2005 (7) TMI 8 - AT - Service Tax

Clearing and Forwarding agents means, any person engaged in providing any service either directly or indirectly connected with clearing or forwarding operation.

Summary

Issues:
1. Whether the services rendered by the appellants fall under the definition of "C&F Agency Service"?
2. Whether the Respondents are liable to pay service tax as Clearing and Forwarding Agents?

Analysis:
1. The Commissioner (Appeals) held that the services rendered by the appellants did not qualify as Clearing & Forwarding Agency service as they were not directly or indirectly connected with clearing and forwarding operations. The Commissioner found that the appellants were only procuring orders and passing them on to the principal for execution, without handling the goods in any manner. Consequently, the demand for service tax under Section 73 of the Finance Act, 1994 was deemed unsustainable. The Commissioner also ruled that since the services were not taxable, penalties under Sections 76 & 77 of the Finance Act were not applicable. The appeal by the Revenue against this decision was based on the argument that the Respondents were working as Clearing and Forwarding Agents, hence liable for service tax.

2. The definition of Clearing & Forwarding Agent under the Finance Act states that it includes any person providing services directly or indirectly connected with clearing or forwarding operations. However, in this case, the Respondents were found to be solely involved in procuring orders and passing them on for execution, with no evidence linking them to clearing and forwarding operations. The Tribunal concluded that the Respondents were not engaged in activities falling under the definition of Clearing & Forwarding Agency service. Consequently, the appeal by the Revenue was dismissed as lacking merit, affirming that the Respondents were not liable to pay service tax as Clearing and Forwarding Agents.

In summary, the judgment clarified that the services provided by the appellants did not meet the criteria for "C&F Agency Service" as they were not involved in clearing and forwarding operations. The Revenue's appeal was rejected as the Respondents were not deemed liable for service tax under the applicable provisions of the Finance Act.