2008 (1) TMI 128 - AT - Service Tax

Sale of goods on behalf of the principal as an Agent - appellants have been covered under Sale of Goods Act for the purpose of levy of Sales Tax - activity involved selling the goods to the purchasers and they were not handing the goods - procuring orders for the principal by an agent on payment of commission basis was held to be not coming within the category of C & F Agent. - impugned activity not taxable under Clearing and Forwarding agent or as a consignment agent

Summary

Issues:
1. Classification of appellant's activity as "Consignment Agent" or "Clearing and Forwarding Agent" under the Finance Act, 1994.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Bangalore arose from an Order-in-Appeal where the appellant's activity of purchasing goods from M/s. ITC Ltd. and selling them at fixed prices was classified as that of a "Consignment Agent." The appellant argued that they were independent dealers registered under the Sales Tax Act and not carrying out activities of a Consignment Agent or Clearing and Forwarding Agent. They contended that the essential requisites for being classified as a Clearing and Forwarding Agent were not met as per Section 65(25) of the Finance Act. The appellant maintained that they were merely selling goods received from M/s. ITC Ltd. under their own invoices, and the Sales Tax was being collected accordingly.

The Commissioner's view was challenged by the appellants based on the definition of Consignment Sale in Black's Laws Dictionary. The Tribunal referred to a ruling where a similar activity of selling goods at retail prices specified by the principal was not considered as falling within the scope of a Clearing and Forwarding Agent. The Tribunal highlighted that a commission agent is not covered by the definition of clearing and forwarding agent services, as they are not limited to selling goods to persons directed by the principal only. The Tribunal emphasized that the activity of the appellant did not align with the typical functions of a Clearing and Forwarding Agent, as detailed in circulars and trade notices.

Additionally, the Tribunal cited precedents where activities similar to the appellant's were not classified as that of a Consignment Agent or Clearing and Forwarding Agent. The learned Counsel relied on various judgments to support the contention that the appellant's activity was more aligned with that of an agent selling goods on behalf of the principal, rather than a Clearing and Forwarding Agent or Consignment Agent. The Tribunal found merit in the arguments presented by the learned Counsel and ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief.

In conclusion, the Tribunal's detailed analysis focused on the specific definitions and requirements under the Finance Act, along with relevant case law and precedents, to determine the classification of the appellant's activity. The judgment highlighted the distinction between the roles of a Clearing and Forwarding Agent, a Consignment Agent, and an independent dealer, ultimately ruling in favor of the appellant based on the presented arguments and legal interpretations.