M/S. COAL HANDLERS PVT. LTD.versusCOMMISSIONER OF CENTRAL EXCISE RANGE KOLKATA - 1

                       [2015] 4 S.C.R. 860


A              M/S. COAL HANDLERS PVT. LTD.
                                v.
       COMMISSIONER OF CENTRAL EXCISE RANGE
                     KOLKATA-1
B
               (Civil Appeal No. 7215 of 2004 etc.)
                           MAY 5, 2015

             [A.K. SIKRI AND R. F. NARIMAN, JJ.]
c      Finance Act, 1994 - s. 65(25) - Services provided by
  appellants under Agency contract - Whether were liable
  to service tax in relation to 'Clearing and forwarding agency'
  - Held: clearing and forwarding operations would cover
  those activities which pertain to clearing of the goods and
0
  thereafter forwarding those goods to a particular
  destination, at the instance and on the directions of the
  principal - In the present cases, no such activities were
  performed by the appellant -Agent - Thus the services
E rendered by the appellants would not qualify as 'Clearing
  and Forwarding Agent' within the meaning of s. 65(25) - The
  demand of service tax from the appellants is quashed.

          Words and Phrases - 'Forwarding agency' - Meaning
F   of, in the context of s.65(25) of Finance Act, 1994.

          Allowing the appeal Nos. 7215 of 2014 and 5159
    of 2013 and dismissing the appeal No. 9967 of 2014,
    the Court.

G       HELD: 1. From the reading of the definition
    contained in s.65(25) of the Finance Act, 1994, together
    with its dictionary meanings contained in Legal and
    Commercial dictionaries, it becomes apparent that in

H                              860
 COAL HANDLERS PVT. LTD. v. COMMISSIONER OF 861
          CENTRAL EXCISE RANGE

order to qualify as a C&F Agent, such a person is to A
be found to be engaged in providing any service
connected with 'clearing and forwarding operations'.
Once it is found that such a person is providing the
services which are connected with the clearing and
forwarding operations, then whether such services are B
provided directly or indirectly would be of no
significance and such a person would be covered by
the definition. [Para 11] [877-C-E]

     2. Clearing and forwarding operations, would C
cover those activities which pertain to clearing of the
goods and thereafter forwarding those goods to a
particular destination, at the instance and on the
directions of the principal. In the present cases, it
would essentially include getting the coal cleared as D
an agent on behalf of the principal from the supplier
of the coal (which would mean collieries in the present
case) and thereafter dispatching/ forwarding the said
coal to different destinations as per the instructions of
the principal. In the process, it may include· E
warehousing of the goods so cleared, receiving
dispatch orders from the principal, arranging dispatch
of the goods as per the instructions of the principal
by engaging transport on his own or through the F
transporters of the principal, maintaining records of the
receipt and dispatch of the goods and the stock
available on the warehouses and preparing invoices on
behalf of the principal. [Para 11] [877-F-H; 878-A·B]

    3. On the facts of the present case, it is found that G
none of the aforesaid activities are performed by the
appellant. There is no role of the appellant in getting
the coal cleared from the collieries/ supplier of the coal.
Movement of the coal is under the contract of sale H
862        SUPREME COURT REPORTS                [2015] 4 S.C.R.


A     between the coal company and the principal
      companies. Even the coal is loaded on to the railway
      wagons by the coal company. The goods are not under
      any legal detention from which they need to be freed
      by the appellant. Destination of the goods is known to
 B    the coal company flnd the railway rakes are placed by
      the coal company for the said destinations. The
      destination is the factories of the principal itself, where
      the coal is to be delivered by the coal company as per
      pre-determined/agreed covenants between them.
C     Therefore, there is no occasion for Ambuja companies
      to instruct the appellant to dispatch/forward the goods
      to a particular destination which is already fixed as per
      the contract between the coal company and the
      principal companies. The appellant does not even
D     undertake any loading operation. The primary job of
      the appellant, as per the contract between the appellant
      and the principal companies, is of supervising and
      liaisoning with the coal company as well as the
E     Railways to see that the material required by principal
      companies is loaded as per the schedule. At no stage,
      custody of the coal is taken by the appellant or
      transportation of the coal, as forwarders, is arranged
      by the appellant. Thus, the services rendered by the
 F    appellant would not qualify as C&F Agent within the
      meaning of Section 65(25) of the Act. The demand of
      service tax made from the appellants is quashed.
      [Paras 12 and 13] [878-C-H; 879-A-B]

