Karnataka High Court
The Commissioner Of Central Excise vs M/S Mahaveer Generics on 24 November, 2009
Bench: K.L.Manjunath, Aravind Kumar
ZN TRE H1<'__:H GE" r<RRs\w %;<i'g?éé~é;'a:;~.§.e:;1-;;;IiiR-:3_"' R.
D!»\.T£D THIS THE 24""; DAY QF u
THE HONBLE MR.JU«..§T1CE K.L;...r\é}R.Njj_:LJV;§2:.{${'f%4 3
,<A'N'§. ' A' '
THE %--:'oR'B1TE éV§R:§;t.> KL.,9Mm%i
BE."rvv:3m.'.; 5..
CO?v1:rv1ISSI{)£\:;+?_£?»gf *0? '{§_E'2"r..'.TP.A_L EXCISE,
BANC§.AE;OR'E : 'C©L4ryw£:ssyzo__NERATE,
BANc;A:,,ORE~550--4301';-RR._LJ "
. ._ APPELLANT
{By SR1 RAC;:HR*u'ENDRA E»; HANJIR, ADV.)
SR: l\i.R. "5H;g$_;<.AR, SRCOUNSEL
" $fRI R._\!EERE§\!L)RA SHARi'v'1l>,,A§)\/.)
Mgfs. rv:A.:}{;w£3:s:2 :3&:Rs:%RR::_f:';
OM 9:: RAM BLJILDRJG,
89, %_).E%'§/ARA <:HIcmNAHRL_L1 MAIN ROAD,
" f5I1._AEF</XHALLE, HM R0511,
- =QF-if BANNERGHATTA ROAD,
'~:BAN(3ALORE«S6{3 075.
....RES¥>O?'JDEl\JT
(By SR1 SEDDARTH SR}ff'éAST'AVA. ADV
M/S. V. LAKSHFVTE KUM/»'«\RAN, /--\D\/S}
This C.E.x'%. fi§E?C§ under seetieh 35<;g1;;er'th.e..'_.§;'e;;%:~-3:
EXCISE Act, arming cut of order tiat_e{§ 231.4.-2{}G4.pa§%;edhint4_
CESTA'? in ST Agpeai i'x§o.18;'2{}O3 "\.f|{§.E~?~~»3e.t_§§"._FE%'}§?i§«. Drifter it
No.12,/2094 praying to consit%erv-tth:--t;;.se:§ti<:;_;;$"ofiaw.fr:a§i's-.ed'j '
therein and in the iight of the}_sa::'3.e set, asici-e;"c;u.a_sh.e.the '
order of the CESTAT in ST Apeea'4:.'N'e__ji'8/20-Q3 --.\/_i§.e"f.t"S._F'i'n.ai
Oréier No.12/20{}4 €§ateC%V.r'2?'.4.2O.Q4" in :»%'ie'uAiiVr}tere:§t9; QT;
gustice aflé equity" -- ' . H ' "
This appea§ eot;j§i"hg ch f§(}:r '.i".f3c3ti¥§.§_} this day, ARAVIND
KUEVEAR 3., deiiverers ti*ie;'i3:')iiO&??'i{?'ig:. .
the iegaiity of
the N0. 18,'2D{}3, by rihai
orderi'13/2ho:;,:'cie'tei§i"*---é?'}<é~20oe wherein the apeeai fiied
byjthex resfiitiehdent ('hereinafter referred to as the assessee)
A éarrwé5't0 he'ailow"e'd«.
The undisgyuted facts leasing to this atapeai are:
What the assessee was registered under the Category
A' =. '0-fetiearing and fO£'WaF§i¥'%§ agent {C & F agent far short)
hinder the service tax by their §etter éated 21-9e2001 they
intended ta .<;:.ir:'enrie:' their' re:;;:sts-atioh Certifétjate under
%"
age
the service tax on the premise that their activities dict not
fail within the §}%..%§"\'i€?W cf the category of C F agerat and
accerdmgiy they geiitght for siiriehder of the Certii'i.c'at..e;a'ri,{i
issuance of a fresh registratien. Thegit}l'iVSdiC"aEi'CJiiiVél?
authority oh affordirig a DEFS0fla§-'F1238-Fi'l'Wg"_'E0_HlEi§§'3§S'E3S~Sé€
and an C{j)§'iS§d€|'a'CiOl7 of objec't'5.Qn:'3tA"fiieci'~_
came "
conclusion that assessee E 'agVe.!jt"'~,a'hcti 'theii9"
activities come within the tax-a~i:i..e'--.seryicestar;-..CZ..{§i F agent:
anti acCordii'igI\,r ordeiea' that"t_£§'e::vaS;sev:S*§eegghotild ctmtihue
with the re§ii::Vt:_fatié{'ii:2' t_i4i'i'cI1:§;§l' the tfat:egcsr\; of C 84 F agent by
ordei" C§'EitE'fJ .T%;E%_~-.1'if->.2£)'£i__j"'»».wizicii is at :[}\f'|.Tl*F,'X'iji'€"Ci The
35563586 t}'eii'i_§3 ~a.(§'--gi'i'eve'ti by the same filed an appeal in
$116/'Z2003;CEi"'"tiefore the COi'£'ii"{ii'ESSiOfl€'l' of Centrai
The appeliate authority Oi": cohssideririg
izhe-_Vgro.I.ihd--§s'tVur'ged, submisaiohs made and argumehta
advamtvergi eh behalf of the assessee tiy ortier dated
,,,t_h"1v2_f'.5'A_v2{}O3 ciismisseti the appeal eihd ccahfirrheci the ercier
iii": origmai dated 28-~12fl2{}O1 pasgeci En 0.1,/k. Ne.2€:»/200.1.
fie
.__1_§._.
