2010 (4) TMI 644 - HC - Service Tax

C & F agent service - consignment agent - assessee contends that the assessee is not discharging its duty as a consignment agent, but it is a commission agent - When the assessee is a consignment agent, as the definition of C & F agent includes consignment agents as held in the case of Mahavir Generics - questions in favour of the revenue - appeal is allowed

Summary

Issues Involved:
1. Interpretation of the service provided by a consignment agent under Section 65 of the Finance Act, 1994.
2. Applicability of a previous judgment on the present case.
3. Legal correctness of bringing the activity of a Consignment Agent under the service tax net.

Analysis:

1. The main issue in this case revolved around the interpretation of the service provided by a consignment agent under Section 65 of the Finance Act, 1994. The CESTAT had granted relief to the respondent-assessee based on a previous judgment in the Mahavir Generics case. However, it was argued by the revenue that a subsequent judgment by the High Court had reversed the finding of the Tribunal in the Mahavir Generics case. The court noted that all authorities had proceeded on the premise that the assessee is a consignment agent and held that the definition of C & F agent includes consignment agents. Therefore, the court answered the question in favor of the revenue, concluding that the assessee is liable to pay the service tax as a consignment agent.

2. The second issue raised was the applicability of a previous judgment on the present case. The revenue contended that the judgment in the Mahavir Generics case, which had been relied upon by the CESTAT, was reversed by the High Court in a subsequent appeal. The court acknowledged this reversal and held that since the assessee was considered a consignment agent, the questions raised in the appeal had to be answered in favor of the revenue and against the assessee.

3. The final issue focused on the legality of bringing the activity of a Consignment Agent under the service tax net. The respondent-assessee argued that they were not discharging duties as a consignment agent but as a commission agent. However, the court found that all authorities had proceeded on the understanding that the assessee was indeed a consignment agent. Given that the definition of C & F agent includes consignment agents, the court ruled in favor of the revenue, setting aside the order of the tribunal and allowing the appeal.

In conclusion, the High Court of Karnataka decided in favor of the revenue, holding that the service provided by the assessee, considered a consignment agent, falls within the ambit of the service tax net as per the provisions of the Finance Act, 1994. The court's decision was based on the interpretation of relevant legal provisions and the applicability of previous judgments in similar cases.