Clearing and forwarding classification upheld where an agent stored principal's goods and arranged delivery for the principal's business.

Where an agent receives goods from the principal, stores them until buyers are located and arranges delivery in furtherance of the principal's business, the activity is classifiable as Clearing and Forwarding Agency service. The tribunal relied on the agreement, the principal-agent relationship, the CBEC circular and prior precedent to conclude that the arrangement fell within clearing and forwarding rather than Business Auxiliary Service. The classification was therefore upheld in favour of the Revenue and the appeals were dismissed.

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Issues: (i) Whether the appellant's activities constituted Clearing & Forwarding Agency service or Business Auxiliary Service.

Analysis: The appellant received goods from the principal, retained them until buyers were found, and delivered them to serve the principal's interest. The agreement and the nature of the principal-agent relationship, read with the CBEC circular, showed that the activities fell within the scope of clearing and forwarding service. Tribunal precedent on similar agreements was also followed.

Conclusion: The activity was held to be Clearing & Forwarding Agency service and not Business Auxiliary Service, against the assessee.

Final Conclusion: The appeals were dismissed and the service tax classification in favour of the Revenue was sustained.

Ratio Decidendi: Where an agent receives goods from the principal, stores them, and arranges their delivery in furtherance of the principal's business, the activity is classifiable as Clearing and Forwarding Agency service.

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