Case: M/S Super Poly Fabriks Ltd Vs. Commnr. Of Central Excise, Punjab

submitting a half-yearly return by the assessee in the prescribed form. Section 77 provides for penalty for contravention of any provision for which no other penalty is provided. 14. Unfortunately, the appellant did not appear before the assessing authority. He also did not appear before the appellate authority. The appellate authority in its order dated 15.2.2005, inter alia, noticed: "During the appeal no one appeared for personal hearing fixed on 12.7.2004 and 20.7.2004. Therefore, I am going to decide the case on the basis of evidence available on records. I have carefully gone through the facts and records of the case and observe that the issue involved is non-payment of Service Tax by the appellant. The appellant has contended that levying of Service Tax on amount received as commission for procuring orders for another person is not legal.Under Section 65(25) "C&F Agent" has been defined as any person who is engaged in the providing any service, directly or indirectly connected with clearing and forwarding operation in any manner to any other person and "C&F agent" includes consignment agent. The appellant has themselves admitted that they were procuring orders for M/s. GAIL. Since during the relevant period appellant was providing services to M/s. GAIL so service tax has been correctly demanded from them." 15. The High Court, however, relying on clauses 4, 5, 11, 14 and 15 of the Agreement opined: "The agent were not at all concerned with the handling or movement of goods unlike in the present case where the consignment agent is required to lift the goods from the factory of the principal and distribute the same either directly to the buyers or bring them to his godown for future sale and delivery. From the agreement under our scanner, it also appears that the liability for delays in delivery in transit through the air, road or water ways solely rested on the appellant. There is a more explicit indication of the fact that the appellant was required by his agency terms to lift the goods for delivery and arrange for distributing them to the buyers, by making necessary transit arrangements. Therefore, the activities of lifting, receiving, stocking and delivering the goods to the buyers, clearly make a clear chain of activities, involving clearing and forwarding operations." 16. The High Court also, while distinguishing the judgment of the larger Bench of the Tribunal, in Larsen & Tourbo Ltd. v. Commissioner of Central Excise, Chennai [(2006) 3 STR 321 (T-LB)] and Medpro Pharma Pvt. Ltd. v. CCE, Chennai [(2006) 3 STR 355 (T-LB), opined: "In this context, a plain reading of Section 65(105)(j), would reveal that Taxable Service should mean any service provided to a client by a clearing and forwarding agent including a consignment agent (Emphasis supplied) in relation to clearing and forwarding operations, in any manner. In the present case, the appellant is admittedly a consignment stockist, who is actively involved in "Clearing & Forwarding Operation" by taking responsibilities for the movement of goods right from the factory/warehouse of the principal upto the stage of delivery to the buyers in one or many ways. There is, therefore, no doubt, that the appellant is fully covered within the tax framework, being a "Clearing & Forwarding Agent" engaged in relation to Clearing & Forwarding Operations." 17. The agreement is titled as "Consignment Stockistship Agreement". Appellant has various jobs to perform thereunder. It does not arrange for any transport. It, however, provides for godowns. It gets the insurance company to conduct a survey. It has to furnish dates as regards stock in its custody. It has to furnish guarantee to recover full value of the stocks which it holds for the company or sell on behalf of the company or for such a sum as would be determined by the company in its discretion. The company, however, has to indicate the recommended list prices for the sale of the product whereto the appellant is entitled to at octroi duty, terminal tax, sales tax or other local taxes or levies in forced in the local area and recover the same from their customers and maintain proper accounts for the same. Clauses 13 and 14 of the said agreement empower to sell the goods as also to issue Form F to the Company. It is also responsible for collection of tax. 18. What is necessary for determining the question is as to whether the purported job of the appellant as a clearing and forwarding agent was incidental to its main activity, namely, getting orders from the clients and selling the products to various customers of the company or not. The notice to show cause contained the following elements: "(i) Service charges of Rs.500/- PMT shall be paid by M/s GAIL to the consignment stockist (i.e. noticee) for the quantity sold by them.(ii) Rs.400/- PMT shall be paid to the consignment stockist for getting/booking orders for the product of M/s. GAIL.(iii) Rs.100/- PMT shall be paid to the consignment stockist for release/clearance of product locally from their stock on the orders booked by M/s. GAIL directly." 19. The period in question is from 1.9.1999 to 31.7.2002. The notice to show cause had referred only to paragraph 20.1 and 20.3 of the agreement. Its activities are said to be sale and/or getting booking orders for the product.20. Whether in the aforementioned situation, the appellant has incurred any liability to pay service tax or not has not been determined. Its principal activities, as indicated hereinbefore, have not been determined.21. It is true that the appellant has not appeared before the assessing authority or the appellate authority.However, keeping this in view, we are of the opinion, that the interest of justice would be subserved if the matter is remitted to the assessing authority with liberty to the parties to adduce such evidence as may be found necessary for determining the issue(s). Appellant, however, shall not take any adjournment before the assessing authority and shall render all cooperation with it in the matter of determination of the question.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. There cannot be any doubt whatsoever that a document has to be read as a whole. The purport and object with which the parties thereto entered into a contract ought to be ascertained only from the terms and conditions thereof. Neither the nomenclature of the document nor any particular activity undertaken by the parties to the contract would be decisive.For the purpose of ascertaining as to whetherthe appellant in effect and substance was a clearing and forwarding agent or it was merely accepting orders for and on behalf ofGAIL, the same must be ascertained from the terms of the agreement itself.What is necessary for determining the question is as to whether the purported job of the appellant as a clearing and forwarding agent was incidental to its main activity, namely, getting orders from the clients and selling the products to various customers of the company or not. The notice to show cause contained the followingService charges of Rs.500/- PMT shall be paid by M/s GAIL to the consignment stockist (i.e. noticee) for the quantity sold by them.(ii) Rs.400/- PMT shall be paid to the consignment stockist for getting/booking orders for the product of M/s. GAIL.(iii) Rs.100/- PMT shall be paid to the consignment stockist for release/clearance of product locally from their stock on the orders booked by M/s. GAIL directly.The period in question is from 1.9.1999 to 31.7.2002. The notice to show cause had referred only to paragraph 20.1 and 20.3 of the agreement. Its activities are said to be sale and/or getting booking orders for the product.20.Whether in theaforementioned situation, the appellant has incurred any liability to pay service tax or not has not been determined. Its principal activities, as indicated hereinbefore, have not been determined.21. It is true that the appellant has not appeared before the assessing authority or the appellate authority.However, keeping this in view, we are of the opinion, that the interest of justice would be subserved if the matter is remitted to the assessing authority with liberty to the parties to adduce such evidence as may be found necessary for determining the issue(s). Appellant, however, shall not take any adjournment before the assessing authority and shall render all cooperation with it in the matter of determination of the question.