Indira Banerjee, J.@mdashIn this writ application, the petitioners have inter alia challenged an order No. 15/Com/ST/KOL/2007-2008 dated 27th November, 2007, of the Commissioner of Service Tax, Service Tax Commissionerate, Kolkata inter alia confirming that the service provided by the petitioner No. 1, hereinafter referred to as the petitioner company to its clients fell within the category of service of a clearing and forwarding agent.
2. The petitioners have also impugned the registration certificate/Order No. V(30) 1/STC/ST/DIV-1/KOL/2005/368 dated 11th September, 2007 whereby the petitioner company has been granted registration in the category of Clearing and Forwarding Agent within the meaning of Section 65(25) read with Section 65(105)(j) of Chapter V of the Finance Act, 1994 and Rule 4 of the Service Tax Rules, 1994.
3. The petitioners claim that the petitioner company has entered into liasoning agreements with various industrial concerns, that are bulk consumers of coal.
4. According to the petitioners, the various industrial concerns and power plants, with which the petitioner company has executed liasoning liasoning agreements are required to make bulk purchase of coal from different collieries located all over India.
5. As per the existing practice, the Standing Linkage Committee which is a body constituted under the Ministry of Coal, Government of India, with representatives of coal companies, railways, bulk consumers and coal ministry officials, makes allotment of coal to bulk consumers from different coal mines.
6. According to the petitioners, the coal companies despatch coal from the collieries and have the same loaded into wagons. The petitioner company is engaged by bulk coal consumers for the work of liasoning coordination and supervision on their behalf, to facilitate movement of coal to plants and factories. The petitioner company only supervises the loading of coal, ensuring that proper indents are placed, the requisite quality of coal is loaded and the wagons are loaded to their full capacity.
7. The Finance Act, 1994 which was brought into force with effect from 1st July, 1994 vide Notification No. 1/94 dated 28th July, 1994 published in the Gazette of India, introduced service tax on certain categories of service.
8. With the enactment and enforcement of the Finance Act, 1994, the Service Tax Rules, 1994 were framed. At the material time when service tax was introduced by the Finance Act, 1994, the services rendered by the petitioner company was admittedly not within the purview of service tax. The Finance Act, 1994 has from time to time been amended and service tax has been imposed on different kinds of service.
9. The Finance Act II of 1996 brought services rendered by inter alia advertising agencies, courier agencies and radio pager services, within the purview of service tax with effect from 1st November, 1996. The service rendered by the petitioner to its clients was admittedly out of the purview of service tax, even after enforcement of the Finance Act II of 1996.
10. The Finance Act of 1997 extended service tax to a number of services including the services provided by customs house agents, steamer agents and clearing and forwarding agents with effect from 16th July, 1997.
11. Various services were brought under the purview of service tax by the Finance Acts of 1998, 2001 and 2002, which are not material for the purpose of this application. The Finance Act of 2003 imposed Service tax on inter alia business auxiliary services with effect from 1st July, 1993 (Sic)(2003). The Finance Act, 2004 expanded the scope of business auxiliary service with effect from 10th September, 2004.
12. Service tax is governed by Chapter V of the Finance Act, 1994, the relevant provisions whereof, as amended, are set out hereinbelow for convenience:
65. Definitions.
In this Chapter, unless the context otherwise requires, -
....
....
(19) "business auxiliary service" means any service in relation to. -
(i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or
(ii) promotion or marketing of service provided by the client; or
(iii) any customer care service provided on behalf of the client; or
(iv) procurement of goods or services, which are inputs for the client; or
[Explanation.--For the removal of doubts, it is hereby declared that for the purpose of this sub-clause, "inputs" means all goods or services intended for use by the client:]
(v) production or processing of goods for, or on behalf of, the client;
(vi) provision of service on behalf of the client; or
(vii) a service incidental or auxiliary to any activity specified in Sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision and includes services as a commission agent, but does not include any information technology service and any activity that amounts to "manufacture" within the meaning of Clause (f) of Section 2 of the Central Excise Act, 1944 (1 of 1944).
[Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause. -
(a) commission agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person -
(i) deals with goods or services or documents of title to such goods or services; or
(ii) collects payment of sale price of such goods or services; or
(iii) guarantees for collection or payment for such goods or services; or
(iv) undertakes any activities relating to such sale or purchase of such goods or services;
(b)....
....
....
(25) "clearing and forwarding agent" means any person who is 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;
....
....
(105) "taxable service" means any service provided or to be provided, -
....
