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TMI Blog2013 (8) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... aring and forwarding agency – Department itself was not certain about the head under which the transaction character would fall, the criteria which was of great significance in the matter of taxation - The attempt of the Revenue appears to be to hit at some clause to bring the assesse somehow with the net of taxation – Decided against revenue. - C.M.A.No. 1212 of 2007 - - - Dated:- 28-6-2013 - Chitra Venkataraman And K. B. K. Vasuki,JJ. For the Appellant : Mr. Vikram Ramakrishnan (SCCG) For the Respondent : Mr. K. S. Venkatagiri for M/s. Lakshmi Kumaran JUDGMENT (Judgment of the Court was delivered by Chitra Venkataraman,J.) The Revenue is on appeal as against the order of the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench at New Delhi. The above appeal was admitted on the following substantial questions of law:- (1) Whether in the facts and circumstance of the case, the Appellate Tribunal is correct in law in holding that the activities of the respondent would not come within the purview of clearing the forwarding agents as per Section 65(a) of the Finance Act, 1994? (2)Whether in the facts and circumstances of the case, the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of market intelligence to members. (c) Purchase such materials and appliances as may be required for the industry and retain the same either for cash or credit to members. (d) Exercise quality grading of the products and to undertake grinding of starch for fineness of mesh and for better price. (e) Construct or hire godowns or other buildings for marketing of the goods. (f) Undertake such other activities as conducive to the attainment of the general objects of the service society. 5. The nature of activities was sought to be explained by the assessee that members of the society sent their products by making their own arrangements for loading, transport and unloading of the goods in the premises of the society. Thereupon, they were weighed and sent to the godown maintained by the assessee. Samples were drawn for quality testing as well as for display in the tender hall. On receipt of the tenders from the registered merchants, who also happened to be members of the society, the higher rate offered for each lot was displayed. On confirmation of the price by the principal, the buyer was thus intimated suitably to make his arrangements to lift the stock. Thereupon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... totally immaterial, since, the sale was effected by the assessee only after obtaining the concurrence of the Principal. This action was nothing but arranging dispatch of goods on the instruction of the Principal; consequently, the activities undertaken by the assessee was connected with or in relation to sale of sago. The Assessing Officer further found that apart from maintaining details as regards the receipt of goods and the dispatch, the invoices were prepared by the assessee. Going by the nature of activity, it was clear that the assessee was required to be assessed as clearing and forwarding agents. The Assessing Officer further pointed out that the assessee had paid the service tax under storage and warehousing, with effect from 16.8.2002. Thus, considering the status to be assigned to the assessee herein as a clearing and forwarding agent, the Assessing Officer adjusted this payment towards the liability fastened on the assessee. Thus holding against the assessee, the Assessing Officer confirmed the levy of penalty too in not submitting the transactions. 7. Aggrieved by the same, the assessee went on appeal before the Commissioner of Central Excise (Appeals), who pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultivators and the manufacturers of sago/ starch. Having regard to the same, the Commissioner viewed that it was difficult to impute any malafide intention, to evade tax. Accordingly, he set aside the penalty imposed by the lower Authority. Thus, the appeal was partly allowed. 9. Aggrieved by the same, the assessee went on appeal before the Customs, Excise and Service Tax Appellate Tribunal, which, as already pointed out, allowed the appeal, holding that the assessee was, in no way, connected with the clearing and forwarding agent. Aggrieved by the same, the present appeal by the Revenue. 10. Learned standing counsel appearing for the Revenue placed reliance on the Notification dated 11th July 1997 in F.No.B.43/7/97- TRU of Ministry of Finance contending that the circular issued clearly listed out the nature of discharge of functions by the clearing and forwarding agents and contested that the nature of activities discharged by the assessee fitted in well with the description given therein. It is clear that the assessee could only be treated as clearing and forwarding agent. He further pointed out that the reliance placed by the Tribunal in the case of MAHAVIR GENERIC V CCE 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of the Revenue, which has the onus of proving that the assessee's case falls within the meaning of 'clearing and forwarding agency', no exception could be taken to the finding of the Tribunal. 12. Heard learned standing counsel appearing for the Revenue and learned counsel appearing for the assessee as well as perused the materials available before us. 13. We agree with the submissions made by learned counsel for the assessee, principally for the reason that the finding of the Tribunal that the assessee was, in no way, connected with clearing and forwarding of the goods, remains undisturbed and undisputed by the Revenue in the appeal filed before us. Even though the Assessing Officer had stated in paragraph 5.14 that even though the assessee Society was formed by the members, in order to undertake the activities with or in relation to sale of sago and created the market platform for the members and hence, the assessee had not claimed that it has no role on dispatch of goods to the purchaser, yet, in the face of the findings of the Tribunal, as to the essential nature of the activity undertaken by the assessee, we hold that the same does not call for any inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quality testing as well as to display in the tender hall. Once tenders were received, they were opened. On opening, the highest rate offered for each lot was displayed. On confirmation from the Principal on the price offered, the sale was confirmed. Thereupon, the buyer took delivery of the goods. 16. As far as maintenance of records were concerned, there is no denial of the fact that the assessee maintained records on receipt of the amount and the stock received and available after the sale. On a reading of the nature of activity thus rendered by the assessee, it is clear that except for receiving the goods which were brought to its door steps by its Principal and displaying the goods received for sale, practically, nothing else was done by the assessee in the matter of taking the goods from the Principal and for further despatching of the goods to the buyer by engaging transporter or on its own transporter. The conduct of the assessee, handling the goods on receipt raising invoices on sale or maintaining of the records as to the stock availability, at best, showed it only as an agency offering storage facility. This act, per se, does not convert the assessee's transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods purchased by the buyer in the auction nor had responsibility undertaken to collect the goods from the Principal's premises to hold that the assessee is a clearing and forwarding agency under the provisions of the Act. Thus, the assessee's business was never that of a clearing and forwarding agency. 18. It may be noted that under Section 65(102) of the Finance Act, 2006, even in respect of storage and warehousing facilities, the Act exempts such services in so far as it related to storage of agricultural produce or any service provided by a cold storage. The question as to whether the activity of the assessee would fall under Section 65(102) of the Act not being a question raised and considering the show cause notice issued on 20.9.2007 for the period falling after 1.5.2006 on the introduction of Clause (105) to Section 65 of the Finance Act, 1994 for the period 1.5.2006 to 31.3.2007 under the Finance Act, 2006, to treat the assessee as an auctioneer, we have no hesitation in holding that when the Department itself is not certain about the head under which the transaction character would fall, the criteria which is of great significance in the matter of taxation, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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