2014 (1) TMI 668 - AT - Service Tax

Demand of service tax - Clearing and forwarding agent service - Held that - respondent was merely procuring/booking orders for JEWL on payment of commission basis. We also take note of the decision of Larger Bench of Tribunal in case of Larsen & Toubro Ltd. Vs. CCE - 2006 (6) TMI 3 - Appellate Tribunal, New Delhi in which Tribunal held that persons engaged in mere procurement of orders on commission basis are not covered under clearing and forwarding agent service under Section 65(25) of the Finance Act. Commissioner (Appeals) has set aside the order-in-Original following this decision of Larger Bench of Tribunal - Decided against Revenue.

Summary

Issues:
Interpretation of 'clearing and forwarding agent service' under Section 65(25) of the Finance Act.

The judgment pertains to an appeal filed by the Revenue against an Order-in-Appeal, where the issue at hand was whether the respondent, engaged in procuring/booking orders for another entity on a commission basis, could be considered as providing 'clearing and forwarding agent service' under Section 65(25) of the Finance Act. The respondent, a manufacturing unit, was appointed as distribution controllers by a sister unit for a specific product. The Revenue contended that the respondent was providing such a service and issued a Show Cause Notice demanding service tax. The Commissioner (Appeals) set aside the Order-in-Original, leading to the Revenue's appeal before the Tribunal.

The Tribunal, after examining the Order-in-Original and Order-in-Appeal, observed that the respondent was solely involved in procuring/booking orders for the sister unit on a commission basis. The Tribunal referenced a decision by the Larger Bench in Larsen & Toubro Ltd. Vs. CCE, which clarified that individuals engaged in mere procurement of orders on a commission basis do not fall under the definition of a clearing and forwarding agent service as per Section 65(25) of the Finance Act. Relying on this precedent, the Commissioner (Appeals) correctly set aside the original order. Consequently, the Tribunal found no fault in the Order-in-Appeal and upheld the decision, ultimately rejecting the Revenue's appeal.

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