Service tax on mixed consignment agent services cannot extend to full reimbursement where clearing and forwarding is only incidental.

Service tax was not chargeable on the full reimbursement paid to a consignment agent where the agreement showed mixed marketing and agency functions, with clearing and forwarding work only incidental. The Tribunal held that tax attaches only to the taxable service actually rendered, and the entire amount cannot be brought to tax under the clearing and forwarding head merely because that activity formed one component of the arrangement. As the assessee was not providing clearing and forwarding service in substance, the demand based on the full reimbursement was unsustainable. Once the tax demand failed, the penalty also had no independent basis and could not survive.

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Issues: Whether service tax was payable on the entire amount reimbursed to a consignment agent for mixed activities including clearing and forwarding operations, and whether penalty could survive.

Analysis: The agreement showed that the recipient performed several marketing and agency functions, with clearing and forwarding being only one component. The amount reimbursed was not exclusively consideration for clearing and forwarding services. The Tribunal applied the principle that service tax attaches only to the taxable service actually rendered, and if the assessee is not providing a clearing and forwarding service in substance, the entire reimbursement cannot be taxed under that head. Since the work was of a consignment agent with only incidental C & F activity, the demand based on the full reimbursement was unsustainable. Once the tax demand failed, the penalty had no independent footing.

Conclusion: The demand of service tax on the full reimbursed amount was unsustainable and the penalty could not be sustained.

Final Conclusion: The appeal succeeded, the service tax demand was set aside, and consequential relief followed.

Ratio Decidendi: Service tax is chargeable only on the taxable service actually provided, and a consignment agent rendering mixed functions cannot be taxed on the entire reimbursement merely because some clearing and forwarding activity is involved.

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