2011 (8) TMI 778 - AT - Service Tax

Demand - Clearing and Forwarding - No other fact to show that the Respondent was doing any activity either in relation to clearing or forwarding has been brought on record - Circular No. 37B No. 2/1/2002-S.T., dated 24-4-2002 - Tribunal in Larsen and Toubro Ltd. v. C.C.E. -( 2006 -TMI - 460 - Appellate Tribunal, New Delhi) wherein it was held that Risk cover is in relation to risk during clearing, forwarding and transport, it is a separate activity from clearing and forwarding - Decided in favor of the assessee

Summary

Issues:
Interpretation of "Clearing and Forwarding" services under the Finance Act, 1994.

Analysis:
The case involved a dispute regarding the liability to pay Service tax on commission received by the Respondent for selling goods of other parties. The Department contended that the commission should be taxed under the category of "Clearing and Forwarding" services as per the Finance Act, 1994. A Show Cause Notice was issued demanding tax payment along with interest and penalties. The adjudication confirmed the demand and imposed a penalty under Section 76 of the Finance Act, 1994. The Respondent appealed to the Commissioner (Appeals), who ruled that the activities in question did not fall under the purview of "Clearing and Forwarding" services. The Commissioner relied on a circular issued by C.B.E.C. and a previous Tribunal decision. Dissatisfied with this decision, the Revenue filed an appeal.

Upon review, the Appellate Tribunal observed that there was no evidence of any contract with the concerned parties or any activity related to clearing or forwarding by the Respondent. The Tribunal noted that the Respondent's activities were limited to canvassing orders and not directly involved in material handling or forwarding. The Tribunal also highlighted the lack of grounds for appeal signed by the Committee of Commissioners and criticized the Revenue officer's dismissal of the relevance of the circular and Tribunal decision. The Tribunal concluded that the Respondent was not providing clearing and forwarding services based on the criteria set by the circular and previous Tribunal decision.

Ultimately, the Tribunal dismissed the appeal, stating that there was no merit in the Revenue's arguments. The judgment emphasized the lack of evidence supporting the Department's claim that the commission received by the Respondent should be taxed as "Clearing and Forwarding" services under the Finance Act, 1994. The decision reaffirmed that the Respondent's activities did not fall within the scope of the specified service category, as determined by the applicable criteria and legal interpretations.

This detailed analysis of the judgment highlights the key legal arguments, interpretations, and findings related to the issue of defining "Clearing and Forwarding" services under the Finance Act, 1994, as applied to the specific circumstances of the case.