2005 (3) TMI 5 - AT - Service Tax

Service Tax Clearing and Forwarding Agent Services of Distributing and Clearing of goods from another company Imposition of penalty

Summary

Issues:
1. Whether the appellants' activity falls under the definition of 'C. & F Agents' for service tax liability and penalty imposition.
2. Whether the penalty imposed on the appellants is justified for non-submission of return and registration.

Analysis:
1. The advocate for the appellants argued that their activity does not qualify as that of 'C. & F Agents' and thus, they are not liable to pay service tax or face penalties. He pointed out that the appellants work as dealers falling under Auxiliary Business Services, citing a relevant Board's Circular. He highlighted the absence of a written contract with the principal C&F agent and the lack of invoicing on behalf of the principals. However, the JDR referred to statements by the partners of the appellants admitting to receiving commission as C&F agents.

2. The judgment examined the definition of 'Clearing & Forwarding Agent' under Section 65(16) of the Finance Act, 1994, which includes any person providing services connected with clearing and forwarding operations. The Tribunal found this definition broad enough to encompass the appellants' activities of distributing and clearing goods. Despite this, considering the appellants' remote location and their inability to pay service tax on time, the Tribunal deemed the penalty equal to service tax as excessive. The Tribunal set aside the additional penalty imposed for non-submission of returns and registration, reducing the penalty amount from Rs. 9,584 to Rs. 1,500, while upholding the rest of the order.