....
(j) to a client, by a clearing and forwarding agent in relation to clearing and forwarding operations, in any manner;
...
....
(zzb) to a client, by a commercial concern in relation to business auxiliary service;
68. Payment of Service Tax
(1) Every person providing taxable service to any person shall pay service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed
Provided that -
(i) in relation to services provided by a clearing and forwarding agent, every person who engages a clearing and forwarding agent and by whom remuneration or commission (by whatever name called) is paid for such services to the said agent for the period commencing on and from the 16th day of July, 1997 and ending with the 16th day of October, 1998; or
(ii) in relation to services provided by goods transport operator, every person who pays or is liable to pay the freight either himself or through his agent for the transportation of goods by road in a goods carriage for the period commencing on and from the 16th day of November, 1997 and ending with the 2nd day of June, 1998 shall be deemed always to have been a person liable to pay service tax, for such services provided to him, to the credit of the Central Government.
(2) Notwithstanding anything contained in Sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in Section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.
13. The Ministry of Finance, Department of Revenue, Tax Research Unit issued Notification No. B43/7/97-TRU dated 11th July, 1997, the relevant parts whereof are extracted hereinbelow:
I am directed to invite your attention to Section 88 of the Finance Act, 1997 which, inter alia, provides for levy of service tax on the services rendered by clearing and forwarding agents and rent-a-cab scheme operators. It has been decided to bring the above services under the service tax net with effect from 16th July, 1997. Notification Nos. 26/97-S.T. and 27/97-S.T., both dated the 11th July, 1997 have been issued in this regard (copies enclosed).
2. Clearing And Forwarding Agents
2.1 "Clearing and forwarding agent" has been defined as "any person who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations in any manner to any other person and includes a consigning agent." The taxable service has been defined as "any service provided to a client, by C&F agent in relation to clearing and forwarding agents are engaged/appointed by manufacturer of goods (both excisable and non-excisable goods).
2.2 Normally, there is a contract between the principal and the clearing and forwarding agent detailing the terms and conditions and also indicating the commission or remuneration to which the C&F agent is entitled. A clearing and forwarding agent normally undertakes the following activities-
(a) Receiving the goods from the factories or premises of the principal or his agents;
(b) Warehousing these goods;
(c) Receiving despatch orders from the principal;
(d) Arranging despatch of goods as per the direction of the principal by engaging transport on his own or through the authorised transporters of the principal;
(e) Maintaining records of the receipt and despatch of goods and the stock available at the warehouse;
(f) Preparing invoices on behalf of the principal
2.3 It has been decided that the person responsible for collecting the service tax in the case of services rendered by a clearing and forwarding agent shall be the person engaging/appointing a clearing and forwarding agent (Notification No. 26/97-service tax refers). It may be noted that unlike in the case of other service tax levies where the service provider is the person responsible for collecting the service tax, in the case of services rendered by the clearing and forwarding agents the service tax liability shall be discharged by the person availing the service so rendered. In order words, the principal who engages a clearing and forwarding agent is the person responsible for collecting and paying the service tax to the exchequer, Commissioners of Central Excise may therefore take necessary action accordingly and also make this position clear by issue of suitable trade notice.
14. The Mumbai Commissionerate-I issued a Trade Notice No. 8/97 dated 11th July, 1997 in which the provisions of the aforesaid notification dated 11th July, 1997 of the Ministry of Finance, extracted hereinabove have been reiterated.
15. In the context of disputes as to whether service of providing storage facilities provided by certain agencies could attract service tax as a service provided by a clearing and forwarding agent, the Central Board of Excise and Customs issued CBEC Circular No. 37B Order No. 2/1/2002-S.T., dated 20-4-2002 making inter alia the following clarification:
Normally, a C&F agent receives goods from the factories or premises of the principal or his agents, stores these goods, despatches these goods as per orders received from the Principal or owner, arranges transport, etc. for the purpose and prepares invoices on behalf of the Principal. For this service, the C&F agents receives commissions on the basis of agreed terms. Therefore, an essential characteristic of any services, to fall in the category of C&F agent, is that the relationship between the service provider and receiver should be in the nature of principal (owner) and agent. The C&F agent carries out all activities in respect of goods right from stage of their clearances from the premises of the principal to its storage and delivery to the customers.
16. Mr. Poddar appearing on behalf of the petitioner company submitted that the service rendered by the petitioner company to its clients was not that of a clearing and forwarding agent.
