Custom, Excise & Service Tax Tribunal
Commissioner Of Service Tax, Ahmedabad vs M/S Viral Makers Ltd on 25 June, 2015
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No.ST/75/2007
[Arising out of OIA-35/2006-STC-AV/COMMR-A-IV-/AH, dt.28/12/2006, passed by Commissioner (Appeals), Central Excise & Service Tax, Ahmedabad]
Commissioner of Service Tax, Ahmedabad Appellant
Vs
M/s Viral Makers Ltd Respondent
AND Appeal No.ST/92/2011 [Arising out of OIA-413/2010-STC-/MM/COMMR-A-/AHD, dt.29/10/2010, passed by Commissioner (Appeals), Central Excise & Service Tax, Ahmedabad] M/s Viral Makers Ltd Appellant Vs Commissioner of Service Tax, Ahmedabad Respondent Represented by:
For Revenue: Shri Jitendra Nair, Authorised Representative For Assessee: Shri Jigar Shah, Advocate For approval and signature:
Honble Mr. P.K. Das, Member (Judicial) Honble Mr. P.M. Saleem, Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. P.M. SALEEM, MEMBER (TECHNICAL) Date of Hearing/Decision:25.06.2015 Order No. A/10868-10869/2015, dt.25.06.2015 Per: P.K. Das A common issue is involved in these appeals and therefore, both are taken up together for disposal.
2. The relevant facts of the case, in brief, are that the Assessee were registered with service tax authorities under the category of Business Auxiliary Service as Commission Agent. A Show Cause Notice dt.13.04.2006 was issued proposing demand of service tax of Rs.5,27,103.00 along with interest and to impose penalty considering the services rendered by the Assessee would be covered under the category of Clearing and Forwarding Agent service as defined under Section 65 of the Finance Act, 1994 during the period from 01.10.2000 to 31.03.2005. The Adjudicating authority confirmed the demand of service tax along with interest and imposed penalty of equal amount of tax. The Commissioner (Appeals) vide OIA dt.28.12.2006 allowed the appeal filed by the Assessee and set aside the Adjudication order. Revenue filed this appeal against the impugned order dt.28.12.2006.
2.1 The Assessee during investigation deposited a sum of Rs.4,17,179.00 in respect of demand raised in the above Show Cause Notice. After receipt of the above mentioned OIA dt.28.12.2006, the Assessee filed application for refund of the amount deposited during investigation. the Adjudicating authority sanctioned the refund claim and ordered to credit the amount to the Consumer Welfare Fund. By the impugned order dt.29.10.2010, the Commissioner (Appeals) rejected the appeal filed by the Assessee. Hence, the Assessee filed the appeal against the impugned order dt.29.10.2010.
3. The learned Authorised Representative for the Revenue reiterates the grounds of appeal filed by the Revenue. He drew the attention of the Bench to the various clauses of the agreement. He particularly drew the attention of the Bench to the relevant portion of the Adjudication order to substantiate the activities of the assessee Assessee would come within the scope of Clearing and Forwarding Agent service. It is contended that the agreement itself termed as Depot Agreement and therefore, it cannot be treated as agreement for Commission Agent. He further submits that the activity of the Assessee is mainly on the clearing and forwarding of the goods of the manufacturer and the activity of sale is incidental thereto. He submits that each case would be decided on the basis of particular facts and circumstances of the case as revealed from the agreement.
