2007 (9) TMI 217 - AT - Service Tax

Whether Consignment Agent can be brought within the category of C&F Agent in view of decision in case of Transasia Sales Syndicate, it is held that a Commission Agent engaged to procure orders and not entrusted with the work of clearing and forwarding of the goods would not be covered under C & F Agents - appeal are allowed

Summary

Issues:
1. Classification of service for tax purposes as 'Clearing and Forwarding Agent' or 'Consignment Agent'.

Analysis:
The appeal in question pertains to the classification of services provided by the assessee for the period 2001-2003 as either 'Clearing and Forwarding Agent' or 'Consignment Agent' for the purpose of levying service tax. The revenue contended that the assessee should be categorized as a 'Clearing and Forwarding Agent' due to receiving commission as a 'Consignment Agent'. The Original Authority and Commissioner (Appeals) upheld this classification, leading to the imposition of Service Tax and penalties. However, the assessee argued against this classification, which was rejected by the authorities.

In a significant development, the learned counsel highlighted a similar case involving Transasia Sales Syndicate, where it was held that a 'Consignment Agent' cannot be equated to a 'Clearing and Forwarding Agent'. The Tribunal had previously ruled on this matter, emphasizing the distinction between the two categories based on the nature of their activities. The Tribunal's decision was based on the understanding that a Clearing and Forwarding Agent primarily arranges the dispatch of goods without the right to sell them, unlike a Consignment Agent who sells goods and earns a commission.

Upon careful consideration, the Tribunal reiterated its stance from the Transasia Sales Syndicate case, emphasizing the distinction between 'Clearing and Forwarding Agents' and 'Consignment Agents'. The Tribunal referenced various legal precedents to support its decision, highlighting that a Commission Agent engaged in procuring orders without handling the physical aspects of goods does not fall under the category of Clearing and Forwarding Agents. Consequently, the Tribunal allowed the stay application and appeal in the present case, providing relief to the assessee based on the established legal principles and precedents.

In conclusion, the judgment clarifies the classification of services for tax purposes, distinguishing between Clearing and Forwarding Agents and Consignment Agents based on their respective roles and activities. The decision emphasizes the importance of understanding the nature of services provided to determine the appropriate tax treatment, aligning with established legal precedents and interpretations of relevant statutes and definitions.