ORDER
C.N.B. Nair, Member (T)
1. Heard both sides and perused the record.
2. Service tax demand has been made against the appellant by holding that the appellant had rendered clearing and forwarding agency service to its sister concern M/s. RAAS Controls, Noida, and therefore, service tax at the rate of 5% was payable on its receipts during the year 2000-2001, 2001-2002 and 2002-2003. Impugned order has been passed by rejecting the appellant’s contention that the appellant was only procuring the orders for sales and it did not deal with the goods in any manner and that procurement of orders did not amount to clearing and forwarding. The order has been passed by relying on the decision of this Tribunal in the case of Prabhat Zarda Factory .
3. The contention of the learned Counsel for the appellant is that in the present case, the appellant was only procuring and forwarding purchase orders to the manufacturer for effecting sales. It is being emphasised that once the orders were received by the manufacturer, it was executing the sales and sending the goods to the buyers without taking the appellant’s assistance in regard to clearing and forwarding. The learned Counsel would also point out that the decision in the case of Prabhat Zarda remains overruled by the Larger Bench of this Tribunal in Larsen and Toubro 2006 (3) STR 321 (Tri-LB). The submission of the learned Counsel is that in the facts of the case and in view of the legal position noted by the Larger Bench, the demand is not sustainable.
4. It is well settled that duty demand as a clearing and forwarding agent will arise only in cases where the party is concerned with the clearing and forwarding of goods and that mere procurement of orders would not attract the levy. In the present case, it is not in dispute that the appellant was only procuring orders and not in any way concerned with clearing, disposal or forwarding of the goods. Therefore, the tax demand is not sustainable. In the absence of tax demand, there could be no penalty.
5. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, to the appellant.
(Pronounced in the open Court)