2006 (11) TMI 666 - Commissioner - Service Tax

Summary

Issues involved: Determination of tax liability u/s Service Tax for services provided by the appellant as a commission agent and the imposition of penalty and interest.

Summary:

Tax Liability: The appellant, engaged in providing services as a commission agent, was held liable to pay Service Tax u/s 65 and 66 of the Finance Act 1994. The department contended that the services provided by the appellant fell under the category of C&F services, making them liable to pay Service Tax, interest, and penalties. The adjudicating authority confirmed the demand for Service Tax, interest, and imposed penalties under various sections of the Finance Act 1994.

Grounds of Appeal: The appellant challenged the decision, arguing that their services did not fall under C&F agent services but under Business Auxiliary Service. They cited precedents and orders to support their claim, emphasizing that mere procurement of orders on a commission basis did not constitute C&F agent services. The appellant also highlighted discrepancies in the adjudicating authority's reliance on certain orders and circulars.

Discussion and Findings: The key issue was whether the service of procuring orders for the principal in exchange for a commission was taxable under C&F agent services. The appellant contended that their activities were not related to clearing and forwarding operations but were covered under Business Auxiliary Service. The definition of C&F agent was analyzed, and it was concluded that the appellant did not perform any functions of a C&F agent but acted solely as a commission agent. The tribunal observed that the controversy had been settled by a larger bench ruling, which clarified that mere procurement of orders on a commission basis did not constitute C&F agent services. Consequently, the Order-in-Original was set aside, and the appellant's appeal was allowed.

Conclusion: The tribunal ruled in favor of the appellant, determining that the activities of procuring orders on a commission basis did not amount to providing services as a C&F agent. Therefore, the demand for Service Tax, interest, and penalties was deemed unsustainable, leading to the setting aside of the Order-in-Original and the allowance of the appellant's appeal.