Commissioner of central Excise Allahabad vs. amitdeep motors

 [2014] 50 taxmann.com 435(New Delhi – CESTAT)

The hon’ble Delhi tribunal held that it is an accepted fact that one of the crucial elements of C& F agent services is that it works on the direction of the principal in the present case the respondent was actually taking orders from the government departments and therefore it was basically facilitating the supply of cars to them and earning commission from MUL. Therefore this crucial elements was absent this fact was also clear from the observations made by the commissioner (appeals) it was also noted that before the commissioner (appeals) assessee vehemently contended that they have never physically received and stored the goods in their premises but the goods were physically delivered by MUL to the customers in this factual background and relying upon the decision of the Delhi Tribunal (lb) in the case of Larsen & Toubro vs. CCE 2006 (3) S.T.R. 321 (TRI –LB) it was concluded that procuring the order from the govt. departments from was the main element of the impugned services and any peripheral  aspects therefore would not bring it within the scope of C& F agent services

Note: it appears that tribunal has taken a view that activity concerning supply of cars was in fact a service to govt. departments from which assessee did not receive any consideration the commission received from MUL was only for procuring the orders in Larsen & turbo case (Supra) it was held that clearing and forwarding activates do not flow directly or indirectly from mere procurement of orders the activity of procuring orders  is treated separately by parliament under business auxiliary services and independent of clearing and forwarding operations this case has also been affirmed by the hon’ble Punjab  & Haryana high court in 2008 (10) STR 229. Reader may also refer to the tribunal decision in transasia sales syndicates case which is affirmed by hon’ble sc in [2014] 50taxmann.com 438(SC).         

Classification of services – commission received for procuring orders and peripheral activities – dominant nature of services – not a C& F agent services.

Facts:   

The respondent assessee was an authorized dealer of M/s. Maruti Udyog ltd (MUL) Apart from procuring orders from the governments department like BSF, CRPF & state polices etc. it conducted pre delivery inspection giving coupons for free after sales services etc. 

And also arranged way bill or entry permit required for the dispatch of the vehicle and received commission from MUL for such services rendered. Revenue sought to tax the activate under clearing and forwarding agent services stating that definition of C& F agent services was wide enough to cover these activities. Commissioner (appeals) Decide in Favor of the assessee.

        Held:

 The  Hon'ble  Delhi Tribunal  held that  it is an  accepted fact  that  one  of  the  crucial  elements   of  C&F  agent service  is that  it works  on the direction  of the  principal. In the  present  case the  respondent  was  actually  taking orders from the Government  departments  and therefore it was basically facilitating  the supply of cars to them and earning  commission  from  MUL.  Therefore, this crucial element was absent.  This fact was also clear from the observations made by the Commissioner (Appeals).  It was also noted that before the Commissioner (Appeals), assessee vehemently contended that they have never physically received   and   stored   the   goods   in   their premises but the goods were physically delivered by MUL to the customers.  In this factual background and relying upon the decision of the Delhi Tribunal (LB) in the case of Larsen&   Toubro VS.   CCE 2006 (3) S.T.R. 321 (Tri. - LB), it was  concluded  that  procuring  the order from the Government  departments  was the  main element  of the impugned  service  and  any  peripheral   aspects  thereof would not bring it within the scope of C&F Agent Service. Note:  It  appears  that  Tribunal  has  taken  a  view  that activity  concerning  supply  of cars was  in fact a service to  Government   departments   from  which  assessee  did not receive any consideration.  The commission received from MUL was only for procuring the orders.  In Larsen & Toubro's  case  (supra)  it was  held  that,  clearing  and forwarding  activities do not flow directly or indirectly from mere  procurement   of  orders.  The activity of procuring orders is treated separately by Parliament under Business Auxiliary Service and independent of clearing and forwarding operations.  This case has also been affirmed by the Hon'ble Punjab & Haryana High Court in 2008 (10) STR 229. Reader may also refer to the Tribunal decision in Transasia Sales Syndicate case which is affirmed by Hon'ble SC in [2014J 50 taxmann.com 438 (SC).