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TMI Blog2009 (2) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax Appellate Tribunal, New Delhi (for brevity 'the Tribunal') claiming that question of law would emerge from the Final Order of the Tribunal passed in appeal No. ST/37/04. In para 1(viii), the question of law has been raised and the appeal was admitted on the aforesaid question which reads thus: Whether a person (agent) who has entered into an agreement with principal (owner) for handling and distribution of the products of the principal and entrusted with the job of receiving, storing and distributing the products of the principal to his authorised stockists and distributing centers is liable to pay Service Tax under the category of 'Clearing and forwarding Agent when no clearing activity from the manufacturer's (Principal) premises is directly undertaken by the agent or Service Tax is leviable under the category Clearing and forwarding only if an agent renders both clearing forwarding services. Brief facts of the case may first be noticed. The assessee respondent is holding registration certificate in form ST 2 for payment of Service Tax as 'clearing and forwarding agent'. Under Section 70 of the Finance Act, 1994 every person liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered did not satisfy the requirement of clearing and forwarding. The Tribunal while placing reliance on sub clause (j) of Section 65(105) of the Finance Act, 1994 has held that levy of service tax is attracted in respect of service rendered 'in relation to clearing and forwarding operations'. According to the Tribunal the definition is patent in its meaning that all services rendered by the clearing and forwarding agent were not within the scope of the levy of service tax which is limited to clearing and forwarding operations. It has also placed reliance on the circular dated 20.4.2002 issued by the Central Board of Excise and Customs, New Delhi being circular No. 2/1/2002-ST dt 20.4.2002 F.No.137/04/.2002-CX.4 It interpreted para 10 of the circular which reads thus: The matter has been examined. Normally, a C F agent receives goods from the factories or premises of the Principal or his agents, stores these goods, dispatches these goods as per orders received from the Principal or owner, arranges transport etc. for the purpose and prepares invoices on behalf of the Principal. For this service, the C F agents receives commissions on the basis of agreed terms. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, he has argued that the view taken by the Delhi Bench of the Tribunal does not hold good in view of the larger Bench decision taken in the case of Medpro Pharma Pvt. Ltd. v. Commissioner of Central Excise, Chenai 2006(3) STR 355 (Tribunal). Learned counsel has submitted that perusal of the aforesaid judgement rendered by the larger Bench of the Tribunal would show that clearing and forwarding operations cannot be dissected into clearing and forwarding. Indeed such operations would fall in the common category and hence all or any of the services of that category would attract the imposition of service tax as per the provisions of sub section (j) of Section 65(105) of the Act. The view of the larger Bench is discernible from paras 32,33,34 and 35 which reads thus: 32. While arriving at this conclusion, we also go by the trade understanding based on sheer common sense, which is often common. Because a buyer buys only rice and not wheat in a grocery shop, which claims to sell wheat and rice , the shop cannot use to be a shop selling wheat and rice . In the same way, rendering only forwarding service cannot make the appellant cease to be Clearing and Forwarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices which are not otherwise covered. Mr. Rao has also argued that the expression 'and' has not been used as disjunctive and it has necessarily to be given its usual general meaning as it has been used as a conjunction connecting words or phrases expressing the idea that later is to be added to or taken alongwith the first. He has emphasised that the expression 'clearing' connotes entirely a different service than the expression 'forwarding' and one person may not necessarily be able to render both the services. He has maintained that the aforesaid emphasis should be accepted especially when the Board has issued a circular. He has further submitted that in any case the revenue has accepted the view of the Tribunal in the case of M/s Mahavir Generics (supra) then the filing of the present appeal would be an unholy act on the part of the revenue. After hearing learned counsel for the parties, perusing the record and various provisions of the statute/ circular we find that for answering the question it would be necessary to first read the provisions of clause (j) of Section 65(105) of the Act which reads thus: 65. Definitions In this Chapter, unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant material. Therefore the word 'and' should be understood in a conjunctive sense. (See Maharaja Sir Pateshwari Prasad Singh v. State of U.P. (1963) 50 ITR 731). 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 we place reliance on the judgement of Hon'ble the Supreme Court rendered in the case of Inayat Ali Khan v. State of U.P. (1971) 2 SCC 31 (Para 5) and para 6 of the judgement of Hon'ble the Supreme Court rendered in the case of Ape Belliss India Ltd v. Union of India (2001) 132 ELT 8. The observations of their Lordship reads thus : 6........ A plain reading of the Section (sic Tariff Public Notice) clearly shows, as contended by Mr. Bhatt, that for an alloy steel to be considered as stainless steel, it will have to satisfy two conditions i.e. The alloy steel should be known in the trade as stainless steel and further, it should contain 11% chromium as a component of the allow steel. This is clear from the use of the word and . If the intention of the trade notice was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different seemingly unrelated instruments. In the 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 forwarders are known variously as clearing agent, shipping forwarding agent etc. We are, therefore, of the view that even if one segment of activities is not 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. 32. While arriving at this conclusion, we also go by the trade understanding based on sheer common sense, which is often uncommon. Because a buyer buys only rice and not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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