2013 (11) TMI 255 - AT - Service Tax

C & F Agent versus as a Del Credere Agent service rendered by the assessee to the IPCL. is more in the nature of an indemnifier as the assessee as to indemnify to the value of the goods sold by the IPCL to its customers and that the assessee shall ensure the proper repayment of the value of the goods sold by the IPCL to its customers - revenue contended that service rendered by the respondent to the IPCL has to be considered as clearing and forwarding Agent as defined under the Finance Act, 1994 Held that - . Combined reading of the definition of C&F agent under the Finance Act under Section 65(25) and the meaning of Del Credere Agent and the amendment brought into in the year 2005, whereunder Del Credere Agent is also included would clearly establishes that prior to the amendment, the service rendered by a Del Credere Agent had been excluded from service tax. Therefore we are of the view that since the respondent-assessee was not a C&F Agent for IPCL as it was a Del Credere Agent the respondent-assessee is not liable to pay service tax - following decision of COMMISSIONER OF SERVICE TAX, BANGALORE Versus SREENIDHI POLYMERS (P) LTD. 2010 (3) TMI 333 - KARNATAKA HIGH COURT - Decided in favour of assessee.

Summary

Issues:
1. Dispute over service tax liability for Del Credere Agency services and Consignment Stockist/Agency services.
2. Classification of services under "Clearing & Forwarding Agency Service" or "Business Auxiliary Service."
3. Applicability of service tax levy on "Business Auxiliary Services" for services rendered prior to 01/07/2003.

Analysis:
1. The appellant was engaged in two agreements with a company, acting as a Del Credere Agent and a Consignment Stockist/Agent. A show-cause notice was issued demanding service tax for both types of services. While the appellant paid the tax for the Consignment Stockist/Agent services, they disputed the liability for the Del Credere Agency services. The lower authorities upheld the demand, leading to the appeal.

2. The appellant contended that the Del Credere Agency services should not be classified under "Clearing & Forwarding Agency Service" but rather under "Business Auxiliary Service." Citing precedents, the appellant argued that since the services were rendered before the introduction of service tax on "Business Auxiliary Services," the demands were not legally sustainable. The Tribunal acknowledged the appellant's limited role in the Del Credere Agency services, which did not involve handling the goods but focused on procuring orders and ensuring payments. The Tribunal concurred with the appellant's position and allowed the appeal, setting aside the lower authorities' decision.

3. The Tribunal's decision was based on the understanding that the appellant's activities as a Del Credere Agent did not fall within the scope of "Clearing & Forwarding Agency Service." By emphasizing the nature of the services provided and aligning with previous judgments, the Tribunal concluded that the services were correctly classifiable under "Business Auxiliary Service." As a result, the demands for service tax on Del Credere Agency services were deemed unsustainable in law due to the absence of a levy on "Business Auxiliary Services" during the relevant period.

This comprehensive analysis highlights the key legal issues, arguments presented, relevant precedents cited, and the Tribunal's decision, providing a detailed overview of the judgment.