2019 (10) TMI 538 - AT - Service Tax

Non-payment of service tax - C F Agent services or not - appellant have been doing business of consignment commission agent - demand of service tax alongwith interest and penalty - Suppression of facts - extended period of limitation - HELD THAT - The appellants have been appointed as selling commission agents and they sell the goods received from the principal under their name and their own invoices and are also paying the Sales Tax/CST on the same. Further, the appellant receives commission as a percentage of the sales done by them. The said activity carried out by the appellant does not fall in the definition of Clearing and Forwarding Agent because the appellants are not clearing and forwarding agency. A person to fall in the definition of Clearing and Forwarding Agent the assesse undertakes both clearing and forwarding operations whereas in the present case, it has not been established by the Revenue that the appellants are carrying both the operations and therefore in view of the decision relied upon by the appellant in the case of Carryfast Agencies Vs CCE 2017 (4) TMI 705 - CESTAT NEW DELHI , the appellant did not fall in the definition of Clearing and Forwarding Agent Service . Time Limitation - HELD THAT - The period in dispute is from 01.04.2002 to 31.03.2005 and the SCN was issued on 26.07.2006 and the Revenue has not brought anything on record to show that appellant indulge in any fraud, mis-statement, collusion or suppression of fact with intent to evade duty rather the appellant was under a bona fide belief that the activity undertaken was that of a selling commission agent on which no Service Tax is payable on the basis of certain decisions rendered by the Tribunal during the relevant period - Therefore, the extended period of limitation cannot be invoked in the present case and the entire demand is barred by time. The impugned order is not sustainable on merit as well as on limitation - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Classification of services provided by the appellant under the category of C & F Agent for Service Tax purposes.
- Invocation of longer period of limitation for demanding Service Tax.
- Applicability of penalty under Sections 76, 77, and 78 of the Finance Act, 1994.

Classification of Services Provided:
The case involved a dispute regarding the classification of services provided by the appellant, specifically whether they fell under the category of Clearing and Forwarding Agent for Service Tax purposes. The appellant argued that they acted as selling commission agents, selling goods received from the principal under their name and invoices, and paying Sales Tax/CST accordingly. The Tribunal noted that the appellant did not undertake clearing and forwarding operations as defined in the Finance Act. Citing relevant precedents, the Tribunal held that the appellant's activities did not qualify as Clearing and Forwarding Agent services. The Tribunal emphasized that for such classification, the appellant must undertake both clearing and forwarding operations, which was not established by the Revenue. The Tribunal found the decisions cited by the appellant to be applicable in this case, ultimately ruling in favor of the appellant.

Invocation of Longer Period of Limitation:
Regarding the invocation of the longer period of limitation for demanding Service Tax, the appellant contended that the demand was time-barred as there was no fraud, misstatement, collusion, or suppression of facts to evade duty. The Tribunal agreed with the appellant, noting that the period in dispute was from 01.04.2002 to 31.03.2005, with the Show Cause Notice issued on 26.07.2006. The Tribunal found no evidence of fraudulent intent on the appellant's part and held that the extended period of limitation could not be invoked. Consequently, the Tribunal ruled that the entire demand was barred by time.

Applicability of Penalties:
The judgment did not delve into the details of the penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The Tribunal's decision primarily focused on the classification of services and the invocation of the longer period of limitation for demanding Service Tax. As the Tribunal found in favor of the appellant on both these issues, the penalties imposed by the Original Authority were likely set aside along with the rest of the impugned order. The Tribunal's ruling effectively allowed the appeal of the appellant, providing consequential relief as necessary.

The judgment by the Appellate Tribunal CESTAT Bangalore addressed the classification of services provided by the appellant, the invocation of the longer period of limitation for demanding Service Tax, and likely implications on the penalties imposed. The Tribunal carefully analyzed the facts, legal arguments, and relevant precedents to determine that the appellant's activities did not fall under the category of Clearing and Forwarding Agent services, thereby ruling in favor of the appellant. Additionally, the Tribunal concluded that the demand for Service Tax was time-barred due to the absence of fraudulent intent, ultimately setting aside the impugned order and providing relief to the appellant.