Clearing and forwarding service requires composite functions; mere labour arrangement and goods movement under direction is not taxable.

Mere arranging of labour for loading or unloading, or movement of goods under the principal's directions, does not constitute clearing and forwarding service unless the service provider also performs the composite functions typically associated with that category, such as receiving goods, warehousing, maintaining stock and despatch records, arranging despatch, and preparing invoices on the principal's behalf. As the record did not show performance of these essential functions, the activity fell outside the taxable service category. The demand for service tax, interest and penalties was therefore unsustainable, and the impugned order was set aside.

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Issues: Whether the appellant's activity of arranging movement of goods and loading or unloading labour under the principal's directions amounted to clearing and forwarding service and attracted service tax.

Analysis: The activity was examined against the settled indicia of clearing and forwarding service. The relevant precedent held that such service normally involves receiving goods from the principal, warehousing them, receiving despatch orders, arranging despatch, maintaining stock and despatch records, and preparing invoices on behalf of the principal. Mere arranging labour for loading and unloading, or mere movement or transportation of goods from one place to another under the direction of the principal, does not satisfy that composite character. Since the record did not show that the appellant prepared invoices or otherwise undertook the essential clearing and forwarding functions, the matter was treated as settled by earlier decisions.

Conclusion: The activity did not amount to clearing and forwarding service, and the demand, interest and penalties were unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Mere arranging of labour or movement of goods under the principal's directions, without performance of the essential composite functions of clearing and forwarding, is not taxable as clearing and forwarding service.

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