Custom, Excise & Service Tax Tribunal
Ridhi Sidhi Logistics vs Commissioner Of Central Gst & Central ... on 12 September, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
New Delhi
PRINCIPAL BENCH - COURT NO. 4
Service Tax Appeal No. 53883 Of 2018
[Arising out of Order-in-Appeal No. 860(CRM)ST/JDR/2018 dated 06.08.2018
passed by the Commissioner (Appeals) of Central Excise & Central Goods and
Service Tax, Jodhpur]
Ridhi Sidhi Logistics : Appellant
C/o Rangoli Ceramics Private Limited
Kanasar Marg, Lalgarh
Bikaner (Rajasthan)
Vs
Commissioner of Central Goods and : Respondent
Service Tax and Central Excise, Jodhpur G-105, New Industrial Area, Basni Near Diesel Shed, Circle, Jodhpur-342003 APPEARANCE:
Ms. Padmavati Patil, Advocate for the Appellant Ms. Jaya Kumari, Authorized Representative for the Respondent CORAM :
HON'BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL) HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) FINAL ORDER No.51286/2025 Date of Hearing:15.05.2025 Date of Decision:12.09.2025 HEMAMBIKA R. PRIYA The present appeal has been filed by M/s Ridhi Sidhi Logistics 1 against the Order-in-Appeal No. 860(CRM)ST/JDR/2018 dated 06.08.2018 wherein the Commissioner (Appeals) confirmed the demand of service tax of Rs. 43,15,181/- along with interest and appropriate penalties.
1 The appellant 2 Service Tax Appeal No.53883 of 2018
2. The brief facts of the case are that the appellant was engaged in providing 'Clearing & Forwarding Services2 for and on behalf of M/s.
Parle Biscuits Pvt. Ltd.3 and M/s. Parle Products Pvt. Ltd.4 from their godown situated at Bikaner 334001, Rajasthan to the wholesalers of the Parle. For the said purpose, the appellant was registered with the Service tax Department. The appellant entered into two separate Agreements, both dated 23.10.2009 with PBPL and PPPL. Under the said Agreements, the appellant carried out the activity of receiving and storing the goods at the godown premises as 'Clearing and Forwarding agent'. In terms of the said Agreements, it was the responsibility of appellant to receive, store and hold the goods of PBPL and PPPL on their behalf in the said godown. The freight for inward movement of the goods till to the godown was borne by PBPL & PPPL and in case, if any expenses were required to be incurred by appellant for inward transportation, then the same was reimbursed to the appellant. On receipt of the goods from PBPL and PPPL depots under Stock Transfer Invoice/Proforma Invoice, the appellant unloaded the stock and prepared Goods Inward Report5. Under the said agreements, as per clause 5, the appellant were responsible for the safety of the goods dispatched to them by PBPL and PPPL from the time of receipt thereof by them until the goods were delivered to the wholesalers of PBPL and PPPL. In consideration of these services, the 2 C&F 3 PBPL 4 PPPL 5 GIR 3 Service Tax Appeal No.53883 of 2018 appellant received service charges of Rs.5000/- per month and were eligible for reimbursement of freight and handling charges incurred by the appellant on behalf of PBPL and PPPL. Apart from the C & F Agency Services, the appellant also provided lorries / trucks for transportation of stocks from godown to the wholesalers and the transportation charges incurred on this account, were reimbursed to the appellant by PBPL and PPPL. The appellant was also registered as a 'Goods Transport Agency. Since the freight for transportation was borne by PBPL and PPPL as a consignor and fell within the categories mentioned under Rule 2(1)(d)(v) of Service Tax Rules, 1994, the appellant held that the person liable for paying service tax in respect of transportation of goods by road service PBPL and PPPL. Hence, on the transportation charges, the appellant being agents of PBPL and PPPL, were paying service tax on their behalf, after availing abatement of 75% as provided under Notification No.13/2008-ST dated 1.3.2008 and under subsequent Notification No.26/2012-ST dated 17.3.2012. Being Goods Transport Agency, the appellant were also issuing Consignment Note as required under Rule 4B of the Service Tax Rules, 1994. Based on Audit objection, the Addl. Commissioner issued a Show Cause Notice dated 23.09.2014, alleging that the appellant was liable to pay service tax on the balance 75% of the freight (although exempt), treating the entire freight charges as part of Clearing and Forwarding Agent Service for the period 2009-10 to 2012-13, along with interest and penalty, invoking extended period. The Assistant Commissioner vide Order-in-Original No.15/2017-ST dated 4 Service Tax Appeal No.53883 of 2018 16.03.2017 confirmed the demand of Service Tax of Rs. 43,15,181/- under Section 73(2) of FA, 1994 along with interest, and imposed penalty of Rs. 2,000/-under Section 77 and Rs. 43,15,181/- under Section 78 of the Finance Act, 1994 based on the findings therein. The said order-in-original was upheld vide the impugned order. The appellant is in appeal before the Tribunal against the impugned order.
