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2017 (12) TMI 1098 - AT - Service TaxClassification of services - Clearing and forwarding agency service or Business Auxiliary services - case of appellant is that they have no infrastructure to handle the coal and the coal companies are solely responsible for C & F operation and this by no stretch of imagination can be called Clearing and Forwarding operations. Held that - From the activities of the appellant as mentioned in the show cause notice and impugned order, it is seen that there is no role of appellant in getting the coal cleared from the collieries. The role of appellant is merely to supervise the loading and movement of coal - it is seen that at no stage during the movement of goods the appellant actually received the goods in their custody. The appellants act as an agent at different stages to take samples of coal. While the appellant are responsible for dispatch of coal as per SLC Linkages/MSEB requirement of the coal they are not responsible to dispatch the goods themselves. In terms of the agreement Clause (2), their activities are merely to supervise the quantity and monitoring the loading, movement of coal from the collieries by Railways in receipt of the same at the destination of rakes are not to be organized by the appellant. The clearance of goods the coals is also not required to be organized by the appellant - the services provided by the appellant are not classifiable under C&F Agent Service - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of services provided by the appellant. 2. Applicability of service tax under Section 65(19)(iv) of the Finance Act, 1994. 3. Interpretation of the term "Clearing and Forwarding Agent" under Section 65(25) of the Finance Act, 1994. 4. Reliance on previous judicial decisions and CBEC circulars. 5. Evaluation of the activities performed by the appellant in the context of service tax liability. Issue-wise Detailed Analysis: 1. Classification of Services Provided by the Appellant: The appellant, M/s. Nair Coal Services Limited, argued that their services fall under the category of Business Auxiliary Service rather than Clearing and Forwarding Agent Service. They emphasized that their activities involve follow-up with collieries and railways, monitoring coal loading, and reporting to State Electricity Boards (SEBs) without taking possession or custody of coal. 2. Applicability of Service Tax under Section 65(19)(iv) of the Finance Act, 1994: The appellant contended that they registered for service tax under Business Auxiliary Service from 2004 and have been paying taxes accordingly. They argued that their services do not involve receiving, warehousing, or dispatching goods, which are typical activities of a Clearing and Forwarding Agent as per CBEC Circular No. B-43/7/97-TRU dated 11.7.1997. 3. Interpretation of the Term "Clearing and Forwarding Agent" under Section 65(25) of the Finance Act, 1994: The definition of Clearing and Forwarding Agent includes any person engaged in providing services directly or indirectly connected with clearing and forwarding operations. The appellant argued that their activities do not fit this definition as they do not handle the physical movement or warehousing of coal. They relied on the Supreme Court's interpretation in the case of Navin Chemicals Mfg. and Trading Co. Ltd. Vs. Collector of Customs, which emphasized a direct or proximate relationship to the service provided. 4. Reliance on Previous Judicial Decisions and CBEC Circulars: The appellant cited the decision in Sandoz Impex Ltd. Vs. Commissioner of Service Tax and the Supreme Court's ruling in Coal Handlers Pvt. Ltd. Vs. Commissioner of C. Ex., Range Kolkata-I, where similar services were not classified as Clearing and Forwarding Agent services. The Tribunal had previously remanded the matter for reconsideration in light of these decisions. 5. Evaluation of the Activities Performed by the Appellant in the Context of Service Tax Liability: The Tribunal examined the specific activities performed by the appellant, such as supervising coal loading and ensuring proper documentation, and concluded that these do not constitute Clearing and Forwarding operations. The Tribunal noted that the appellant does not receive or warehouse goods, nor do they dispatch goods on behalf of their clients. The Tribunal referenced the Supreme Court's definition of a Clearing and Forwarding Agent, which involves activities like receiving goods, warehousing, and dispatching as per the principal's directions. Conclusion: The Tribunal concluded that the services provided by the appellant do not fall under the category of Clearing and Forwarding Agent Service. The appeal was allowed based on the Supreme Court's interpretation in Coal Handlers Pvt. Ltd. and the lack of direct involvement in clearing and forwarding operations by the appellant. The demand for service tax and the imposition of penalties under Sections 76, 77, and 75A of the Finance Act, 1994, were set aside. The judgment was pronounced in court on 28/11/2017.
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