was confirmed against the appellant along with interest thereon and also by imposing penalties, vide order dated 20-11-2012 passed by the Jurisdictional Deputy Commissioner. Aggrieved of the same, the appellant preferred an appeal before the lower appellate authority. The lower appellate authority vide order dated 11-7-2013 directed the appellant to make a pre-deposit of entire amount of service tax along with interest. Inasmuch as the appellant failed to comply with the pre-deposit order, the appeal was dismissed for non-compliance of the conditions of the stay order without going into the merits of the case. Hence the appellant is before us.
2. From the wholesale distributorship agreement dated 1-2-2008 entered into between the manufacturer and the appellant, it is seen that the goods were sold to the appellant by the manufacturer after paying excise duty and VAT and the appellant becomes the owner of the goods on delivery at the factory gate and thereafter the appellant re-sells the goods to other dealers/retailers. Thus, the transaction is one of sale of goods and not of rendering any service. Therefore, we find that the appellant has made out a prima facie case in support of their contention that the activity undertaken by them does not attract service tax. In these circumstances, the order of the lower appellate authority directing the appellant to make a pre-deposit of entire service tax along with interest is not sustainable in law. Accordingly, we set aside the same.
3. Inasmuch as the appeal has not been decided on merits by the lower appellate authority, the matter has to go back to the lower appellate authority for consideration of appeal on merits. Accordingly, we remand the matter back to lower appellate authority for consideration of the appeal on merits after giving a reasonable opportunity to the appellant of being heard. Thus, the appeal is allowed by way of remand. Stay petition is also disposed of