2006 (8) TMI 41 - AT - Service Tax

Service Tax Clearing and forwarding agent Consignment agents provided services of handling rejected/scrap material as per terms of contract comes under the definition of clearing and forwarding agent

Summary

Issues:
- Appeal against Order-in-Appeal setting aside service tax demand on the ground of not providing services as clearing and forwarding agent.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI was filed by the Revenue against the Order-in-Appeal passed by the commissioner (Appeals) where a demand of service tax was set aside on the basis that the respondents were not providing services as a clearing and forwarding agent. The crux of the matter revolved around the definition of 'clearing and forwarding agent' as per Section 65 of the Finance Act, 1994. The definition encompassed any person engaged in providing services connected with clearing and forwarding operations to another person, including a consignment agent.

Upon reviewing the agreement between Tata Iron & Steel Co. Ltd. and the respondent, it was revealed that the respondent was appointed as a consignment agent for handling rejected/scrap materials. The material was to be collected by the respondent at Jamshedpur, stored at their premises, and delivered to TISCO's customer. The Revenue relied on a previous judgment by the Larger Bench of the Tribunal in the case of Medpro Pharma Pvt. Ltd Vs C.C.E, Chennai, which clarified that services provided in either clearing and forwarding or both would fall within the definition of a 'clearing and forwarding agent'. Since the respondents were appointed as consignment agents, and consignment agents were included in the definition of 'clearing and forwarding agent', the Tribunal found that the impugned order was not sustainable.

Consequently, the appeal was allowed, and the Order-in-Original was restored by the Tribunal. The judgment highlighted the importance of contractual agreements and the broad interpretation of the term 'clearing and forwarding agent' to encompass various services related to clearing and forwarding operations. The decision underscored the significance of adherence to statutory definitions and contractual obligations in determining the applicability of service tax in such scenarios.

This detailed analysis of the judgment provides a comprehensive understanding of the legal principles applied by the Tribunal in deciding the appeal related to the demand of service tax in the context of clearing and forwarding services provided by the respondents.