2017 (12) TMI 723 - AT - Service Tax

Interpretation of statute - clearing and forwarding services - scope of service - case of appellant is that the activity of clearing and forwarding consisting of two activities i.e. clearing and forwarding when carried out cumulatively and simultaneously, that only is taxable - Held that - It is inconceivable how an activity not being covered by the fold of law shall be taxable beyond its mandate - When law prescribed certain activity shall only be taxable on occurrence of taxable event, without any evidence to that effect, there is no presumption in taxation. The term clearing and forwarding would cover only those activities which pertain to clearing of the goods and forwarding thereof to a destination, under the directions of the principal. Beyond this, no other activities shall be taxable under the above said taxing entry. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Taxability of services provided in relation to clearing and forwarding operations.

Analysis:
1. The appellant contended that the services provided, as listed in the show cause notice, did not fall under the scope of clearing and forwarding operations. The appellant argued that liaisoning, supervising, and loading activities were not directly related to clearing and forwarding services. They emphasized that taxing the entire gamut of services was not intended by the law unless clear clearing and forwarding services were provided.

2. The appellant referred to Section 65(25) and Section 65(48)(j) of the Finance Act, 1994 to support their argument. The appellant highlighted that the law required the activities to be directly connected to clearing and forwarding operations to be taxable. They cited a Supreme Court judgment (Coal Handlers Pvt. Ltd. Vs. CCE, Range Kolkata-I) which clarified the scope of clearing and forwarding operations. The appellant emphasized that only activities directly related to clearing and forwarding, such as clearing goods and forwarding them to a destination under the principal's directions, should be taxable.

3. The appellant further relied on the Supreme Court's judgment to assert that liaisoning activities were not covered under the definition of clearing and forwarding services. They pointed out that the appellant did not perform activities related to clearing goods from suppliers or arranging transportation. The appellant's primary role was supervising and liaisoning with coal companies and railways, not directly involved in clearing and forwarding operations.

4. In contrast, the Revenue argued that all services listed in the show cause notice should be taxable. However, the Tribunal emphasized the need for strict interpretation of taxing provisions, citing the Cape Brandy Syndicate case. The Tribunal noted that without clear evidence of activities falling under the taxable event, there should be no presumption of taxation. In the absence of such evidence, the Tribunal could not hold activities beyond the scope defined by the law as taxable.

5. Ultimately, the Tribunal allowed the appeal, stating that activities not covered by the law's mandate should not be taxed. The decision was based on the strict interpretation of the law and the lack of evidence to support taxing the services beyond the defined scope of clearing and forwarding operations. Consequential relief, if applicable, was directed to flow in accordance with the law.