Case Law Details
Brief of the case
The appellant in this case is providing certain services as agent. Such services are provided to
M/s. Gujarat Ambuja Cements Limited and M/s. Ambuja Cements Eastern Limited (Ambuja companies) .Under this Agency agreement, the appellant was required to undertake the following activities on behalf of the Ambuja companies:
(i) following up the allotment of coal rakes by the Railways;
(ii) expediting and supervising the loading and labeling of rail wagons;
(iii) drawing the samples of coal loaded on the wagons;
(iv) complying with the formalities relating to payments for freight to the Railways; and
(v) dispatching of rail receipts to Ambuja companies.
The appellant had filed an application for registration in Form ST-1 under Section 69 on November 17, 1999 for the service of ‘handling agents'(C&F Agent). Certificate of Registration was granted on November 18, 1999. Thereafter, on May 30, 2000, the appellant surrendered the said Registration Certificate on the ground that services rendered by them were not covered by Section 65(25) of the Act. The application for surrender was, however, rejected by the Superintendent of Central Excise (SCE).
The SCE, in that order, took the view that the services rendered by the appellant under the
aforesaid contract with Ambuja companies would be covered by Section 65(25)-C& F agents services of the Act and,therefore, charge able to service tax. Aggrieved by the said order, the appellant preferred an appeal before the Commissioner of Central Excise (Appeals), Kolkata, which was also dismissed by the Commissioner on November 05, 2002. This order was challenged by the appellant before the CESTAT.The CESTAT has also dismissed the appeal by observing that the matter is covered by its own judgment in the case of M/s. Prabhat Zarda Factory (India) Ltd. v. Commissioner of Central Excise, Patna.Now, the assessee company is in appeal before the Hon’ble Supreme Court
Contention of the Assessee:
The learned counsel for the assessee submitted that as per the agency contract the primary responsibility of the appellant is to supervise and liaison with the coal companies and Indian Railways so that the coal can be loaded as per the schedule. The assessee was not responsible for clearing & forwarding of coal asat no stage custody of the coal was taken by the assessee. Thus, the services should be classified as Business Auxiliary and not C&F agents.
Contention of the Revenue:
The learned counsel for the revenue reiterated the findings of the tribunal and submitted that as per Sec 65(25) of the Finance Act, 1994 clearing and forwarding agent 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. The use of the expression “any” and “indirectly” in the said definition of clearing and forwarding agent, indicates that the scope of the services to be provided by clearing and forwarding agent is quite wide. He is not only the person who is actually dealing with the goods but also include a person who is indirectly connected with the clearing and forwarding operations in any manner of the other persons.
The appellants in the instant case render their services in all the sections of pre load of the coal rakes, as such, it is quite clear that the appellant is covered by the definition of clearing and forwarding agent.
Decision of the Hon’ble Supreme Court:
The Supreme court after considering the rival submissions observed that the issue here for considerations is that whether such services provided by the appellant could be treated as Clearing& Forwarding Agents and, thus, makethem liable to service tax in accordance with the Finance Act, 1994.
The court found that there was no role of the appellant in getting the coal cleared from the collieries or the supplier of the coal. The goods are not under any legal detention from which they need to be cleared or released by the appellant. Not only this, destination of the goods is known to the coal company and the railway rakes are placed by the coal company for the said destinations.
Therefore, the appellant was in no responsible to arrange the clearing & forwarding of coal a particular destination as the same was already fixed as per the contract between the coal company and the Ambuja companies. The appellant does not even undertake any loading operation. The primary job of the appellant, as per the contract between the appellant and the Ambuja companies, is of supervising and liasioning with the coal company as well as the Railways to see that the material required by Ambuja companies is loaded as per the schedule. At no stage custody of the coal is taken by the appellant or transportation of the coal, as forwarders, is arranged by the appellant.
Thus, the services provided by the appellant is not in the nature of C& F agent services rather it can be classified as Business Auxiliary Services.
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