17. Even after the Finance Act, 1993 (sic)(2003), imposed Service tax on ''business auxiliary service'', the service rendered by the petitioner company did not come within the definition of business auxiliary service.
18. Mr. Poddar submitted that with the amendment of the definition of ''business auxiliary service'' in Section 65(19) and in particular Clause (iv) thereof to read ''for procurement of goods or services intended for the use of clients" and insertion of the Explanation to Sub-clause (iv) with effect from 16th June, 2005 the petitioners were advised that the petitioner company became liable to pay service tax with effect from 16th June, 2005.
19. On or about 2nd November, 2005, the petitioner company made an application for centralised registration in the category of ''business auxiliary service'' u/s 69 of Chapter V of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994 to the Commissioner of Service Tax, Service Tax Commissionerate, Kolkata on 2nd November, 2005.
20. Sections 69, 70 and 73(1) of the Finance Act, 1994 are set out herein below for convenience:
69. Registration
(1) Every person liable to pay the Service Tax under this Chapter or the rules made thereunder shall, within such time in such manner and in such form as may be prescribed, make an application for registration to the Superintendent of Central Excise.
(2) The Central Government may, by notification in the Official Gazette, specify such other person or class of persons, who shall make an application for registration within such time and in such manner and in such form as may be prescribed.
70. Furnishing of returns
(1) Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency as may be prescribed.
(2) The person or class of persons notified under Sub-section (2) of Section 69, shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency as may be prescribed.
73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded
(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously levied, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
21. Rule 4 of the Service Tax Rules, 1994 provides as follows:
Rule 4. Registration
(1) Every person liable for paying the Service Tax shall make an application to the concerned Superintendent of Central Excise appointed under Rule 3 in Form ST-1 for registration within a period of thirty days from the date on which the service tax u/s 66 of the Finance Act, 1994 (32 of 1994) is levied.
Provided that where a person commences the business of providing a taxable service after such service has been levied, he shall make an application for registration within a period of thirty days from the date of such commencement.
Provided further that a person liable for paying the service tax in the case of taxable services referred to in Sub-section (4) of Sub-section (5) of Section 66 of the Finance Act, 1994 (32 of 1994) may make an application for registration on or before the 31st day of December, 1998:
Provided also that a person liable for paying the service tax in the case of taxable services to in Sub-clause (zzp) of Clause (105) of Section 65 of the Act may make an application for registration on or before the 31st day of March, 2005.
(2) Where an assessee is providing a taxable service from more than one premises or offices and has centralised billing systems or centralised accounting systems in respect of such service, and such centralised billing or centralised accounting systems are located in one or more offices or premises, he may, at his option, register such premises or offices from where such centralised billing or centralised accounting systems are located.
(3) The registration under Sub-rule (2), shall be granted.--
(a) by the Commissioner of Central Excise or the Chief Commissioner of Central Excise, as the case may be, in whose jurisdiction all the premises or offices providing taxable service and the premises or office from where centralised billing or centralised accounting is done, are located; and
(b) in cases other than (a) above, by such authority, as may be specified by the Board:
Provided that nothing contained in this sub-rule shall have any effect on the registrations granted to the premises or offices having such centralised billing or centralised accounting systems, prior to 1st day of April, 2005.
(3A) Where an assessee is providing a taxable service from more than one premises or offices, and does not have any centralised billing or centralised accounting systems, as the case may be, he shall make separate applications for registration in respect of each of such premises or offices to the jurisdictional Superintendent of Central Excise.
(4) Where an assessee is providing more than one taxable service, he may make a single application, mentioning therein all the taxable services provided by him, to the concerned Superintendent of Central Excise.
(5) The Superintendent of Central Excise shall after due verification of the application form, grant a certificate of registration in Form ST-2 within seven days from the date of receipt of the application. If the registration certificate is not granted within the said period, the registration applied for shall be deemed to have been granted.
(6) Where a registered assessee transfers his business to another person, the transferee shall obtain a fresh certificate of registration.
(7) Every registered assessee, who ceases to provide the taxable service for which he is registered, shall surrender his registration certificate immediately.
22. By a letter dated 18th January, 2006, the Assistant Commissioner of Service Tax (Technical) requested the petitioner company to resubmit its application for centralised registration in the category of "service of clearing and forwarding agent" by filing a fresh Form ST-1.
23. In reply, the petitioners wrote a letter dated 8th February, 2006, objecting to the direction to resubmit the application for centralised registration in the category of clearing and forwarding agency and requesting that the application of the petitioners for centralised registration in the category of "business auxiliary service" be reconsidered.
