2016 (8) TMI 948 - AT - Service Tax

Demand of tax, interest and penalty - classification GTA service cargo handling service clearing and forwarding agent services reverse charge mechanism Held that - mere movement or transportation of the goods from one place to another, under the direction of principal cannot be held to be clearing and forwarding service . This was established in the case Videocon TV Manufacturer P. Ltd. vs. CCE, NOIDA 2013 (7) TMI 349 - CESTAT NEW DELHI. Thus, appellant not liable to pay appeal allowed decided in favor of appellant.

Summary

Issues:
Interpretation of services provided by the appellant under the category of transport of goods and cargo handling services; liability of service tax under reverse charge mechanism; classification of appellant's activity as 'clearing and forwarding agent services'; applicability of extended period of limitation; confirmation of demand, interest, and penalties.

Analysis:
The appellant, registered for transport and cargo handling services, faced a show cause notice alleging their activities fell under 'clearing and forwarding agent services', requiring tax liability discharge. The appellant contended they were not engaged in clearing and forwarding, citing a contract with their principal and legal precedents. Despite the appellant's arguments, lower authorities confirmed the demand, interest, and penalties.

The Tribunal reviewed the issue, referencing the Punjab and Haryana High Court decision in Kulcip Medicines (P) Ltd. and the Tribunal's decision in Narottam & Co., emphasizing that merely arranging labor for loading and unloading goods does not constitute 'clearing and forwarding' activity. The Tribunal also cited the Larsen & Toubro Ltd. case, outlining activities of a clearing and forwarding agent, noting that even the absence of one activity precludes classification as such. The Tribunal highlighted the Videocon TV Manufacturer case, where movement of goods under the principal's direction was not deemed 'clearing and forwarding service'.

Considering the settled legal precedents, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief. The decision was based on the established interpretation that the appellant's services did not align with the characteristics of 'clearing and forwarding' activities, as defined by relevant legal judgments and precedents.