4. The learned Advocate on behalf of the Assessee particularly drew the attention of the Bench to the Clause (6) of the agreement. It is submitted that the Clause (6) clearly shows that the Assessee has to arrange sale of the goods and the other activities as shown in the agreement are incidental to the sale of the goods. He submits that the Commissioner (Appeals) has rightly set aside the Adjudication order. It is submitted that the present case is squarely covered in favour of the Assessee by the decision of the Tribunal in the case of CCE Bangalore Vs Transasia Sales Syndicate - 2007 (8) STR 467 (Tri-Bang), which has been upheld by Honble Supreme Court as reported in 2014 (33) STR J 126 (SC). He further submits that the Tribunal in the case of Transasia Sales Syndicate (supra) followed the earlier decision of the Tribunal in the case of Mahavir Generics Vs CCE Bangalore 2004 (170) ELT 78 (Tri-Del). It is submitted that the Honble Punjab & Haryana High Court in the case of CCE Panchkula Vs Kulcip Medicines (P) Ltd 2009 (14) STR 608 (P&H) held that in order to cover within the definition of Clearing and Forwarding Agent service, it is required both the clearing and forwarding of the goods. In the present case, the activities of clearing and forwarding of the Assessee are absent. The decision of the Honble Punjab & Haryana High Court was upheld by the Honble Supreme Court as reported in 2012 (25) STR J126 (SC). He further submits that the Assessee was registered with the Department under Business Auxiliary Service and therefore, the Revenue cannot change their stand subsequently and relied upon the decision of the Tribunal in the case of R.K. Paliwal Vs CCE Kanpur 2012 (26) STR 567 (Tri-Del). It is submitted that Honble Supreme Court in the case of Coal Handlers Pvt. Ltd Vs CCE Kolkata-I, by judgment dt.05.05.2015 in Civil Appeal No.7215 of 2004 had taken same view. He submits that the Revenues appeal should be dismissed and their appeal should be allowed with consequential relief.
5. After hearing both the sides and on perusal of the records, we find that the Assessee entered into Depot Agreement with M/s The Lakshmi Mills Company Limited (hereinafter referred to as The Company). The learned Advocate on behalf of the Assessee placed a copy of the agreement with letter dt.29.11.2000 of M/s The Lakshmi Mills Company Limited, before the Bench. On perusal of the agreement dt.01.04.1999, we find that M/s The Lakshmi Mills Company Ltd, was engaged in the manufacture and selling of yarn of various qualities and counts. The Company has set up Sales Depot at 74, New Cloth Market, O/s. Raipur Gate, Ahmedabad 380 002 to improve their sales. The Assessee herein, was appointed as a Depot Manager to manage the sales depot efficiently and to market the yarn, manufactured by the Company. For the purpose of proper appreciation of the case, the relevant portions of the agreement are reproduced below:-
1. The Company has appointed M/s Viral Makers Ltd as the Depot Managers to be in-charge of their depot at 74, New Cloth Market, O/s. Raipur Gate, Ahmedabad 380 002.
2. The Company will dispatch their goods on self consignment (stock transfer) from their factories to their Depot at Ahmedabad covering transit insurance for each and every consignment they dispatch.
3. The Depot Managers shall be incharge of the Depot and responsible for the safe custody of the stocks of the Company in the Depot and shall maintain the stock register on day to day basis.
4. The goods entrusted to the Depot Managers for sales, will remain the sole property of the company until sold and delivered by the depot. For this purpose, the documents employed at Depot will be in a form approved by the Company, since the sales are effected by the Company.
5. The goods will be delivered to the Depot freight paid. Transit insurance and storage will be to the account of the Company.
6. The Depot managers shall arrange for the sale of the products of the Company to genuine third party purchasers at not less than the rates recommended by the Company from time to time after arrival of the goods at Ahmedabad. Such Sales shall be in the name of the Company. No forward sales is to be offered by the Depot Manager. The Depot Managers shall not purchase or take the goods either themselves, or their relatives or nominees or benomies either directly or indirectly.
6. The definition of Clearing and Forwarding Agent under Clause (25) of Section 65 of the Finance Act, 1994, as it stood during the relevant period, is reproduced below:-
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. 6.1 With effect from 01.07.2003, the service tax was levied under the category of Business Auxiliary Service. On 10.07.2004, the definition of Commission Agent was incorporated in the Explanation (a) under sub-clause (vii) of clause (19) of Section 65. It states that -
Commission Agent means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person
i) deals with or services or documents of title to such goods or services; or
ii) collects payment of sale price of such goods or services; or
iii) guarantees for collection or payments for such goods or services; or
iv) undertakes any activities relating to such sale or purchase of such goods or service; 6.2 CBEC vide Circular No.B.43/7/97-TRU, dt.11.07.1997 has clarified that Clearing and Forwarding Agent normally undertakes the following activities
a) Receiving the goods from the factories or premises 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 authorised transporters of the principal;
e) Maintaining records of the receipt and dispatch of goods and the stock available at the warehouse;
f) Preparing invoices on behalf of the principal.