'DJ
Bemg aggrieved by this erder tliiet~._a-see.ssee
ereferred an appeai before CESTAT in STA_i::8l/2"..T{i?£.h'a§
order 12/2004} contending thatflyiytbs E3C?;i'\}i't"y"'::§:'Ollfi'9S','v\.'%v§hll'i»H'
purview of CO%Tll'l1§SS§O%"l Agent ahd ..St.i<:*h._i:'he" :"e}e'Etéo¥1r'i'of
the prayer by the ase.esVsee"~yfo'r Vsu'r%e.ti'd«.er§n3gi the'
registrattoh Certificate i:astiedu"u,Vi:"itle_i- the'ea_2tl category of C
8: F agent by tvlidfiiifl_E3it)'Zh<ili'%'Ci'é=S*-:y\;'EjbS erroneous and
accord l ngly seug ht :"'~E1lV|Ol{V.l'{%l;2.'V v_ [.the appeal. On
C{}l'lS§Cl€:"lll'Q§-_.v t:}}'e_. ;:ji\}al7._eub.ihé.sééo_i'i'5" marie before the
Trébi_mal._t'hle.gT.VriE3t;r'rall"a_l__lowed the appeal of the assessee
by §WO'§'L'j.V§_¥'lg.' thatarjtd/i'ty»l"carréed on by the assesssee would
310;?"CQ{fl€VWi{|Ti'i§ the purview of the Category of clearing
to:'i'\ryVa~ryd%i'ig alolerit and by the order dated 27w<$w2oee
tellowe§{._¢tVrie.i'-aepeal which is at Anne><ure~A.
4;-jj_ The revenue being aggrieved ey the eame has
colnteltgpvin further appeal before this Court uneer Sectéori
35.56} of the Central Excise Act Conteridmg inter aléa that
}the order of the Trihuriai is erroneous and the orders;
fir"
\lfllll 5 VIC"
passed by the authorities namely, the GrlglPlait§%'L;lél'iwQF§ty
and the appellate authority were in Cerise_r;-a.nc:'e"-EeltE"€"v.?_he>
definition ef "Clearing and Ferwarding-'iX'g'e~é?1't."V"a¥3{ésame» L4
did not call for interference and a;'C::eh'rdi'iinglay_"'liaiz%§~--._;aTl.secl
the question of law and"ls'e..gight for beiingAV.aia»i=:s3wered ~i.n"
favour of the appellant and a__§juai.n5t._V_t%":easeeeseei.
5. At the tinre of" atl'n°.-lesion. of this appeal on
30-6-2005 this Court lla-tlAV_vfrla'£é§ecl.--'t§§.en~'fo»l__i'0vvirig question of
iaw for being-.3nswMei*'eAd"«anrl i_t reaas as fcilov-.15: ~
%% '3 }_ i?i,(/'}e«1.fl~~'lV M/s.i"v?ahai/eel" Generics are
;rerider'iri.g::ti7eA:sel"vi'Ce of rece/wng, stomxg and
A iiiii H the goods manufacmred by
it 1 Lfa',, whether' the Hozibie
v(:'E}S:i.7--V5.'i:;z";,Bc3!7§7é3fO/'€i' is r'/givt' in holding that the
wag mat acting as r:/earfng and foiwa/'c:fir7g
'v.A"ge:7fs and was not ,{)I"OV/Cffrlg taxable service. "
We have heard Sri Raghavenerafi, Advecate
appearing on behalf of Sri N.R.B%2asl<ar learned Standing
%/
counsel for the appellant--revem.,ie and Sr: E§iii~~d__haran,
learned Counsel appearing for the resgaondent on
Lakshnwikumaratn.
6. The learned counsel aifipearitnig to'r._A.th_e
would contend that at:tho.r:'i'"{'ies viiete'fg'l.l_:y*.,;i{éétitied in
rejecting the Claim tl1e,ia'ss.e'5ée'e_who"h--ad/eouglwt for
surrendering of the Ciieritviftiicia-te on the ground
that it did rt-sit.' vc_on'1;_emVtr\kit*£.éin_:i:h'e.__pl.ii'>wiVew or Category of
Clearing &i'fc§ii._wc'grVding,a'gents_'and the aa:tiwoi'itéee had taken
a holistic"vgiew.V_in~--..'iht_er.;5r'et'ing the Section 65 (25) of the
Financge "wt'ii"r:h"':.ie.'fir2eS the activity of Clearing and
AVft}i'i'\ii:a"r'6int;..__agenvtmand ae such the reversal of the said
iV'Vl.t~r,i:§§;~:;nal, by interpreting the definition "C & F
A'g__ent_'7' oefttxe basis; of dictionary meaning is erroneeus and
AA liablevvto be set aside.
