2011 (7) TMI 803 - AT - Service Tax

Waiver of pre-deposit - clearing and forwarding agency - in cases where the goods are already cleared by the manufacturer and the dealer is to store those goods and forward to the buyer of the goods as per direction of the manufacturer, such service does not fall under the clearing and forwarding service. - As per the terms and conditions of agreements appellants also show that applicant are undertaking activity of clearing the goods - Decided in favor of the assessee

Summary

Issues:
1. Waiver of pre-deposit of service tax and penalties for a clearing and forwarding agency.
2. Interpretation of the definition of "clearing and forwarding agency" under relevant law.
3. Examination of agreements to determine if the appellant is engaged in clearing goods.
4. Application of precedents, including the decision of the Hon'ble Punjab & Haryana High Court in a similar case.

Analysis:
The Appellate Tribunal CESTAT, New Delhi, considered an application for the waiver of pre-deposit of service tax and penalties amounting to Rs. 21,88,122 for a clearing and forwarding agency. The applicant contended that they were not providing clearing and forwarding services as they did not engage in activities related to the clearance of goods. They relied on a decision of the Hon'ble Punjab & Haryana High Court to support their argument that storing and forwarding goods already cleared by the manufacturer did not constitute clearing and forwarding services.

The Revenue, represented by the Ld. SDR, argued that the terms and conditions of the agreements between the parties indicated that the applicant was indeed responsible for clearing the company's products, as per the manufacturer's instructions. The Revenue pointed out that the agreements were specifically termed as "clearing and forwarding agency agreements," and clauses within the agreements indicated the applicant's involvement in clearing goods.

The Tribunal referenced the decision of the Hon'ble Punjab & Haryana High Court in the case of Kulcip Medicines P. Ltd., where it was observed that the dealer received goods already cleared by the manufacturer, stored them, and forwarded them to the buyer as per instructions. In the present case, the Tribunal noted the existence of 13 agreements termed as "clearing and forwarding agency agreements," with specific clauses indicating the applicant's responsibility for clearing goods. Consequently, the Tribunal found that the applicant was engaged in clearing activities and directed them to deposit Rs. 5 lakhs within four weeks. Upon this deposit, the remaining amount of tax, interest, and penalties were waived, and recovery stayed during the appeal's pendency.

In conclusion, the Tribunal's decision was based on a detailed analysis of the agreements and the nature of activities undertaken by the applicant, aligning with the interpretation of the definition of a clearing and forwarding agency. The decision also considered relevant precedents to arrive at a fair and reasoned judgment.