2018 (1) TMI 493 - AT - Service Tax

Classification of services - clearing and forwarding agency services - amounts received by the respondent as commission for negotiating the purchase and sale of particular items - Held that - the issue now stands settled in their favor by the Larger Bench decision of the Tribunal in the case of Larsen & Toubro 2006 (6) TMI 3 - CESTAT NEW DELHI , where it was held that mere procuring or booking orders for the principal by an agent on payment of commission basis would not amount to providing services as clearing and forwarding agent , within the meaning of the definition of that expression under Section 65(25) of the FA, 1994 - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
Service tax liability on commission received for procuring orders and direct supplies from manufacturers to clients.

Analysis:
The appeal was against an order-in-appeal dated 14.10.2013 filed by the Revenue. The respondent, a clearing and forwarding agent, did not discharge service tax liability on commission received for procuring orders and direct supplies. The show cause notice relied on a Tribunal decision, leading to demands confirmed with penalties. The first appellate authority set aside the order-in-original, concluding that the commission did not fall under clearing and forwarding agent services.

The department argued that agreements with clients indicated the respondent supervised product dispatches, falling under clearing and forwarding services. However, the respondent contended that agreements were for procuring orders and earning commissions, not falling under such services. The respondent started discharging service tax liability under a different category post-2004, and the issue was based on a Tribunal judgment reversed by a Larger Bench and affirmed by the High Court.

The Tribunal found the issue was the service tax liability on commission for negotiating purchases and sales. The agreements showed the respondent procured orders without storing or dispatching goods, not qualifying as clearing and forwarding services. The first appellate authority's detailed findings supported this, uncontroverted by the Revenue.

Referring to the Larger Bench decision, the Tribunal held in favor of the respondent, as the commission for procuring orders and direct supplies did not fall under clearing and forwarding agent services. The impugned order was deemed correct, legal, and in line with judicial pronouncements.

Conclusively, the Tribunal upheld the impugned order, rejecting the appeal and disposing of the cross objection.