2007 (4) TMI 81 - AT - Service Tax

Clearing and forwarding Agent - Alleged that appellant would liable to pay service tax under C & F agent and accordingly demand were made - Held that allegation was not correct.

Summary

Issues:
Interpretation of service tax liability for a commission agent under Business Auxiliary Services versus clearing and forwarding agent.

Detailed Analysis:
The case involved a respondent who sold various products manufactured by a company under an agreement describing the respondent as a "commission agent." The dispute arose when the revenue contended that the respondent should be treated as a clearing and forwarding agent, thus subject to service tax. The Commissioner (Appeals) had set aside the service tax demand, stating that commission agents were exempt from duty during the relevant period.

The revenue argued that based on the agreement terms, the respondent should be considered a consignment agent liable for service tax. They relied on specific clauses in the agreement related to clearing consignments, storage, and sale procedures to support their claim. Additionally, they referenced a Tribunal judgment to strengthen their position.

On the other hand, the respondent's counsel asserted that the respondent fell under Business Auxiliary Services as a commission agent dealing with goods, not a clearing and forwarding agent. They highlighted that merely receiving and storing goods did not transform a commission agent into a consignment or clearing agent. They also disputed the applicability of the Tribunal judgment cited by the revenue.

The Tribunal carefully examined the agreement clauses and concluded that the respondent's role was that of a commission agent earning a commission on sales, regardless of the terminology used in the agreement. They emphasized that the statutory definition of Business Auxiliary Services included commission agents and exempted them from service tax during the relevant period.

Ultimately, the Tribunal upheld the Commissioner (Appeals) decision, stating that the respondent's service did not fall under the category of a clearing and forwarding agent. They rejected the revenue's appeal, citing the statutory provisions and the nature of the respondent's relationship with the principal as a commission agent.

In conclusion, the judgment clarified the distinction between commission agents and clearing and forwarding agents, emphasizing the statutory definitions and the specific terms of the agreement in determining the service tax liability of the respondent.