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2023 (9) TMI 770 - AT - Service TaxClubbing of clearances - rules of classification - C & F service - clearing and transporting the goods under two separate contracts and bills have also been raised separately - HELD THAT:- C&F Agent Service includes two kinds of service providers i.e. the freight forwarders and the clearing agent. When the C&F himself is providing both the services to the principle, he is liable to tax under Section 65(25) of the Finance Act. However, when C&F agent is engaging a GTA or another agency who are freight forwarders than the levy cannot be raised against the C&F agent for providing C&F agent service. This Tribunal in the case of MEDPRO PHARMA PVT. LTD. VERSUS COMMISSIONER OF C. EX., CHENNAI [2006 (6) TMI 2 - CESTAT, NEW DELHI] had held that even isolated activity of freight forwarding is covered under C & F operations and is taxable as C & F Agent Service. It was held by the Tribunal that segregation of holistic concept of clearing and forwarding into divisible activities is not possible due to presence of word ‘and’ in between ‘clearing’ and ‘forwarding - however the said findings have been overturned by the High Court of Punjab and Haryana while deciding the appeal of Revenue in the case of COMMISSIONER OF CENTRAL EXCISE, PANCHKULA VERSUS M/S KULCIP MEDICINES (P) LTD. [2009 (2) TMI 89 - PUNJAB AND HARYANA HIGH COURT], where while interpreting the definition of Clearing and Forwarding Agent Service it was held that taxable service has been defined to mean any service provided or to be provided to a client by a ‘clearing and forwarding agent in relation to clearing and forwarding operations in any manner’. If the clearing operations are separated from forwarding operation, the levy of tax would not be attracted as it only involves one of the two activities. This decision though has taken a contrary view than decision in Medpro Pharma Pvt. Ltd. in the sense that clearing & forwarding can be segregated. However, the rationale of the Kulcip Medicines (P) Ltd. decision still is that if clearing & forwarding both the operations are undertaken by only one person, the activity shall be clearing & forwarding agent service only. The outcome of this decision therefore is that if one person has rendered service as ‘forwarding agent’ and also the service as ‘clearing agent’ then he be deemed to have rendered both services would amount to replacing the conjunctive ‘and’ by a disjunctive which is not possible. The conclusion which stands finalized to understanding is that for the service of clearing and forwarding agent to be taxable, the activities of clearing as well as forwarding shall be performed by one and the same agent - the service provider for the forwarding activity since is a person different from C&F agent that the value of freight forwarding shall not be included in the value of taxable C&F Agent Service. If fact, service cannot be taxed as C&F Agent Service. Reverting to the facts of the present case, it is observed that irrespective there are two separate agreements between the principle and the agent, one for transportation and another for clearing. In addition, the consideration received is also in two different modes with respect to the invoices of respondent’s clearing activity, he is receiving the consideration as commission. Whereas for the invoices about providing forwarding services, he is receiving the contractual payment. But the forwarding activity has been provided by the C&F agent i.e. the assessee and he, himself is clearing the product of his principle. The bifurcation of both the services, there is no doubt, permissible as per the decision in Kulcip Medicines (P) Ltd. - even if respondent is rendering transportation service under a separate contract but said service rendered by him cannot be called as Goods Transport Service. Thus, when one and the same person is providing service of clearing as well as forwarding irrespective under two separate contracts, it shall not amount to be the bifurcation of C&F Service. The agent has to be assessed for rendering C&F Service 65(25) and 65(105) of the Finance Act. The question framed is answered in negative that two separate contracts bifurcating the activity of clearing and forwarding will not discharge the C&F Agent from his liability of C&F Service taxable under Section 65(105)(i) of the Finance Act. It is for the sole reason that under two separate contracts, the respondent himself is the service provider. We hold that such an arrangement is to camouflage the C&F Agent’s liability for providing clearing & Forwarding Agent Service. The impugned order of Commissioner (Appeals) set aside - appeal of Revenue allowed.
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