2015 (6) TMI 121 - AT - Service Tax

Clearing and forwarding agency service - delcredere agent - Held that - The appellant is found to be a delcredere agent who in the commercial world guarantees recovery of the debt. Even reading of the scope of the activities carried out by appellant as depicted in the appellate order does not appeal to common sense that the appellant carried out clearing and forwarding service when Department has not brought out which are the consignments he cleared and origin and destination of the goods for forwarding. - Decided in favour of assessee.

Summary

Issues:
1. Whether the appellant's activity as a Delcredere Agent constitutes a clearing and forwarding agency service.

Analysis:
1. The Revenue contended that the services provided by the appellant, such as organizing sales, establishing connections between the company and customers, submitting market reports, collecting sale proceeds, and receiving commissions, should be classified as clearing and forwarding agency services. The definition of 'clearing and forwarding agency' under Section 65(25) of the Finance Act, 1994 was examined, which specifies that the activity should be directly or indirectly related to clearing and forwarding operations. Any other unrelated operation does not fall under this definition.

2. The appellant was identified as a Delcredere Agent, responsible for guaranteeing debt recovery in the commercial realm. Despite the activities described in the appellate order, there was no evidence presented by the Department regarding the clearance of consignments or the forwarding of goods by the appellant. The judgment highlighted the lack of clarity on the consignments cleared or the origin and destination of goods for forwarding, which are essential components of clearing and forwarding services.

3. Consequently, the Revenue's argument was deemed insufficient, and the appeal was allowed in favor of the appellant. The judgment emphasized the importance of activities directly or indirectly related to clearing and forwarding operations to classify a service as a clearing and forwarding agency service. The lack of evidence linking the appellant's activities to traditional clearing and forwarding operations led to the dismissal of the Revenue's contentions.

4. The judgment was dictated and pronounced in open court, providing a clear resolution to the dispute regarding the classification of the appellant's services. The detailed analysis of the appellant's role as a Delcredere Agent and the specific criteria for defining clearing and forwarding agency services underlined the importance of evidence and connection to traditional operations in such classifications.