M. Veeraiyan, Technical Member - Heard both sides on the stay petition.

2.1 The appellants are canalizing agent and they have exported iron ore procured from M/s. NMDC Ltd. The nature of activities between MMTC and NMDC, in the words of the Adjudicating Authority, are as follows :-

"All the exports are done in the name of MMTC and the export proceeds are realized by MMTC through Letter of Credit in the banking channels from their overseas buyers. After retaining their fixed percentage of 3% from the sale proceeds, the remaining amount is paid to NMDC. The entire export documentation is made in the name of MMTC. There is no doubt that the documents and records were maintained in such a way that the transactions are on principal to principal basis. This can be gauged from the fact that the annual accounts, export documents, Income-tax returns, sales tax returns/assessment orders etc., displayed that iron ore was purchased from NMDC by MMTC for onward export."

2.2 After recording the findings on nature of activities as above, Commissioner has come to the conclusion that 3% amount retained by the appellants is in the nature of commission received by them and for this purpose, she has relied on the record of minutes dated 14-8-2001 of the Committee of Secretaries wherein the appellants were described as a canalizing agent and the 3% amount was treated as commission. On this ground, the Commissioner has held that the amount retained by the appellants is consideration towards 'Business Auxiliary Service (BAS)" rendered by them to NMDC and confirmed demand of service tax of Rs. 6,23,24,614/- + Rs. 9,38,663/- along with interest and imposed equal amount of penalty under Section 78.

3. The learned advocate for the appellants submits that the transactions between NMDC and the appellants are in the nature of sale & purchase and this is recognized by the Sales Tax authorities of the State Government. The Income-tax Appellate Tribunal has also held that the transaction between NMDC and the appellants are in the nature of sales and accordingly held that the amount earned by the appellants cannot be treated as commission paid by NMDC and no TDS was deductible at the hands of NMDC. In this regard, he relies on the order dated 20-7-2009 of the Income-tax Appellate Tribunal.

4. The learned Commissioner (AR) reiterates the findings of the Adjudicating Authority.

5. We have carefully considered the submissions from both sides and perused the records. Notwithstanding the claim by the appellants to be a canalizing agent, the transactions between NMDC and the appellants are in the nature of purchase and sale as duly recorded by the Commissioner. This is also the view held by the Sales Tax Department and Income-tax Department. Therefore, we do not, prima facie, treat the profit earned by the appellants as consideration towards service rendered to NMDC. Therefore, there shall be waiver of pre-deposit of dues as per the impugned order and stay of recovery thereof till the disposal of the appeal.