2003 (9) TMI 1 - AT - Service Tax

Summary

Issues:
1. Challenge of service tax imposed on commission paid to brokers.
2. Challenge of penalty imposition.
3. Interpretation of the definition of "Clearing & Forwarding Agents".
4. Jurisdiction to impose service tax on selling agents.

Analysis:

1. The appellant contested the service tax imposed on the commission paid to brokers, arguing that the brokers are selling agents and not Clearing & Forwarding Agents. The appellant had already deposited a significant amount but was required to pre-deposit a balance of Rs. 4,00,000 for the appeal. The appellant challenged the imposition of penalty amounting to Rs. 1,75,000. The appellant's consultant argued that the Commissioner's findings did not specify the imposition of service tax on payments to selling agents and that the reliance on a clarification by the Deputy Director of Service Tax, which is not binding, was unjustified.

2. The Departmental Representative (DR) supported the Commissioner's findings, citing clarifications by the Deputy Director of Service Tax. The DR argued that the services provided by brokers in procuring orders for goods to be sent directly to customers fell under the definition of services provided by Clearing & Forwarding Agents. The consultant for the appellant contended that brokers were not acting as Clearing & Forwarding Agents but merely assisted in procuring orders for direct sales to customers.

3. Upon careful consideration, the Tribunal noted that the Revenue's position was that selling agents of yarn were liable to pay service tax under the Finance Act. The clarification from the Director General of Service Tax indicated that services rendered by brokers could be considered as falling under the definition of "clearing and forwarding agents." The Tribunal found that the appellants had established a prima facie case for a waiver of the service tax. Consequently, the Tribunal granted a stay on the recovery of the balance amount and allowed the appeal to proceed in due course.

This detailed analysis of the judgment highlights the key issues raised by the appellant, the arguments presented by both parties, and the Tribunal's decision based on the interpretation of relevant legal provisions and clarifications provided by the tax authorities.