2025-VIL-380-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Business Auxiliary Service - Appellant was engaged in the business of manufacturing, procurement and commissioning of ash handling equipment including EPC Projects for thermal power plants and also in providing operation and maintenance of ash handling projects - Appellant incurred expenses in foreign currency for "Technical Know-how", "Consultancy" and "Selling Commission". While the appellant discharged service tax under Reverse Charge Mechanism for the first two expenses, no service tax was paid on the "Selling Commission" paid for procurement of orders - Department alleged that the "Selling Commission" paid to the overseas entity was taxable under BAS under Section 65(105)(zzb) of the Finance Act, 1994 - Whether the appellant is liable to pay service tax on selling commission on RCM basis - HELD - The agreement between the appellant and M/s. Parah clearly evidences that the service provider was engaged to provide services of marketing and sale of appellant’s products in UAE. The payment made in convertible foreign exchange was under the head “selling commission” - the services provided by a commission agent are included in the category of taxable service termed as BAS, where 'service' is provided by a service provider who is based outside India to a service recipient who is based in India. Section 66A, inserted by the Finance Act, 2006 read with the Service Tax Rules, 1994 mandate that service tax liability is to be discharged by the service recipient - The services provided by M/s Parah International to the appellant in relation to the marketing or sale of the goods produced by the appellant are covered by the definition of 'Business Auxiliary Service' under Section 65(19) of the Finance Act, 1994. Therefore, the appellant as the recipient of the taxable service from the offshore service provider is liable to pay the service tax under Rule 2(1)(d)(iv) of the Service Tax Rules - However, the demand for the extended period is held to have been wrongly invoked in view of revenue neutrality. Penalties imposed under Section 77(2) and 78 is set-aside – The appeal is partly allowed
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