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2019 (6) TMI 629 - AT - Service TaxRefund of service tax paid - C F Agent Service - Reverse Charge Mechanism - Rule 2 (d)(xii) and (xvii) of the Service Tax Rules, 1994 - HELD THAT - The relationship is in the nature of Principal and Agent and further satisfies the definition of Clearing and Forwarding Agent under Section 65 (25) ibid. Consequently, we are of the view that during the period 1997-1999, M/s. IES would be liable for payment of Service Tax on Reverse Charge Basis - In the light of the validating amendments vide Finance Act, 2000, subsequent to the order of the Hon ble Supreme Court in Laghu Udhog 1999 (7) TMI 1 - SUPREME COURT , Service Tax paid under the category of C F Agent Service, will not be refundable. Demand of Service Tax under the category of Clearing and Forwarding Agent service - Time limitation - HELD THAT - M/s. ICI has acted as C F Agent of M/s. IES for providing clearing and forwarding agent service. Since the agreement has continued during the dispute period, the classification of the service will continue under the Clearing and Forwarding Agent Service. Hence, M/s. IEL will be liable for payment of Service Tax as a service provider in terms of the agreement and we uphold the demand for Service Tax. Time Limitation - HELD THAT - The service, Clearing and Forwarding Agent Service has been the subject matter of much Litigation. There have been conflicting decisions at the level of various judicial fora regarding the activities which are covered under the definition of Clearing and Forwarding Agent Service. A perusal of the agreement indicates that the activity undertaken is in the nature of Consignment Agent which is subsumed within the definition of Clearing and Forwarding Agent Service - the Revenue is not entitled to raise the demand for the extended period of limitation. Appeal disposed off.
Issues Involved:
1. Classification of services under "Clearing and Forwarding Agent" (C&F Agent) Service. 2. Refund claim of Service Tax paid on Reverse Charge Basis. 3. Validity of demand for Service Tax under C&F Agent Service and Consulting Engineer Service. 4. Invocation of the extended period of limitation for Service Tax demand. Issue-wise Detailed Analysis: 1. Classification of Services under "Clearing and Forwarding Agent" (C&F Agent) Service: The core issue was whether the activities carried out by the appellant under an agreement dated 29/08/1996 constituted "Clearing and Forwarding Agent" Service as defined under Section 65(25) of the Finance Act, 1994. The Tribunal examined various clauses of the agreement, including the duties and responsibilities of the agent, the commission structure, and the nature of the relationship between the principal and the agent. The Tribunal concluded that the relationship was indeed in the nature of Principal and Agent, thus satisfying the definition of 'Clearing and Forwarding' Agent under Section 65(25). Consequently, the appellant was liable for payment of Service Tax under this category. 2. Refund Claim of Service Tax Paid on Reverse Charge Basis: The appellant sought a refund of Service Tax paid on Reverse Charge Basis following the Supreme Court's decision in Laghu Udyog Bharati Vs. Union of India, which held the relevant provisions of Service Tax Rules as ultravires. However, subsequent amendments by the Finance Act, 2000 validated actions taken under the Service Tax Rules, making any Service Tax already paid non-refundable. The Tribunal noted that the Commissioner (Appeals) had not adequately analyzed the agreement's clauses in the denovo proceedings. Nevertheless, after its examination, the Tribunal upheld the rejection of the refund claim, affirming that the appellant's activities fell under the C&F Agent Service category, and the tax paid was not refundable. 3. Validity of Demand for Service Tax under C&F Agent Service and Consulting Engineer Service: The Tribunal dealt with a demand for Service Tax for the period 2000-2001 to 2004-2005, raised through a Show Cause Notice dated 21/04/2006. The demand was based on the same agreement dated 29/08/1996, which had already been examined. The Tribunal upheld the demand for Service Tax under the C&F Agent Service category, confirming that the appellant was liable for payment based on the agreement. However, the Tribunal did not provide detailed findings on the demand raised under the "Consulting Engineer Service" category, as it was set aside on the question of time bar. 4. Invocation of the Extended Period of Limitation for Service Tax Demand: The appellant contested the demand on the grounds of time bar, arguing that the extended period of limitation should not apply since the agreement was already known to the Revenue. The Tribunal noted that the service "Clearing and Forwarding Agent Service" had been subject to much litigation, with conflicting judicial decisions creating ambiguity. Citing the Tribunal's decision in Bharat Aluminum Co. Ltd. V. CCE, Raipur, which recognized the legitimacy of a bonafide belief due to conflicting views, the Tribunal concluded that the Revenue was not entitled to invoke the extended period of limitation. Therefore, the appeal was allowed on the ground of time bar, except for the demand falling within the normal time limit. Conclusion: - Appeal No. ST/314/2009: Rejected, upholding the rejection of the refund claim. - Appeal No. ST/105/2008: Allowed on the ground of time bar, except for the demand within the normal time limit. The demand under "Consulting Engineer Service" was also set aside on the question of time bar. Final Order: - Appeal No. ST/314/2009: Rejected. - Appeal No. ST/105/2008: Allowed in favor of the appellant on time bar, except for the normal time limit demand.
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