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Learn MoreFacts:
The Appellant purchased goods from vendor in India and sold the same to its principal foreign entity abroad at a markup of 3% of the purchase price. The goods were shipped abroad directly by the vendor, however invoices for the same were made on Indian entity and VAT was discharged on the same. The Appellant raised export invoice on the foreign entity and received the export proceeds from their foreign principal as evidenced from the bank realisation certificate and the proceeds were credited to the Appellant’s accounts. However, in the books of accounts the markup in the transaction was reflected as ”commission income”. Department contended that markup of 3% shown as commission is liable to service tax under Business Auxiliary Services provided to Indian vendor.
Held:
After going through the purchase order and sales invoice issued by the Indian vendor and observing that VAT liability was discharged and also noting that the Appellant has issued export invoice to foreign entity and also realised proceeds, the Tribunal held that transaction is that of purchase and sale of goods on principal-to-principal basis and not as agent of anybody else.