2009 (11) TMI 157 - AT - Service Tax

Clearing and forwarding agent- The assessee was engaged in providing services to the customers in port area in respect of getting the goods fumigated, loading and unloading, stuffing goods in containers, facilitating clearance of imported cargo and also arranging ocean transports. The department took a stand that in the absence of having a licence, the assessee could not be treated as a CHA and the service fall in the category of clearing and forwarding agent s service . In the light of the various decision held that- set aside the order and remand the matter to the commissioner for fresh decision.

Summary

Issues: Classification of services provided by the appellant as clearing and forwarding agency service, liability of service tax on the charges collected, applicability of circulars and judicial precedents.

The judgment by the Appellate Tribunal CESTAT, Ahmedabad involved a case where the appellant was providing various services in the port area, including fumigation, loading/unloading, stuffing goods in containers, and arranging ocean transport. The Department contended that the appellant's services should be classified as clearing and forwarding agency service, leading to a demand for service tax and imposition of penalties. The appellant argued that their services did not fall under CHA or clearing and forwarding agency service, citing a Circular and judicial decisions. They highlighted that the service tax demand was on the total amount collected, which included expenses and charges paid to service providers. The appellant emphasized that the service charges collected were a small percentage of the total amount. The Department, however, referred to a Larger Bench decision and partner's statement to support their stance.

Upon considering the submissions, the Tribunal acknowledged the nature of services provided by the appellant, focusing on logistics and facilitating cargo clearance and ocean freight arrangements. The Tribunal noted the Circular and a High Court decision supporting the appellant's position that their services did not fit the clearing and forwarding agency category. The Tribunal found that the Commissioner's order, while detailed, did not consider certain key aspects, such as the non-taxable nature of ocean freight. Referring to judicial precedents and instructions, the Tribunal concluded that the appellant had a strong case, especially considering the decision that freight elements were not subject to service tax. Due to the unavailability of crucial judgments at the time of the Commissioner's order, the Tribunal set aside the order, allowing a fresh consideration with the appellant's full presentation opportunity.