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2004 (7) TMI 3 - AT - Service TaxService Tax Clearing and forwarding agents (1) Demand (2) C & F agents availing of services as users (3) Determination and recovery of service tax
Issues:
Service Tax levy on the manufacturer of electrical motors who entered into an agreement for sale and distribution of the electrical motors with another company mainly acting as a consignment agent. Analysis: 1. The issue in this case revolved around the Service Tax levy on the appellant, a manufacturer of electrical motors, who had an agreement with another company, M/s. Remi Sales and Engineering Ltd., for the sale and distribution of the motors. The agreement was titled as "Agreement of Consignment Agent." The lower authorities confirmed the demands on the service user, M/s. Remi Sales and Engineering Ltd., rather than the service provider. 2. The Tribunal referred to the definition of 'Clearing and Forwarding Agent' as per Clause 25 of Section 65 of the Finance Act, 1994. It was noted that a consignment agent is included in the definition. The Tribunal also cited a previous case, L.H. Sugar Factories Ltd. & Ors. v. CCE, Meerut II, which established that recovery action for service tax not paid by users of transport services was not maintainable under Section 73 of the Finance Act, 1994. The Tribunal highlighted the absence of machinery for recovery from users availing services and set aside the orders for determination and recovery of service tax. 3. The Tribunal mentioned several previous cases where matters were remitted back for awaiting the application of machinery clauses for recovery. Following these decisions, the Tribunal decided to remit the matter back to the original authority to redetermine the issue after the introduction of machinery clauses. 4. The Tribunal emphasized the need to establish whether the appellants were liable for the levy of duty under the Service Tax levied on a Clearing and Forwarding agent, considering the agreement with the consignment agent. 5. Ultimately, the appeal was disposed of based on the above analysis and decisions made regarding the Service Tax levy issue.
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