Clearing and forwarding agency test: mere storage and commission sales do not attract service tax absent forwarding functions.

Stocking, display and sale of goods on commission basis did not amount to clearing and forwarding agent service where the operator did not receive dispatch orders, arrange dispatch, maintain warehouse records, or prepare invoices on behalf of the principal. The activity was limited to storing the goods, displaying them in a showroom and selling them under its own invoices for commission. As the accepted indicia of clearing and forwarding agency were absent, mere custody or storage of the principal's goods was insufficient to attract service tax. The operator was therefore not treated as a clearing and forwarding agent and no service tax was payable on the activity.

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Issues: Whether the respondent's activities of stocking, display and sale of goods on commission basis amounted to clearing and forwarding agent services and attracted service tax.

Analysis: The agreement showed that the respondent did not receive dispatch orders, arrange dispatch of goods, maintain warehouse records, or prepare invoices on behalf of the principal. The respondent merely stored the goods, displayed them in the showroom and sold them under its own invoices for commission. The accepted indicia of clearing and forwarding agency services were absent. A person free to sell goods under its own invoices, without undertaking forwarding functions on behalf of the principal, cannot be treated as a clearing and forwarding agent. Mere custody or storage of the principal's goods does not by itself bring the activity within that service.

Conclusion: The respondent was not a clearing and forwarding agent and was not liable to service tax on the disputed activity.

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