2016 (10) TMI 961 - AT - Service Tax

Services of truck diversion agent - whether the service would fall under the services of C&F agent? - CBEC Circular No. 543/7/97 TRU dated 11.7.97 - Held that - the main activity of the respondent is to divert the truck bearing the goods from M/s. Grasim for onward transportation as per the instruction of the Company officials. It is obvious that the activity undertaken by the respondent is not covered under any of the 6 CBEC Circular No. 543/7/97 TRU dated 11.7.97 in which the primary functions of C&F agents are enumerated, which will bring the activities of the respondent within the service of C&F agents. Neither the show cause notice nor the order in original clearly gives any justification as to how the activities of the respondent will be covered by C&F agents - activities of the respondent would not be covered by the services of C&F agent - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the activities of the respondent fall under the services of a C&F agent.
2. Validity of the demand for service tax and penalties imposed by the original authority.
3. Appeal against the order of the Commissioner (Appeals) ruling in favor of the respondent.

Analysis:
1. The appeal was against the order passed by the Commissioner (Appeals) regarding the respondent, a proprietary firm providing truck diversion services. The Revenue contended that the respondent's activities should be classified as those of a C&F agent. The respondent's role involved diverting trucks for transportation as per instructions, with fixed freight charges and commission. The Tribunal referred to CBEC Circular No. 543/7/97 TRU listing primary functions of C&F agents, noting that the respondent's activities did not align with these functions. The Tribunal concluded that the respondent's actions did not fit within the scope of a C&F agent's services, as they mainly involved truck diversion based on company instructions. Therefore, the Revenue's appeal was dismissed.

2. The original authority had demanded service tax from the respondent, along with interest and penalties, based on the view that the respondent's activities were akin to those of a C&F agent. However, the Commissioner (Appeals) ruled in favor of the respondent, leading to the Revenue's appeal. The Tribunal found that the show cause notice and the original order did not provide sufficient justification for categorizing the respondent as a C&F agent. Consequently, the impugned order was upheld, and the Revenue's appeal was set aside.

3. During the proceedings, only the Revenue was represented, while no one appeared for the respondent. The Tribunal considered the agreement between the respondent and Grasim Industries, highlighting the specific responsibilities undertaken by the respondent as a truck diversion agent. The Tribunal's analysis focused on the discrepancy between the respondent's activities and the defined functions of C&F agents, ultimately leading to the decision to uphold the order in favor of the respondent. The judgment was pronounced in open court, concluding the matter in favor of the respondent.