24. By a letter dated 27th March, 2006, the Assistant Commissioner of Sales Tax (Technical)(sic) advised the petitioners to deposit tax along with interest, if any, by filling in "applied for" in place of registration number in the ''challan''.
25. While decision on the application of the petitioner company for registration, was pending the Superintendent (Audit) Central Excise and Customs, Bhubaneswar-1, examined the same kind of contract between the petitioner company and Tamil Nadu State Electricity Board and issued a memo dated 25th May, 2006, inter alia observing as follows:
In course of audit in the office premises of Karam Chand Thapar & Bros. (CS) Ltd., Paradip, it is seen that the Assessee are engaged in making payment of freight etc. on behalf of M/s. TNEB, keep inventory of coal dispatched from the collieries/received at the destination, supervise the loading of rake at the pit head, and monitor movement of the same upto the destination. These activities called by them ''Mechanical Handling of Coal'' apparently/all under the category of Business Auxiliary Service'' and the Assessee is liable to pay appropriate Service Tax on the Service Charges collected by the Assessee from M/s. TNEB on such services rendered by them with effect from 16-6-2005 along with interest under intimation to audit.
26. The petitioner company was called upon to give its comments on the above quoted observation. The authorised representative of the petitioner company agreed with the audit observations and undertook to pay service tax in the category of "business auxiliary service" within a month from 25th May, 2006.
27. Mr. Poddar submitted that the memo dated 25th May, 2006, issued by the Department supported the case of the petitioner company that the service rendered by the petitioner company did not fall in the category of service of a clearing and forwarding agent, but in the category of "business auxiliary service".
28. By a letter dated 11th August, 2006, the Commissioner of Service Tax informed the petitioner company that having regard to the adjudication proceedings in case C. No. V(12) 7/SIV/ST/Kol/04/822 dated 16-2-2005 as well as the decision of the Central Excise and Service Tax Appellate Tribunal in case of
29. By a letter dated 16th August, 2006, written in response to the said letter of the Commissioner of Service Tax, the petitioner reiterated their stand that the service rendered by the petitioner company did not bring it within the definition of clearing and forwarding agent in the Finance Act, 1994 as amended.
30. On or about 12th April, 2007, the petitioner company was served with an order No. 21-22/Commr./ST/Kol./2006-07 dated 30th March, 2007 whereby the petitioner company was assessed to service tax in the category of clearing and forwarding agent, for the period from 1st September, 1999 to 31st March, 2004 along with interest and penalty.
31. On 27th June, 2007, the petitioner company filed an appeal being Appeal No. 30/37 against the said order before the Central Excise and Service Tax Appellate Tribunal, Kolkata and also made an application in the appeal, for stay of operation of the said order. It is submitted that the appeal as also the stay application is pending.
32. In the meanwhile, the petitioners received another letter dated 12th April, 2007 calling upon the petitioners to apply for registration in the category of service provided by a clearing and forwarding agent. The petitioners replied to the said letter reiterating its earlier stand.
33. On or about 3rd September, 2007, the petitioner company received a letter requesting it to contact jurisdictional Assistant Commissioner of Service Tax, Division 1, Kolkata for obtaining the registration certificate and location code.
34. By a letter dated 11th September, 2007 the Deputy Commissioner of Service Tax, Kolkata called upon the petitioner company to collect its registration certificate on producing the requisite challans used for remitting service tax.
35. The petitioners were issued a Registration Certificate in Form ST-2 bearing the No. v. (30) 1/STC/ST/DIV-1/Kol/2005/360 dated 11th September, 2007, granting the petitioner company centralised registration in the category of clearing and forwarding agent.
36. Being aggrieved by registration of the petitioner company in the category of clearing and forwarding agent, the petitioner company filed a writ application under Article 226 of the Constitution of India in this Court being W.P. No. 1146 (W) of 2007.
37. By a judgment and order dated 11th October, 2007 [
38. In compliance with the aforesaid order dated 11th October, 2007, the Commissioner of Service Tax granted the petitioner a hearing and thereafter passed an order dated 27th November, 2007 impugned in this writ application, confirming that the services rendered by the petitioner company would fall in the category of service of a clearing and forwarding agent u/s 65(25) of the Finance Act, 1994.
39. The first issue in this writ petition is whether Sub-rule 5 of Rule 4 of the Service Tax Rules, 1994 under which registration is to be deemed to have been granted upon failure to grant a certificate in Form S-2 within seven days, is attracted in the facts and circumstances of this case.