3. Learned Counsel for the appellant submitted that service tax had been paid on the gross amount charged for the services of 'Clearing and Forwarding Service'. As regards the outward freight with respect to transportation of goods from godown to the wholesaler, learned counsel submitted that the same was provided independent of C&F service and service tax was paid on behalf of PBPL and PPPL. He contended that the consignment note issued by the appellant for the activity of transportation undertaken was correctly covered under 'Transport of Goods by Road Service'. Accordingly, service tax had been correctly discharged on behalf of PBPL and PPPL by availing abatement of 75% under Notification No. 13/2008-ST dated 1.3.2008 and subsequent Notification No.26/2012-ST dated 17.3.2012. Learned counsel stated that as per clause (a) to the said Section 65A(2), the nature of the transportation services provided by the appellant was squarely covered under the specific description of the services provided under the 'Transportation of Goods by Road Service' and liability to pay service tax was upon PBPL and PPPL (being the consignors) and appellant had paid service tax only on behalf of M/s. PBPL and PPPL; thus in accordance with Section 5 Service Tax Appeal No.53883 of 2018 65A(2)(a), Finance Act, 1994, taking into consideration the nature of the service provided by the Appellants, the service gets covered under 'Transport of Goods by Road Service', which give the most specific description. Learned Counsel relied on the following judgements and CBEC Instruction:-
(i) CBEC Circular No. 43/7/97-TRU dated 11.07.1997
(ii) Coal Handlers Private Limited vs. Commissioner of Central Excise, Range, Kolkata-I6
(iii) Larsen & Toubro Limited vs. Commissioner of Central Excise, Chennai7 The said transportation charges and the service tax paid thereon was reimbursed by PBPL and PPPL. Thus, the freight paid to GTA (as certified by CA), reimbursed by principals was not includible in the taxable value of Clearing & Forwarding Service.
3.2 Learned counsel further submitted that the charges which were reimbursed cannot form part of consideration under C&F services as the expression "consideration" had been substituted specifically to include reimbursement expenditure or cost w.e.f. 14.5.2015. However, for the period from 2009-10 to 2012-13, the demand was not sustainable. Learned counsel relied upon the following judgements:-
(i) Intercontinental Consultants & Technocrats Private Limited vs. Union of India8 6 2015 (38) STR 897 (S.C.) 7 2006 (3) STR 321 (Tri.-LB) 6 Service Tax Appeal No.53883 of 2018
(ii) Union of India vs. Intercontinental Consultants and Technocrats Private Limited9
(iii) Shri M. D. Yusuf vs. The Commissioner of CGST & Central Excise- (Tri.-Chennai)10
(iv) Venkatesh Merchantiles Private Limited vs. CCE & ST- Bhopal11 3.3 Learned counsel further contended that the demand for the period 2009-2010 to 2012-2013 vide SCN dated 23.9.2014 was barred by limitation, in the absence of any suppression and there was no conscious or deliberate withholding of any information inasmuch as the appellant had regularly filed ST-3 returns for Clearing and Forwarding service as well as Goods Transport Agency Services.
Learned counsel stated that the Show Cause Notice was sent to the appellants by registered post, but despite repeated request by follow up and through letters dated 23.02.2016 and 23.05.2016 no postal acknowledgement and receipt of notice by appellant was produced. Further, the subject show cause notice was issued to the appellants on 27.04.2016 covering period from 2009-10 to 2012-13, the same was barred having been issued lapse of more than 4 years from the relevant date.
3.4 Learned counsel submitted that the issue was interpretational, hence, suppression of fact and/or deliberate intention to evade/avoid
8. 2013 (29) STR 9 (Del.)
9. 2018 (10) GSTL 401 (S.C.)
