2017 (11) TMI 613 - AT - Service Tax

Clearing & Forwarding Agent Services - case of appellant is that Since clearing activities by the appellant is absent in the present case, the activities undertaken by the appellant for its client will not fall under the ambit of such service for the purpose of levy of service tax - Held that - the appellant is only engaged in forwarding the goods received at DEWS Unit by diverting the materials to different depots located within such zone/area. Since the appellant is not involved in clearing the goods from the factory of its principal, M/s. Grasim Industries, it cannot be said that the appellant is providing both clearing & forwarding service to its principal - the activities of only forwarding without involvement of any clearing activities will not subject to levy of service tax under the category of clearing & forwarding agent service . In an identical set of facts, this Tribunal in the case of Commissioner of Central Excise, Meerut-II Vs. Rakesh Ahuja & Others 2016 (12) TMI 596 CESTAT-Allahabad , while dismissing the appeal filed by the Revenue, has held that in absence of any provision of clearing service, other services of receiving /storing of goods and delivering the same on the direction of the principal would not fall under the purview of taxable service as defined under Section 65(105) ibid. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of "Clearing & Forwarding Agent Services" under Section 65(25) of the Finance Act, 1994.

Analysis:
The appeal challenged an order upholding the demand on the grounds that the appellant's activities fell under "Clearing & Forwarding Agent Services." The appellant argued that for a service to be classified as such, it must involve both clearing and forwarding activities. Citing a previous Tribunal decision, the appellant contended that since clearing activities were absent, their services did not fall under this category. The respondent, however, supported the findings of the impugned order.

Upon examination, it was revealed that the appellant had been assigned tasks by M/s. Vikram Cement, which included diverting materials by issuing new challans. The Tribunal noted that the appellant was only engaged in forwarding goods received at a specific unit, without involvement in clearing goods from the factory. As a result, the Tribunal concluded that the appellant's activities of only forwarding, without any clearing involvement, did not attract service tax under the "clearing & forwarding agent service" category. This decision was supported by a previous Tribunal ruling in a similar context.

Ultimately, the Tribunal found no merit in the impugned order's classification of the disputed service under "Clearing and Forwarding Service." Consequently, the appeal was allowed in favor of the appellant, and the impugned order was set aside.

The judgment, delivered on 19.09.2017 by Members S. K. Mohanty and V. Padmanabhan, clarified the scope of taxable services under the relevant legislation, emphasizing the distinction between clearing and forwarding activities in determining the applicability of service tax.