7. Sri Raghaventlrafi, learneei counsel fer the
giappeltant would elaborate his submissioes to Contend that
%-P"
the fliotjnal ought not to have traverses?_:"'l}_e=;.rvoz1d
interpreting the Seetion as per the lariguag-3..ern;§l'o--yAe'cj.._{in
the Statute itself and would stJl:3_m..itp__ti"tat-'ik§1h'i'le'j:vi.nt'er'p1jeti_n'Qop
the taxing Statutes; the at.ithorit'i--.es
not expressed in the prov'ifs_i_io--n.. itself .;dl'lC§'
relies upon the decision in .C.)'f":C'Q.flfAT1lAfiV"i§iSSiO!3er of
Sales «tax U.Pa vs. !'*i:"-:.l_fe'l'.<_".,:§"'t-;,rrt.Ltcl., reported in
AIR 1961 SC :1.o<;7. ti'e«~§§.'@,.:o-- Tribtinal was in
error in t_l'i-9:Gi1.t§Vtii¢vn'éVriflneaning and in this
regaartl decision of the Hon'ble
Supreinieé' of PO|\§DS INDIA LTD vs.
cotvawt. o't'.3*AAR'Aoe :¥'"A>§, LUCKNOW reported in zoos (227)
. AVE';eL:Tf5£€9i7.{SC) Votkllétlrawing our attention to paragraph 24
definition of dictionary meaning as found
in-...__Wilg.i~peé'i=alshould not be used in aiti of construction of a
n§is<:ai-,.$tat:.ite, He would also sobrnit that Section itse§f
"b.eir-lg explicitly clear wherein the word Consignment agent
has also been tnemdea in the Section itself and hence it
comes within incfnsive definition of "C & F Agents" and
Q./
thus supports the order of Driginai Atiti1orit';?fV*f$z 1"
appellate authority. He relies upon the ClESSl'Q2n.__'__"'t"§f'the
Hen'b|e Supreme Court in the matter..,C§4?'»._K}§f.R§§l_ATlAKA9*__
POWER TRANSMISSION CORPC{.l{Al;_§Of%ll"i3D',* 5
vs. ASHOK IRON WORKS ;>,v_T. t1*t1>,_l,"'reporvttig}2/'/\fn"20't§§"~,t\'1R_
SCW 1502 and seeks for an'"sv§Tei*i:tg the_t§'1;e:sti.e;§2 of law in
faveur of the appel|a%}t'=lrevehn::'e "allilil against assessee.
respzjmdenlt' _tl*_iat the authorities relied ueon
the déc;j_s'i'o%ti "ZARDA FACTORY QENDIA) Lia,
VS5.» _CCl§,i.,v P;5\Tl\.l}'~\ reeorted in 2OG2{14S)E.l_.T.
-~,.i.,_2'2é(?F<IB"i3l§§AL} lllll "anti the said decision having been
t$$,2.vt.i~2e larger Bench of the Tribunal in the {E136} of
tixessti _gig'i:xte mueeo vs. CGlViMISSIOl\IER OF CENTRAL
AAE><CiE~3Et', CHENDJAE reeerted in 2006 {3} STR 321
«.AV"{-Tr:i5.LE3)and affiimetfi by the Ptmgab 84 Haryatza High Court
fin the Case at COMMESSIONER OF CEl~lTR;i'tL EXCESE
}ALAN©HAR vs, %.}NL{Tl7f:"D P§mASTOl'-i'lERS reported in 2008
W
'\Nfl>]'8'lOIOt
Degartment wherein the definition of Comrnission Agent
with reference to ciearing and forwarciing agentWhra_s'r§geee
clearly seeit out anti the nature of activity __c:é%':'i--et§.._:or:_. §3y_
the present assessee is in coesonaece _wi-ttzjft~¥1e'--..hieanvirig. V._
assigned in the said Cii'Cl§iEi.%" azézci thusfjvthe .act'ivityV.ccarri-ed
on by the assessee faiis ;::'L3.t_side"'t?_i-e" pur\;»i'ew.:of c?'ea:'in'g*.
and forwarding agent and prays. ttéat the question
of iaw be answeree' the" r.ei-.rv:ei'me and in favour of
the assesee.
4' tie'._Qwjomd'---.__:""re'iy upon the decision of
cofriimgssituzxéeai7oé'- cismraat EXCESE, JALANDHAR vs,
A _u'i's.=i:'r§i> i>i.c;§sTo:%éée'r'zs reported in 2008 (:0) S.T.R. 229
it(Frin;.:iV_'D..oi.v&ViVHzéryana) to contend that the iazger Bench of
the "¥"v_ri§;3uvt'rf1.aAi had expiicitiy overruieci the 9rabhat Zarda
AA Eactovryii' case as coriférmed by the High
Vi}A"Cot's'rt and contends that Tritiasrsai was fi.i£|\,.r justified in
Héhoiding that the saici i?'ret;ie.at Zarda Factory case reiéeé
@.
upoe by the authorities in the instant case was'«ertoneoigs
and accordingly seeks for clismissal of the .
