TaxTMI 
TaxTMI 
2005 (6) TMI 569
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....emsp;The appellants have complied with stay given in the matter. In pursuance of stay order No. CEX.XI/JMJ/11/916/STY/NSK/2004 dtd. 17-2-2005, they have deposited Rs. 1,00,000/- (Rs. One lakh only) vide TR 6 challan No. BAMD-04/2004-05 dtd. 5-3-2005. Therefore the case is taken up for final decision. 3. The brief facts of the case are as under - (i) The department has issued show cause notice on 10-2-2004 alleging that the appellant failed to pay service tax on the total taxable value including the commission and reimbursement of certain essential expenses i.e. amount of minimum guarantee charges, misc expenses, material handling expenses directly or indirectly, relating to C & F Agent activity. Also they have not included the value of the rent paid for the godown charges and the reimbursement of freight claim. Further they failed to disclose the fact to the department; hence there is a suppression of facts. Therefore the appellant is contravened the provisions of Sections 67, 68, 73(9) of Chapter V of the Finance Act, 1994 read with Rule 6(8) of Service Tax Rules, 1994. Further, for contravention the abovesaid provisions they are liable for penal action under Sect....
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.... indicated in the said deed that the appellant would inter alia deal in carrying and forwarding goods, transportation of goods etc. Therefore, even assuming that transportation of goods fall under service tax net, the said service i.e., transportation of goods is exempted from service. (iii) Clearing and Forwarding agents services were brought under the service tax net by Finance Act, 1997 w.e.f. 16-7-1997 through Notification No. 26/1997 dated 11-7-1997. Initially, the burden of collecting or payment of service tax was on the person who engages a clearing and forwarding agents. In other words, the receiver of C&F Agent's service was liable to service tax. The liability was shifted from the receiver to the provider of service in the case of C&F Agents by Notification No. 7/99-ST dated 1-9-1999. Section 65(25) of Finance Act, 1994 as amended reads as under : "Clearing and forwarding agents means any person who is engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent." Section 65(105)-(j) which defines taxable serv....
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....idered as amounts received for services rendered. It is relevant to note that Section 67 of the Finance Act, 1994 as amended clearly refers only to the gross amount charged by the service provider for the services rendered by him as value of the taxable services. The Government vide Circular MF (DR) TRU. F. No. 341/11/98-TRU, dated 23-8-1999 while explaining the changes has clarified as under: "It may be noted that the value of taxable service rendered by clearing and forwarding agents continue to remain as the gross amount of remuneration or commission (by whatever name called) paid to such agent by the principal or the client engaging the agent. " Only activities which are connected with the clearing and forwarding activities directly or indirectly for which service charges are received can be considered as service charges, which are subject to tax in respect of C&F agents. The Central of Excise and Customs vide Circular dated 24-4-2002 has clarified in the context of storage of liquid cargo that the agencies are providing only storage facility for liquid cargo which has been imported or is intended for export. They charge rent for storage of liquid car....
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.... clear that what is taxable is the remuneration or the commission that is paid to the C&F Agent. Therefore, payments such as godown rent representing the rent paid by the Agent on behalf of the company and recovered as a reimbursement and freight which are incurred by the C&F Agent and recovered from the company on an actual basis cannot be considered as amounts received by the Agent for services rendered. The C&F Agent is liable to service tax only in respect of the remuneration or commission which has been identified and paid to the said C&F Agent. Therefore, there is no legal basis to propose to include the godown rentals and freight charges in the taxable value for the purpose of arriving service tax liability. Also it is clear from the following features of the C&F Agent agreement that the godown rentals and freight are totally outside the scope and purview of C&FA services: (a) The C&FA is appointed for a particular area; (b) The goods are directly dispatched by the company to the C&F agents freight paid; (c) The C&FA does not have any privity or contract with the owner of the p....
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.... under:- "8.  The C&F Agent has requested the company to provide godown space to store the goods received by C & F Agent from the company which the company has provided godown at Agrawal Warehousing compound, 9/2/1; Viloli Village, Bombay Nashik Highway, Near Sanjivani Hotel, Nasik- 422010 on the terms and conditions, more particularly mentioned in this agreement and in an agreement supplemental to this agreement PROVIDED ALWAYS that the C & F Agent shall store the goods belonging only to the company in the said godown." Therefore it is clear that the godown is provided by the company. Also para 11 of the said agreement says that : "The C & F Agent shall at no time have any lieu on the goods or the godown premises for its charge, remuneration or dues of whatsoever nature". para 26 says "It 'is expressly agreed between the parties that the company providing such godown space without any commensuration of charges and would be purely incidental and for the purpose of the C & F Agent carrying out is obligations under this agreement". Therefore the allegation, godown facility is essential to carry out the C & F Agent's activity and ....
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....t or engage such agent. These agents charge separately for incidental services provided to the client such as warehousing and storage of goods in owned godown. They also recover expenses such as postage, courier, telephone, freight, cartage, octroi, loading and unloading charges etc. The reimbursement of such expenses shall not form part of the gross receipt. Normally, there is a contract between the principle and the C & F Agent detailing the terms and conditions and also increasing the commission or remuneration to which the C & F agent is entitled. The service tax will be computed on the gross amount to remuneration or commission paid to the clearing and forwarding agent by the principal engaging such an agent. 8. The appellant rightly pointed out that the godown rent for storage facility is not attract service tax in view of the case of Gujarat State Fertilizers and Chemicals Ltd. - 2002 (148) E.L.T. 1122 discussed above and also freight charges for providing facility of transportation is not attract service tax in view of the case E.V. Mathai & Co. v. Commissioner of Central Excise - 2003 (157) E.L.T. 101 has held that service tax is not imposable on transportation cha....