G      Mis. Prabhat Zarda Factory {India) Ltd. v.
  Commissioner of Central Excise, Patna 2002 (145) ELT
  222; Larsen & Toubro Ltd. v. Commissioner of Central
  Excise, Chennai 2006 ECR 634 Tri Delhi Black's Law
  Dictionary (Seventh Edition); Penguin Business Dictionary;
H Halsvury's Laws of England (Volume 5) - referred to.
 COAL HANDLERS PVT. LTD. v. COMMISSIONER OF 863
          CENTRAL EXCISE RANGE

                 Case Law Reference                        A

    2002 (145) ELT 222           referred to Para 5

    2006 ECR 634 Tri Delhi       referred to Para 7

   CIVIL APPELLATE JURISDICTION: Civil Appeal No.          B
7215 of 2004.

    From the Judgment and Order No. A-305/Kol/2004
dated 24.05.2004 of the Customs Excise and Service Tax
Appellate Tribunal, Eastern Regional Bench, Kolkata in C
Appeal No. EDM-59/03.

                      WITH

    C. A. No. 5159/2013 and 9967/2014
                                                           D
     N. K. Poddar, K. Radhakrishnan, M. P. Devanath, Vivek
Sharma, L. Charanya, Aditya Bhattacharya, R.
Ramchandran, Hemant Bajaj, Ambarish Pandey, Rajesh
Kumar, Anandh K., V. Tibrewal, A. Agarwal, Alok Singh, B.
Vijayalakshmi Menon, Sanjay Jain, Nisha Bagchi, S. A. E
Haseeb, Kapil Rastogi, Sujeeta Srivastava, B. Krishna
Prasad, for the Appearing Parties.

    The Judgment of the Court was delivered by
                                                           F
    A.K. SIKRI, J.

    CIVIL APPEAL NO. 7215 OF 2004

    CIVIL APPEAL NO. 5159 OF 2013
                                                           G
     Appellants in both these appeals are the assessees
and the issue involved in these appeals is common. Both
the appellants provide certain services as Agents under the
contracts signed with their respective Principals. The issue
is as to whether such services provided by them would label H
864         SUPREME COURT REPORTS                 [2015] 4 S.C.R.


A them as Clearing & Forwarding Agents (for short, 'C&F
  Agents') and, thus, make them liable to service tax in
  accordance with the Finance Act, 1994 (hereinafter referred
  to as the 'Act'), as amended from time to time. Since the
  issue to be decided in both the appeals is identical and
B also arises almost in the same factual background, it would
  serve our purpose if we reproduce the facts from Civil
  Appeal No. 7215 of 2004.

           2) The appellant in this case is providing certain
C     services as Agent. Such services are provided to M/s.
      Gujarat Ambuja Cements Limited and M/s. Ambuja
      Cements Eastern Limited (hereinafter collectively referred
      to as 'Ambuja companies'). At the material time, these
      were public sector undertakings under the Government of
D     Gujarat. These industries need coal as a raw material for
      productiqn of cement, which is the main manufacturing
      activity undertaken by the said companies. Industries that
      need coal as a raw material generally approach the Ministry
               I

      of Industries, Government of India with their requirements.
E     The Ministry of Industries, after enquiry, recommends to the
      Ministry of Coal the quantity that is required to be supplied
      to such industries. Thereafter, the Ministry of Coal, as per
      the norms prescribed, allots the coal to these industries
F     through the Long Term Linkage Committee indicating the
      coal companies and the location from which coal can be
      made available to them. While fixing the locations from
      where the coal is to be supplied to such companies, the
      Committee takes into account the Railways commitment for
G     movement of the coal. The Railways is responsible for
      placing of rail rakes according to the programme. To
      maintain constant liaison with the Railways for the actual
      placing of coal rakes, such companies generally appoint
      its Agents. The aforesaid Ambuja companies, for this
H     purpose, had appointed the appellant for this purpose and
  COAL HANDLERS PVT. LTD. v. COMMISSIONER                       865
   OF CENTRAL EXCISE RANGE [A.K. SIKRI, J.]

a contract was entered into between the said Ambuja A
companies and the appellant. Under this Agency
agreement, the appellant was required to undertake the
following activities on behalf of the Ambuja companies:

    (i) following up the allotment of coal rakes by the          B
Railways;

