Service Tax – C and F Agent not C or F Agent – High Court not impressed with CESTAT Larger Bench Orchestra
The whole “operations” involved in “C&F operations” now remind us of an orchestra, performing a western classical symphony. It reminds us of a connoisseur's experience of harmony in western classical music. While listening to Mahler's 9th symphony, one does not listen to an individual violin or a trumpet, but the harmony emanating from many different seemingly unrelated instruments. In the same way, a C&F Agent's functions consisting of seemingly unrelated tasks are well orchestrated. Merely, because the bassoon was not played in one of the movements of a symphony, it does not cease to be otherwise a part of the orchestra. While forming this view, we have certainly not overlooked the fact that while music can be sometimes taxing, a tax can never be musical. Because a buyer buys only rice and not wheat in a grocery shop, which claims to sell “wheat and rice”, the shop cannot cease to be a shop selling “wheat and rice”.
That is an extract from the CESTAT Larger Bench order in Medpro Pharma Pvt. Ltd - 2006-TIOL-848-CESTAT-DEL-LB.
The High Court was not impressed and said, “We have not been able to understand with utmost respect to the Tribunal as to what is 'Orchestrated nature of work' involved in the present transaction. The example of 'wheat and rice' grocery shop is obviously wholly mis -appropriate and does not fit in the context.”
The High Court did not accept the larger Bench decision and upheld the Mahavir Generics's case - 2004-TIOL-344-CESTAT-DEL.
Please see our ST se GST tak tomorrow for more details.