Classification under Freight Forwarding Service vs C & F Agency Services.

PJ/CASE LAW/2015-16/2832

Case:-SWAGAT FREIGHT CARRIERS PVT. LTD. VsCOMMR. OF SERVICE TAX, MUMBAI

Citation:-2014 (33) S.T.R. 81 (Tri. - Mumbai)

Brief Facts:-The appeal is directed against Order-in-Appeal No. BR(46)/46/STC/2005, dated 31-10-2005 passed by Commissioner of Central Excise (Appeals), Mumbai.
The appellant, M/s. Swagat Freight Carriers Pvt. Ltd. is a freight forwarder and collected charges for the services rendered from the customers by way of documentation charges, transportation charges, shipping bill charges, etc. The department was of the view that the services rendered by the appellant comes under the category of “Clearing & Forwarding Agency Service”. Accordingly, a notice dated 21-3-2003 was issued demanding Service Tax of Rs. 1,99,001/- along with interest thereon and also proposing to impose penalties. The demands were confirmed and penalties were imposed on the appellant. The appellant preferred an appeal before the lower appellate authorities, who dismissed the appeal and hence, the appellant is before Tribunal.

Appellant contentions:- The ld. Counsel for the appellant submits that they are doing freight forwarding business and they do cargo booking. The activity undertaken by the appellant does not come under the purview of “Clearing and Forwarding Agency Service” and since 1-7-2003 they have been discharging Service Tax under “Business Auxiliary Service” on the services rendered by them. Since the impugned demand pertains to the period prior to 1-7-2003, the demand is not sustainable. He also relies on a number of decisions in support of the above contention :
(a) Gudwin Logistics v. CCE, Vadodara - 2012 (26) S.T.R.443 (Tri.-Ahm.)
(b) Gudwin Logistics v. CCE, Vadodara - 2010 (18) S.T.R.348 (Tri.-Ahm.)
(c) Larsen & Toubro Ltd. v. CCE, Chennai - 2006 (3) S.T.R. 321 (Tri.-LB)
(d) CCE, Jalandhar v. United Plastomers - 2008 (10) S.T.R. 229 (P&H)
Accordingly, he prays for allowing the appeal.

Respondent contentions:-The ld. Additional Commissioner (AR) appearing for the Revenue reiterates the findings of the lower authorities and submits that the appellant is rendering a bundle of services, some of which might come under “Clearing & Forwarding Agency Service”.

Reasoning of Judgment:-After hearing both the sides and going through the records of the case, it is evident that the appellant is rendering freight forwarding service. Freight forwarding is distinct and different from “Clearing & Forwarding Agency Service” as defined in law. In the light of the decisions (supra) relied upon by the appellant, the services rendered by the appellant do not come under the category of “Clearing & Forwarding Agency Service”. Accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any, in accordance with law.

Decision:- Appeal allowed.

Comment:-The crux of the case is that “Freight forwarding Service” does not get covered ‘Clearing & Forwarding Agency Service’. Freight forwarding is distinct and different from ‘Clearing & Forwarding Agency Service’ as defined in law. This view is supported by number of decisions rendered by the Tribunal and High Court.

Prepared by:Meet Jain

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PJ/CASE LAW/2015-16/2832

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