By TIOL News Service

NEW DELHI, OCT 06, 2017: THE appellants were appointed as a Clearing and Forwarding Agent of M/s Yamaha Motor India Pvt. Limited (YMI). As per agreement entered into by the appellant with YMI, they were required to receive the goods from YMI, store the same and deliver the products to the destination specified by the company. They also receive remuneration as per the agreement.

The department noticed that w.e.f. 01.04.2007 the appellant had started raising separate invoices for C&F service as well as transportation service to YMI. In respect of C&F, Service Tax was paid by the appellant. However, with reference to transportation services, service tax was claimed to be paid by M/s Yamaha Motor India on reverse charge basis after availing the abatement of 75%.

The department was of the view that the amounts covered by invoices issued towards transportation was nothing but a part of the consideration received by the appellant from YMI for clearing and forwarding services.

Accordingly, demand was issued and confirmed along with interest and penalty.

The appellant is before the CESTAT.

After considering the submissions made by both sides, the Tribunal observed –

“7. …As per the terms of agreement they were entitled to receive various amounts towards godown rent, staff and security, establishment charges, computerisation charges, loading and unloading charges and also transportation freight payment. From the wordings of the agreement, it is evident that the C&Fservice rendered for YMI include not only receipt and storage of the vehicle, but also despatch of the same to the destination. Under such terms of the provision of service, all consideration received by the appellant from YMI should form part of the consideration for payment of tax under C&F agent service. Since loading and unloading, handling and transportation of goods upto the destination was an integral part of C&F service, we are of the view that transportation charges alone cannot be bifurcated and charged separately to service tax under GTA service. Further, it is evident from the facts of the case that the appellant does not satisfy the condition of being considered as Goods Transport Agency. Consequently, we are of the view that the transportation charges received should form part of the consideration for C&F service.”

Holding that there is no reason to interfere with the impugned orders, the same were upheld and the appeals were rejected.

(See 2017-TIOL-3602-CESTAT-DEL)