ST - Appellant engaged in transport service & initial temporary storage of vehicles near railway sidings, only for few days, will not render appellant to fall under 'Clearing & Forwarding Agent': CESTAT
By TIOL News Service
MUMBAI, FEB 03, 2014: THE appellant is engaged in the business of transportation of vehicle of M/s. Tata Motors. The appellant entered into an agreement with M/s. Tata Motors for transporting their vehicles by railway rakes. Under the aforesaid agreement, the appellant are required to carry out following functions:
(a) To transport cars/vehicles from the premises of Tata Motors to Railway sidings for the purpose of loading into railway rakes. The appellant gives trust receipt to Tata Motors for having received cars/vehicles under bailment for the said cars and vehicles given for transportation.
(b) To load vehicles on to railway rakes
(c) To pay freight to railways
(d) To unload the vehicles from the railway rakes at the destination stations and to transport the same to the dealers premises.
(e) To ensure that no damage is caused to the vehicles during transportation
(f) To establish and maintain the stockyards at various places to stock the vehicles pending availability of rakes at Pune and pending transfer of cars/vehicles to the dealers yard at the destination.
(g) To obtain a receipt from the concerned dealer for delivery of vehicles and submit the same to Tata Motors.
SCNs were issued demanding Service Tax under the category ‘Clearing and Forwarding Agent Service' for the period April, 2001 to March, 2005 and the same were confirmed along with penalties and interest and were also upheld by the lower appellate authority by placing reliance on the decision in Coal Handlers Pvt. Ltd. Vs. Commissioner of Central Excise, Kolkata-I - (2004-TIOL-579-CESTAT-KOL).
Before the CESTAT, the appellant submitted that they are doing transportation work and unlike clearing and forwarding agent they are not involved in storing of goods on behalf of the principal and thereafter forwarding them from time to time as per the direction of the principal. Inasmuch as they are simply doing the transportation job wherein the vehicles at the time of despatch from the factory are earmarked for delivery to particular buyers/dealers of the principal and upon receiving the vehicles from the factory, the appellant brings them near the railway sidings and stores them temporarily subject to availability of the railway rakes for the purpose of loading. The appellant does not provide any storage or warehousing facility as provided in the ‘clearing and forwarding agent'. Further, they are entitled to remuneration as transporter and actual reimbursement of railway freight incurred by them. They also place reliance on the CBE&C vide Circular No. B.43/7/97-TRU dated 11.7.1997 wherein the scope of the taxable service of Clearing & Forwarding Agent has been clarified.
It is also submitted that the reliance placed by the Commissioner(A) on the decision of Coal Handlers is not applicable as the said decision is based on ruling upon the earlier decision of the Tribunal in the case of PrabhatZarda - (2002-TIOL-232-CESTAT-KOL) and which decision has been overruled by the Larger Bench of the Tribunal in the case of Larsen & Toubro Ltd. Vs. CCE - 2006-TIOL-118-CESTAT-DEL and which decision has been accepted by Revenue. Reliance is inter alia also placed on the decision in Commissioner of Central Excise, Jalandhar Vs. United Plastomers - (2008-TIOL-262-HC-P&H-ST).
The Revenue representative relied on the decisions in Mahaveer Generics - (2010-TIOL-20-HC-KAR-ST) & the Larger Bench decision in Medpro Pharma Pvt. Ltd. 2006-TIOL-848-CESTAT-DEL-LB, wherein the Larger Bench of the Tribunal held that even the singular operation of clearing or forwarding also falls within ambit of C & F Agent and is liable to service tax.
The Bench in terse words observed -
5. Having considered the rival contentions, we are satisfied that the appellant is engaged in providing transport service as transporter and the initial service of temporary storage of the vehicles at or near railway sidings, which is eventually for a few days subject to availability of the rail rakes, will not render the appellant to fall under the category of ‘Clearing & Forwarding Agent'. Thus, the appeal is allowed with consequential relief, if any, in accordance with law.
In passing : Perhaps this is not the last that we hear of this case.
(See 2014-TIOL-166-CESTAT-MUM)