Rule 4 Sub-rule 5 provides as follows:
4(5) The Superintendent of Central Excise shall after due verification of the application form, grant a certificate of registration in Form ST-2 within seven days from the date of receipt of the application. If the registration certificate is not granted within the said period, the registration applied for shall be deemed to have been granted.
40. The deeming provision in Rule 4(5) is applicable to registration granted by the Superintendent of Central Excise, as rightly pointed out by Mr. Roy Chowdhury, appearing on behalf of the respondents.
41. The petitioner''s application is, however, for centralised registration under Rule 4(2). The registration is to be granted by the Commissioner of Service Tax or the Chief Commissioner of Service Tax in whose jurisdiction the premises of the petitioner company, from where centralised billing/accounting is done, is located.
42. There being no time stipulation on the Commissioner of Central Excise to grant centralised registration under Sub-rule 2, the provision of deemed registration is not attracted in case of grant of registration by the Commissioner.
43. It is true, every person liable to pay service tax is required under Sub-rule 1 of Rule 4 of the Service Tax Rules, 1994, to apply to the Superintendent of Central Excise for registration in Form ST-1.
44. It is immaterial that all applications might have to be submitted to the Superintendent of Central Excise. Registration under Sub-rule 2 can only be granted by the Commissioner. Rule 4 of the Service Tax Rules is not really inconsistent with Section 69 of the Finance Act, 1994, which requires that all applications for registration have to be submitted to the Superintendent of Central Excise. Section 69 does not denude the Commissioner of authority to grant registration.
45. There can be no doubt that registration cannot be indefinitely delayed. Registration has to be granted within reasonable time. In view of the circulars referred to by Mr. Poddar, seven days may be considered reasonable time. However, while in case of grant of registration by the Superintendent of Central Excise, the time stipulation of seven days is mandatory under the Rules and its contravention attracts the consequence of deemed registration, in case of the Commissioner, the same time stipulation extended by circulars is only directory. The circulars prescribe appropriate action against officers who delay registration.
46. For the reasons discussed above, the submission of Mr. Poddar that the petitioner company is deemed to have been registered as a business auxiliary service provider, because the certificate had not been granted or refused within seven days, cannot be accepted.
47. However, as rightly argued by Mr. Poddar, the provisions of the Finance Act, 1994 do not empower the Superintendent of Central Excise or the Commissioner of Central Excise to refuse an application for registration. There is also no provision in the Service Tax Rules, 1994 for refusal of an application for registration.
48. If the registration application in Form ST-1 and/or ST-2, as the case may be, is complete and properly filled up, registration would have to be granted.
49. In Paragraph 3 of the Circular No. 72/2/2004-Service tax dated 2-1-2004 of the Central Board of Customs and Excise, it is clarified that in granting registration the jurisdictional officer cannot question the correctness of the declaration made by an applicant for registration. The jurisdictional officer is therefore to accept the declaration of the service provider for the purpose of registration.
50. Circulars of the Central Board of Excise and Customs are binding on the Department. This proposition finds support from the judgments of the Supreme Court in
51. Relying on the judgment of the Supreme Court in
52. In the aforesaid case, Supreme Court held as follows:
Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law.
53. The judgment is not applicable in this case. There is no decision of Court that is contrary to the circulars of the Central Board of Excise, relied upon by Mr. Poddar. Nor are the circulars patently contrary to statute. Even assuming that the circulars might be challenged, the same would bind the Department, until the challenge succeeded.
54. The application dated 2-11-2005 of the petitioner company being for registration in the category of business auxiliary service, registration had to be granted in the category of business auxiliary service. The petitioner never applied for registration in the category of service of clearing and forwarding agency and could not, therefore, have been granted registration in that category.
55. The Commissioner of Central Excise and the Superintendent of Central Excise have no power to grant registration on their own, even though no application for registration might be made. On a parity of reasoning the Superintendent of Central Excise and the Commissioner have no power to grant registration in a category other than the category in which registration has been sought. Failure and/or omission to pay service tax in full might give rise to recovery proceedings and attract the penal provision of the Finance Act, 1994 read with the Service Tax Rules, 1994.
56. There is no provision, either in the Finance Act, 1994 as amended from time to time, or in the Service Tax Rules, 1994 framed thereunder which stipulates the consequences of delay in applying for registration.
