AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 629
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....s Ltd. 3. During the relevant time, an agreement was entered into by M/s. IES as Principal with M/s. ICI (Agent). This agreement dated 29/08/1996, through its various clauses, provided the terms by which M/s. ICI will act as the consignment, distribution and selling agent of M/s. IES. The Department, after perusal of the agreement, came to the conclusion that M/s. ICI was acting as a "Clearing and Forwarding Agent" of M/s. IES as per the provisions of Section 65(25) of the Finance Act, 1994 along with Service Tax Rules, 1994. The Department concluded that M/s. IES was required to pay Service Tax under the category of "C & F Agent Service" on Reverse Charge basis in terms of Rule 2 (d)(xii) and (xvii) of the Service Tax Rules, 1994. Service Tax applicable was paid by M/s. IES under the Reverse Charge Mechanism. However, the dispute regarding liability to payment of Service Tax on Reverse Charge basis in respect of Goods Transport Operators as well as C & F Agent Service, was the subject matter of a longstanding dispute which came to be decided by the Hon'ble Supreme Court in the case of Laghu Udyog Bharati Vs. Union of India reported in 1999 (112) E.L.T. 365 (S.C.). The Hon'ble Su....
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....tivities involved in both these appeals deal with the agreement executed between IES and ICI, these two appeals are taken together in decision through this common order. 7. The appellant is represented by Shri Ravi Raghavan, Harsh Shukla Advocates & Shreya Mandra, CA and Revenue is represented by Shri K. Choudhary, Ld. DR. 8. The submissions in respect of Appeal No. ST/314/2009 made on behalf of the appellants are summarized below:- (i) The activities carrying out by IEL (ICI Ltd.) does not fall under the category of "C & F Agent" Service. He relied on various decisions to support his argument. Finally, he submitted that since the activities are not covered under C & F Agent service, the appellant will not be covered by the validating amendments by Finance Act, 2000 and hence, will be entitled to the grant of refund claimed by them. (ii) He specifically referred to the impugned order dated 06/10/2009 which was passed in the Denovo Proceedings. He submitted that the remand directions of the Tribunal in its order dated 03/10/2007 was for the Appellate Authority to examine the entire fact with reference to the agreement between the parties and the real nature of the arrangem....
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....ition which emerges is that any Service Tax paid on Reverse Charge basis for the period prior to the decision of the Hon'ble Supreme Court, will not be refundable. But the appellant has claimed that the agreement entered into between M/s. IES (Principal) and M/s. ICI (Agent) will not satisfy the definition of 'Clearing and Forwarding' Agent Service under Section 65 (25) of the Finance Act, 1994. The earlier remand of the Tribunal vide its final Order dated 03/10/2007, has outlined the legal developments but remanded to the Commissioner (Appeals) for considering the agreement and to give finding whether the activity will be covered under 'C & F' Agent Service. In the Denovo Proceedings, the Commissioner (Appeals) has rendered the finding that the agreement is in the nature of C & F Agent Service, but the conclusion of the Ld. Commissioner (Appeals) is not duly supported by analysis and findings with reference to the various clauses of the agreement which should have been done in compliance with the directions of the Tribunal. Hence, we are left with no option but to examine the various clauses of the agreement for coming to a conclusion about the nature of the service. 13. In term....
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....hall hold the same for and on behalf of the Principal. (vi) The clause 3.6 states that the Agent shall effect all sales on behalf of the Principal, in its own name and under its own invoices clearly including the words to the effect that it is doing so as: "Consignment, Distribution and Selling Agent of IES. (vii) The clause 7.1 indicates the Commission which will be payable to the agent. Further the clause 7.6 indicates that the Agent shall effect the sales of the products and collect the proceeds thereof. (viii) Further the clause 7.3 specifies that the Principal shall establish periodically, but not less frequently than annually, a published list price for each of the Products after consultation thereon with the agent. 15. After considering the various clauses of the agreement visa vis the definition of Clearing and Forwarding Agent Service, we are of the view that the relationship is in the nature of Principal and Agent and further satisfies the definition of 'Clearing and Forwarding' Agent under Section 65 (25) ibid. Consequently, we are of the view that during the period 1997-1999, M/s. IES would be liable for payment of Service Tax on Reverse Charge Basis. In the ....
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....Jurisdictional Authorities for M/s. ICI, were situated at Ranchi and were not preview to developments at Kolkata where the Principal, IES was covered for Service Tax payment. 18. We note that the service, "Clearing and Forwarding Agent Service" has been the subject matter of much Litigation. There have been conflicting decisions at the level of various judicial fora regarding the activities which are covered under the definition of Clearing and Forwarding Agent Service. A perusal of the agreement indicates that the activity undertaken is in the nature of "Consignment Agent" which is subsumed within the definition of Clearing and Forwarding Agent Service. The question whether the department will be entitled to recover the Service tax on consignment agent, by invoking the extended period of limitation was the subject matter in the case of Bharat Aluminum Co. Ltd. V. CCE, Raipur reported in 2007 (8) STR 27 (Tri.-Delhi). The Tribunal concluded that the appellant in that case was entitled to bonafide belief that the Service Tax was not liable under clearing and forwarding Agent Service, in view of the fact that two divergent views of the CESTAT were prevalent during the relevant perio....
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....ed in clause (a) of Section 73(i) of the Act prevailing at the time of issue of show cause notice and limitation of five years period for issue of show cause notice is applicable in this case. Therefore, the show cause notice issued to the appellant so far as it relates to period from 16-10-1998 to 31-8-1999 is not time barred under Section 73 of the Act." 9. The contention of the learned Counsel for the appellant is that it is well settled that when there is difference of opinion in judicial bodies, the assessee could not be faulted for holding either of the views. It is being pointed out that in such a case, failure to comply with the procedural requirement of law cannot be held as resulting from mala fides but from a bona fide belief that tax was not attracted. Reliance in this connection is placed on the decision of this Tribunal in the case of CCE v. Wonderax Laboratories (I) Pvt. Ltd. reported in 2005 (186) E.L.T. 427. 10. The learned Joint CDR would, however, contend that the Commissioner has considered the facts carefully and he has reached a sound conclusion on the applicability of extended period and that finding is required to be confirmed. 11. We have already n....