2010 (12) TMI 978 - AT - Service Tax

Clearing and forwarding agency service v/s business auxiliary services - Held that - Perusal of the agreement and also the speaking order passed by the ld. first appellate authority, it is unable to find 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. Therefore he was correct to hold that the respondent had provided business auxiliary service . revenue s appeal dismissed.

Summary

Issues: Classification of services as "clearing and forwarding" agency service provider or "business auxiliary services".

Analysis:
1. The main issue in this case revolves around the classification of services provided by the Respondent. The Revenue argues that the Respondent should be taxed under the category of "clearing and forwarding" agency service provider, while the Respondent asserts that they have 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 to enhance sales promotion.

2. 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 (P.) Ltd. The agreement outlined the terms governing the sale of goods to M/s. KCK International (P.) Ltd., emphasizing the dominant role of the appellant as a marketing agent. The terms of the contract strongly indicated the marketing agency nature of the services provided by the Respondent.

3. The Departmental Representative (DR) representing the revenue contended that the Respondent received goods and subsequently engaged in marketing activities after clearance, suggesting that the Respondent should be categorized as a "clearing and forwarding service" provider. However, upon a thorough review of the agreement and the detailed order passed by the first Appellate Authority, the Tribunal found no grounds to overturn the decision of the lower authority. The Tribunal concurred with the first Appellate Authority's assessment that the services rendered by the Respondent fell under the classification of "business auxiliary service."

4. After considering arguments from both sides and examining the agreement and the first Appellate Authority's order, the Tribunal affirmed the decision of the lower authority, concluding that the Respondent indeed provided "business auxiliary services." Consequently, the Tribunal dismissed the appeal filed by the Revenue, upholding the classification of services as determined by the first Appellate Authority.