2011 (7) TMI 827 - AT - Service Tax

Refund - Clearing and Forwarding service - consignment stockiest for selling resins - As per the terms of the agreement the Appellant agrees to arrange at his own cost suitable godowns for warehousing the products and also to arrange insurance of the goods in the joint name with the principal - Appellants are entitled for annual commission on the volume of sales - Appeal is dismissed

Summary

Issues:
1. Appeal against rejection of refund claim for Service Tax.
2. Interpretation of agreement between the Appellant and M/s. Bayer ABS Ltd.
3. Classification of the Appellant as a Clearing and Forwarding Agent.

Issue 1: Appeal against rejection of refund claim for Service Tax
The Appellant filed an appeal against the Order-in-Appeal upholding the rejection of their refund claim for Service Tax amounting to Rs. 6,86,888. The Appellant contended that they are not providing any taxable service, leading to the refund claim. However, the impugned orders rejected the refund claim, prompting the appeal.

Issue 2: Interpretation of agreement between the Appellant and M/s. Bayer ABS Ltd.
The Appellant entered into an agreement with M/s. Bayer ABS Ltd. for selling products on a commission basis. The Appellant, registered as a provider of Clearing and Forwarding services, claimed that their transactions were at arms length as they bought goods from M/s. Bayer ABS Ltd. and sold them in the market. On the other hand, the Respondent argued that the agreement classified the Appellant as a consignment stockiest, entitling them to commission for selling resins.

Issue 3: Classification of the Appellant as a Clearing and Forwarding Agent
The Tribunal examined the agreement dated 1-6-1999 and found that the Appellants were appointed as consignment stockiest for selling resins. The agreement required the Appellant to arrange warehousing and insurance of goods, entitling them to an annual commission on sales volume. Despite the Appellant's claim of arms length transactions, the Tribunal concluded that the terms of the agreement did not support this contention. Therefore, the Tribunal dismissed the appeal, upholding the classification of the Appellant as a consignment stockiest providing taxable services.

This judgment involved the rejection of a refund claim for Service Tax, the interpretation of an agreement between the parties, and the classification of the Appellant as a Clearing and Forwarding Agent based on the terms of the agreement. The Tribunal's analysis focused on the specific clauses of the agreement to determine the nature of the services provided by the Appellant, ultimately leading to the dismissal of the appeal.