19. The leamed cioimsels
appeilant and as well as taken us
extensively through' ag--'ree.r§h 'e:nVtwin«tguestvitonivywhich is at
.£mne><ure--D pl'Od£JC€tfAC}H_?i'i1Va*b.;%éd.tl: ..';\i{l€F'£":OraF'i{§U¥33 to
buttress theiirj&c§'i¢e";2i'h;ent€c§ -forwarding agent
and alsoas --i§_comniVi's'si_oéi,'i_aglerit. "';V|~l"a\/mg given our anxious
Cons.ide:'a_t1ie:"i_.. totl E.i~.'§:>%}3_}l§"¥i'SS|O§"¥ made at the Bar it would
he rietessaryfoi' to-.t__e'x«a"%'nine the agreement in question
whit:-sh_wou"ld.,he'~a' vital ?actor to ascertain as to whether the
.Vattivi3't'i'es"c?arried on by the assessee in question would fall
itwiVthivnv"'«Vtdh'e%qf<:a.tegor\; of clearing and forwarding agent or
Aw.hetifie~r_l'i,itwould faél within the category of Commission
_agenv*»;._.:'as contended by the revenue and assessee
"tees-pectivety. in order to appreciate the 'Said rival
contentions it would be necessary to extract few Clauses
$/
_12_
mentioned in the agreement and accorcizhgly_.éf'i's"e>§~t_r_ae?f_e:i,_
be|Ow:--
::e_ssestE/r~:§ai§It so
This Agreement is i7"iag_c§..e:'e3n{iV.._ge><eei;ited" this
15' day of Ja'r~}.t,';':;«--:y {E19-es between
M/s.CipIa Limited a5 under
the IndigentComigiainiiesg: having its
registe.reti ¥\i,o.28'9,,"WE'>e¥|asia Road,
Mum represerted by
therieiiwaftei" called the
pi'r.i'nCi:pa'i wherever the context
so 'successors, adnzinistrators
ge;.n_d ass».i,gns}", "the one part and iviessers
5,j'u"Sh-sri.E\/iahavoior "" "Ganorics, having its Qiace of
at No.16, T.T.Comple><,
'f5..___«SV;'L'§7Narayanappa Layout, 1" floor, I1 Cross,
La!ba.ghARoad, BangaIore~S6O O27' represented by
Shir?-..Dhanra§', hereinafter called the Agent (which
n 'igterm shall, wherever the context so permits
'includes his successors, administrator and
assigns} on the other eart.
NOW THIS AGREEMENT WITf'\EE.;'SSETH AS
FOLLOWS:
...13w
1.The principal hereby aforesaid agent as its "Consignment.A§;w.eh't.ff' on a l"lOl'l*€)<ClLlS'§\/E' basis for the'ma_r§;eti.;r:gV'"of the product and the Agent hereéoi/Qateepit-sitiiflpe appointment on theio-..term--s~._ and ii'V:C'o..h.di,tViVon3s hereinafter mentioned.'V'Vi't'..:_V'2. _Thé§.__p'Vriii*iVt:ip'a§| will suppty the DFOdi:§CfL: froiwiiiiaitg/ioi'*it_s ciepots loan licence (as per at:he_Vagent on a consignment transfer note fo_:._" s'alé."by giiimasi tlie:a'tj'ern_t.xaf the prmcipalt The deliver the products to a-.t.fi_a»hgalore at his cost.
* VTl3e.';i'.ige»iii't*~..iriiilltake charge of the prodoct aridlstovre 'tlie.m"..-in his gociowris and such product'-wivll remain the property of the pi'ri'n§ii"g3;3l at alt times.
agents wili sell the proctucts as ci:§nS'i"g.V}i*tment agent of the principal, and the pfites at which the products can be sold shall be fixeti by the principal fl"Oi3'3 time to time after mutual consultation between the Agent and the Principal considering market conditions. W
-153"
7. The Agent may, in turn, :_.
stcckists/deaiers/distributors f'iW'.Vc";'i'l"'l.4')'/~.,.[)Vifi:V:§ of it the territory covered by f;nii's'*/xqreenjientiafter approval from the erincioai i&'%.lfl(l7.é>|'i'iEl|| §u.r'n'is.--'h of such stockists/deialers/cli"s.tr'i"butois" the erincipal. lie shall fiirt'l'iieV:r'l~:ipciate~.alndhv-Zseriicl the list to the printtviiaeil asA..a'ndi.':wh'en. a céha'i"ige"V:tai<es place. Such stoeiziists/'d_e:;i,le2r's}'ifi':ist'ri~.t>_utors wili be responsible OlWl\/'...t0:._ the. 'ell dealings with th;en'i«~T:.i5iiII be cioiié Agent. It is agreed i)r,lnfic:'i~~pV§'3'l'4'_shell_.not in any become liabelve .sevVVbe'tween the Agent and 'the__ stolb!'<ls:_sfdeai_ér.s'/'distribiitors so appointed. The /1.gei"it.VVshe'lil.l'notA"ag3'point any Sl.ib"agEHt. Foi*..§lje efforts put in by the Agent he will corn...[j3er'isate<:i as foiiows, "'e:')w.f€tie'iigent will be entitled to a commission Gf~~5_O.{bAGl'i net price ifexciuding =:ommissioi'i E%i3{§ ~.sai;{--':s tax} on all proirhicts €><{,"|tJdif'%g liquid " preparations. The commission so caiculated shall be paid to him directly 0?} the previous month's sales. @/ M15...
