2007 (6) TMI 39 - AT - Service Tax

Valuation(Service tax) - Appellant contended that amount collected on behalf of the principal by the appellant can t be subject matter of service tax and also already service tax paid by the principal - Held that appellant contention is correct

Summary

Issues:
Service tax liability of Clearing and Forwarding Agents for collected commissions.

Analysis:
The judgment involves two appeals concerning the service tax liability of Clearing and Forwarding Agents for collected commissions. The appellants, falling under the category of "Clearing and Forwarding Agents," had collected commissions on behalf of their principals. The Revenue added these commissions to the category of C & F Agency services, leading to a dispute. The appellants argued that their principals were already covered under the net of service tax and had paid the tax on the commissions received. They contended that the amounts collected on behalf of the principal should not be subject to service tax.

The learned Counsel referenced Tribunal rulings in similar cases to support the appellants' position. The citations included cases such as E.V. Mathai & Co. v. CCE, Cochin; Mahavir Generics v. CCE, Bangalore; and M/s. B.S. Refrigeration Ltd. v. CST, Bangalore. The Counsel highlighted that stay of recovery had been granted based on these citations. Additionally, it was argued that certain elements like loading/unloading expenses, coolie cartage handling, etc., reimbursed by the appellants were not liable to be added to the assessable value, as established in previous judgments.

The learned JDR reiterated the impugned orders, but the Tribunal carefully considered the submissions and found that the appellants were already discharging service tax. The amounts collected by them, which were not part of the C & F activity, were deemed non-liable for service tax. Citing precedents like Mahavir Generics, M/s. B.S. Refrigeration Ltd., and E.V. Mathai & Co., the Tribunal ruled in favor of the appellants. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief.

The judgment underscores the importance of considering the specific nature of collections made by Clearing and Forwarding Agents and their relationship to service tax liability. It establishes that amounts collected by agents that do not pertain to the core activity may not be subject to service tax, aligning with previous decisions on similar matters. The ruling provides clarity on the treatment of such collections and sets a precedent for future cases involving similar issues.