     (ii)expediting and supervising the loading and labeling
of rail wagons;

    (iii) drawing the samples of coal loaded on the wagons;      C

     (iv) complying with the formalities relating to payments
for freight to the Railways; and

    (v) dispatching of rail receipts to Ambuja companies.        D

    3) The issue that arose for consideration was as to
whether aforesaid services were liable to service tax under
the provisions of the Act. By the said Act, sub-section (25)
was inserted in Section 65, which defines C&F Agent as E
under:

     "(25) "clearing and forwarding agent" means any
     person who is engaged in providing any service, either
     directly or indirectly, connected with the clearing and     F
     forwarding operations in any manner to any other
     person and includes a consignment agent;"

    We may also note that the taxable service as provided
in Section 65(48)0) of the Act in relation to service of C&F
Agent means 'any service provided to a client, by a clearing G
and forwarding agent in relation to clearing and forwarding
operations in any manner'.
    4) It so happened that the appellant had filed an
application for registration in Form ST-I under Section 69       H
866          SUPREME COURT REPORTS           [2015] 4 S.C.R.


A of Chapter V of the Act on November 17, 1999 for the
  service of 'handling agents' (C&F Agent). Certification of
  Registration was granted on November 18, 1999.
  Thereafter, on May 30, 2000, the appellant surrendered the
  said Registration Certificate on the ground that services
B rendered by them were not covered by Section 65(25) of
  the Act. The application for surrender was, however,
  rejected by the Superintendent of Central Excise (SCE),
  Service Tax Cell, Kolkata-1, Commissionerate on February
  08, 2001 by passing the Order-in-Original. The SCE, in that
C order, .took the view that the services rendered by the
  appellant under the aforesaid contract with Ambuja
  companies would be covered by Section 65(25) of the Act
  and, therefore, exigible to service tax. Aggrieved by the
  said order, the appellant preferred an appeal before the
0
  Commissioner of Central Excise (Appeals), Kolkata, which
  was also dismissed by the Commissioner on November 05,
  2002. This order was challenged by the appellant before
  the Customs, Excise & Service Tax Appellate Tribunal (for
E short, 'CESTAT').

      5) The CESTAT has also dismissed the appeal by the
  impugned order dated May 24, 2004 by observing that the
  matter is covered by its own judgment in the case of Mis.
F Prabhat Zarda Factory (India) Ltd. v. Commissioner of
  Central Excise, Patna 1 . The Tribunal has noted in this
  behalf that in the said case the Bench of the Tribunal had
  considered the definition of C&F Agent and has held that
  such definition was very wide and includes any service,
G even provided indirectly. It was also noted that the said
  judgment was delivered on February 09, 2002 and
  thereafter Finance Act of 2003 was introduced and the new
  service, viz. 'Business Auxiliary Service' appearing in

H     1. 2002 (145) ELT 222

                                                                ...
     COAL HANDLERS PVT. LTD. v. COMMISSIONER OF 867
        CENTRAL EXCISE RANGE [A.K. SIKRI, J.]

    Section 65(19) was introduced. The said service is in A
    relation to promotion or marketing of service provided by
    the client; any customer care service provided on behalf
    of the client and any incidental or auxiliary support service
    such as billing, collection or recovery of cheques, accounts
    and remittance, evaluation of prospective customer and B
    public relation services, and includes services as a
    commission agent. The CESTAT, however, held that the
    activities undertaken by the appellant were not covered by
    the expression 'Business Auxiliary Service', which include
    Commission Agents, and stand exempted from service tax C
    with effect from July 01, 2003 vide Notification No. 13/2003
    dated June 20, 2003. Therefore, no such exemption was
    available. The relevant paras of the impugned order
    containing the aforesaid discussion are as under:
                                                                   D
'
          "5) The appellants have agreed that the issue
          involved stands decided in the case of Prabhat Zarda
          Factory (India) Ltd. (Supra). The Tribunal under the
          said judgment has observed that as per definition of
          clearing and forwarding agent, he is a person who is E
          engaged for providing any service, either directly or
          indirectly connected with clearing and forwarding
          operations in any manner to any other person and
          includes a commission agent. The use of the F
          expression "any" and "indirectly" in the said definition
          of clearing and forwarding agent, is indicative of the
          fact that the scope of the services to be provided by
          clearing and forwarding agent is quite wide. He is
          not only the person who is actually dealing with the G
          goods, which has to be termed as clearing and
          forwarding agent, but even if the services are indirect
          and if the same are connected with the clearing and
          forwarding operations in any manner of the other
          persons, he would be covered within the scope of the  ,  H
868   SUPREME COURT REPORTS                   [2015] 4 S.C.R.