7. The main contention of the learned Advocate is that as per the Clause (6) of the agreement, the Assessee shall arrange sale of the product of the Company to genuine third party purchaser and therefore, it deals with the sale of the goods. It is also submitted that the Appellant was paid the commission for sale of the goods and therefore, it is covered within the definition of Commission Agent.
8. We find from the agreement that it is not a Commission Agent agreement. In other words, it is a Depot Agreement between the Company and the Assessee. Upon perusal of the letter dt.29.11.2000 of the Company, it is addressed as The Lakshmi Mills Company Limited, Sales Depot, C/o M/s Viral Makers Ltd, 74, New Cloth Market, O/s. Raipur Gate, Ahmedabad 380 002. It is clearly evident that the activities of the Assessee would be termed as Sales Depot of the Company. On reading of the agreement as a whole, we find that the Assessee were engaged in maintaining the sales depot of the Company efficiently and to market the yarn manufactured by the Company. The Company appointed the Assessee as a Depot Manager to be in-charge of the depot and not as a Commission Agent or Consignment Agent. Clause (2) of the agreement stipulates that the Company will dispatch their goods on self consignment from their factory to their depot covering transit insurance for each and every consignment. The Assessee as a Depot Manager, shall handle the goods and also would cause the sale of the goods. Clause (6) of the agreement stipulates that the goods entrusted to the Assessee for sale will remain the sole property of the Company until sold. Upon reading of the above clauses and Clause (6) as relied upon by the learned Advocate, it is clear that the Company entrusted the Assessee as a Depot Manager for clearing and handling of the goods, in their depot upto the sale of the goods in the market. The definition of Clearing and Forwarding Agent covers any service either directly or indirectly connected with clearing and forwarding operation in any manner. The expression in any manner has wide amplitude. The definition of Commission Agent would apply predominantly on sale or purchase of the goods. In the present case, we find that the appointment of the Assessee is not as a Commission Agent, but for Depot Manager, and therefore, it would cover under the definition of Clearing and Forwarding Agent.
9. The learned Advocate strongly relied upon the decision of the Tribunal in the case of Transasia Sales Syndicate (supra), which has followed the decision of the Tribunal in the case of Mahavir Generics (supra). On perusal of the decision of Mahavir Generics (supra), we find that the Principal has agreed to appoint the agent as a consignment agent for the sale of the product. In the present case, the Principal engaged the Assessee as a Depot Manager and not as Consignment Agent and therefore, the said case law would not be applicable in the present case. It is also argued that the activities of the Clearing and Forwarding Agent service are absent in the agreement and relied upon the decision in the case of Kulcip Medicines (P) Ltd (supra) of the Honble Punjab & Haryana High Court and the decision of Honble Supreme Court in the case of Coal Handleres Pvt. Ltd (supra).
10. On plain reading of the agreement and particularly the clauses (1) to (5) of the agreement, it is revealed that the Assessee was engaged only to manage the Companys Sales Depot, which cover the activities of clearing of the goods and also forwarding to the customers. The Assessee was engaged to manage the depot, in respect of the maintenance and sale of the goods, which clearly cover the activities in any manner and within the definition of Clearing and Forwarding Agent.
11. The learned Advocate submitted that the Appellants were registered under Business Auxiliary Service which was accepted by the Revenue and therefore, Revenue cannot change their stand at this stage and relied upon the decision of the Tribunal in the case of R.K. Paliwal (supra). We are unable to accept the contention of the learned Advocate. It is well settled that the principle of res judicata would not apply in the taxation matter. In any event, the case of the Revenue is made on the basis of the agreement and therefore, the contention of the learned Advocate cannot be accepted.
12. In view of the above discussion, we allow the appeal filed by the Revenue and set aside the impugned order passed by Commissioner (Appeals) and restore the order of the Adjudicating authority. Consequently, the appeal filed by the Assessee in respect of the refund of the duty cannot survive and accordingly, the appeal filed by the Assessee is rejected.
(Dictated & Pronounced in Court)
(P.M. Saleem) (P.K. Das)
Member (Technical) Member (Judicial)
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