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TMI Blog2009 (11) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... rview of clearing and forwarding agent. – Coverage under definition depends on nature and activity – Word “include” mentioned in definition clause indicating legislative intention to give extended and enlarged meaning – Appeal is allowed - 6 of 2004 - - - Dated:- 24-11-2009 - K.L. Manjunath and Aravind Kumar, JJ. S/Shri Raghavendra B. Hanjir, Advocate, N.R. Bhaskar, Sr. Counsel and R. Veerendra Sharma, Advocate, for the Appellant. S/Shri Siddarth Srivastava and V. Lakshmi Kumaran, Advocates, for the Respondent. [Judgement per : Aravind Kumar, J.]. - The revenue is in appeal questioning the legality of the order passed by CESTAT in STA No. 18/2003, by Final Order 12/2004 dated 27-4-2004 [2006 (3) S.T.R. 276 (Tri.-Del.)] wherein the appeal filed by the respondent (hereinafter referred to as the assessee) came to be allowed. 2. The undisputed facts leading to this appeal are: That the assessee was registered under the category of clearing and forwarding agent (C F agent for short) under the service tax by their letter dated 21-9-2001 they intended to surrender their registration Certificate under the service tax on the premise that their activities did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) When M/s. Mahaveer Generics are rendering the service of receiving, storing and distributing the goods manufactured by M/s. CIPLA Ltd., whether the Hon'ble CESTAT, Bangalore is right in holding that the party was not acting as clearing and forwarding Agents and was not providing taxable service. We have heard Sri Raghavendra B. Advocate appearing on behalf of Sri N.R. Bhaskar learned Standing counsel for the appellant-revenue and Sri Sridharan, learned counsel appearing for the respondent on behalf Sri Lakshmikumaran. 6. The learned counsel appearing for the appellant would contend that authorities were fully justified in rejecting the claim of the assessee who had sought for surrendering of the registration Certificate on the ground that it did not come within the purview or category of clearing forwarding agents and the authorities had taken a holistic view in interpreting the Section 65(25) of the Finance Act which defines the activity of clearing and forwarding agent and as such the reversal of the said orders by Tribunal, by interpreting the definition C F Agent on the basis of dictionary meaning is erroneous and liable to be set aside. 7. Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines Private Ltd., which activity carried on by the said assessee was identical to the activity carried on by the present assessee and the Punjab Haryana High Court [2009 (14) S.T.R. 608 P H)] having taken a view that the activity carried out by the assessee therein was of commission agent and submits that while examining the said issue the order of CESTAT in Mahavir Generics (present case) also came up for consideration came to be approved and prays this Court should also fall in line with the said Judgment and seeks for answering the question of law against the revenue and in favour of the assessee. He would also bring to our notice the definition of Commission Agent as defined under Section 2(19)(a) to contend that respondent would fall within the purview of said definition and the Circular bearing No. 59/8/2003 S.T., dated 20-6-2003 issued by the Department wherein the definition of Commission Agent with reference to clearing and forwarding agent has been clearly spelt out and the nature of activity carried on by the present assessee is in consonance with the meaning assigned in the said Circular and thus the activity carried on by the assessee falls outside the purview of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principal hereby appoints the aforesaid agent as its Consignment Agent on a non-exclusive basis for the marketing of the product, and the Agent hereby accepts the said appointment on the terms and conditions hereinafter mentioned. 2. The principal will supply the product from any of its depots in loan licence (as per Annexure-) to the agent on a consignment basis through a stock transfer note for sale by him as the agent of the principal. The principal undertakes to deliver the products to the Agent's godown at Bangalore at his cost. 3. The Agent will take charge of the product and store them in his godowns and such product will remain the property of the principal at all times. 5. The agents will sell the products as consignment agent of the principal, and the prices at which the products can be sold shall be fixed by the principal from time to time after mutual consultation between the Agent and the Principal considering market conditions. 7. The Agent may, in turn, appoint stockists/dealers/distributors in any part or the territory covered by this Agreement after approval from the principal and shall furnish a list of such stockists/dealers/distributors to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or any other service primarily in relation to operation or computer systems;) As per Section 65(105)(j) Taxable Service in relation to clearing and forwarding agent is defined as follows: to a client by clearing and forwarding Agent in relation to clearing and forwarding operations in any manner. Section 65(72)(j) of the Finance Act, 1994 (as amended) defines the taxable service means any service provided, to a client, by a clearing forwarding agent, in relation to clearing forwarding operations in any manner (emphasis supplied) At the outset it is to be noticed by