A     said definition. The appellants in the instant case
      render their services in all the sections of pre load of
      the coal rakes i.e. obtaining consent on behalf of their
      customers, sanctions from the office of Executive
      Director-Rail Movement, supervising loading of the
 B    wagons, sending samples and assuring the proper
      quality and quantities, complying with the formalities
      relating to payments for freight. As such, it is quite
      clear that the appellant is covered by the definition
      of clearing and forwarding agent, as interpreted by the
c     Tribunal in the above referred case of Prabhat Zarda.

      6) The appellants have alternative contention that
      they are covered by the new i.e. Business Auxiliary
      Service introduced vide Finance Act of 2003.
D     However, we find that the said services are in the           •
      nature of promotional or marketing of the customers
      goods or in the nature of doing the other routine type
      of jobs like billing or collection of cheques,
      maintenance of accounts and evaluation of
E     prospective customers and public relation services.
      The services being provided by the appellant cannot
      be equated to the above. It is also seen that the
      expression 'commission agent' has been explained by
      the Notification dated 201h June, 2003 reported in 155
 F
      ELT N-171; vide paragraph 2.1.3 it has been clarified
      that C&F agents work on commission basis do not
      fall under the definition of 'Business Auxiliary Service',
      in as much as they are substantially covered within
G     the definition C & F service. It has, further, been
      clarified that under Section 65A of Finance Act, 1994,
      it has also been provided that in case of overlap, a
      service would be classified under the head, (a) which
      provides most specific description, (b) in case of a
H     composite service having combination of different
  COAL HANDLERS PVT. LTD. v. COMMISSIONER OF 869
     CENTRAL EXCISE RANGE [A.K. SIKRI, J.]

        taxable services, the service which give them their A
        essential character and (c) in case the test of (a) and
        (b) does not resolve, the service which comes earlier
        in the clauses of Section 65, i.e. the service that was
        subjected to service tax earlier. Since Insurance
        services and C & F Services are more specific B
        description and were also subjected to service tax
        prior to imposition of tax on business auxiliary service,
        the insurance agents, C & F agents working on
        commission basis would fall under those respective
        categories. From this, it follows that a particular C
        service can be taxed only under one head of service."

     6) As is clear from the reading of the aforesaid
extracted portion of the order, the Tribunal has rested its
impugned decision on its earlier judgment in the case of D
Prabhat Zarda (supra) and the reasons contained in the
said judgment are restated in support of the view taken by
the Tribunal in the impugned judgment.

     7) It so happened that the ratio of the decision in E
Prabhat Zarda (supra) was doubted by another Bench of
the Tribunal and the said Bench referred the matter to the
larger Bench. On reference being made, the Full Bench
of the Tribunal decided the issue and on the aforesaid
aspect decision in Prabhat Zarda (supra) has been F
overruled by it. The judgment of the Full Bench is known
as Larsen & Toubro Ltd. v. Commissioner of Central
Excise, Chennai2. It gets revealed from the decision of
the larger Bench that after taking note of the definition of
'clearing and forwarding agent' (which has already been G
extracted above), the larger Bench observed that the

2. 2006 (3) STR 321 (Tri.-LB) :: 2006 (110) ECC 634 :: 2006 ECR 634 Tri
Delhi                                                                     H
870        SUPREME COURT REPORTS                 [2015] 4 S.C.R.


A service should be connected with clearing and forwarding
  operations. The 'clearing and forwarding' operations would
  be various activities having bearing on clearance of goods,
  which would involve documentary processes and
  arrangements for transfer of goods to their destination,
B which process may also involve clearance at subsequent
  stages during forwarding operations. In the opinion of the
  larger Bench, the procurer of orders on commission basis
  renders services which are not connected with such
  clearing and forwarding operations, which have bearing on
C the movement of goods. It also mentioned that normally
  a C&F Agent undertakes the following activities:

           (i) receiving the goods from the factories or premises
      of the principal or his agents;
D
          (ii)warehousing these goods;

          (iii) receiving despatch orders from the principal;

       (iv) arranging despatch of goods as per the directions
E of the principal by engaging transport on his own or through
  the authorized transporters of the principal;

         (v) maintaining records of the receipt and despatch of
      goods and the stock available at the warehouse; and
 F
            (vi) preparing invoices on behalf of the principal.

