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TMI Blog2018 (9) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal can be said to be proper and legally sustainable while confirming the demand as adjudicated of Rs. 3,20,604/?" 3. Brief facts of the case are that the appellants are engaged in providing service with reference to loading, unloading, transportation, storage of cargo for M/s. Binani Cement Ltd. The dispute in the present case is relating to their service tax liability under the category of "Clearing and Forwarding Agent" in terms of Section 65(25) read with Section 65(105)(j) of the Finance Act, 1994. The appellants were registered with the Department from 2003 onwards under the said category and were paying service tax. The present proceedings are with reference to non-payment of service tax on full consideration received by the appellant from their clients. The Original Authority confirmed the service tax liability of Rs. 3,20,604/- and imposed equal amount of penalties under Section 76 and 78 of the Finance Act, 1994. 4. Counsel for the appellant has contended that the Tribunal has committed serious error in dismissing the appeal of the assessee inasmuch as the period involved in the present case is from 1st April 2000 to 9th September, 2004 which is clear from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers in the vicinity and around the said storage depot. that the time of arrival of the goods at Rail Heads under the Cover of Transfer challans issued by M/s Binani Cement Ltd., the staff employed at the above said storage places requisition the services of labour from the noticees for unloading of the cement at Rail heads-and its loading in the Trucks for transportation of the Cement from the Rail head to the above said storage place." 8. Therefore, he contended that the Original Authority has not appreciated the facts of the case correctly. 9. He has also taken us to the order passed by the Commissioner (Appeals) wherein it has been observed as under:- "Now in the present case since there is no dispute about the fact that the Appellants are not engaged in clearing of any Cement from the factory of M/s Binani Cement Ltd. and they hare engaged only in dealing handling of the goods which have already been cleared by M/s Binani Cement Ltd. from their factory and are transferred to their depots for convenient sale for the said Cement. Now since it is clearly establish that the Appellants are not engaged in clearing of any Cement from the factory of M/s Binani Cement Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red into an agreement with M/s. Cipla for handling and distribution of their products and were entrusted with the job of receiving, storing and distributing Cipla products to their authorised stockists and distributing centres. For the service so rendered, the assesseerespondent was entitled for commission based on agreed percentage of sales figures and also for reimbursement of recurring expenses. The assesseerespondent failed to submit the half yearly return for the period ending 31-3-2001 therefore a show cause notice dated 15-6-2001 was issued by the Deputy Commissioner, Ambala Division as to why penalty be not imposed upon them under Section 77 of the Finance Act, 1994 for contravention of Section 70. A penalty of Rs. 1000/- was imposed and the assesseerespondent was directed to pay service tax on the taxable service rendered by them along-with interest and to file the return in form S.T. 3 for the half year ending 31-3-2001 vide order-in-original dated 30-10- 2002 (A.1). The assessee-respondent preferred an appeal before the Commissioner (Appeals) but the same was rejected vide order dated 8-9-2003 (A.2) by holding that assessee-respondent has been correctly treated as "C&F a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd forwarding operations'. To say that if, one person has rendered service as 'forwarding agent' without rendering any service as 'clearing agent' and he be deemed to have rendered both services would amount to replacing the conjunctive 'and' by a disjunctive which is not possible. The counsel for the revenue has not been able to bring on record any material to show the word 'and' should be construed as disjunctive. He has not shown any 'trade practice' which may lead to a necessary inference that service of one kind rendered by one is invariably considered to comprise both. No argument has been advanced before us by him to canvass that the legislature intention is discernible from the scheme of the statute or from any other relevant material. Therefore the word 'and' should be understood in a conjunctive sense. (See Maharaja Sir Pateshwari Prasad Singh v. State of U.P. MANU/SC/0115/1963 : [1963]50ITR731(SC) . In these circumstances if we read the word 'and' as 'or' then it would amount to doing violence to the simple language used by Legislature which cannot be imputed ignorance of English language. In that regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition to appreciate the wisdom in the words of Jules Romains when he said "What I say below represents only conclusions with which I would identify myself, if I were obliged to stop thinking today". The underlying wisdom in these words has greatly encouraged us in this inquest to appreciate the emerging facts and scenario in a proper perspective. Crucial key-word the definition of taxable services, namely "C&F Operations" needs to be viewed afresh in this scenario. The whole "operations" involved in "C&F operations" now remind us of an orchestra, performing a western classical symphony. It reminds us of a connoisseur's experience of harmony in western classical music. While listening to Mahler's 9th symphony, one does not listen to an individual violin or a trumpet, but the harmony emanating from many different seemingly unrelated instruments. In same way, a C&F Agent's functions consisting of seemingly unrelated tasks are well orchestrated. This view of ours is strengthened by various references including the Report of United Nations Economic Commission for Africa referred to by us in the preceding paragraphs all revealing in no uncertain terms that the freight forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dealer is to store those goods and forward to the buyer of the goods as per direction received. In that regard the findings of the Tribunal in the instant case is patently clear when it observed as under in para 6: "It is clear from the terms of the agreement that appellant herein does not attend to the clearing of the medicines manufactured by Cipla. Consignments of medicines are cleared from the factory by the manufacturer and delivered to the appellant at his premises. In this factual situation, it has to be held that there is no clearing by the appellant and for that reason, the service rendered by the appellant does not satisfy the requirement of clearing and forwarding. We, therefore, are of the view that the demand is not sustainable. To the same effect is our earlier decision in the case of Mahavir Generics." 