us that the words found in the Section are that any person engaged in private service either directly or indirectly which is connected with the clearing and forwarding operations in any manner to any other person would come within the purview of the said definition. It is also to be noted that the consignment agent has also been brought in by inclusive clause. Thus, in the instant case, it is to be examined whether the conditions prescribed in the said Section is satisfied by reading of the agreement. The agreement itself starts by the words Principal has agreed to join the agent as it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Another aspect being that the assessee having given the authority and power to appoint dealers, stockists and distributors it is clear that it is not a mere case of commission agent but, on the other hand it is the responsibility fixed on the assessee to carry out the activity of getting the goods stored by clearing it and then forwarding it to the stockists and dealers if any appointed by the assessee itself or as directed by the Principal. If it were to be the commission agency only these clauses would not have found a place in the contract. Hence, we are unable to agree with the contention of the assessee that they should be classified under the category of commission agent. In so far as the Judgment relied upon by the assessee viz., L T supra, the Tribunal has held therein at para 9.3 to the following effect:- 9.3 An agent engaged only for procuring purchase orders for the vendor on commission basis does not engage in any of the above activities, directly of indirectly. Commission agent engaged to procure orders and not entrusted with the work of clearing and forwarding of the goods would be a person who, in the ordinary course of business, makes contracts for sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part from procuring the orders the assessee is also engaged in the activities as mentioned in the agreement which is thus independent of commission agency. In certain circumstances there may be a situation where only commission agency work is carried out and in a situation as is existing in the present case the assessee may also indulge or carry on with not only with the work of commission agent but also with the clearing and forwarding as a Consignment Agent and thus both these activities might overlap and on account of such overlap it cannot be said that the assessee would fall only under the category of commission agent and claim to distance himself from coming within the ambit and purview of clearing and forwarding agent. If it was only the case of commission agency there was no necessity or requirement by a commission agent to empower the respondent to appoint Dealers, Stockiest etc., for the principal as we have noticed in the instant case. Hence, the said decision of Larsen and Toubro (supra) pressed into service is distinguishable on the facts of the present case. 13. In so far as the second case is concerned that is the Judgment in the case of Commissioner of C.Ex., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts circumstances of the case and also in the background or our examination, scrutiny and interpretation with regard to the agreement in question. 14. The contention of the learned counsel with regard to the definition of commission agent as defined under the Finance Act namely, Section 65 (19) under the heading Business Auxiliary Service that they would come within the said purview and would fall outside the purview under the definition of the clearing and forwarding agent is examined in the background of definition Clauses which has been extracted by us herein above and we find that in the definition of Clearing Forwarding Agent itself the consignment agent has been brought within the said Section. We have also examined the agreement in question and we find not only the consignment agent is expressly described at various places as stated herein above and on combined reading of the agreement we find that assessee in question has not restricted its activities to business of commission agency but has also carried on business as Consignment Agent as mentioned in Clause (iii), (v) and (vii) of the agreement and as such we are unable to accept the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cludes for the purposes of such enactment. Thus, the activity carried on by the assessee with reference to the text of the enactment would depend on the nature and activity and as held by Their Lordships both in text and context the word 'includes' as mentioned in the definition clause of clearing and forwarding agent we find that the Legislature in its wisdom have desired to give extended and enlarged meaning to such expression and as such we accept the contention of the revenue to hold that the activity carried on by the assessee in question would fall within the purview of clearing and forwarding agent and accordingly we answer the question of law framed herein above by holding that the services rendered by the respondent would fall within the category of clearing and forwarding agent and thus, amenable to the definition of taxable service. Accordingly, the following order is passed: ORDER The substantial question of law formulated herein above is answered in favour of the appellant revenue and against the assessee and the order passed by the Tribunal in Appeal No.18/2003 vide its Final Order No.12/2004 dated 27-4-2004 is hereby set aside and the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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