33) The agent wiii be entitI%f.:'."itaV'.'ije' commission of 90/0 on net or'i_t:e.{,.e}<.¢I'e-diingi commission and safes;'JW;§"'a:>c}i_ on preparations. The coiriiiwissidze é;.fiii"Cia|e{r'iaAAter} be paid to him riirergtixj 'err the'-.;3re\4éoe§'A safes."
in order to appre<:iate'th_e: hererrr above and aisso ciauses arzd to examine Jae fall in either of the be neceseery for us to extraC*tAt'he "clearing and forwareirrg agent" /ixgerit". As per the definition AC'tAAofv1.9-9'4 wiiicrr reads as foifowsw ei' the Finance Act, 1994 (as amewéjideéé defines the "Ciearing 8: Forwarding ..Aig_ent means any person who is engaged in "r)reviding any service, either direcizéy or indirectly, connected with the ciearrng arrd forwarding operatierie in any manner to any other person and Erscfudes a Coris£gnmer3t %/ Agent {erephasrs eun;3lied}".
Mi "Commission Agent" fvzeares any eersoi'i'«.yvi:{3w.acté' on behalf of another §3E3l'S{J:."I""<".3.'.IC| <;.ausesn-VI.salVev.o'r purchase of goods, or pr»ovis'i'on3 or, r-ecei;{j't:'--o«f"*::r* services, for C{)riSld€,--l'F34flOI'i_,V",§i.Fi"fi inc§{§id.e's'ar';y"' person who, while act'i-z.j§<,oiw be---h.a5'§._o-_:f aémother person:--
i) deals documents of t'i-tl_e to,:;'uch:fg(jod,ss._o'r'sen/i'ces; or ii} é,~.ayij1'ént:_"o_f"'s'a'§e"' price or such ' or . on ' ,i~ii--)~ Alcorlfettion or pawnerit for d ._s e rvi ce s ; o r 4' _L2nder§e'%<eds---.._e"rr*,? activities relating to ;+;L,:cl1 3 °'~sale_';.or'=_ ozirchase of such goods or se'r'vlce_s_,;.v T"-'.I_r~ifor'i'na';.ion technology service" means any sei'=&;:;¢t: in relation to designing (or developing of giolrrfitzter software) or system networking, or z:3,.:'téy other service erimariiy in relation to operation or computer systems,'} per Section 65{1GS}{J) "Ta><a£3ie E3ervi<:e" in relation to clearing and fomzarcling agent is Cl€flf}€*{§ as follows:
% _.j_"j'.,,.' "to a client by clearing and forwaircl_i'n.g~.._ Agent in reiation to ciearing and fo_rwaridi.n_igVil' operations in any manner."
Sectioi: 6S(72) ll) of the l§ir2a:§'i'ce:' amended) definesthefitaxableese~--rvice1e§eaV'ns service provided, to EI"~«.:vCaf'léeiit," '& forwarding agent ii}_...i<eAla--tioogA to "'ciiear.i'hg & forwarding opera_tiL)ns'._ iri; Vanyf'inannei'(empahsis seemed)".
At thi3"o'Lits_E§"t;;Vit' ilsfijto lj-eA'i°.otice'd""dy us that the words found in the Section' 'iit.hvat._any person engaged in orivate service eliitherv clvirectiiy ociiidirectly which is connected with th'e'?.clegar%ng aii{i'~§O.!7'vVal'C§irlg operations in any mariner to ' gAo't,herV'"p:'ei*---son wouid come within the purview of the "s.ait:idel*iri~Victjio.:1i. It is aiso to be noted that the consignment agent has also been broi.ight in by inclusive ciause. Thus, Aiiodtihe instant case, it is to be examined whether the "conditions prescribed ii: the said $t'f%CUOl'l is satisfied by ' reading of the agreeiheiit. The agreement itself stafts by the words "Priiieig3ai has agreed to join the agent as it is W _..]_8m Consignment agent" and even to paragragah---j.._j;o_fIthe agreement the principal namely, M/s.
appointed the assessee as "c;ons_ig'r:Vn*eer'ét'-a'ger:iii"',__iri Clause (5). With regard tovgthe price"'deterrtrfilnawtion been mentioned in the Agreenient thatV"pri'n<:i§3al:2as well as the Consignment agventi' af_ter_tii*;£.r_ltr.;va'l--.. corisultations and considering the market Co'n.dit,i'or{s -sha'l-l.I'V_':f%2{-V--'the price of the product whic;'§*2'§§1o:eld he Even in Clause (7) the Printi»o4'a;l:'.'V'h'a'5»a:ut.lvio.ri'sv'ei'dintheiconsignment agent to on its behalf. It is in Counsel apfleanng for the assessee v§Jou_l'drtzontendsthat Clause No.17 envisage that on'-fax/.":'apeommissit:én""i;i\;rould be paid to the agent for sale of the Clauses {a} to (b) Clearly postulates that exceptllnoaymeiit of coinrnéseion nothing else is envésageid under the agreement and as such srrornits that _on_'.y ae assessee carries on commission agents workl Thus by reacting the above Clausses eonjunctively it can be seen that clearing and forwarding operations is a $2,.» _..19m..