       8) Since the appellant in that case was engaged only
  for procuring purchase orders for vendor on commission
G basis and was not engaged in any of the above activities,
  the larger Bench concluded that the services provided by
  the said appellant would not fall within the definition of
  'clearing and forwarding agent' as contained in the Act. The
  detailed discussion on this aspect runs as follows:
H
COAL HANDLERS !-'VT. LTD. v. COMMISSIONER OF 871
   CENTRAL EXCISE RANGE [A.K. SIKRI, J.]

   "9.3 An agent engaged only for procuring purchase          A
  orders for the vendor on commission basis does not
  engage in any of the above activities, directly or
  indirectly. Commission agent engaged to procure
  orders and not entrusted with the work of clearing and
  forwarding of the goods would be a person who, in           B
  the ordinary course of business, makes contracts for
  sale or purchase of goods for others. The definition
  of "commission agent" in Section 2(aaa) of the Central
  Excise Act, 1944, would apply in relation to service
  tax as it applies in relation to duty of excise by virtue   C
  of Sub-section (121) or Section 65 of the Act. Services
  of commission agent are included in the definition of
  "business auxiliary service" under Sub-section (19) of
  Section 65 w.e.f. 1-7-2003, which includes service of       D
  a commission agent. As defined in Explanation (a) to
  Sub-section (19) of Section 65 commission agent is
  a person who acts on behalf of another person and
  causes sale or purchase of goods, or provision or
  receipt of services, for consideration, and includes any    E
  person who, while acting on behalf of another person:
  deals with goods or services or documents of title to
  such goods or services; or collects payment of sale
  price of such goods or services; or guarantees for
  collection or payment for such goods or services; or        F
  undertakes any activities relating to such sale or
  purchase of such goods or services. This clearly
  shows that the activity of mere procurement of
  purchase orders for the principal on commission basis
  of a commission agent is treated separately by the          G
  Parliament from the activities of a clearing and
  forwarding agent. Activity of procuring orders is thus
  independent of clearing and forwarding operations.
  The agents doing these activities can be different.
  Moreover, clearing and forwarding operations do not         H
872   SUPREME COURT REPORTS                  [2015] 4 S.C.R.


A     flow directly or indirectly from mere procurement of
      orders. There is no obligation on the person procuring
      orders as a commission agent for the principal, only
      by virtue of that agency, to carry out clearing and
      forwarding operations in respect of the goods which
 B    are to be supplied pursuant to the orders so procured.

       10. It appears to us that the expressions "directly or
       indirectly" and "in any manner" occurring in the
       definition of "clearing and forwarding agent" cannot
C      be isolated from the activity of clearing and forwarding
       operations. A person may undertake to provide service
       of' procurement of orders as agent of the principal
       without agreeing to provide services of clearing and
       forwarding of the goods. Clearing and forwarding has
D      a very specific connotation in the context of movement
       of goods from the supplier to their destination and
       agents undertaking clearing and forwarding operations
       mav never have been concerned with procurement of
       orders for the goods which are cleared and forwarded.
E     A person entrusted with the work of commission agent
       for procuring orders for the principal cannot insist on
       also providing services as clearing and forwarding
       agent in respect of those goods and it would be open
       for the principal to engage some other person for the
F
      purpose of forwarding such goods. In cases where
      the buyer is under an obligation to take delivery of
      the goods from the vendor's premises, there would
      not be even any need on the part of the vendor to
G     engage any forwarding agent, nor can a person
      engaged for the purpose of clearing and forwarding
      operations, insist on procuring orders for the principal
      in the absence of any stipulation to that effect.

      11. We, therefore, hold that mere procuring or booking
H
  COAL HANDLERS PVT. LTD. v. COMMISSIONER OF 873
     CENTRAL EXCISE RANGE [A.K. SIKRI, J.]

     orders for the principal by an agent on payment of A
     commission basis would not amount to providing
     services as "clearing and forwarding agent", within the
     meaning of the definition of that expression under
     Section 65(25) of the Finance Act, 1994, as has been
     held in the decision of the Tribunal in Prabhat Zarda B
     Factory (Pvt.) Ltd. v. CCE Patna reported in 2002
     (145) ELT: 2002 (50) RLT 326 (CEGAT-KOL.). The
     decision in Prabhat Zarda Factory (Pvt.) Ltd. stands
     overruled to the extent of the aforesaid ratio laid down
     thereunder. The reference is answered accordingly. C
     All these appeals will now be placed before the
     concerned Division Bench for decision on merits in
     the light of this judgment and in accordance with law.

