Clearing and forwarding agent status depends on actual goods handling; mere order procurement is only commission agency.

Mere procurement of purchase orders for a foreign principal, without handling goods or carrying out clearing and forwarding functions, does not amount to service as a Clearing and Forwarding Agent for service tax purposes. The Board circular treated clearing and forwarding activity as involving receipt of goods, warehousing, dispatch under principal's instructions, stock and dispatch records, and invoice preparation, but the agreement showed that none of these functions were performed. On that basis, the agent was characterised as a commission agent rather than a Clearing and Forwarding Agent, and the service tax demand was held not sustainable.

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Issues: Whether an agent who merely procures purchase orders for a foreign principal, without handling goods or performing clearing and forwarding functions, can be treated as a Clearing and Forwarding Agent for service tax purposes.

Analysis: The Board's circular describing clearing and forwarding agency activities covered receipt of goods, warehousing, dispatch on principals' instructions, maintenance of stock and dispatch records, and preparation of invoices. The agreement showed that the appellant undertook none of those functions. The activity was confined to procuring orders on commission basis, which does not amount to direct or indirect performance of clearing and forwarding work. Such an agent is a commission agent and not a Clearing and Forwarding Agent.

Conclusion: The demand of service tax as a Clearing and Forwarding Agent was not sustainable and the appellant succeeded on this issue.

Ratio Decidendi: Mere procurement of purchase orders, without handling goods or performing the functions ordinarily associated with clearing and forwarding, does not constitute service as a Clearing and Forwarding Agent.

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