TaxTMI 
TaxTMI 
2008 (6) TMI 39
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....h failure to comply with the law till 15-7-2001 imposed u/s 77 and Rs. 1000/- thereafter for such failure. (iv) Penalty of Rs. 500/- u/s 75A of the Act. 2.1 On the basis of investigations made and intelligence gathered by Revenue, Show Cause Notice (SCN) dated 19-10-2004 relating to the period 1-9-1999 to 31-3-2004 was served on the Appellant charging that services provided by the Appellant to its clients fall under the class of "clearing and forwarding" for which the value of taxable service provided shall be liable to service tax under the Act. Further charge was that for the breach of law, penalty and interest were leviable under the law. Granting opportunity of hearing to the Appellant and on consideration of different agreements executed between the Appellant and its clients as well as materials on record and defence pleas of the appellant, learned Adjudicating Authority framed following issues and held that the Appellant had provided "clearing and forwarding agent services" for the period for the aforesaid period and demand stated herein before arose: 1. Whether Noticee No. 1 is a clearing and forwarding agent within the meaning of Sec. 65 of the said Act? 2. Whet....
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....il way yards for supply of inspected wagons to avoid or minimize the Railway claims on account of detachment of wagons during transit; (vii) To supervise coal loading and to ensure dispatch of quality coal, as per as possible. In case of quality complaint KCT have to take up the matter suitably with the respective authority of Coal Companies for necessary corrective steps; (viii) To supervise the weighment of each and every wagon at the weighbriedge and to take all corrective steps to ensure the quantity of the coal; (ix) To undertake all such other Acts/works to ensure proper planning and movement of coal rakes as per the requirements of their Principals; (x) To monitor the movement of loaded wagons/rakes; (xi) To do all the liaison job on behalf of their Principals including the refund/claims till the claims are settled with the Coal Compnies/Railways; (xii) To keep regular monitoring and building up an information system to ensure better coal management. Regular report to be submitted to their Principals; (xiii) To plan the movement of coal in advance as per the requirements of their Principals keeping in view of the trends of wagon availability. 2.3 Serv....
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....e, the Appellant was liable to Service Tax under the class 'clearing and forwarding services'. 2.7 The fifth issue relating to ascertainment of liability was held to be correct. 2.8 The sixth issue relating to grant of benefit of cum-duty value in the event of taxation of the consideration received towards providing service was decided holding that the Appellant was entitled to the benefit and accordingly tax liability was determined giving such concessions. 2.9 The plea of limitation under issue No. 7 was held to be untenable in view of the past liability of the Appellant arose for the reason that position of law was not ambiguous during the period under dispute in view of the clarification issued by C.B.E.C. on 10-12-2003 and that does not restrain from invoking longer period of limitation. 2.10 The eighth issue relating to interest and penalty being consequence of law that was ordered to be followed. 3.1 Learned Sr. Counsel Shri Poddar appearing on behalf of the Appellant opposed the adjudication made by the impugned order on the following grounds : (A) That following scope of work of Appellant, in terms of the agreements entered into with various State Electri....
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..... This activity is limited only for TNEB, and that too in relation to Paradip Port only. (B) Notification bearing F. No. B.43/7/97-TRU dated 11-7-97 of the Ministry of Finance read with Trade Notice No. 8/97-ST dated 11-7-97 issued by Mumbai Commissionerate-I and Trade Notice No. 59/99 dated 4-10-99 of that Commissionerate, Circular No. 39/2/2002 dated 20-2-2002, paragraph 10 of Service Tax Circular/Order No. 2/1/2002-ST dated 24-4-2002 throw light that essential characteristic of clearing and forwarding service is that such service can be said to have been provided only if the service provider and service receiver are in the capacity of agent and principal. The clearing and forwarding agent carries out all activities in respect of goods, right from the stage of their clearances from the premises of the principal to its storage and delivery to the customers. There was no case on the part of the Appellant to clear the coal at any stage for which it shall not be clearing agents. In the case of the Appellant the coal moved under a contract of sale directly entered into in between coal moving company and the Electricity Boards who are clients of the Appellant. The destination of coa....
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....es intended for use by the client". (F) The Appellant having been denied to be registered under the class of provision of service of "business auxiliary" w.e.f. 16-6-2005 in terms of order dated 11-9-2007, the Hon'ble High Court of Court (sic) by order dated, 11-10-2007 in W.P No. 1146/07 directed the learned Commissioner of Service Tax to consider the case of the Appellant granting opportunity of hearing. Although hearing was granted, the said Authority again by order dated 27-11-2007, arbitrarily and unreasonably confirmed that the Appellant shall fall under clearing and forwarding under the class "clearing and forwarding agent" under Section 65(25) of the Finance Act, 1994. Against such order, the Appellant's Writ Application in WP No. 1359/07 is pending before the Hon'ble High Court of Calcutta. However, as an interim measure, the Hon'ble Court on 18-12-2007 has passed an order [2008 (11) S.T.R. 577 (Cal.)] and operative part of that order reads as under: "Having heard the learned counsels appearing for the parties I am of the opinion that the writ petition has to be adjudicated upon after filing of affidavit. Affidavit in opposition may be filed within four weeks; reply ....
