Order procurement on brokerage basis is not clearing and forwarding service; service tax demand and penalty were set aside.

Mere procurement or booking of orders for a principal on a commission or brokerage basis, without handling goods or performing clearing and forwarding functions, does not fall within clearing and forwarding agent service. The assessees showed that they only procured orders, the goods were supplied directly to customers, and they received brokerage; this position was not rebutted by the Revenue. Applying the Larger Bench principle, the activity was held outside the taxable category, and the service tax demand and penalty were set aside.

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Issues: Whether the activity of procuring orders for customers and receiving brokerage fell within the ambit of clearing and forwarding agent service so as to sustain the service tax demand and penalty.

Analysis: The assessees' stand that they only procured orders, that goods were supplied directly to customers, and that they received brokerage was not rebutted by the Revenue. The activity was held to be mere booking of orders for the principal on a commission basis, which does not amount to clearing and forwarding agent service. The principle laid down by the Larger Bench that such activity is not taxable under that category was applied to the facts.

Conclusion: The service tax demand and the penalty were not sustainable and were set aside in favour of the assessees.

Ratio Decidendi: Mere procurement or booking of orders for the principal on a commission or brokerage basis, without more, does not constitute clearing and forwarding agent service.

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