comeendious expression of nature of services ;'re--:>i.cl'e.rjeV<iii;__by Principal to the Agent anti in the instant ca.seA«_:tihVVe'ilaissessee,V' in question does not stop at r*end»erin_gT'o.nly tl1e'--.s4e-rvi§eso.o'f Commission Agency but also e><teno"s_ iaeyonrliitiiielvsamjig ancl_', thus would Come within tlie"i'...categor\)'-of"'<:ie'aring and forwarding agents" 'a_s'*-._tlii67l o_pe'r-a_ti,o"rs_ are in the said nature.
11. 3: _ F:g4r't.h.er',* aeie to accept the . . i . p' contention oii'.jit_!f:e e;§se:s~ste%§e¥ more than one reason. At the outset it is to' l3e"A:jseeiii._A_ltiia~t agreernent itself terms the assessee as" a_V'c'o.n.sig'icarnent agent. "ihus, the parties were at"iaEE~i.,deninwhen"t'h'e contract was entered into between t'li'ei*n "--\..':\Jl:l.;:,lt their status woule be. In so far this Concerned the parties nainely that the princi"p.a__i'?~ancl the agent having uncierstood in unequivocal as to their duties and responsibilities which inciiide not only having effective COl'l'Ei'O§ of the goods by the Principal but aiso in so far as the price determination is 7 ....20.._ concerned it was in the hands of both the prina:~i~;1al»..alltl:__Vas well as the agent namely, the assessee,....,_tle.nC*e:;' by" no., stretch of imagination it can be concl{_;:de.:i"that'in of assessee being a cornmis4s'i----o.n'v-- agegn-tivthle determination would also withi%:.V_t«he.V':donwain of a C0mml55i0" a9e"t- woluvltl not agpeal to logic. Hence, the said Contention.
l2\no?he_rv:"asi3.eVctl'_.Vbeing"that the assessee having given they authotfl_tg,[;a.ntj'~._g'ow'er to appoint dealers, stockists and_distribLi"i;ors'it" is."-clear that it- is not a mere case of 'sh'2,cota.rhis'sioi'1..'agent "" 'but, on the other hand, 'it is the l'.__rvegsoonrnsib_ility'=._vi5ii><ed on the assessee to Carry out the acnyity io.fd_g'.etltirig the goods stored by clearing it and then forwarding it to the stockists and Qlealers if any appointed assessee itself or as directed by the arincipai. If it yiiere to be the Commission agency only these clauses would not have found a place in the contract. Hence, we ._2l_.
are unable to agree with the contention of the ,ass4es_see that they should be classified under the Commission agent. In so far as the 3uclgme».n.t:~rel'ied«;_;;3o'n"we by the assessee viz., L & T Sl.lD:i'3a, Ztiséxfivli<vi,bu.na-llia:s.___heist therein at para 9.3 to the foli'oi/ving £:~.r.rex:r.;-- V "9.3 An agent engag'Vee*.'::'o.ivi£yllfotfiprootiring purchase orders tlfi'e""vAe'-ititlognrugh Covrnzinvission basis does not 4eng'ag'e.f5ii?i a'nyV"_»..o'i'~._.the above activities, _A'di'rect:!y" inxfiirectiivy.ti" Commission agent 'V'pro'_cu_re"orders and not eiii't'rus_t;e*j§§' 2':\J:"§'-Ii'l'."!"i of clearing and ioirw-.a'rdin"'g'of':g4the"i'go'o--ds would be a person who, inlithe. ordiVrie'r',a_4"cyourse of business, makes ycontraléctsiv for s'a|e'": or purchase of goods for "'7.ot_t_i:ers. The~d..efi'riitioi2 of "Commission agent" in A _V S:Vec.tiori'~2{aaa) of Central Excise Act,19«44, would iéfarelation to service tax as it applies in '...'Vre|Va.ti'ojfi2'lto dety of excise by virtue of sub-- 3eo_tion(12i) or Section 65 of the Act. Services of"'C0mmission agent are included in the fdefinition of "business auxiliary service" under SLJb"S€Ctl{}fi(19} of Section 65 w.e.f. 1~7~20{}3, which includes service of a Commission agent. As defined in explanation (a) to subsection (19) 4@"""' M 22 hit!' of Section 65 Commission agent is a person who acts on behaif of another person and causes sale or purchase of goods, or rjrrovision or recei_pt,_iofi~.,_ services, for consideration, and incicrdes'-,an.yV»l'.A' person who, whiée acting on behaif ofV.anoth.e'r'i person: deais with goodsrrrr'-or .serv'i'ce,s documents of titre to such {}QOd'Sr£3cY serx/.ic°es," or_ coiiects payment of saiegprice".of'r--such;goo'ds or'; services; or guarantees 'f--or"'-coiiection 'or_"'_pahy,rne'nt for such goods or serv,ices",v-_o'r.._undertvake.s'§ any activities reiating'«~.to_As--L:c1:jijsa~!e«Aofgbpurchase of such goods or serviiies. VV__This--"c.iVe'a§ri:y-shows that the aictiivity procrrrement of purchase o"rde'rs for thfe..p'r'inci..pai_. on commission basis of a Coi"rim_4issvioVn_aVgei1tK"_,ii»s treated serirarately by the 5'Parriiarne-artfrorn the activities of a ciearing 84 .C'fo.r~.