10. Final Order No. 40538 of 2024 dated 08.05.2024
11. 2015 (37) STR 606 (Tri.-Del.) 7 Service Tax Appeal No.53883 of 2018 payment service tax cannot be alleged. Further, the appellant was under a bonafide belief that once service tax had been paid on the transportation charges under the head 'Transport of Goods by Road Service', then the same charges need not be again subjected to service tax under the head 'Clearing & Forwarding Service' and when the Appellants have acted under this bonafide belief, there is no suppression on their part. Consequently, the extended period is not invocable. Learned counsel contended that non-furnishing of information which is not required does not amount to suppression, as per several various judgements. Therefore, the learned counsel contended that the demand, penalties and interest are not sustainable.
4. Learned Authorized Representative while reiterating the findings in the impugned order, submitted that the appellant as CFA was required to forward goods of PBPL & PPPL to the wholesalers of the Parle. Thus, he contended that the transportation was included in the consideration received by them against the provision of taxable service of clearing and forwarding agent. While issuing the consignments notes, the appellant had acted as Goods Transport Agency and these activities had nothing to do with the CFA service being provided by them. Learned AR submitted that being proprietor-ship concern, the appellant was not liable for service tax under GTA service, had the appellant acted as pure agent. However, there is no such clause in the agreement which provides for reimbursement of freight charges and service tax paid thereon to the appellant. Learned Authorized 8 Service Tax Appeal No.53883 of 2018 Representative stated that the appellant had paid service tax on GTA after calming 75% abatement and filed ST-3 return under GTA, therefore the contention in as much as on the one hand they were contending that service tax is not payable and on the other hand they paid service tax by availing benefit of 75% abatement is not acceptable.
4.1 As regards the invocation of extended period and imposition of penalty, learned Authorized Representative submitted that there was no force in the plea of the appellant as it is evident from the record that this case was unearthed only after conducting the audit of the record of the appellant. There had been a deliberate act on part of the appellant to suppress the information, the appellant has misclassified the taxable services under GTA.
5. We have heard Ms. Padmavati Patil, learned counsel for the appellant and Ms. Jaya Kumari,, learned authorized representative for the Department. In order to appreciate the submissions, it would be appropriate to go through definition of the services during the relevant time:
"Section 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."
"Taxable Service" means any service provided or to be provided [to any person], by a clearing and forwarding agent in relation to clearing and forwarding operations, in any manner;9
Service Tax Appeal No.53883 of 2018 Section 65B (26), Good transport agency means "any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called"
As per the explanation given under Rule 4B of Service Tax Rules, 1994, Consignment note means a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency."
5.1 From the above, it evident that „clearing and forwarding‟ operations would be various activities having bearing on clearance of goods, which would involve documentary processes and arrangements for transfer of goods to their destination, which process may also involve clearance at subsequent stages during forwarding operations. The procurer of orders on commission basis renders services which are not connected with such clearing and forwarding operations, which have bearing on the movement of goods. In the instant case, it is apparent that the appellant was registered for providing taxable services under the category of „Clearing & Forwarding agent‟, „Transport of goods by Road/GTA service‟ and „Renting of immovable property service‟. It is on record that the appellant was providing these services and paying appropriate duties on such services. The Department has contended that the transportation charges recovered 10 Service Tax Appeal No.53883 of 2018 by the appellant should include as gross consideration received for „Clearing & Forwarding service‟.
6. We note that the appellant entered into two agreements, both dated 23.10.2009 with M/s. PBPL and M/s. PPPL respectively. Under the said Agreements, the Appellants carried out the activity of receiving and storing of goods at the godown premises. As per the aforesaid agreements, it was the responsibility of Appellants to receive, store and hold the goods of M/s. PBPL and M/s. PPPL on their behalf in the said godown. The goods to be stored in the said godown were dispatched by M/s. PBPL and M/s. PPPL directly to the said godown, on which freight was paid. The goods were booked for delivery at the said godown or to the nearest railway, shipyard, ferry, airport or lorry office. It is apparent that the freight for inward movement of the goods till to the godown, was borne by M/s. PBPL & M/s. PPPL and in case, any expenses were required to be incurred by Appellants for inward transportation, then the same was reimbursed by M/s. PBPL and M/s. PPPL to the Appellants. On receipt of the goods from M/s. PBPL and M/s. PPPL depots under Stock Transfer Invoice / Performa Invoice, Appellant unload the stock and prepare Goods Inward Report (GIR).
