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 Clearing and Forwarding Agent Services Minimize
Definition and Meaning
Section 65(105) (j) - 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.
Services Provided Services provided or to be provided
16.07.97 16.06.2005
Essential Ingredients
Services are provide or to be provided by a clearing and forwarding agent. Section 65 (25) defines clearing and forwarding agent as any person engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent.
The Services shall be in relation to clearing and forwarding operations such as clearance of goods from railways/ roadways/ steamer/ ship, storing and or warehousing of goods, receiving dispatch or clearance instructions from the owner of goods, arranging for dispatch of goods etc.
Person Liable to make payment of service tax (Service provider/ service recipient)
The person responsible for payment of service tax is the person engaging or appointing the agent ie., as service recipient. This was challenged before the Hon’ble Supreme Court in the case of Lagu Udyog Bharati & Anr. Vs. UOI, and the Apex court upheld the challenge, and the service tax rules were amended vide notification no 7/99-ST dated 23.08.1999 making the service provider responsible for payment of service tax.
However, the Finance Act, 2000 overcame the effect of the judgment by again levying the liability on the service recipient to pay the service tax retrospectively.
Abatement (If Any)
No abatement has been granted to any person liable to pay service tax under the Section.
Import of Services
Where the taxable service is provided from outside the country, the recipient of service would be treated as deemed service provider under the reverse charge mechanism and would be liable to apply for registration for paying tax on imported services.
Rule 3 of Taxation of services (provided from outside India) Rules, 2006 classifies taxable services into three categories. The Clearing and forwarding agent’s services falls in the second category ie., ‘When service is performed in India.’ (Rule 3 (ii))
Notifications / Circulars
F.No. V/DGST/21(9)/ C&F/2/99/10683, Dated 06.06.2000 - Tanks used for storage of liquids / chemicals for which customers pay rents based on tank capacity. In addition to this there are pipelines, valves, pumps connected with these tanks for purpose of loading the cargo from the ships and unloading the same to road tankers. The Directorate held that the same falls within the definition of clearing & forwarding Agents.
Circular No. 39/2/2002-ST- Dated 20.02.2002 - The services rendered by the ICD/ CFS are not covered under the ambit of this category.
Circular No 48/10/2002-ST, dated 13.09.2002 - In case where the grain agents purchases the goods from the farmer and then sell the same, they do not function as agents, hence not liable to be taxed under this category.
Case / Judgement
Mahaveer Generics Vs. CCE, Bangalore - If the commission agent is neither clearing any goods nor forwarding any goods and goods are supplied to the agent only on consignment basis so that the same could be sold to the customers, then he is not liable to be taxed under this category.
Larsen Toubro Ltd Vs. CCE, Bangalore - Mere procurement or booking of orders for the principal by an agent on payment of commission would not fall under the category of clearing and forwarding agent service.
Gujarat State Fertilizers & chemicals Ltd. Vs. CCE - Mere storage of liquid cargo in tanks and charging rent for the same cannot be considered as clearing and forwarding agency services.
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