2014 (5) TMI 419 - AT - Service Tax

Demand of service tax - C & F are agent services - Held that - Failure on the part of the assessee to produce agreement copies cannot result in confirmation of demand. The facts have to be seen. It is the Revenue who has alleged the activities of the appellants as C & F agent activities and as such onus is upon them to show that the said activities are covered under the said category. We find that the show cause notice very clearly mentions that the appellant is engaged in trading activities on behalf of their client and are charging commission from their clients. The notice proposes to hold the said activity of trading as falling under C & F category. We find that definition of C & F agent as is given under Section 65(25) of Chapter V of the Finance Act, 1994 refers to the activities which are much more that the mere procurement of orders for the clients on commission basis. The Circulars issued by the Board, on the basis of which trade notice were issued by various Commissionerates, details the said activities as covering receiving of the goods from principal, warehousing goods received, dispatching the goods from the principal, arranging dispatch of goods as per the directions of the principal, maintaining record of receipt, dispatch of the goods and stock available at the ware house and preparing facts on behalf of the principal. As such, it is seen that the definition covers various activities required to be undertaken by C & F agent and mere procurement of orders on commission basis, by itself would not get covered under the clearing and forwarding agent services. There is no allegation in the show cause notice to the effect that the appellant was undertaking such activity on behalf of their client. It was held that the expression directly or indirectly and in any manner in the definition of Clearing and Forwarding Agent services is not to be isolated from the activity of C & F operations. And after taking into consideration the definition as also the Board s Circular, it was held that mere booking of orders for the principal by an agent on commission basis is not covered under C & F agent services. - Decided in favour of assessee.

Summary

Issues:
Interpretation of activities as C & F agent services, reliance on previous judgments, failure to produce documentary evidence, definition of C & F agent services, scope of C & F agent services.

Analysis:
The appellants, engaged in manufacturing MS ingots and trading activities on a commission basis, faced a show cause notice proposing Service Tax confirmation for commission earned from clients. The adjudicating authority confirmed the tax and imposed penalties, leading to an appeal before the Commissioner (Appeals) where the appellants argued that their activities did not fall under C & F agent services. They contested the reliance on a previous Tribunal decision and the lack of documentary evidence. Despite the appellants' failure to provide agreement copies, the first appellate authority dismissed the appeal, prompting the present appeal before the Tribunal.

The Tribunal found the Commissioner (Appeals)' reasoning flawed, emphasizing that the burden of proof lies with the Revenue to show that the appellants' activities qualify as C & F agent services. The show cause notice highlighted the trading activities and commission charges, but the definition of C & F agent services under Section 65(25) of the Finance Act, 1994, involves more than mere order procurement. The Tribunal referenced Circulars detailing C & F agent activities, which include receiving, warehousing, and dispatching goods, tasks beyond order procurement. Notably, the show cause notice did not allege that the appellants performed such activities on behalf of their client.

The Tribunal cited a Larger Bench decision on C & F agent services, clarifying that the expression 'directly or indirectly' should not be isolated from C & F operations. It was established that booking orders on a commission basis alone does not constitute C & F agent services. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellants.