By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether on facts of the case, the storage of spare parts for motor vehicles/their transportation/dispatch etc. would be treated as Clearing and Forwarding Agent’s Service? Held, yes.
Facts:
The appellant’s services to M/s. Ford India Ltd. were considered Clearing and Forwarding Agent’s Services by the department. However, according to the appellant, they were business support services. The spare parts of motor vehicles were kept in the godown of Ford who would manufacture motor vehicles. Further, the computers were provided to the appellant for their day-to-day operations and the appellant was not engaged in arranging transport for receiving or dispatching goods. Since the appellant was under the bonafide belief that their activities did not fall under the Clearing and Forwarding Agent’s Services, the appellant contested invocation of extended period of limitation. Demands were computed on the basis of bills raised and not on the basis of receipt. Since the appellant did not collect service tax, extension of cum duty benefit was pleaded for.
The department in terms of the agreement between the appellant and Ford, the appellant was engaged in receiving service parts, packing, etc., carry out inventory control, to maintain customer relations, to do distribution, handling shipping, documentation and outbound transportation etc. Thus, the activities were essentially in the nature of Clearing and Forwarding Services. Further, since there was no registration at Tamil Nadu and the appellant had centralised registration at Pune, the case was within the jurisdiction of the Pune Commissionerate. Since the appellant had not paid service tax and filed returns, the appellant had suppressed the facts with intention to evade service tax.
Held:
Considering the activities were to receive goods, warehouse the goods, receive and arrange dispatches, maintaining records for delivery etc. and the provisions of law, it was held that the services were Clearing and Forwarding services and not business support services. Further, the delayed registration, non-payment, non-filing of returns and disputing service tax liability at a later date post registration were the core reasons proving suppression of facts and wilful intention to evade tax. Therefore, the extended period of limitation and penalty was held justified. Since all payments were received though belatedly, the delay in receipt would not affect service tax liability except shifting of dates. Since the amounts collected were for various components of services, it could not be considered as inclusive of service tax and therefore even benefit of cum duty was not extended.
