2014 (12) TMI 586 - AT - Service Tax

Refund claim - contention of the applicant is that the applicant paid the service tax under the wrong belief the applicant had provided Clearing and Forwarding Agent service. Held that - The only contention of the appellant is that as per the definition a person has to undertake Clearing and Forwarding activity. In the present case, M/s. Dynamic Logistics had not undertaken the activity of clearing of the goods from the principal. - As per the agreement, M/s. Dynamic Logistics are to provide service in connection with receiving, storing, packing and discharge of goods comprising of spare parts of the principal. Therefore, it cannot be said that Dynamic Logistics has not undertaken the activity of clearing and forwarding. - where going by the terms and conditions of the agreement under which Dynamic Logistics is undertaking the activity on behalf of the appellant and Dynamic Logistics are receiving the goods from the appellant and thereafter undertaking other activities such as packing, etc., as per the instructions of the appellant and also clearing the goods as per the instruction of the appellant. In view of this, we do not find any merits in the appeal - Decided against assessee.

Summary

Issues:
Challenge to impugned order upholding refund claim of service tax paid under wrong belief; Interpretation of Clearing and Forwarding Agent service; Applicability of retrospective amendment on service tax liability; Determination of whether Dynamic Logistics undertook clearing and forwarding activities as per the agreement.

Analysis:
The appellant contested an order where the Commissioner (Appeals) upheld a refund claim of service tax amounting to Rs. 5,34,645. The appellant initially paid the tax under the mistaken belief of providing Clearing and Forwarding Agent service, later filing a refund claim. Following a retrospective amendment, the appellant refunded the tax except for the disputed amount, arguing they did not receive the service and filed a separate refund claim.

The appellant argued that M/s. Dynamic Logistics did not engage in clearing activities but only received and performed packing and discharging tasks for the principal. Citing a High Court decision, the appellant claimed that Dynamic Logistics did not undertake clearing activities from the appellant's location, thus not falling under the Clearing and Forwarding Agent service definition.

The Tribunal noted that during the disputed period, recipients of Clearing and Forwarding Agent service were liable to pay duty until a High Court decision set aside the provision. Subsequently, a retrospective amendment made the appellant liable for service tax. The appellant refused to pay the disputed amount, asserting they did not receive the service.

Examining the agreement, the Tribunal found that Dynamic Logistics received, stored, packed, and discharged goods on behalf of the appellant, indicating their involvement in clearing and forwarding activities. Referring to a previous court decision, the Tribunal concluded that Dynamic Logistics' actions aligned with the definition of clearing and forwarding services, dismissing the appeal.

In light of the agreement terms and Dynamic Logistics' activities, the Tribunal upheld the decision, emphasizing that Dynamic Logistics' actions constituted clearing and forwarding services, rejecting the appellant's claim.