Clearing and forwarding agent classification fails where the service is limited to truck diversion and onward movement instructions.

A truck diversion agent's limited role in reporting truck arrivals and diverting goods for onward movement at the principal's written instructions was held not to fall within clearing and forwarding agent service. The activity lacked the core functions identified in CBEC Circular No. 543/7/97 TRU, such as receipt of goods, warehousing, dispatch arrangement, stock maintenance, and invoicing. As the show cause notice and adjudication order did not establish how the respondent's work satisfied the statutory description, the classification failed and the Revenue's challenge was rejected.

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Issues: Whether the respondent's activity as a truck diversion agent for onward transportation of goods at the principal's instruction fell within the taxable service of a clearing and forwarding agent.

Analysis: The respondent's role was limited to reporting the arrival of trucks and diverting them for onward movement as per the company's written instructions, while freight was fixed by the principal and commission was paid under the agreement. The activity was tested against the recognised primary functions of a clearing and forwarding agent, as reflected in CBEC Circular No. 543/7/97 TRU dated 11.7.97, which contemplates receipt of goods, warehousing, receipt of dispatch orders, arranging dispatch, maintaining stock records, and preparing invoices. The facts did not show performance of those core functions, and neither the show cause notice nor the adjudication order established how the respondent's activity satisfied the statutory description.

Conclusion: The respondent's activity was not classifiable as clearing and forwarding agent service, and the Revenue's challenge failed.

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