2008 (10) TMI 127 - AT - Service Tax

Scope of C&F service was examined in detail by Tribunal s Larger Bench in the cases of Larsen & Toubro Ltd. and Medpro Pharma (P.) Ltd. where it was held that activity of mere procurement of purchase orders for principal by an agent on commission basis is distinct and different from C&F operations in instant case appellant were not in any manner physically dealing with the goods nor did they maintain any godown so view taken by the LB squarely applies to this case against the revenue

Summary

Issues: Classification of service as 'Clearing and Forwarding Agents' service

In this judgment by the Appellate Tribunal CESTAT, Ahmedabad, the issue at hand is whether the activity undertaken by the respondent during the material period constituted rendering of 'Clearing and Forwarding Agents' service ('C&F service'). The appellant argued that the respondent's activities fell under the purview of 'C&F service' based on the expressions "in relation to" and "in any manner" used in the definition of the service. The appellant relied on the Tribunal's decision in Prabhat Zarda Factory (India) Ltd. v. CCE, while the respondent cited the decision in Mahavir Generics v. CCE to support their position. The Tribunal examined the records, written submissions, and relevant case law to determine the classification of the service provided by the respondent.

The Tribunal analyzed the nature of the respondent's activities, which included organizing, advertising, following up with customers, explaining technical aspects of products, and collecting payments on behalf of the manufacturer. The Tribunal noted that the respondent's role primarily involved procuring purchase orders for the manufacturer, collecting payments, and promoting relations between the manufacturer and buyers. It was observed that the respondent did not physically handle the goods or maintain storage facilities for the goods. The Tribunal referred to previous judgments by the Larger Bench, such as Larsen & Toubro Ltd. v. CCE and Medpro Pharma (P.) Ltd. v. CCE, which clarified the distinction between mere procurement of purchase orders and C&F operations. The Tribunal concluded that the respondent's activities did not qualify as 'C&F service' based on the established principles and overruled the decision in Prabhat Zarda Factory (India) Ltd.'s case. Consequently, the appeal filed by the revenue was dismissed, affirming that the respondent's activities did not constitute 'C&F service.'