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TMI Blog2006 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... and 20.3 thereof, indicating that GAIL had appointed the appellant as its consignment stockist with following terms and conditions: (i) Service charges of Rs. 500/- PMT shall be paid by M/s. GAIL to the consignment stockist (i.e notice) for the quantity sold by them (ii) Rs. 400/- PMT shall be paid to the consignment stockist for getting/booking orders for the product of M/s GAIL. (iii) Rs. 100/- PMT shall be paid to the consignment stockist for release/clearance of product locally from their stock on the orders booked by M/s. GAIL directly. In reply dated 8-1-2004 to the said show cause notice, the appellant contended as under: We refer to Show Cause Notice No. V (ST) 21 /D/LDH-II/9/03/8420, dated 20-10-2003 and case fixed for hearing on 8-1-2004 before you. We have deposited Rs. 25,000.00 vide Challan No. 01 /SPL, dated 10-1-2003 a photocopy of the same is enclosed herewith for your ready reference and records. Sir, we hereby stated that due to financial crises, our all units are closed since February, 2003. On these adverse circumstances, we have to file our application with BIFR a copy of registration with BIFR is enclosed herewith for your ready reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision made by the Court of Justice of the European Communities and also House of Lords in Card Protection Plan Ltd. Case reported respectively in (1999) STC 270 and (2001) STC 174. In the former case, (Case No. C-349/96), the Court of Justice held that a service must be regarded as ancillary to the principal service if it does not constitute for customers and aim in itself, but a means of better enjoying the principal service supplied. 6. In the later case. (2001 UKHL/4) the House of Lords had an occasion to examine fifteen types of services, namely, for example, Confidential Registration, Insurance Cover, Un-limited Protection, Immediate Loss Notification, Replacement Cards etc. etc.) rendered in what is called Card Protection Plan (CPP). It was observed that, an overall view should be taken and over-zealous dissecting and analysis of particular clauses should be avoided. The essential feature of the scheme or its dominant purpose was identified as the provision of insurance cover against the loss arising from misuse of credit card and had to suffer tax. 7. Drawing a clue from this case, the learned Counsel argues that in the case before us, the appellant is engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds from the appellant's premises. The delivery from factory was to be taken by the customers only when orders were procured by the appellant. Emphasizing on the fact that selling operations were essential part of consignment stockist, the learned counsel relied upon definition of consignment as defined in Black's Law Dictionary: Consignment. The Act or process of consigning goods; the transportation of goods consigned; an article or collection of goods sent to a factor; goods or property sent, by the aid of a common carrier, from one person in one place to another person in another place; something consigned and shipped. Entrusting of goods to another to sell for the consignor. A bailment for sale. The term consignment , used in a commercial sense, ordinarily implies an agency and denotes that property is committed to the consignee for care or sale. Parks v Atlanta News Agency, Inc., 115 Ga.App.842, 156 S.E. 2d 137,140. 12. He also heavily relied upon this Tribunal's judgment in Mahavir Generics v. CCE, Bangalore - 2006 (3) S.T.R. 276 (T) = 2004 (170) E.L.T. 78 (T-Del), which happened to examine a similar agreement. It was held in para 8 of the said judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was vast and wide by the inclusion of terms, such as, in relation to and in any manner . 16. It has been argued by the learned Counsel for the appellant that the appellant was rendering a composite service of selling the goods on behalf of GAIL in which storage and other activities were only ancillary in nature and the tax levy should be addressed only in respect of the principal service which is made taxable under the law. 17. It was also argued by the learned Authorised Representative of the Department that the very definition under Section 65(25) has created a legal fiction inasmuch as the consignment agent whether engaged in the activities of clearing and forwarding or not has to be included as rendering taxable service. On going through the Section 65(105) (j) of the Finance Act, 1994 which defines the 'Taxable Service', which is reproduced below: Section 65(105) (j). to a client, by clearing and forwarding agent in relation to clearing and forwarding operations, in any manner; 18. Having heard both the sides for long and on going through the record, more particularly, an agreement rifled as Consignment Stockist Agreement made on the 12th January, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys solely rested on the appellant. There is a more explicit indication of the fact that the appellant was required by his agency terms to lift the goods for delivery and arrange for distributing them to the buyers, by making necessary transit arrangements. Therefore, the activities of lifting, receiving, stocking and delivering the goods to the buyers, clearly make a clear chain of activities, involving clearing and forwarding operations. Clause 8(3) of the contract spells out such an arrangement in no unclear terms: 8.3 In case of any stock transfer consignment is received in damaged condition, consignment stockist shall record the same on the original lorry receipt indicating the number of damages bags and lodge the claim on transporter within five days under registered acknowledgement due and simultaneously send intimation to the company together with a copy of the claim. 20. The argument made on behalf of the appellant that Para 8.3 of the said agreement makes it clear that they only received the goods and based on this, the contention that their case was akin to the case of Mahavir Generics, supra, appears to us rather misconceived in view of the fact that the other te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s demonstrated to be performed, it cannot be held that the appellants were not engaged in taxable service. Due to their orchestrated nature of work, such isolated activity can also be covered under C F Operations . Merely, because the bassoon was not played in one of the movements of a symphony, it does not cease to be otherwise a part of the orchestra. While forming this view, we have certainly not overlooked the fact that while music can be sometimes taxing, a tax can never be musical'. 24. The Circular dated 11 th July, 1997 issued by the Central Board of Excise Customs acknowledges the following activities normally undertaken by a Clearing Forwarding Agent: (a) Receiving the goods from the factories or premises of the principal or his agents; (b) Warehousing these goods; (c) Receiving despatch orders from the principal; (d) Arranging despatch of goods as per the directions of the principal by engaging transport on his own or through the authorised transporters of the principal; (e) Maintaining records of the receipt and despatch of goods and the stock available at the warehouse; (f) Preparing invoices on behalf of the principal. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X
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