2011 (8) TMI 886 - AT - Service Tax

Waiver of pre-deposit - C&F Agent - Time limitation - The terms of the contract revealed that the applicants were supplying the spare parts of M/s. Bajaj Auto Ltd. which were further being sold by them in the State of Rajasthan - In the present case, the goods are being sold by the appellant to independent persons and invoices are being given in their own name and sales-tax is being paid on them - Decided in favor of the assessee

Summary

Issues:
Prayer to dispense with pre-deposit of service tax confirmed against the appellant for providing services as a C&F Agent to M/s. Bajaj Auto Ltd. and the invocation of the longer period of limitation for raising the demand.

Analysis:

1. Prayer to Dispense with Pre-deposit of Service Tax:
The appellant sought dispensation of the condition of pre-deposit of service tax amounting to Rs. 1,43,698/-, contending that they were not operating as a C&F Agent for M/s. Bajaj Auto Ltd. The Tribunal examined the agreement between the parties dated 1-7-2001, which revealed that the appellant was supplying spare parts to M/s. Bajaj Auto Ltd., and the goods were subsequently sold by the appellant independently in the State of Rajasthan without any intervention from M/s. Bajaj Auto Ltd. The definition of a C&F Agent under Section 65(25) of the Finance Act, 1994, was considered, which includes persons engaged in clearing or forwarding services. The Tribunal referred to a Circular of the Board dated 11-7-1997, indicating that a C&F agent receives dispatch orders from their principal. However, in this case, the appellant was selling goods to independent parties, issuing invoices in their own name, and paying sales tax directly. Consequently, the Tribunal held that the appellant could not be considered a C&F Agent, thereby granting a full waiver of service tax and penalty.

2. Invocation of Longer Period of Limitation:
The Tribunal also addressed the issue of the demand being raised by invoking the longer period of limitation. It noted that the charge of suppression was based on a general allegation without any concrete evidence of positive acts of suppression. As a result, the Tribunal found that the demand was prima facie barred by limitation. Therefore, in addition to granting the waiver of service tax and penalty, the Tribunal fixed the appeal for final hearing on a specific date to address the remaining issues comprehensively.

In conclusion, the Tribunal's judgment provided detailed reasoning for granting the appellant's request to dispense with the pre-deposit of service tax, emphasizing the independent nature of the appellant's operations and the lack of evidence supporting the charge of suppression. The decision also highlighted the importance of adhering to the statutory limitations while raising demands, ensuring a fair and just resolution of the legal dispute.