57. Even assuming, as argued by Mr. Roy Chowdhury, that there was some delay on the part of the petitioner company in applying for registration in the category of business auxiliary service, the application could not have been rejected on that ground. Nor could registration have been granted in a different category on the ground of delay. At best, interest and/or penalty might be imposed on the ground of delay in applying for registration.
58. This Court does not, in writ proceedings adjudicate disputes with regard to the nature of the work performed by an applicant for registration. However, as argued by Mr. Poddar, there is really no dispute with regard to the nature of service provided by the petitioner company. The respondents have virtually admitted that the petitioner carries on job of supervision.
59. It prima facie appears to this Court that the nature of the services rendered by the petitioner company to its clients does not fall within the category of service of a clearing and forwarding agent.
60. As rightly argued by Mr. Poddar, the Finance Act 1994 does not specify the activities that would constitute clearing and forwarding operations. In Advanced Law Lexicon (3rd Edn.) the expression ''clearing agent'' has been defined to mean "an agent on behalf of a shipper to clear goods through customs and other formalities on arrival." The Random House Compact Dictionary defines the word "clear" as to free a ship of cargo.
61. Mr. Poddar submitted that the activity of clearing involved freeing of a cargo. However, in terms of the contract with the coal companies, the coal companies were responsible for loading coal into railway wagons. The petitioner company did not have to clear coal from the mines. The petitioner only supervised the loading to ensure that the wagons were fully utilised and coal of the requisite quality was loaded.
62. Similarly, the word "forward" would mean to send towards the place of destination in terms of the meaning in Black''s Law Dictionary. This, according to Mr. Poddar, is also not done by the petitioner company.
63. A clearing and forwarding agent undertakes the service of receiving the goods from the factories or premises of the principal or his agents, warehousing the goods, receiving despatch orders from the principal, arranging the despatch of goods as per the directions of the principal, either by engaging transport of his own or through authorised transporters of the principal and maintaining records of the receipt and despatch of goods and stock available at the warehouse.
64. The real test of taxable service as clearing and forwarding agent is whether the activity includes inter alia receiving the goods from the factories or the premises of the principal or his agents, warehousing the goods, receiving despatch order from the principal, arranging despatch of goods as per the directions of the principal by engaging transport of his own or through the authorised transporters of the principal, maintaining records of the receipt and despatch of goods and the stock available at the warehouse.
65. In any case, the expression ''clearing and forwarding agent'' is apparently conjunctive and not disjunctive. Only clearing activities would not attract service tax in the category of service of clearing and forwarding agent. Similarly only forwarding activity would also not attract tax in the category of service of clearing and forwarding agent. The service provider would necessarily have to be engaged in providing clearing and forwarding services in order to be taxable in the category of clearing and forwarding agent.
66. In Commissioner of
67. The Court further held and observed that if, a person rendered service as "Forwarding Agent" without rendering any service as "Clearing Agent", he could not be brought within the tax net, since he could not be deemed to have rendered both services.
68. It is true, as argued by Mr. Roy Chowdhury, appearing on behalf of the petitioner, disputed questions of fact with regard to the exact nature of the activities of the petitioner company might not be adjudicated by this Writ Court under Article 226 of the Constitution of India. However, as observed above, the facts are not disputed. There being no dispute with regard to facts, the question of classification would be a question of law. Reference may, in this context, be made to the judgment of the Supreme Court in
69. In paragraph 100 of the writ petition, the petitioners have given instances of at least eight other concerns rendering the same services as the petitioner company, who have been given registration in the category of ''business auxiliary service''. The averments in the petition have not been controverted by the respondents. There is no attempt to explain the difference between the petitioner company and the concerns specified in Paragraph 100 of the writ petition. There is only a vague assertion of steps being taken for the registration of those concerns in the proper category.
70. If it is assumed that the averments in the writ petition with regard to the nature of service performed by the petitioner company are correct, the petitioner company would not be liable to service tax in the category of service of clearing and forwarding agent but in the category of provider of ''business auxiliary service''. However, disputes, if any, with regard to the jobs which the petitioners are required to do, might have to be decided in appropriate adjudication proceedings and/or the pending appeal of the petitioner company.
71. In any case, as observed above, there is no provision either in the Finance Act, 1994 or in the Service Tax Rules, 1994, whereunder an application for registration can be refused. As rightly argued by Mr. Poddar, registration can only be granted in the category in respect of which the application for registration has been submitted. Recovery and/or penal proceedings might be initiated against a person for non-payment of service tax, if the service provider is taxable under a different category.
72. For the reasons discussed above, the writ application succeeds. The impugned orders are set aside and quashed.