                   (emphasis added)"                             D

     9) Significantly, the Revenue accepted the aforesaid
decision in the case of Larsen & Toubro (supra) and did
not file any appeal thereagainst. Even otherwise, we find
that the larger Bench of the Tribunal in the said case has       E
rightly interpreted the definition of 'clearing and forwarding
agent' contained in Section 65(25) of the Act.
Notwithstanding the aforesaid dicta of the larger Bench,
learned senior counsel appearing for the Revenue
submitted that judgment in Prabhat Zarda (supra) has not         F
been overruled entirely, as is clear from the reading of para
11 of the judgment where the larger Bench has said that
Prabhat Zarda (supra) 'stands overruled to the extent of
the aforesaid ratio laid down thereunder'. His endeavour
was to demonstrate that in the present case the Tribunal         G
in the impugned judgment had rightly relied upon Prabhat
Zarda (supra) and when the services rendered by the
appellant are looked into, it would clearly fall within the
definition of 'clearing and forwarding agent' contained in       H
874        SUPREME COURT REPORTS                  [2015] 4 S.C.R.


A     Sec~on 65(25) of the Act.

          Let us, therefore, examine whether services rendered
      by the appellant would qualify it as C&F Agent?

           10) It W()Uld be relevant to point out the definition of
 8
      'forwarding a,gent', as known in legal parlance, from Black's
      Law Dictionary (Seventh Edition), which is as under:

       "forwarding agent. 1. A person or company whose
  business is to receive and ship goods for others - Also
C termed freight-forwarder. 2. A freight- forwarder who
  assembles less-than-carload shipments 'small shipments'
  into carload shipments, thus taking advantage of lower
  freight rates."

D         The Penguin Business Dictionary defines this
      expression in the following words:

           "Forwarding agent. A GENERAL AGENT who
           specializes in moving goods from a factory or port of
E          entry to their proper destination. Such an agent
           normally owns the transport necessary for this work
           and often arranges FREIGHT and customs formalities
           for his principal."

F            In Fourth Edition of Halsbury's Laws of England
      (Volume 5), the characteristics of 'forwarding agents' are
      narrated in the following manner:

           "442. Characteristics of forwarding agents. A
G          forwarding agent is one who carries on the business
           of arranging for the carriage of gods for other people.
           It must be clearly understood that a forwarding agent
           is not, in general, a carrier: he does not obtain
           possession of the goods: and he does not undertake
H          the delivery of them at the other end. All that he does
COAL HANDLERS PVT. LTD. v. COMMISSIONER OF 875
   CENTRAL EXCISE RANGE [A.K. SIKRI, J.]

  is to act as agent for the owner of the goods to make    A
  arrangements with the people who do carr)t, such as
  shipowners, road hauliers, railway authorities and air
  carriers, and to make arrangements, so far as they
  are necessary, for the intermediate steps between the
  ship and the rail, the customs or anything else.         B

  Although there is a clear distinction between a
  forwarding agent and a carrier, the same person may
  carry on both activities at once, and contract
  sometimes as one and sometimes as the other. The C
  fact that a person describes himself as a forwarding
  agent is not conclusive: and it is a question of fact to
  be decided according to the circumstances of each
  case whether a person normally carrying on business
  as a forwarding agent cont~acts solely as agent so D
  as to establish a direct contractual link between his
  customer and a carrier (or possibly with several
  carriers, each undertaking a different part of the
  transit), or whether he contracts as principal to carry
  the goods, the customer appreciating that he will E
  perform the contract vicariously through the
  employment of sub-contractors. The nature of the
  carriage, the language used by the parties in
  describing the role of the person concerned, and any F
  course of dealing between the parties will be relevant
  factors.

  Persons properly described as shipping and
  forwarding agents frequently act as carriers
  themselves with respect to part of the carriage, for G
  example, by performing collection and delivery
  services between the customers' premises, their own
  depots, and warehouses, docks and carriers' depots.
  In such cases they would have the rights and duties H
876   SUPREME COURT REPORTS                 (2015] 4 S.C.R.