7. We further observe that as per clause 8 of the Agreements, in consideration of services rendered by the appellant, they received service charge of Rs.5000/- per month and were eligible for reimbursement of freight and handling charges incurred by the Appellant on behalf of M/s. PBPL and M/s. PPPL. It was for the said services provided by Appellant to M/s. PBPL & M/s. PPPL, that they 11 Service Tax Appeal No.53883 of 2018 were registered with the Service Tax Department under the head 'Clearing & Forwarding Agent Service' and paying appropriate service tax on the consideration received by them from M/s. PBPL and M/s. PPPL. In addition, the appellant also provided lorries / trucks for transportation of stocks from godown to M/s. PBPL's and M/s. PPPL's wholesalers and such transportation charges incurred were reimbursed to the Appellant by the said M/s. PBPL and M/s. PPPL. Since the freight for transportation was borne by M/s. PBPL and M/s. PPPL as consignors, therefore, it is apparent that they fell within the purview of Rule 2(1)(d)(v) of Service Tax Rules, 1994. The appellant being agent of M/s. PBPL and M/s. PPPL, paid service tax on the transportation charges after availing abatement of 75% under Notification No.13/2008-ST dated 1.3.2008 and under subsequent Notification No.26/2012-ST dated 17.3.2012. For the said service, we find that the appellant was registered as GTA.
8. As per Section 67 of the Finance Act, 1994 during the disputed period i.e. 1.4.2010 to 30.9.2014, service tax was payable on the gross amount charged for the service provided. In this context, in so far as, Clearing and Forwarding Service and was concerned, we find that the appellant had discharged service tax liability on the gross amount charged for the services so provided.
9. We also observe that the transportation service was a activity separate from the Clearing and Forwarding Service. It is imperative to note that no lump sum amount had been charged for Clearing and Forwarding Service which included transportation charges. In this 12 Service Tax Appeal No.53883 of 2018 context, we note the judgment of Hon'ble Tribunal in the case of Commissioner of Central Excise, Lucknow vs. Technical Associates12, which is reproduced below:
"3. We have perused the show cause notice. Show cause notice clearly indicates that there was maintenance and repair contract. That contract has two parts. One is for lifting faulty transformers and second aspect of the contract is repair of such faulty transformer. Therefore, we looked into the finding part of the first appellate authority to know what was the reason of allowing appeal of the assessee. We are satisfied that he has recorded transport was one separate activity involved in the contract of repair which was another activity.
4. Learned DR emphasized that when repair was undertaken by the assessee bringing that to the place of repair, adjudication was done properly. On the other hand, learned Counsel rebuts submitting that learned first appellate authority made a finding that transport charges appearing in Annexure 5 of the Schedule Il of the contract was separate from repair and maintenance value. Had there been a lump sum price for repair, in that case, Revenue had scope to hold against the respondent.
5. When there was serious rivalry submissions we heard both sides for a long time and also examined pleadings of both with the materials on record. Finding no merit in stay application and appeal of Revenue, we dispose off the appeal dismissing the same appreciating reason given by first appellate authority to be sound when transportation of faulty transformer and repair service undertaken by respondent were two different activities. Accordingly both the stay application and appeal of Revenue are dismissed"
10. We also note that the aforesaid decision in Technical Associates13 was upheld by the Allahabad High Court-Lucknow bench. From the factual matrix, it is apparent that service tax had
12. 2011 (24) STR 567 (T)
13. 2013 (31) STR 538 (All) 13 Service Tax Appeal No.53883 of 2018 been paid on the gross amount charged for the services of 'Clearing and Forwarding Service' provided.
11. In addition, our view is supported by the Central Board of Excise and Custom Circular No.43/7/97-TRU dated 11.07.1997, which clarified the Clearing and Forwarding Service, its gamut and the valuation. The relevant extract is reproduced below:
"2.3 It has been decided that the person responsible for collecting the service tax in the case of services rendered by a clearing and forwarding agent shall be the person engaging/appointing a clearing and forwarding agent (Notification No. 26/97-ST refers). It may be noted that unlike in the case of other service tax levies where the service provider is the person responsible for collecting the service tax, in the case of services rendered by the clearing and forwarding agents the service tax liability shall be discharged by the person availing the service so rendered. In order words, the principal who engages a clearing and forwarding agent is the person responsible for collecting and paying the service tax to the exchequer, Commissioners of Central Excise may therefore take necessary action accordingly and also make this position clear by issue of suitable trade notice.
