2011 (1) TMI 198 - AT - Service Tax

Business auxiliary services or clearing and forwarding agency - Various methodologies followed for marketing were attributable to the promotion of sales - There are no any reason to reverse the order of the first Appellate Authority who has not failed to examine the entire gamut of service provided by the Respondent - Decided in the favour of the assessee

Summary

Issues:
1. Classification of services provided by the Respondent as "clearing and forwarding" agency service or "business auxiliary services."

Analysis:
The main issue in this case revolved around the classification of services provided by the Respondent. The Revenue contended that the Respondent should be liable for tax under the category of "clearing and forwarding" agency service provider. On the other hand, the Respondent argued that they had actually provided "business auxiliary services." The first Appellate Authority meticulously examined the nature of the services provided by the Respondent, particularly focusing on the marketing agreement between the suppliers of the goods and the Respondent. The agreement highlighted various methodologies employed for marketing that were aimed at promoting sales.

During the proceedings, the Counsel for the respondent presented a copy of the agreement dated 1-11-2000 between M/s. KCK International Ltd. and the Respondent, formerly known as Technic Holding Pvt. Ltd. The terms of the contract clearly indicated that the appellant acted as a marketing agent, with such terms being predominant in nature. The Revenue argued that the Respondent received the goods and then engaged in marketing activities, suggesting that they should be categorized as a "clearing and forwarding service" provider.

After considering the arguments from both sides, examining the agreement, and reviewing the order passed by the first Appellate Authority, the Tribunal found no reason to overturn the decision of the first Appellate Authority. The Tribunal agreed with the first Appellate Authority's thorough evaluation of the services provided by the Respondent and upheld the classification of the services as "business auxiliary services." Consequently, the Tribunal affirmed the first appellate order and dismissed the Revenue's appeal.