2004 (4) TMI 2 - AT - Service Tax

Tribunal rules in favor of appellant, exempting from service tax under Finance Act

The Tribunal ruled in favor of the appellant, setting aside the order to pay service tax under Section 65(105)(j) of the Finance Act, 1994. The Tribunal ... Service Tax – Clearing and forwarding agents in relation to clearing and forwarding operations – Service tax not imposable Issues:Liability to pay service tax under Section 65(105)(j) of the Finance Act, 1994 for services provided by the appellant as a consignment agent.Analysis:The appeal challenges an order by the Commissioner of Central Excise (Appeals) regarding the liability to pay service tax on services provided by the appellant as a consignment agent for M/s. Cipla Limited. The issue revolves around whether the services rendered by the appellant fall under Section 65(105)(j) of the Finance Act, 1994, as amended.The definition of 'clearing and forwarding agent' includes a consignment agent as per Section 65(25) of the Act. The Commissioner opined that the appellant's activities of receiving, storing, and distributing goods make them liable for service tax under the category of 'clearing and forwarding agents.' This interpretation was supported by a CBEC Circular clarifying the scope of persons liable to pay service tax.The appellant argued that their activities align more with those of a consignment agent rather than a clearing and forwarding agent. They referenced various legal definitions and dictionaries to support their claim that they do not fall under the definition of a clearing and forwarding agent.The Tribunal analyzed the agreement between the appellant and M/s. Cipla Limited, noting that the appellant's role was that of a consignment agent based on the specific clauses outlined in the agreement. The Tribunal differentiated between the responsibilities of a clearing and forwarding agent and those of a consignment agent, concluding that the appellant's services did not qualify as those provided by a clearing and forwarding agent.In contrast to a previous decision relied upon by the opposing party, where the agent had different responsibilities, the Tribunal found that the appellant in this case was not involved in clearing or forwarding goods but was engaged in consignment sales. Therefore, the Tribunal ruled in favor of the appellant, setting aside the order to pay service tax as they were not providing a taxable service under Section 65(105)(j) of the Finance Act, 1994.