2014 (8) TMI 784 - AT - Service Tax

Tribunal rules against Revenue in service tax dispute over C&F agent services

The tribunal dismissed the Revenue's appeal against a service tax demand for C&F agent services provided to M/s Maruti Udyog Ltd. The Commissioner ... C&F agent service - activities undertaked are (i) To source orders (ii) To liase with MUL for timely production (iii) pre delivery inspection and stamp three free service coupon etc. - Held that:- Clearing and Forwarding Agentmeans any person who is engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent - It is an accepted fact that one of the crucial elements of C&F agent service is that the C&F agent works on the direction of the principal. But in the present case the respondents are actually taking orders from the Government departments and basically facilitating the supply of cars to them, getting commission from Maruti Udyog Ltd. for so doing. It is seen that in the judgement in the case of Larsen & Toubro (2006 (6) TMI 3 - CESTAT CHENNAI), the CESTAT (LB) held that mere procuring or booking orders for the principal by an agent on payment of commission would not amount to providing C&F Agent Service. In a similar case of CS Suvarna Vs. CCE Mumbai [2007 (1) TMI 48 - CESTAT,MUMBAI] came to same conclusion. Thus, at least this much is undeniable that procuring the order from the Govt. departments was the main stay of the impugned service and any peripheral aspects thereof would not bring it within the scope of C&F Agent Service because at the least the crucial element of C&F agent service is conspicuously missing in this case - Decided against Revenue. Issues:Appeal against service tax demand for C&F agent service.Analysis:The appeal was filed against the Order-in-Appeal No.14/ST/ALLD/2009 which set aside the service tax demand of Rs. 1,29,903/- along with interest and penalties confirmed against the appellant for providing C&F agent service to M/s Maruti Udyog Ltd. The Commissioner (Appeals) held that the service did not fall under the category of Clearing and Forwarding Agent Service, making the original order unsustainable.The facts revealed that the appellant, an authorized dealer of M/s Maruti Udyog Ltd., received commission for procuring orders from Government departments for Maruti cars. The Show Cause Notice alleged various roles played by the appellant in sourcing orders, liaising with MUL for production and order execution, and arranging necessary documentation. The original adjudicating authority determined that the commission received was liable to service tax under C&F Agents Service.The Commissioner (Appeals) found that the activities of the appellant did not align with C&F agent service, leading to the setting aside of the original order. The Revenue contended that the definition of C&F agent service was broad enough to cover the appellant's activities, emphasizing that the appellant conducted various tasks beyond just procuring orders. However, the judgment highlighted that the crucial element of a C&F agent working on the direction of the principal was missing in this case.The definition of Clearing and Forwarding Agent under Section 68(25) of the Finance Act, 1994 was crucial in determining the scope of the service. The judgment referenced previous cases to establish that merely procuring orders for the principal, even on commission, did not amount to providing C&F Agent Service. The judgment emphasized that the main aspect of the service was procuring orders from Government departments, and peripheral activities did not bring it under the C&F Agent Service category.Ultimately, the tribunal found no merit in the Revenue's appeal and dismissed it, along with disposing of the cross-objections. Despite no representation from the appellant, the judgment concluded that the crucial element of C&F agent service was absent in the activities performed by the appellant, leading to the dismissal of the appeal.