2.4 Further under the Finance Act, 1997 the value of taxable service rendered by a clearing and forwarding agent has been defined as the gross amount charged by such agents from the client for the services of clearing and forwarding operations in any manner. However, under service Tax rules it has been provided that the value of taxable service in relation to services rendered by clearing and forwarding agents to a client shall demand to be the gross amount of remuneration or commission (by whatever name called) paid to such agent by the client engaging such agent (Notification No. 27/97-ST refers).
2.5 For their services rendered, the Clearing & Forwarding agent receives commission or remuneration which usually consists of two components:14
Service Tax Appeal No.53883 of 2018 (I) Minimum commission on a flat rate or turnover basis depending on the packages/consignments handled; (II) A variable commission based on performance which is computed on the performance indicators agreed upon between the agent and the principal. This is usually given as a percentage of the turnover.
The above two constitute the remuneration or commission paid to the C&F agent by the principal 2.6 In cases where Clearing & Forwarding agents engaged for various towns, states or areas are paid only by the regional or the head office of the company appointing such agents, for service tax purposes it would suffice to register only such regional or head office. In such cases the regional office or the head office, as the case may be, should also be required to give an undertaking to discharge the service tax liability."
12. We also observe that in Coal Handlers Pvt Ltd. vs. Commissioner of Central Excise, Range Kolkata-I14 the Supreme Court held as under:
"12. On the facts of the present case, we find that none of the aforesaid activities are performed by the appellant. There is no role of the appellant in getting the coal cleared from the collieries/supplier of the coal. Movement of the coal is under the contract of sale between the Coal Company and Ambuja companies. Even the coal is loaded on to the railway wagons by the coal company. The goods are not under any legal detention from which they need to be freed 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. The destination is the factories of the principal itself, namely, Ambuja companies, where the coal is to be delivered by the coal company as per pre-determined/agreed covenants between them. Therefore, there is no occasion for Ambuja companies to instruct the appellant to dispatch/forward the goods to a particular destination which is already fixed as per
14. 2015(38) S.T.R. 897(S.C.) 15 Service Tax Appeal No.53883 of 2018 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 liaisoning 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. We are, thus, of the clear opinion that the services rendered by the appellant would not qualify as C&F Agent within the meaning of Section 65(25) of the Act."
13. In view of the above settled legal position, we hold that the appellant had correctly discharged his duty liability on Clearing and Forwarding agent service. The Appellant had undertaken the transportation of goods independent of the Clearing and Forwarding service, and, as per the clause 8 of the agreement, the transportation charges were reimbursed by M/s. PBPL and M/s. PPPL to the Appellant. Further, the appellant was availing abatement of 75% as provided under Notification No.13/2008-ST dated 1.3.2008. In cases where the gross amount charged on the consignment transported did not exceed Rupees Seven Hundred Fifty, the Appellant availed the exemption under Notification No.34/2004-ST dated 3.12.2004. We note that Rule 2(1)(d)(v) of the Service Tax Rules, 1994 (upto 30.6.2012) and Rule 2(1)(d)0)(B) (w.e.f.1.7.2012), defines the 'person liable for paying service tax' in specified cases. Rule 2(1) (d)
(v) of Service Tax Rules, 1994 (upto 30.6.2012), read as follows:-
"Rule 2. Definitions -
(1) In these rules, unless the context otherwise requires, - 16
Service Tax Appeal No.53883 of 2018 xxxxx xxxxx xxxxx
(d) "Person liable for paying service tax" means, -
xxxxx xxxxx xxxxx
(v) in relation to taxable service provided by a goods transport agency, where the consignor or consignee of goods is,-
(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);
(b) any company formed or registered under the Companies Act, 1956 (1 of 1956);
(c) any corporation established by or under any law;
(d) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India;
(e) any co-operative society established by or under any law;
(f) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder; or
(g) any body corporate established, or a partnership firm registered, by or under any law, any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage;"
14. With effect from 1.7.2012, the said definition of 'person liable for paying service tax' is contained under Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994 and the same reads as under:
"Rule 2 Definitions.
(1) In these rules, unless the context otherwise requires, --
xxxxx xxxxx xxxxx
(d) "person liable for paying service tax", --
(i) in respect of the taxable services notified under sub-section (2) of section 68 of the Act, means, ---
xxxxx xxxxx xxxxx (B) in relation to service provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, where the person liable to pay freight is, - 17
Service Tax Appeal No.53883 of 2018 (I) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);
(II) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;
(III) any co-operative society established by or under any law; (IV) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;
(V) any body corporate established, by or under any law; or (VI) any partnership firm whether registered or not under any law including association of persons;
any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage:
Provided that when such person is located in a non-taxable territory, the provider of such service shall be liable to pay service tax."
