2008 (2) TMI 208 - AT - Service Tax

Refund claim filed by appellants when they came to know that services of consignment agents cannot be charged to Service Tax as C&F Agent claim rejected on ground that they can t be treated as commission agent - there is no evidence to say that the appellant carried out clearing and forwarding activities on behalf of the Principal - They were only purchasing and selling the goods and obtained commissions at mutual agreed rates appeal of assessee allowed refund allowed

Summary

Issues:
1. Whether the appellants can claim a refund of Service Tax paid as C & F Agents based on a CESTAT decision.
2. Whether the appellants can be considered as Commission Agents for the purpose of Service Tax liability.
3. Applicability of previous decisions and judgments on the present case.

Analysis:

1. Refund Claim based on CESTAT Decision:
The appellants, registered as C & F Agents, sought a refund of Service Tax paid after learning about a CESTAT decision exempting consignment agents from Service Tax liability. The Commissioner (Appeals) rejected the refund claim, stating that the appellants cannot be treated as Commission Agents. The appellants argued that they were only selling agents, not C & F Agents, and should be considered as commission agents. They highlighted that the period of dispute predates the introduction of service tax on commission agents. The Tribunal noted the appellants' role as selling agents based on the agreement terms and allowed the appeal, granting consequential relief.

2. Classification as Commission Agents:
The Commissioner (Appeals) classified the appellants as Consignment Agents under the C & F Agent definition, making them liable for Service Tax. However, the appellants contended that they were independent selling agents, not involved in clearing and forwarding activities like traditional C & F Agents. They emphasized that they operated under a commission-based agreement and were not under the control of the principal. The Tribunal analyzed the agreement, noting the appellants' role as selling agents selling goods on consignment basis, distinct from traditional C & F Agent activities. Relying on the Larsen and Toubro case, the Tribunal held that the appellants' activities did not amount to providing services as clearing and forwarding agents, thus allowing the appeal.

3. Applicability of Previous Decisions:
The Tribunal considered various decisions cited by both parties to determine the applicability of precedents. The appellants relied on the Larger Bench decision in the Larsen and Toubro case, which clarified that procuring orders on a commission basis did not fall under C & F Agent services. They argued that their case aligned with this interpretation. The Tribunal referenced multiple cases following the Larsen and Toubro decision, supporting the appellants' position as selling agents. In contrast, the Revenue cited cases where assesses were appointed as consignment agents, emphasizing the distinction in the present case. Ultimately, the Tribunal found merit in the appellants' arguments, ruling in their favor based on the prevailing legal interpretations.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal, the arguments presented by the parties, and the legal reasoning behind the decision to allow the appeal and grant relief to the appellants.