Clearing and forwarding agent
CESTAT,
Commissioner of Central Excise,
v.
Cardamom Mkg. Corpn.
JUSTICE R.K. ABICHANDANI, PRESIDENT
AND T.K. JAYARAMAN, TECHNICAL MEMBER
FINAL ORDER NOS. 1125 AND 1126 OF 2007
SERVICE TAX APPEAL NOS. 94 and 76 OF 2006
SEPTEMBER 18, 2007
Section 65 of the Finance Act, 1994 - Clearing and forwarding agent - Mere receiving and storing goods for auctioning them has nothing to do with clearing and/or forwarding operations contemplated under taxable service of ‘clearing and forwarding agent - Held, yes - Assessees were engaged in activity of cardamom auctioning which was governed by conditions of licence and marketing rules under cardmom (Licensing and Marketing) Rules, 1987 - In that process growers or dealers brought to them cardamom which was to be sold by licenced auctioneer, at a place, on a day and time specified by board as stipulated in licence - Revenue categorised activity undertaken by assessees as licenced auctioneers of receiving and storing cardamom, drawing samples and selling cardamom at auction for a commission as services of clearing and forwarding agent - However, on appeal, Commissioner (Appeals) held that assessees will not be categorized under that category - Whether since neither provisions having bearing on activity done by these actionneers as regulated by rules and licensing conditions nor any evidence on record indicated an activity of clearing or forwarding operation, there was no warrant for restoring to category of taxable service of clearing and forwarding agent for including services provided by assessee for cardamom business as licenced auctioneers - Held, yes - Whether therefore there was no reason to interfere with order of Commissioner (Appeals) - Held, yes (Para 5.3)
The assessees were engaged in the activity of cardamom auctioning which was governed by the terms and conditions of the licence and the marketing rules known as the ‘Cardamom (Licensing and Marketing) Rules, 1987’. In the process, the growers or dealers brought to them cardamom which was to be sold by the licenced auctioneer, at a place, on a day and time specified by the Board as stipulated in licence issued under rule 4(3) of the said rules. According to the revenue, the activities undertaken by the assessees of receiving and storing cardamom, drawing samples and selling cardamom at the auction for commission 1 per cent was an activity falling under the taxable service of clearing and forwarding agents. Accordingly the adjudicating authority held the assessees as clearing and forwarding agent. On appeal, the Commissioner (Appeals) held that assessees could not be categorized as clearing and forwarding agent.
On appeal :
On close scrutiny of the nature of functioning of the licenced auctioneer
and the terms and conditions incorporated in the licence which regulated the
cardamom business of the licensee, it became obvious that, there was no
clearing or forwarding activity involved while the licensee acted only as an
auctioneer for selling cardamom brought to him by growers/dealers. Subject to the statutory regulation and
licensing of cardamom business under the rules, the auction sale would be
complete when the auctioneer anounces its completion by the fall of the hammer
or in any other customary manner as contemplated by section 64(2) of the sale
of goods Act. While the law regulates
the manner in which cardamom will be sold, it does not purport to regulate the
price at which it would be sold and the matter is obviously left to the choice
of the owner for fixing a reserved or up set price. Though the provision, defining “action of
property” under section 65(7a) and 65(105)(zzzr) have been
inserted with effect from 18-4-2006, they indicate the nature of taxable
service which involves the activity of calling the auction or providing a
facility, advertising or illustrating services, pre-auction price estimate,
short term storage services, repair or restoration services in relation to
auction of property. Auction of property
under directions or orders of a Court of law or orders by the Government was
excluded. Short term storage can also
take place while rendering service in relation to auction of property. Mere receiving and storing goods for
auctioning them has nothing to do with clearing and/or forwarding operations
contemplated under taxable service of ‘clearing and forwarding agent’. Since neither the provisions having bearing
on the activity done by these auctioneers as regulated by the rules and
licensing conditions nor any evidence on record indicates an activity of
clearing or forwarding operation, there was no warrant for restoring to the
category of taxable service of clearing and forwarding agent for including the
services provided by the assessees for cardamom business as licenced auctioneers. There was, therefore, no warrant for
interfering with the impugned order on any grounds. Both the appeals were, therefore, to be
dismissed. [