15. On a plain reading of the aforesaid provisions it is clear that if the consignor or consignee is a body corporate/Company, then such body corporate/ Company is the 'person liable for paying service tax'.
In the present case, M/s. PBPL and M/s. PPPL are the consignor and the wholesalers are consignees. At this point, it is also imperative to note that the Appellant, for the transportation of goods by road, were under obligation to issue consignment note, as per Rule 4B of Service Tax Rules, 1994. In terms of this rule, the "consignment note" means "a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying Service tax whether consignor, consignee or the goods transport 18 Service Tax Appeal No.53883 of 2018 agency. In the instant case, the Appellants have issued consignment notes for the aforesaid activity. In view of the above, we hold that the payment of service tax under the head 'Transport of Goods by Road' is correct.
16. We find support from the judgement of Commissioner of Central Excise vs. M/s. Kulcip Medicine (P) Ltd15 wherein the High Court of Punjab-Haryana held as follows:
"The question which falls for consideration is whether word 'and' used after the word 'clearing' but before the word 'forwarding' at two places in clause (j) be considered in a conjunctive sense or dis-injunctive sense. It appears to be fairly well settled that the context and intention of legislature are the guiding principles. In that regard reliance may be placed on the judgement of Hon'ble the Supreme Court in the case of Mazagaon Dock Ltd. V CIT (1958) 34 ITR 368. By necessary intendment the expression 'a clearing and forwarding agent in relation to clearing and forwarding operations, in any manner' contemplates only one person rendering service as 'clearing and forwarding agent' in relation to 'clearing and forwarding operations'. To say that if, one person has rendered service as 'forwarding agent' without rendering any service as 'clearing and forwarding agent' and he be deemed to have rendered both services would amount to replacing the conjunctive 'and' by a disjunctive which is not possible. The counsel for the revenue has not been able to bring on record any material to show the word 'and' should be construed as disjunctive. He has not shown any 'trade practice' which may lead to a necessary inference that service of one kind rendered by one is invariably considered to comprise both. No argument has been advanced before us by him to canvass that the legislature intention is discernible from the scheme of the statute or from any other relevant material.
Therefore the word 'and' should be understood in a conjunctive
15. CEA No.34 of 2006 dated 24.02.2009 19 Service Tax Appeal No.53883 of 2018 sense. (See Maharaja Sir Pateshwari Prasad Singh v. State of U.P. (1963) 50 ITR 731). In these circumstances if we read the word 'and' as 'or' then it would amount to doing violence to the simple language used by Legislature which cannot be imputed ignorance of English language. In that regard we place reliance on the judgement of Hon'ble the Supreme Court rendered in the case of Inayat Ali Khan v. State of U.P. (1971) 2 SCC 31 (Para 5) and para 6 of the judgement of Hon'ble the Supreme Court rendered in the case of Ape Belliss India Ltd v. Union of India (2001) 132 ELT 8. The observations of their Lordship reads thus :
"6........ A plain reading of the Section (sic Tariff Public Notice) clearly shows, as contended by Mr. Bhatt, that for an alloy steel to be considered as stainless steel, it will have to satisfy two conditions i.e. The alloy steel should be known in the trade as stainless steel and further, it should contain 11% chromium as a component of the allow steel. This is clear from the use of the word "and". If the intention of the trade notice was to treat the two types of alloy steels as stainless steel, then it would have been made clear by using the word "of" instead of the word "and"."
We are further of the view that the circulars issued by the Board are binding and meant for adoption for the purposes of bringing uniformity. In that regard reliance may be placed on the judgements of Hon'ble the Supreme Court in the cases of Ranadey Micronutrients v. Collector of Central Excise 1996(87) ELT 19 (SC) and Paper Products Ltd. v. Commissioner of Central Excise (1999) 7 SCC 84. If the aforesaid principle is applied to the facts of the present case there does not remain any CEA No.34 of 2006 11 doubt that the circular issued by the Board is to be considered as binding and cannot be deviated even by the department. On that account also the expression 'clearing and forwarding agent' have to be interpreted in the light of the circular.
