2015 (7) TMI 554 - AT - Service Tax

Classification of service - Business Auxiliary Service or Commission Agent service or clearing and forwarding agent service - Held that - It is a Depot Agreement between the Company and the Assessee. - Clause (6) of the agreement stipulates that the goods entrusted to the Assessee for sale will remain the sole property of the Company until sold. Upon reading of the above clauses and Clause (6) as relied upon by the learned Advocate, it is clear that the Company entrusted the Assessee as a Depot Manager for clearing and handling of the goods, in their depot upto the sale of the goods in the market. The definition of Clearing and Forwarding Agent covers any service either directly or indirectly connected with clearing and forwarding operation in any manner. The expression in any manner has wide amplitude. The definition of Commission Agent would apply predominantly on sale or purchase of the goods. In the present case, we find that the appointment of the Assessee is not as a Commission Agent, but for Depot Manager, and therefore, it would cover under the definition of Clearing and Forwarding Agent - Decided in favour of Revenue.

Summary

Issues:
1. Whether the Assessee's activities fall under the category of Clearing and Forwarding Agent service as per the Finance Act, 1994.
2. Whether the Assessee should be considered a Commission Agent based on the agreement terms.
3. Whether the Assessee is entitled to a refund of the amount deposited during investigation.

Detailed Analysis:

Issue 1: The main contention revolved around whether the Assessee's activities could be categorized as Clearing and Forwarding Agent service. The Revenue argued that the Assessee's activities aligned with this category based on the agreement terms, emphasizing the nature of the activities performed. The Tribunal examined the agreement between the Assessee and the Company, concluding that the Assessee was appointed as a Depot Manager to handle goods and cause their sale, falling within the definition of Clearing and Forwarding Agent service. The Tribunal highlighted the wide scope of the definition and ruled in favor of the Revenue.

Issue 2: The debate also focused on whether the Assessee should be classified as a Commission Agent as per the agreement clauses. The Assessee's representative contended that the activities, particularly arranging sales of goods, indicated a Commission Agent role. However, the Tribunal analyzed the agreement clauses and determined that the appointment was as a Depot Manager, not a Commission Agent, as the Assessee managed the sales depot and handled goods until their sale, aligning more with Clearing and Forwarding Agent service.

Issue 3: Regarding the refund claim by the Assessee, the Adjudicating authority initially sanctioned the refund, but the Commissioner (Appeals) rejected it. The Tribunal, after considering the overall judgment on the primary issue, dismissed the Assessee's appeal for the refund, as it was interconnected with the main issue. The Tribunal upheld the Adjudicating authority's decision and rejected the Assessee's refund claim.

In conclusion, the Tribunal ruled in favor of the Revenue, determining that the Assessee's activities corresponded to Clearing and Forwarding Agent service based on the agreement terms, rejecting the Commission Agent classification. The Tribunal also dismissed the Assessee's appeal for a refund, upholding the Adjudicating authority's decision.