IN THE HIGH COURT OF KARNATAKA AT BANGAEORE
DATED THIS THE 5* DAY OF MARCH, zoifiadg
PRESENT
THE HON'BLE M.JUSEICE_K.LlMAfi$fiNATH'g C
AND '~« »
THE HON'ELE MRS. JUsTIcE*3.V;NAGARATRfiAc
c.E.A.RO}26/2005
BETWEEN:
1 THE cOMMIssIONER.OE SERVICE TAX
SERVICE TAX cOMIssIONERATE*.*
BANGALORE 27.""~Jj V52, 1,_*
.""«7' * £~' *_'7:.i»AppELLANT
(By Sri : g;v CHAfifiRRSHEKARA REDDY,ADV.)
1 Mrs SREENI§HI*EO1YMERS (P) LTD
NO 1674 AVIEASH MANSION, IST FLOOR
,.1sT CROSSJLAL EAGH ROAD,
.{,BANGALORE,70,
"ir:'H """ " RESPONDENT
=,*;By-sr;;*g_s RAVISHANKAR,ADV.)
_ This ;CEA filed u/S.35G of the Central
Excise Act, 1944 arising out of order dated
nC«25~02e2005 passed in Appeal NO.128/04 in Order
f;NO:388/O5, praying that this HOn’ble Court may
@be_pleased to:
direct the Appellate Tribunal to refer the
E”‘, question of law amended section 35G(1) of the
Central Excise Act, 1944 which is stated at
para–8 and set–aside the Final Order in Appeal
No.l28/04 in Order 160.388/05 and decide the
question Of law accordingly, in the interest
of justice and equity.
f/I
contends that service rendered by the assessee
falls under the category of Del Credere Agent
and therefore the assessee is not liable tol
pay the tax. He further’ ¢og£éfia5′.thg:’
amendment to Finance Act was brought;in thex
year 2005 which hash come finto_fforceW$withf
effect from 16.5g§O0§;”fWhe¢§in hthe< service
rendered by a Del dredage agent has also been
included under business auailiarv service. In
view of "the dfifiéndment' uhich has come into
force with effect from 16¢d.2005 holding a Del
Credere Agent iaaliable to be taxed under the
service Tax.Act_e Therefore, taking us through
-. theé definition _____ ,of Del Credere Agent and
i_’a@endmentybrought into the Finance Act, in the
year* Zfifififi? contends that in view of the
j inclusion of the service of a Del Credre Agent
.fas a Auxiliary service, it goes without saying
‘ ‘that the Del Credere Agent was excluded from
Ax payment of service Tax prior to the
amendment. He further contends that the
service rendered by the assessee to the IPCL
£3″
is more in the nature of an indemnifier as the
assessee as to indemnify to the value of the
goods sold by the IPCL to its customers andW
that the assessee shall ~ensure Vthel proper
repayment of the value of the goods_sol§nhy
the IPCL to its customers.d y Therefore; hed
contends that the act of–the respondent cannot
be treated as a”C’i§??FVlAgent. In the
circumstances he re§uests{the:CQurt to dismiss
the appeal} _i,fi
7. Hayinde’heard_.the counsel for the
parties{” we haye to look into the meaning of
the _-pe1 ‘”‘c,§~;.ec1;:-r.-._§- ‘Agent. In Black’s Law
-mpictionaryy 6a; Edition, dddd Del Credere Agent
‘Mfieans an agreement by which a factor, when he
sells_>goeds on credit for an additional
‘W_”commission (called a ‘del credere commission’)
dguaranties the solvency of the purchaser and
d”uHhis performance of the contract. Such a
vfactor is called a ‘del credere agent’. He is
a mere surety, liable to his principal only in
case the purchaser makes default. Agent who
§$/.
. _ ,?a._x
(a) ‘commission agent’ means any person who
acts on behalf of another person and ’causes
sale or purchase of goods, or proyisionl or
receipt of services, for a considerationf*andW
includes any person who, while” aCting_ on”
behalf of another person f
(i) deals with goodslt or services “»¢r,
documents of title to such ;goods or_*
services; or
(ii) collects payment of”sale price of such
goods or services; org, v
(iii) guarantees ,for,’collection° or payment
for such goods or services; or
(iv) undertakes .agy. activities relating to
such sale or purchase of such goods or
awservicésa ‘”v ”
Whereunder ‘the vservice rendered by a Del
Credere hgent~ has Tbeen. brought into service
xr*10f?e§mbined reading of the definition of
‘V C in Ft agent under the Finance Act under
®%section 65(25) and the meaning of Del Credere
l Agent and the amendment brought into in the
“year 2005, whereunder Del Credere Agent is
also included would clearly establishes that
prior to the amendment, the service rendered
fly
=«._..«
Ff)
by a Del Credere Agent had been excluded from
service tax. Therefore, we are of the jfiew
that since the respondent~assessee=nas-notiafich
& f Agent for IPCL as it”‘”w–:–1s 5a .3Z)”e3;’4_CVVre}fieVir=ei
Agent the respondent ~assesseeJispnot,iiahleu
to ‘pay service tax as *ordered’.byg flfie””Asstth
Commissioner of Centra;~Excise.
11. Accoprdingiyi View that
a similar mistake has aleo been committed by
the Commissi¢ner’.}Appea1s% and further we are
of is justified in
distingnishingmfi$$g@§finition of Clearing and
Forwarding Agent anfl the Del Credere Agent and
igingviewgoffthe agreement entered into between
IACL and respondent–assessee and the nature of
“‘* “service rendered to IPCL by the respondent, we
hare_fof the view that the assessee is not
A” “liable for payment of service tax.
12. Accordingly, the question of law
framed in this appeal is answered against the
revenue and in favour of the assessee,
Accordingly, the appeal is dismissed.