Tribunal: Transport Charges for Clearing Agents are Considered Part of Service; Not Separately Taxed

The Tribunal upheld the order-in-appeal, ruling that transportation charges received by Clearing and Forwarding Agents should be considered part of the consideration for C&F service. The Tribunal held that since transportation was integral to C&F service, the charges should not be separately taxed under Goods Transport Agency service. The decision was made on September 22, 2017, rejecting the appeals against the demand for service tax on C&F agent service and transportation of goods by road service.

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Issues:
Appeals against order-in-appeal regarding demand for service tax on clearing and forwarding agent service and transportation of goods by road service.

Analysis:
The appeals were filed against the order-in-appeal passed by the Commissioner (Appeals) regarding the demand made for the period April 2011 to March 2013 for services taxable under Section 65(105)(j) and Section 65(105)(zzp) of the Finance Act, 1994. The appellants were appointed as Clearing and Forwarding Agents of a company and started raising separate invoices for C&F service and transportation service. The department claimed that the transportation charges were part of the consideration for C&F service, leading to a demand for service tax under C&F services along with interest and penalty.

The appellant argued that service tax on transportation freight cannot be part of the C&F agent service as the recipient of the transportation service had already paid service tax under reverse charge mechanism. The department contended that the agreement with the company covered C&F services, including transportation, and all charges were consolidated. The Tribunal noted that the agreement required the appellant to provide C&F services, including storage and dispatch of goods, and all consideration received should form part of the tax payment under C&F agent service. Since transportation was integral to C&F service, the Tribunal held that transportation charges should not be separately taxed under Goods Transport Agency service.

Ultimately, the Tribunal upheld the impugned orders, rejecting the appeals and emphasizing that transportation charges received should be considered part of the consideration for C&F service. The judgment was pronounced on September 22, 2017.

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