2011 (1) TMI 678 - AT - Service Tax

Clearing and forwarding agent services - payments for the price of coal bought by various persons and arranged the transportation of the same by paying the freight and arranged issuance of railway receipts etc - The lower authorities have relied on the Tribunal s decision in the case of Prabhat Zarda India Ltd. 2002 -TMI - 78 - CEGAT KOLKATA - However the said decision stands over-ruled by the Larger Bench judgment of the Tribunal in the case of Larsen & Toubro Vs CCE (2006 -TMI - 460 - Appellate Tribunal New Delhi). Apart from the above also note that the Commissioner has held that the appellants indirectly dealt with the goods and as such has to be held as clearing and forwarding agent - It stands held by the larger Bench that the expression directly or indirectly cannot be from the activity of clearing and forwarding operations - Thereafter there are a number of decisions of the Tribunal which hold that such type of services would not be covered by the clearing and forwarding agent services.

Summary

Issues:
Demand of service tax, imposition of penalty under Sections 76, 77, and 78 of the Finance Act, 1994; Classification of services as clearing and forwarding agent services; Registration under business auxiliary services; Barred by limitation.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi dealt with the confirmation of a demand for service tax, interest, and penalties against the appellants under Sections 76 and 78 of the Finance Act, 1994. The appellants were considered service providers categorized as clearing and forwarding agents, leading to the imposition of penalties. The Tribunal noted that the appellants were engaged in clearing and forwarding activities, arranging transportation and payments for coal, falling under the definition of clearing and forwarding agent services for a specific period. However, the appellants later registered under business auxiliary services, paying service tax under this category. The Revenue argued that services provided before registration were clearing and forwarding agent services, issuing a show cause notice for demand and penalties.

The Tribunal considered the reliance on a previous decision in the case of Prabhat Zarda India Ltd, which was overruled by a Larger Bench judgment in the case of Larsen & Toubro Vs CCE. It was highlighted that the expression 'directly or indirectly' cannot be inferred from clearing and forwarding operations, as per the Larger Bench judgment. Several Tribunal decisions were cited, indicating that such services would not fall under clearing and forwarding agent services. Additionally, the appellants' subsequent registration under business auxiliary services was a crucial point, indicating that they could not be considered as providing clearing and forwarding agent services before registration. The Tribunal also noted that the demand raised for a specific period was barred by limitation, being beyond the statutory time limit.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellants. The judgment emphasized the importance of proper classification of services, registration under relevant categories, and adherence to statutory limitations in tax-related matters.