The view taken by the Tribunal in M/s Mahavir Generics's case (supra) has been accepted by the revenue as no appeal has been filed. Moreover we are not able to persuade ourselves to accept the view taken by the larger Bench of the Tribunal in the 20 Service Tax Appeal No.53883 of 2018 case of Medpro Pharma Pvt. Ltd. (supra) which has been fascinated by musical notes of symphony as is evident from the following paras:
"31. We have heard both sides and perused the record. On a fresh look at the whole issue and after taking into account the various newfangled arguments and nascent lines of thinking, unwrapping before us, as discussed in the fore-going paragraphs, we find ourselves in a better position to appreciate the wisdom in the words of Jules Romains when he said "What I say below represents only conclusions with which I would identify myself, if I were obliged to stop thinking today". The underlying wisdom in these words has greatly encouraged us in this inquest to appreciate the emerging facts and scenario in a proper perspective. Crucial key-word the definition of taxable services, namely "C & F Operations" needs to be viewed afresh in this scenario. The whole "operations" involved in "C & F operations" now remind us of an orchestra, performing a western classical symphony. It reminds us of a connoisseur's experience of harmony in western classical music. While listening to Mahler's 9th symphony, one does not listen to a individual violin or a trumpet, but the harmony emanating from many different seemingly unrelated instruments. In the same way, a C&F Agent's functions consisting of seemingly unrelated tasks are well orchestrated. This view of ours is strengthened by various references including the Report of United Nations Economic Commission for Africa referred to by us in the preceding paragraphs all revealing in no uncertain terms that the freight forwarders are known variously as clearing agent, shipping forwarding agent etc. We are, therefore, of the view that even if one segment of activities is not demonstrated to be performed, it cannot be held that the appellants were not engaged in taxable service. Due to their orchestrated nature of work, such isolated activity can also be covered under "C & F Operations". Merely, because the bassoon was not played in one of the movements of a symphony, it does not cease to be otherwise a part of the orchestra. While forming this view, 21 Service Tax Appeal No.53883 of 2018 we have certainly not overlooked the fact that while music can be sometimes taxing, a tax can never be musical.
32. While arriving at this conclusion, we also go by the trade understanding based on sheer common sense, which is often uncommon. Because a buyer buys only rice and not wheat in a grocery shop, which claims to sell "wheat and rice", the shop cannot cease to be a shop selling "wheat and rice". In the same way, rendering only "forwarding" service cannot make the appellant ceases to be "Clearing and Forwarding Agent", so as to save him from the tax. Some customers may want only clearing operations, while some forwarding, and others both. The expression "clearing and forwarding operations" is a compendious expression of nature of services offered any of which will bring the service providers in the tax net of this category. Moreover, in the process of forwarding operations- clearance stages may arise such as at octroi posts or subsequent transits.
33. We, do agree that it is the context in which the word "and" is positioned, being sandwiched between the words "clearing" and "forwarding" has to be looked into while interpreting the meaning. Like the legendary Trishanku, the word "and" is dangling between "clearing" and "forwarding"- neither divorcing from the Heavens, nor from the Earth. In such a positioning, it is not possible to segregate the holistic concept of 'clearing and forwarding"
into divisible activities, either or both of which can be provided for answering the customers' needs." We have not been able to understand with utmost respect to the Tribunal as to what is 'Orchestrated nature of work' involved in the present transaction. The dealer in the present case as per the arrangements reached between the parties has to receive goods which are already got 'cleared' by the manufacturer. The dealer is to store those goods and forward to the buyer of the goods as per direction received. In that regard the findings of the Tribunal in the instant case is patently clear when it observed as under in para 6:
"It is clear from the terms of the agreement that appellant herein does not attend to the clearing of the medicines 22 Service Tax Appeal No.53883 of 2018 manufactured by Cipla. Consignments of medicines are cleared from the factory by the manufacturer and delivered to the appellant at his premises. In this factual situation, it has to be held that there is no Clearing by the appellant and for that reason, the service rendered by the appellant does not satisfy the requirement of clearing and forwarding. We, therefore, are of the view that the demand is not sustainable. To the same effect is our earlier decision in the case of M/s Mahavir Generics"
The example of 'wheat and rice' grocery shop is obviously wholly mis-appropriate and does not fit in the context. We are also not in agreement with the interpretation of word 'and' which has already been dilated upon by us."
17. In view of the above settled position, we set aside the impugned order. Consequently, the appeal is allowed.
(Order pronounced in the open Court on 12.09.2025) (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) G.Y.