May 2015
[2015] 55 taxmann.com 245 (Mumbai – CESTAT) – Malhotra Distributors Pvt. Ltd. vs. CCE
By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 2 mins
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Where the assessee merely procures purchase orders based on prices determined by the principal and does not deal with goods at all, his services would be that of commission agent and not of clearing and forwarding agent.
Facts:
The Appellant received commission from manufacturer of goods for rendering assistance in the marketing of goods, by obtaining orders and also ensuring that the goods are sold at the terms and discounts specified by the manufacturer. The Appellant contended that the activities are taxable under Clearing and Forwarding services.
Held:
The Tribunal observed that in terms of agreement between the parties, the Appellant has to only procure the orders from the stockists and forward them to manufacturers and ensure that the goods are sold at the terms and discounts specified in writing by the manufacturer. For the services so rendered, commission at prescribed percentage on the net sale value was receivable. Therefore, having regard to the terms of agreement and relying upon various cases including Larsen & Toubro Ltd. [2006] 4 STT 231 (New Delhi) the Tribunal held that the Appellant did not deal with the goods at all as is expected in the case of clearing & forwarding Agent and he was liable for service tax as commission agent.
