Appellant not liable for service tax as distributor, not clearing agent. Tribunal sets aside order.

The Tribunal held that the appellant, appointed as a distributor by Indian Petrochemicals Corporation Ltd., was not liable for service tax as a clearing and forwarding agent. The agreement clearly outlined the appellant's role as a distributor, not a clearing and forwarding agent. The Tribunal analyzed the agreement and relevant clauses, concluding that the appellant did not function as a clearing and forwarding agent based on the terms of the agreement. The impugned order was set aside, and the appeal was allowed, as the appellant's role did not fall under the category of clearing and forwarding agent services.

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Issues involved:
Whether the appellant is liable to pay service tax as a clearing and forwarding agent based on the agreement with Indian Petrochemicals Corporation Ltd.

Analysis:
The appeal challenged an Order-in-Original dated 28.06.2006, where the authorities concluded that the appellant, appointed as a distributor by Indian Petrochemicals Corporation Ltd. (IPCL), acted as a clearing and forwarding agent and was liable for service tax. The appellant contested the show cause notice, but the adjudicating authority confirmed the demands. The first appellate authority also dismissed the appeal. The main contention was whether the appellant's role as a distributor fell under the category of clearing and forwarding agent services. The appellant argued that the agreement with IPCL clearly outlined their role as a distributor, not a clearing and forwarding agent, citing specific clauses in the agreement.

The departmental representative, however, argued that the appellant represented themselves as a consignment agent of IPCL based on the agreement's holistic reading. They referred to a judgment by the High Court of Karnataka to support their position. The Tribunal analyzed the agreement and relevant clauses, noting that the appellant was required to function as a distributor, sell products at list prices, remit sale proceeds to IPCL, and disclose as a distributor. The definition of Clearing and Forwarding Agent under section 65(25) was examined, and it was concluded that the appellant did not function as such based on the agreement's terms.

The Tribunal referred to a previous case involving a distributor of IPCL, where a similar agreement was considered, and it was held that the distributor was not a clearing and forwarding agent. The Tribunal found that the arguments raised by the departmental representative were previously addressed and rejected in the earlier case. Consequently, the impugned order was deemed unsustainable, set aside, and the appeal was allowed.

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