«vai'irding ageht. Activity of procuring drders is ,V"'rirfrci-epentient of ciearing 8: forwarding The agents doing these activities can be"different. Moreover, ciearing 8:. forwarding o.p__erations d'o not flow directiy or indirectiy from Vttkmere procurement 91' orders, There is no A opiigation on the person procuring orders as a commission agent for the prineipai, only by virtue of that agency, to carry out clearing & forwarding
-- .23 -- '_ operations in respect of the goods which be supplied pl.;l'SL.Ial"it to the orders so and have come to the conclusion that the for procuring the purchase orc?v'e'rs""for Oh commission basis does not engacie.__in".the as mentioned at para 9.2a rnerell procuremeot of purctiase .o'rcler:s:' thfle'"pi'i'h;cipal on commission basis by the have definiteiy fallen under t.he,ca.te or' _. CoVré*1*:*{:ii.ss.io"i*i a ent and woulci have "sto-do' .o'urfs;i.ci'e.c»'ti32Ve""~«a'Ctivity of the clearing anti forwardirilgaigeiwt'._ 'Vl:";.l._lL',.""%!'l.L" is not so in the instant case as seen: from tlie"C--l.auses mentioned in the Agreement. "inns, _wil_l: §<z.ave'~--to hold in the context of the agreement in "cue-Sitio'n'Vt%:--at'paoart from procuring the orders the assessee is a':so"'«Vce:*:§agea in the activities as mentioned in the "'ie.V,agii*e_enéent which is thus iecieoenclent of Commission "agency. In certain circumstances there may be a situation V' "where only commission agemiy worl< is carrieci out and in a situation as is existing in the present Case the assessee fix, .
__25_ Bench of the Tribunal having been relied upon it h.aS_il5neVeri held in paragraph«13 in l<ULC§P's Case to effect: « ":3 ............ .. and mere i-.p'i.'oeL::ri.:n,g'--. having orders for the _print:n:§a'i--._by agn,.".l,agent A' on Da'/rnent of con1Vi1';-i.§$~~i.on ba5;~i..S'WACl£i:idA'--rh'é't"
amount to providing__.SVé'i*v_ice_s as "'«'<:leaVrihg and forwardirigjager-iAt",i--.w?itl3_inA""t.he meaning of the definition 5-of under Section-l6v£§_(2£§;) "F[i'n..aliVt:e:«V'fiV\ct, 1994. .V"'\'fif'i*.-ig,¥.§:i:g rit§:;rf*:t:hir'i'~fl.VV"- to «""'t'i"i*iSV: conclusion the Tx-'ibL.l.na£v':'hais._o'be§'e"i<v'ed that the expression lldgi're<:tlyrr.or'r.AiVrn.di'regetlJi;r" and "in any manner"
_ oce{Jrif:ing...'in 'tr%'2e"'..clefinition of 'clearing and E_._tAfor,wartA§i"n'g--7--------agent cannot be isolated or the of clearing and forwarding it and an agent it engaged only for V~pr:o:t:L.iiring gmrchase orders for the vendor .. 'ton cornmission basig does not engage in litany of the activitieg Connected with clearing and forwarding operations directly or indirectly.
...26...
And thus found on facts that it was mere orders for the gyrihcioai by an agent on""~;j:>ay§hef'nt commission basis and thus wouid:
of clearing and forwarding Vag_ent.:4Th1e--._saidftdeicfisvionn be inappEicab%e to the facts cVase_4_a's held' that activity carried "that of a Consignment Agent. MEDICINE» Supra re1ieg§"%'g?i;:i'on itbyg :COi3fiS€| for the responderityy Vutfiarhfaveer Generics case qtiiessftfifon before this Court in the present _a'p;}Veai.:_é;i.VajS»_»ai§§-..been taken into consideration in KULCIP's tf'a§é fish.'-liaE;le"'t:o be brushed aside the contention . «o'i>s..t:he."casseAsseeAifsiiot apoeaung to us for the reason that 'vV'iT_ariVbcunje.!:'iinuthVej..said decision (i<U§,,C§P's Case) at paragraph~ ha,s."ta.i--<en the View that the Judgment in Mahaveer A Generir: {hresent case) has been accepted by the revenue no appeal has been fiied and accordingiy was Héhersuaded to accept the stand of assessee. The View taken by the Punjab & Haryana High Court in i<ULCIP's fife _28._.
