2010 (5) TMI 507 - HC - Service Tax

Demand - Clearing and Forwarding Agency services Assessee engaged in procuring the customers for the foreign principal and fulfilling their obligations - assessee cannot be brought within the scope of definition of C and F Agent under section 65(25) of the Act - appeal dismissed as being devoid of merits

Summary

Issues:
Challenge to CESTAT order on service tax liability for Clearing and Forwarding Agency services.

Analysis:
1. The appeal challenges the CESTAT order setting aside the Order-in-Original (OIO) that confirmed the demand for service tax, interest, and penalty on the respondent for allegedly not remitting service tax for Clearing and Forwarding Agency services. The main issues revolve around whether the respondent's activities fall under the taxable category of C&F Agent Services as per the Finance Act, 1994.

2. The appellant contends that the respondent, though indirectly providing clearing and forwarding services, should be considered within the scope of the C&F Agent definition under section 65(25) of the Act. Reference is made to a previous court decision to support the argument that the CESTAT order is not legally sound and should be set aside in favor of the revenue.

3. Conversely, the respondent argues that their activities do not align with the definition of a C&F Agent under the Act. They highlight specific agreements and activities that demonstrate their role in procuring sales orders and maintaining machines rather than traditional C&F operations. The respondent also cites previous legal precedents to support their position that they do not fall under the C&F Agent category.

4. Upon reviewing the statutory definition of a Clearing and Forwarding Agent and relevant trade notices, the court finds that the respondent's activities do not match the typical functions of a C&F Agent. The court emphasizes that the respondent's role in procuring customers for the foreign principal does not constitute C&F operations as defined by the Act. Legal precedents are cited to support the conclusion that mere procurement of orders does not amount to providing services as a C&F Agent.

5. The court rejects the appellant's argument that any indirect activity resembling C&F Agent services should be included in the definition. Citing a specific case where commission agent services were categorized differently, the court affirms that the respondent's primary activities do not qualify them as C&F Agents. Consequently, the substantial questions of law raised by the revenue are answered against them, leading to the dismissal of the appeal for lacking merit.