Tribunal rules in favor of appellant, finding no liability for service tax.

The Tribunal ruled in favor of the appellant, holding that they were not liable to discharge service tax under the category of 'Clearing and Forwarding Agency Service.' The Tribunal found that the appellant's role as a commission sales agent, as outlined in the agreement, did not involve clearing and forwarding activities. Since the appellant did not undertake clearance of goods and only sold products stored by the principal, they were not considered a clearing and forwarding agent for service tax purposes. The Tribunal set aside the service tax demand, allowing the appeal with consequential relief.

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Issues:
1. Whether the appellant is liable to discharge service tax under the category of 'Clearing and Forwarding Agency Service' or not.
2. Whether the appellant's activity falls under the purview of a clearing and forwarding agent or a commission sales agent.

Issue 1: Liability to discharge service tax under 'Clearing and Forwarding Agency Service':
The case involved a show cause notice issued to the appellant for the demand of service tax under the category of 'Clearing and Forwarding Agency Service.' The appellant contended that they were only providing commission sales agent services and not engaged in clearing and forwarding activities. The original authority confirmed the service tax demand along with penalties. The Commissioner (Appeals) upheld the decision, leading to the current appeal before the Tribunal.

Issue 2: Classification of appellant's activity:
The appellant argued that they were appointed as a commission sales agent and were not involved in clearing and forwarding operations. They highlighted that the activity of a commission agent falls under Business Auxiliary Service, exempted from service tax. The appellant's role was to sell products on consignment basis, which, according to them, did not constitute clearing and forwarding agency service. The appellant presented the commission sales agreement to support their claim. On the other hand, the respondent contended that the appellant was indeed connected with the clearing and forwarding operations of the principal, thus falling under the category of a clearing and forwarding agent.

After considering the arguments and examining the agreement provided by the appellant, the Tribunal observed that the agreement clearly outlined the appellant's role as a commission sales agent, without any obligation to undertake clearance of goods. Referring to a relevant precedent, the Tribunal held that if goods were already cleared by the principal and the recipient only stored and sold them, they could not be considered a clearing and forwarding agent liable for service tax. Consequently, the Tribunal concluded that the demand for service tax was unsustainable in the appellant's case, setting aside the impugned order and allowing the appeal with consequential relief.

This judgment clarifies the distinction between commission sales agent services and clearing and forwarding agency services, emphasizing the specific roles and obligations outlined in agreements to determine the tax liability under different service categories.

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