2008 (5) TMI 236 - AT - Service Tax

Clearing and Forwarding Agents from the agreement made by appellants with their principles it is clear that assessee was only a commission agent and not C/F Agent services of commission agent were brought under tax net only w.e.f. 1/7/2003 which shows that Parliament has treated Commission agent separately from C/F Agent - in the light of the Larger Bench decision in Larsen & Toubro Ltd. case respondents can only be held to be Commission Agents therefore demand was rightly set aside

Summary

Issues:
Revenue's appeal against Commissioner (Appeals) order demanding service tax from respondents treated as "Clearing and Forwarding Agents" for a specific period.

Analysis:
The Commissioner (Appeals) set aside the original authority's order demanding service tax from the respondents, considering them as "Clearing and Forwarding Agents." The Commissioner found that the respondents were only 'Commission Agents' based on specific findings:
- Separate lease agreement between appellants and principals for storage of goods.
- Principals independently store goods and deliver them directly to customers.
- Appellants act as "Sole Marketing Agents" for marketing products and collecting amounts.
The appellate authority concluded that the respondents were not involved in clearing goods, storing goods, or dispatching goods, thus dropping the service tax demand.

The revenue's appeal challenges the lower appellate authority's findings, arguing that the respondents functioned as Clearing and Forwarding Agents, not Commission Agents. The revenue relies on a Tribunal decision but the respondents cite a Larger Bench decision that overruled the precedent. The Larger Bench clarified that a commission agent procuring purchase orders does not engage in clearing and forwarding activities. The activity of procuring orders is distinct from clearing and forwarding operations, indicating separate roles for agents.

Considering the facts and the Larger Bench decision, the respondents can only be categorized as Commission Agents. The precedent cited by the revenue was overruled, making it no longer applicable. Consequently, the revenue's appeal is dismissed, upholding the lower appellate authority's decision.