2007 (10) TMI 139 - AT - Service Tax

Merely booking orders and receiving the commission, not handling the goods at all - activity is in the nature of principal and agent so it cannot be brought under the heading of Clearing & Forwarding Agent - no merit in this appeal and the same is rejected

Summary

Issues: Revenue's appeal against setting aside of Order-in-Original by Commissioner (A) regarding the nature of services provided by the assessee as a Clearing and Forwarding Agency.

Analysis:
1. The main issue in this case was whether the services provided by the assessee qualified as those of a Clearing and Forwarding Agency. The Commissioner (A) set aside the Order-in-Original and accepted the assessee's contention that they were acting as an "Indenting Agent" rather than a Clearing and Forwarding Agency. The Commissioner noted that the appellant was appointed as an 'Indenting Agent' by the principal company and was responsible for procuring orders for the products without handling the goods directly. The Commissioner relied on previous Tribunal judgments to support this finding, emphasizing that the appellant's role did not involve clearing or forwarding goods. The Commissioner's decision was based on the understanding that the appellant's services were akin to that of a Del Credere agent, indemnifying the principal against non-payment by customers.

2. The Appellate Tribunal considered the arguments presented by both sides and reviewed the grounds of appeal. The Tribunal noted that the assessee's activities did not align with the definition of a Clearing and Forwarding Agent under the Finance Act. Instead, the Tribunal agreed with the Commissioner (A) that the appellant's role was that of a principal and agent relationship, primarily involved in booking orders and receiving commissions. The Tribunal referenced a Larger Bench judgment in Larsen & Toubro Ltd. v. CCE, Chennai, which supported the view that the appellant's activities did not fall under the category of a Clearing and Forwarding Agent. Consequently, the Tribunal upheld the Commissioner's decision, rejecting the revenue's appeal on the grounds that the appellant was not engaged in handling goods but rather in facilitating transactions between the principal company and customers.

In conclusion, the judgments by the Commissioner (A) and the Appellate Tribunal focused on determining the nature of the services provided by the assessee and whether they qualified as those of a Clearing and Forwarding Agency. Both authorities found that the appellant's role as an 'Indenting Agent' was distinct from that of a Clearing and Forwarding Agent, leading to the dismissal of the revenue's appeal. The decisions were supported by references to relevant Tribunal judgments and legal definitions, emphasizing the specific responsibilities and activities undertaken by the appellant in the context of the agreement with the principal company.