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.... falling within the category of 'Business Auxiliary Service', as defined in Section 65(19) read with Section 65(105)(zzb) of the said Act?" 3.2 It was submitted by the learned senior Counsel that Some of the agreements which are subject matter of Writ Petition under Annexure P-1 to P-11 are also involved in the impugned assessment. Therefore when proper interpretation and construction of the nature of activity is in question in the Writ Petition, the Appellant should not be called upon to make pre-deposit for hearing of its Appeal. The case of the Appellant is that Revenue has not taken any step to file counter-affidavit in W.P. No.1359/07 to explain its stand for Classification of the service provided by the Appellant for which the interim order passed by the Hon'ble High Court on 18-12-2007 directed the petitioner to continue to pay Service Tax at the rate specified for the category of 'business auxiliary service' since the rate of taxation is same for both category of services i.e. 'clearing and for warding agency' as well as 'business auxiliary service'. 3.3 It was further submitted that the interim order was passed by the Hon'ble High Court having regard to the fact that....
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....ic Dye Chemical v. CCE - 1995 (75) E.L.T. 721-723 (S.C.), Chamundi Die Cast Pvt. Ltd. v. CCE - 2007 (215) E.L.T. 169 (S.C.), CCE v. Chemphar Drugs & Liniments - 1989 (40) E.L.T. 276 (S.C.), Pushpam Pharmaceuticals Co. v. CCE - 1995 (78) E.L.T. 401, 403 (S.C.), Anand Nishikawa Co. Ltd. v. CCE - 2005 (188) E.L.T. 149 (S.C.), Densons Pultretaknik v. CCE - 2003 (155) E.L.T. 211 (S.C.) = (2003) 11 SCC 390. 3.6 He also submitted that penalty is not leviable for no mala fide of the Appellant brought to record and the levy all along being in the legal debate, whether the nature of services provided by the Appellant shall be belonging to the class of clearing and forwarding agent or business auxiliary service, the penalty levied is also unjust and uncalled for. Denial of liability by the Appellant having been made by its three consecutive letter dated 8-2-2006, 21-4-2006 and 16-8-2006 bringing out material facts, Department should not have proceeded to ignore all those letters and taxed the Appellant under the category of "clearing and forwarding agent". 3.7 It was submitted on behalf of the Appellant that it being not liable to Service Tax and if at all liable there shall only be lia....
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....tatutory provisions. Therefore pre-deposit of the demand would be justified for hearing Appeal. 5.1 Heard both sides and perused the record and considered the citations made by them. 5.2 Record reveals that investigation brought out material facts to light for issue of Show Cause Notice (SCN). The Appellant executed contracts with various clients as per terms of agreement argued by both parties. Summary of scope of activity of all contracts has been depicted by the learned Commissioner at page 28 of order of adjudication and on consideration of pleas of appellant held that the services provided by it were clearing and forwarding. It has sought registration under the class of "Business Auxiliary Service" under the Act w.e.f. 15-6-2005 (which has been denied by Registering Authority). However such Classification is in dispute before Hon'ble High Court of Calcutta in W.P. No. 1359/07. 5.3 The very nature of service provided being determinative of classification that calls for rigorous scrutiny in the present appeal. This Bench had occasion to examine scope and ambit of clearing and forwarding service in the case of Naresh Kumar & Co. v. Commr. of Service Tax in Appeal case No....
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....ed to be carried out by an agent on behalf of his principal to make or ensure that goods manufactured or traded by that principal to reach his buyer or consignment Agent from his premises or elsewhere, but also the activities of making or ensuring goods to reach from a manufacturer/trader to the principal of such Agent, in any manner, is covered by the levy. All services in relation to such act provided directly or indirectly, incidental or ancillary to achieve the main object of clearing of goods and or forwarding thereof, in any manner, attract incidence of levy. It is not necessary that the goods should be in the custody or possession of the Agent while carrying out aforesaid operations. But it is such service activity which enables the goods to reach its destination and may be through a series of several sub-activities, incidental or ancillary to the principal activity of clearing and forwarding operation. Various sub-activities integrally and inseparably connected with the principal activity of clearing and forwarding operation makes the operation performable without frustrating the contract. All such sub-activities even by their different character if any shall not oust the p....