15. The example of 'wheat and rice' grocery shop is obviously wholly misappropriate and does not fit in the context. We are also not in agreement with the interpretation of word 'and' which has already been dilated upon by us." 13. He contended that the said judgment was confirmed by the Supreme Court in Commissioner of C.EX., Panchkula Versus K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab & Haryana High Court in the case of CCE, Panchkula vs. Kulcip Medicines (P) Ltd. (supra), has been upheld by the Apex Court vide judgment reported in 2012 (25) S.T.R. J 127 (S.C.). In view of this, the impugned order is not sustainable. The same is set aside. The appeal is allowed." 15. He has also relied on another decision of Supreme Court in Coal Handlers Pvt. LTD. Versus Commisioner of C.EX,. Range Kolkata-I 2015(38) S.T.R. 897(S.C.) wherein it has been held as under:- "11. From the reading of the definition contained in the aforesaid provision, together with its dictionary meanings contained in Legal and Commercial dictionaries, it becomes apparent that in order to qualify as a C & F Agent, such a person is to be found to be engaged in providing any service connected with 'clearing and forwarding operations'. of course, once it is found that such a person is providing the services which are connected with the clearing and forwarding operations, then whether such services are provided directly or indirectly would be of no significance and such a person would be covered by the definition. Therefore, we have to see as to what would constitute clearing and forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as the Railways to see that the material required by Ambuja companies is loaded as per the schedule. At no stage custody of the coal is taken by the Appellant or transportation of the coal, as forwarders, is arranged by the Appellant. We are, thus, of the clear opinion that the services rendered by the Appellant would not qualify as C & F Agent within the meaning of Section 65(25) of the Act. " 16. He also relied on the judgment Mumbai Tribunal in case of Novacare Drug Specialities PVT. LTD. Versus Commr. Of C.EX. Mumbai-II 2014(34) S.T.R 247 (Tri. Mumbai) wherein it has been observed as under:- "5.1 We have perused the agreement entered into by the appellant with Cipla Ltd. From the terms and conditions specified therein, the activities of the appellant start from receiving the goods supplied by Cipla, warehousing the same and dispatching as per the instructions given by Cipla. The appellant does not undertake any clearing functions from the premises of Cipla. Thus the activity of the appellant is a forwarding activity. 5.2 In the Kulcip Medicines case, the Hon'ble High Court of Punjab & Haryana held that to come under the category of "Clearing and Forwarding Agent" b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has failed to provide any detail or evidence that on what account the alleged amount has been received. 20. The assessee has further submitted that his activities relate to supply only labour which is not covered by the heading "C&F Agent" of the Service Tax Rules, 1994. I observe from the documents that the assessee had obtained Service Tax registration for the service being provided as C&F Agent on 10.12.03 and started to pay Service Tax on part value from 01.04.03 & full taxable value from 10.09.04 " 21. From the perusal of the said contracts it would be observed that the assessee was not only responsible for arranging labour but was also responsible for handling work at dump of M/s Binani Cement Ltd, Ahmedabad, transportation for delivery of the material from dumps to dealers and maintaining the relevant records. For these activities viz. loading, unloading & other providing services the assessee was being paid the remuneration at agreed rates. Had the assessee been providing labour only. He would have not been paid remunerations for three different categories separately as explained above. Further, on careful reading of Section 65(25), 65(105)j) & 67 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to clear the consignments from railways on behalf of their clients and in case of delay in getting Rrs, they were to clear the cargo under necessary indemnity bond. They were also to bear the railway expenses incurred for getting the consignments cleared, liability for payment of demurrage, wharfage penal whargar, etc., which will be on the appellant' s account. We find in such situation, it is clear that factually the appellants are involved in clearing activities also in terms of the statutory definition for C&F Agents. As the appellants were involved in both the clearing and forwarding activities alongwith maintenance of records for such dealings, their services are covered by tax entry. The appellants did not establish existence of any bonafide belief or reasonable cause for nonpayment of service tax during material time. They were registered with the department for C&F Agent service and were paying service but not on full quantum. As such, we find no reason to interfere with the impugned order. The appeal is dismissed. " 20. We have heard both the parties. 21. Before proceeding with the matter, it will not be out of place to mention that from the clause which we have reprod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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