Central Excise Appeal No. 91 of 2015 with C.E.A. Nos. 92 and 100 of 2015. Case: Commissioner of C. Ex. & S. T., Kolhapur Vs Karan Agencies. Bombay High Court

Case Number:Central Excise Appeal No. 91 of 2015 with C.E.A. Nos. 92 and 100 of 2015
Party Name:Commissioner of C. Ex. & S. T., Kolhapur Vs Karan Agencies
Counsel:For Appellant: Shri Jitendra B. Mishra, Adv. and For Respondent: Shri V. Sridharan, Senior Advocate with Prakash Shah and Jas Sanghavi i/b. M/s. PDS Legal, Advs.
Judges:S.C. Dharmadhikari and B.P. Colabawalla, JJ.
Issue:Finance Act, 1994 - Section 65(104c)
Citation:2016 (41) STR 161 (Bom)
Judgement Date:November 23, 2015
Court:Bombay High Court
 
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Order:

  1. This appeal by the Revenue challenges the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, dated 9th June, 2014 (CEXA/91/2015) [2014 (36) E.L.T. 667 (Tri. - Mumbai)].

  2. The Revenue submits that the following substantial question of law would arise for determination of this Court:-

    "Whether on the basis of facts and circumstances of the case, the activity conducted by the respondent is taxable under the category of ''Business Support Service'' especially when the respondent has received a sizable amount under the name and guise of "Conducting Charges" against the activities?"

  3. The Revenue states that the assessee had entered into an contract with M/s. Kolhapur Sugar Mills Ltd. (for short ''M/s. KSM'') for manufacturing and sale of liquor in the name of M/s. KSM. The plant and machinery is owned by M/s. KSM, who allowed to use the entire infrastructure by the respondent for a consideration of Rs. 30 lacs per annum. The respondent conducted entire business of manufacture of liquor, its sale and even effected the recovery of the sale proceeds in the name of M/s. KSM. The books of account were maintained in the name of M/s. KSM and sale proceeds were also credited to the account of M/s. KSM. At the end of each financial year, after settlement of accounts, the balance in Profit and Loss Account was paid by M/s. KSM to the respondent after retaining an amount of Rs. 30 lacs being the consideration agreed against use of infrastructure. Such amount is termed as "conducting charges" in the books of account. The agreement is dated 23rd February, 1999 and a copy of the same is at Annexure ''A'' to the memo of appeal.

  4. The case of the Revenue is that the respondent-assessee was conducting entire business for and on behalf of M/s. KSM. It had received an amount of Rs. 6,89,53,366/- from M/s. KSM against conducting charges towards the activities done by them during the financial year 2011-12. The Revenue contends that managing or conducting of such business is providing taxable service under the category of ''Business Support Service'' classifiable under Section 65(104c) of the Finance Act, 1994.

  5. Since the assessee did not register itself for payment of service tax nor it paid any service tax on the conducting charges, a show cause notice was issued demanding service tax of Rs. 71,02,197/-. The proposal for recovery of interest under Section 75 of the Finance Act, 1994 and with imposition of...

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