2009 (7) TMI 715 - HC - Service Tax

Registration requirements - refusal to grant registration - clearing and forwarding agent - storage facility - Held that - , the expression clearing and forwarding agent is apparently conjunctive and not disjunctive. Only clearing activities would not attract service tax in the category of service of clearing and forwarding agent. Similarly only forwarding activity would also not attract tax in the category of service of clearing and forwarding agent. The service provider would necessarily have to be engaged in providing clearing and forwarding services in order to be taxable in the category of clearing and forwarding agent. - there is no provision either in the Finance Act, 1994 or in the Service Tax Rules, 1994, whereunder an application for registration can be refused. - registration can only be granted in the category in respect of which the application for registration has been submitted. - Recovery and/or penal proceedings might be initiated against a person for non-payment of service tax, if the service provider is taxable under a different category.

Issues Involved:
1. Validity of the order confirming the petitioner company as a clearing and forwarding agent.
2. Legality of the registration certificate issued under the category of clearing and forwarding agent.
3. Classification of the services provided by the petitioner company.
4. Applicability of deemed registration under Rule 4(5) of the Service Tax Rules, 1994.
5. Authority of the Commissioner to grant registration in a category different from the one applied for.

Detailed Analysis:

1. Validity of the Order Confirming the Petitioner Company as a Clearing and Forwarding Agent:
The petitioners challenged an order dated 27th November 2007, which confirmed that the services provided by the petitioner company fell within the category of a clearing and forwarding agent. The petitioner company argued that their services did not include activities such as receiving goods from the factory, warehousing, and arranging dispatches, which are characteristic of clearing and forwarding operations.

2. Legality of the Registration Certificate Issued Under the Category of Clearing and Forwarding Agent:
The petitioners also impugned the registration certificate dated 11th September 2007, which categorized them as a clearing and forwarding agent. The court found that the petitioner had applied for registration under the category of 'business auxiliary service' and not 'clearing and forwarding agent'. The Commissioner and Superintendent of Central Excise had no authority to grant registration in a category different from the one applied for.

3. Classification of the Services Provided by the Petitioner Company:
The court examined whether the services rendered by the petitioner company fell within the definition of 'clearing and forwarding agent' or 'business auxiliary service'. It was found that the petitioner company's activities primarily involved supervision of coal loading, ensuring proper indents, and quality control, which did not align with the typical functions of a clearing and forwarding agent. The court referred to the definition in Section 65(25) of the Finance Act, 1994, and concluded that the petitioner's services were more appropriately classified under 'business auxiliary service'.

4. Applicability of Deemed Registration Under Rule 4(5) of the Service Tax Rules, 1994:
The petitioners argued that their registration should be deemed to have been granted under Rule 4(5) since the certificate was not issued within seven days. However, the court clarified that Rule 4(5) applies to registrations granted by the Superintendent of Central Excise, not the Commissioner. The petitioner's application was for centralized registration under Rule 4(2), which does not have a time stipulation for deemed registration.

5. Authority of the Commissioner to Grant Registration in a Category Different from the One Applied For:
The court held that the Commissioner and Superintendent of Central Excise do not have the power to refuse an application for registration or to grant registration in a different category than the one applied for. If the application for registration is complete and properly filled, registration must be granted in the category applied for. The court emphasized that any disputes regarding the nature of services should be resolved through appropriate adjudication proceedings.

Conclusion:
The court quashed the impugned orders, holding that the petitioner company should have been registered under the category of 'business auxiliary service' as applied for. The court reiterated that the Commissioner and Superintendent of Central Excise cannot unilaterally change the category of registration. The writ application succeeded, and the orders categorizing the petitioner as a clearing and forwarding agent were set aside.

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