consignment agent has been brought within thejsald Section. We have also examined the a_e_t'eetz*3'e.n:t'7;_.in'« question and we find not only the cor1sigh---:w'3_en_tV expressly described at various [plac.esAfiva4s_ .statedV."hs_er.e.isn' above and on combined rea.téin__g ofVl:tive"agreVer'h1en't we; firidd. that assessee in question has not'reVsti'ictedtl:ts activities to business of COlTiI}§iSSVl(1_F.t"--BQEIWQIJ vl"t;:.V;t.,aMh«aes also carried on business as CoAn_signmeet._Age_nt_ asVi'n'e':j.ti'oned in Clause
(iii), (V) ant§?_"(x/«i}la}"_cf_:t-hei;_ai§ire:ei:ne'Vnt'*--atzd as such we are unable' tolvatrcteiat contentionllwlof the learned counsel for the assessee they would stand outside the {§E.'fi{1.il",lOfl 'ol'V_:'cl'=e.a'*rin'g and forwarding agent. in this go'i§.te)(%f,'t it*vlWotiidAVb'e'Aof benefit to extract the Judgment of
-._ the.' H <:{'r".~'.
Snisreine Court of Endia in the ease of KPTCL szgora avt.;':):a:ras 12, 13 &:1.4 which reads as followsw ""12, Lord Watson in Dilworth v.
Coinmlssioner of Stamps (1899) AC 99 made the foilowing classic statement: QZ who 29 W "The word "include" is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring body of the statute; and when it 'V' these words or phrases must be c0.n,st'r=s,;ed.::'a.s comprehending, not only ;sr;ch"t|j_1ingsy signify according to their'"nat':.A;'r"a(I mgort, also those things which the inltergaretatliyiodngcl.auVs.e declares that they shall"in_'clioi'de. ll'-Bu't'the"':Eword "include" is stis-:e.ptiblel"'or" aif.o'thei' conVs'tri'r"ction, which may becorne;'irré'|:1e}'fa?tiye;vV:%_ifgthe context of the Act is Vstrffi:c'i'enl{fto'--'it was not gidmerellly'lvj'ernVolo--ye.d"~for the purpose of adding to the.nVati.irall'f,sig_néfic.*ance of the words or e><gre_ssi.ons._clefihed. It may be equivalent to ,.§f"""rr2eah "'an_dVinclude", and in that case it may . a"f'forl{§~.gan exhaustive explanation of the rneanirrg "for the hzorrposes of the Act, must 'in\ra"r--iagl3lVy be attached to these words or e'>rprve'ssions."
15' Dilworth {supra} and few other 'A decisions came up for consideration in Peerless General Finance and Investment C0.Ltd. and this Court surmnarzzed the legal position that dz _. ..
inclusive definition by the Legislature is (one) to enlarge the meaning of phrases so as to take in the ordtnara/';.._:l3o;;at.tlVar'% and natural sense of the words alndval-so sense which the statute wis»hes::'to..raictrribtltle toljt-.;_A 7 (two) to iFlC|L§d(-3 rzrteaning "at_>o't--it v\;?ifiv;=--"cl§?:..V'Vthere 3 might be some disptsté';en(three)'---to one fiOITleI'lC|a'Ct}§'e aIll.---transactions"posscessing certain similar Fealltiireifi b§.g'tvv'.g'0i'§t:pi'urider eifferent HBETEES.
say§.,ng.5that interpretation of w_ordVVV'o"r.V--~ev$€'press'io..;2 --rnus'c depend on the text and the c'o.nt'e§<t. resort to the word 'includes' by the-VLegisl'attj':e"otVteri shows the intention of the Leugis|atur'e--wth_a_t,it wanted to give extensive and er.!.Aarge{i meaning to such expression. V'f§~.onJetiiV'ne_is, however, the cont.e><t may suggest thatflirerd "includes" may have been designed to 4' .m"'eAan4'''means''. The setting, context and object of an enactment may provide sufficient guidarsce for ltinterpretation of word 'includes' for the purposes of Such enactmetzt."
M 3; M Thus, the activity carried on by the assessee:««_l»_Vw.ivth reference to the text of the enactment the nature and activity and as hel.d...by_"
in text and context the wore the definition clause of find that the Legislatezre in have to give extended and eniargetl"~;%'3e.a'n§nigV':to"'eil'ehexpression and as such we accegatthe con'te.nt'i:on' to hold that the activity.r;»a'rr5ije_cl.'_ ovn:.'by~_vthe;aIssesseVe in question would fall with%n"ft'he_., pu:n'rv:evv'«V..ol' clearing anti forwarding agent and ac'i:ortliV:ig'§\,4VAi-eel. ai~ug'm:+ the question of law framed herein ahG've._:Vb'v»Vh'old'ingT:that the services rendereti by the . revspaon--d'en"t..wouldffaulll within the Category of "clearing; and and thus, amenable to the definition of-,ta><a~ble'gservice, A<:<:orcfingly, the following order is f~ eassed;;
ORSER the substantial question of law forrnulated herein above is answered in favour of the appellant-revenue aeé ®,,,.
-32....
against the assessee and the order passe-6 in Appeai i'\!o.18;'2OQ3 vide its Fina?
dated 27-$2004 is hereby set aieicie-Aaefia'°:e#3e..e'r-eef[ines+s<;»e by the originai 8LJthOl'it')/3:df73ted ".12"§"2€)v(j"3_:11$' Confirmed. No costs.
V JUDGE Sd/"
V JUDGE r'S