2019 (6) TMI 1452 - AT - Service Tax

Demand of service tax - Clearing and Forwarding services - period from September 1999 to March 2004 - HELD THAT - The very essential requirement, in order to constitute clearing and forwarding services, of clearance of coal from the collieries is absent in the present case and that the assessee is only undertaking liaisoning related services to ensure smooth supply of coal. The present issue is no longer res integra and therefore, the appeal of the assessee is entitled to succeed. The demand of service tax, interest and penalty are set aside - In favor of assessee.

Summary

Issues:
1. Classification of services under the category of 'Clearing and Forwarding' services for service tax liability.
2. Applicability of the decision in the case of Coal Handlers Pvt. Ltd. vs. CCE, Kolkata.
3. Dispute regarding the demand on the ground of limitation and imposition of penalty.

Analysis:
1. The appeal addressed the demand confirmed by the Ld. Commissioner for service tax under 'Clearing and Forwarding' services for activities related to coal supply coordination. The Tribunal noted that the assessee's activities did not align with the essential requirement of clearing coal from collieries for forwarding. The Tribunal referred to the decision in Coal Handlers case, emphasizing that liaisoning services do not fall under the purview of 'Clearing and Forwarding' services. Consequently, the appeal of the assessee was upheld, and the demand for service tax, interest, and penalty was set aside.

2. The Ld. Advocate for the assessee cited the Coal Handlers case and the Tribunal's Mumbai Bench decision in Naresh Kumar & Co. case to support the argument that the activities undertaken did not qualify as 'Clearing and Forwarding' services. The Tribunal concurred, highlighting the Supreme Court's interpretation that 'Clearing and Forwarding' operations involve clearing goods from suppliers and forwarding them to destinations under the principal's instructions. Since the assessee's services did not involve physical handling or storage of coal, the Tribunal ruled in favor of the assessee, emphasizing the limited scope of taxable activities under 'Clearing and Forwarding' services.

3. The Ld. Advocate contested the demand on grounds of limitation, penalty imposition, and incorrect tax classification. The Tribunal considered the arguments and found that the demand under 'Clearing and Forwarding' services was not sustainable due to the nature of the services provided by the assessee. Consequently, the appeal of the assessee was allowed, setting aside the demand, interest, and penalty. The Revenue's appeal was rejected as it lacked merit in light of the non-taxable nature of the services provided by the assessee.

In conclusion, the Tribunal's judgment clarified the scope of 'Clearing and Forwarding' services, emphasizing the necessity of activities involving clearing goods from suppliers and forwarding them to destinations under the principal's instructions for taxability. The decision highlighted the importance of aligning service activities with the legal definitions to determine service tax liability accurately.