| Q.1
|
Who are clearing and
forwarding agents? |
| Ans. |
Clearing and forwarding
agents are those who provide services relating to the clearing
and forwarding operations and are engaged/appointed by manufacturer
of goods (both excisable and non-excisable), producers and distributors
of goods and also include such agents appointed for agricultural
and mineral goods. |
| Q.2 |
Who is the person
responsible for payment of Service Tax in case of a clearing
and forwarding agent ? |
| Ans. |
As in the case of all
other services, the service providers are responsible for payment
of Service Tax in respect of clearing and forwarding agents
also.
Earlier, it was directed that receivers of the service would
be responsible for paying the Service Tax. The same has been
held to be invalid by the Hon’ble Supreme Court of India in
the case of M/s.Laghu Udyog Bharati and Another Vs. Union of
India {1999(89)ELT.247(SC)}. Finance Bill 2000 has sought to
revalidate earlier position for limited period from 16.07.1997
to 01.08.1998 . |
| Q.3 |
What are the types
of services provided by clearing and forwarding agents which
attract Service Tax? |
| Ans. |
The levy of Service
Tax will applies to services rendered by clearing and forwarding
agents, who undertake, among other things, services of receipt,
warehousing, despatch, record maintenance and account of goods
on behalf of the principal who appoint or engage such agents.
Normally, there would be 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 on behalf of a
principal:
- receiving the goods from the factories or premises of
the principal or his agents;
- warehousing these goods;
- receiving despatch orders from the principal;
- arranging despatch of goods as per the directions of
the principal by engaging transport on 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;
Service Tax is payable in respect of the above services. |
| Q.4
|
What is the taxable
value of services provided by the clearing and forwarding agents? |
| Ans. |
The Service Tax is computed
on the gross amount of remuneration or commission paid to the
clearing and forwarding agent by the principal engaging such
agent.
Under Service Tax Rules, it has been provided that the value
of taxable service in relation to services rendered by clearing
and forwarding agents to a client shall deemed to be the gross
amount of remuneration or commission (by whatever name called)
paid to such agent by the client engaging such agent . For the
services rendered, the C & F agent receives commission or
remuneration, which usually consists of two components:
- minimum commission on a flat rate or turnover basis depending
on the packages/consignments handled, and
- a variable commission based on performance which is computed
on the performance indicators agreed upon between the agent
and the principal.
The above two constitute the remuneration or commission paid
to the C & F agent by the principal. |
| Q.5 |
Is the facility of
Centralised registration available to company having C&F
services in various towns, states, or areas? |
| Ans |
Yes. In cases where
C&F agents engaged for various towns, states or areas are
paid only by the regional or the head office of the company
appointing such agents, for Service Tax purposes it would suffice
to register only such regional or head offices. In such cases
the regional office or the head office, as the case may be,
should also be required to give an undertaking to discharge
the Service Tax liability. |
| Q.6 |
Whether brokers,
through whom factories/persons send their goods direct to the
customers, could be covered under the expression C & F agents? |
| Ans. |
Yes. If factories or
persons are engaging brokers for sending their goods directly
to their customers, on the basis of orders procured by them,
services rendered by brokers would amount to services provided
by a Clearing & Forwarding Agents and would be liable for
payment of Service Tax. |
| Q.7 |
Is the tax on service
of C & F agents abolished ? |
| Ans. |
No, the service tax
on C & F agents is not abolished but the manner of collection
of the tax has changed. With effect from 1.9.99, the C &
F agents themselves have to apply for registration and pay the
Service Tax to the Govt. for services rendered to their clients. |
| Q.8 |
What is the value
of taxable services in case of ‘turn-key’ contracts handled
by the C & F agents ? |
| Ans. |
The value of taxable
services rendered by a C & F agent is the gross amount charged
by such agent from the clients for the services of Clearing
& Forwarding operations in any manner. Further, the gross
amount means the amount of commission or remuneration received
for such services. Therefore, the remuneration received towards
‘turn-key’ contracts would be chargeable on gross basis. |
| Q.9 |
- Whether the "Arhatiya" (commission agent) working
in the mandies (such as vegetable mandi, food grain mandi
and fruit mandi) who are providing the service with regard
to selling the goods on behalf of agriculture producers
and getting commission for the same will be covered under
the definition of consignment agents or not ?
- Whether consignment agents are included under the
category of clearing & forwarding agents ?
|
| Ans. |
Yes, consignment agents
are included under the category of clearing & forwarding
agent. The clearing & forwarding agent means any person
who is engaged in providing any services either directly or
indirectly, connected with the clearing and forwarding operation
in any manner to any other persons and includes a consignment
agent. Since the consignment agents provide service in respect
of clearing & forwarding of a consignment, the services
provided by them are chargeable to service tax as C & F
agents.
(Authority : S.65 (12) of Finance Act, 1994) |
