Case Law Details
SUMMARY OF CASE LAW
The activity of marketing agents was brought under the tax net with effect from 1-7-03 when BAS was introduced; same services could not be classifiable under C&F Agent Service for any previous period as the scope of C&F Agent service was not modified when BAS was introduced in the Finance Act, 1994.
RELEVANT PARAGRAPH
3. We have heard both sides. We find that Commissioner (Appeals) vacated two demands confirmed against the respondents towards services classifiable under “Clearing and Forwarding Agents” availed during the material period from a few i marketing agents. The scope of the service C& F Agents was explained by the Board in its Circular F.NO.B.43/7/ 97-TRU dated 11.7.97 in paragraph 2.2 of which the same were enumerated as follows:-
“2.2. Normally, there is a contract between the principal and the clearing and forwarding agent dealing with the, terms and conditions and also s indicating the commission or remuneration to which the clearing and forwarding agent is entitled. A clearing and forwarding agent normally undertakes the following activities:-
“a. Receiving the goods from the factories or premises j of the principal or his agents;
b. Warehousing these goods;
c. Receiving dispatch orders from the principal;
d. Arranging dispatch of goods as per the directions of the principal by engaging transport on his own or through the authorized transporters of the principal;
e. Preparing invoices on behalf of the principal.”
As per the orders of the original authority the respondents did not carry out any of these activities. He relied on the decision of the Tribunal in Prabhat Zarda Factory case (supra) and confirmed the demand. We find that the Larger Bench of this Tribunal in Larsen & Toubro Ltd V s. CCE, Chenriai [2006 (3) STR 321 (Tri.LB)] examined the following question referred to it.
“Whether mere procuring/booking orders for the principal by an agent on payment of commission basis would amount to providing services as ‘clearing and forwarding agent’ within the meaning of the definition of the expression ‘clearing and forwarding agent* under Section 65(25) of the finance Act, 1994, as held in the decision of the Tribunal in Prabhat Zarda Factory (Pvt.) Ltd v. CCE, Patna, reported in 2002 (145) K.L.T. 222 (Tri.) – 2002 (50) RLT 326 (CEGAT-Kol.) .”
The Tribunal found that an agent engaged only for procuring purchase orders for the vendors on commission basis does not engage in any of the activities enumerated in the para 2.2 of Trade Notice 87/97 of Madurai Commissionerate directly or indirectly. The Commission Agent engaged to procure orders and not entrusted with the work of clearing and forwarding of the goods would be a person, who in the ordinary course of business made contract for sale or purchase of the goods for others. The definition of “Commission Agent” under Section 2 (aaa) of the Central Excise Act, 1944 would apply in or in relation to service tax as it applied to duty of excise by virtue of sub-section (2) of Section 65 of the Act. Services of Commission Agents were included in the, definition of BAS under sub-section 19 of Section 65j of the Act with effect from 2003 which included, service of the Commission Agent. The activity of mere procurement of purchase order for the principal on commission basis of a Commission Agent was treated separately by the parliament from the activities of the C&F Agents. We find that the Commissioner (Appeals) found that the marketing agents appointed by the respondents did not carry out any activity other than procuring orders for the respondents’ goods. This activity was brought under the tax net with effect from 1.7.03 when BAS introduced. BAS, inter alia, covered of promotion of marketing or sale of goods. Therefore the service involved is correctly classifiable under BAS with effect from 1.7.2003. Same services could not be classified under C&F Agent service for any previous period as the scope of C & F Agent service was not modified when BAS was introduced in the Act. Prabhat Zarda Factory case (supra) relied on by the Revenue was over ruled by Larger Bench decision of the Tribunal in Larseon & Tourbo Lid case (supra). In the circumstances, we sustain the impugned order and reject the appeal filed by the Revenue. The cross objection filed by the respondents does not seek any other relief. The same also stands disposed