A     of carriers with respect to such carriage as they
      undertake personally, but the rights and duties of
      forwarding agents with respect to the remainder of the
      transit.

 B    443. Rights and liabilities of forwarding agents.
      The rights and liabilities of a forwarding agent are
      governed by the general principles of the law of
      agency: and so he is entitled to be indemnified against
      all expenses incurred on behalf of his principal and
c     to be paid his proper charges for his services. He is
      liable for failure to make proper arrangements for the
      carriage and for ancillary matters which he has
      undertaken, such as customs clearance. He is not
      liable for the failings of persons with whom he makes
D     contracts on behalf of his principal, unless he know
      of those failings and ought to have taken action either
      to remedy them or at least to inform his principal so
      that damage might be avoided or mitigated: thus he
      is under no duty to supervise the actions of carriers
 E
      whom he reas0nably and properly expects to perform
      their normal obligations competently.

      In ordinary transactions a forwarding agent is not
 F    liable for failing to insure the goods, in the absence
      of instructions from his customer to do so: but he may,
      in certain circumstances, be liable for not consulting
      his customer and advising him as to the proper
      transport and insurance arrangements which should
G     be made for valuable goods

      A forwarding agent is not normally personally liable
      to pay the charges of carriers whom he engages to
      carry the gods on behalf of his principal; but there is
H     a custom of the London freight market that forwarding
  COAL HANDLERS PVT. LTD. v. COMMISSIONER OF 877
     CENTRAL EXCISE RANGE [A.K. SIKRI, J.]

     agents incur personal liability to shipowners for the      A
     payment of freight or of dead freight for booked space
     left unfilled.

     A forwarding agent who tenders dangerous goods to
     carriers without warning them of their nature or of the    B
     precautions which should be taken in their carriage
     is personally liable to the carriers for any resulting
     damage through breach of the implied warranty that
     the goods are fit for carriage."
                                                                c
     11) From the reading of the definition contained in the
aforesaid provision, together with its dictionary meanings
contained in Legal and Commercial dictionaries, it becomes
apparent that in order to qualify as a C&F Agent, such a
person is to be found to be engaged in providing any            D
service connected with 'clearing and forwarding operations'.
Of course, once it is found that such a person is providing
the services which are connected with the clearing and
forwarding operations, then whether such services are
provided directly or i111directly would be of no significance   E
and such a p~rson would be covered by the definition.
Therefore, we have to see as to what would constitute
clearing and forwarding operations. As is clear from the
plain meaning of the aforesaid expression, it would cover
those activities which pertain to clearing of the goods and     F
thereafter forwarding those goods to a particular
destination, at the instance and on the directions of the
principal. In the context of these appeals, it would
essentially in"clude getting the coal cleared as an agent on
behalf of the principal from the supplier of the coal (which    G
would mean collieries in the present case) and thereafter
dispatching/ forwarding the said coal to different
destinations as per the instructions of the principal. In the
process, ft may include warehousing of the goods so             H
878         SUPREME COURT REPORTS                 [2015] 4 S.C.R.


A  cleared, receiving dispatch orders from the principal,
   arranging dispatch of the goods as per the instructions of
   the principal by engaging transport on his own or through
   the transporters of the principal, maintaining records of the
   receipt and dispatch of the goods and the stock available
 B on the warehouses and preparing invoices on behalf of the
   principal. The larger Bench rightly enumerated these
   activities which the C&F Agent is supposed to perform.

            12) On the facts of the present case, we find that none
C     of the aforesaid activities are performed by the appellant.
      There is no role of the appellant in getting the coal cleared
      from the collieries/ supplier of the coal. Movement of the
      coal is under the contract of sale between the coal
      company and Ambuja companies. Even the coal is loaded
 D    on to the railway wagons by the coal company. The goods
      are not under any legal detention from which they need to
      be freed by the appellant. Not only this, destination of the
      goods is known to the coal company and the railway rakes
      are placed by the coal company for the said destinations.
 E    The destination is the factories of the principal itself,
      namely, Ambuja companies, where the coal is to be
      delivered by the coal company as per pre-determined/
      agreed covenants between them. Therefore, there is no
 F    occasion for Ambuja companies to instruct the appellant
      to dispatch/forward the goods to a particular destination
      which is already fixed as per the contract between the coal
      company and the Ambuja companies. The appellant does
      not even undertake any loading operation. The primary
G     job of the appellant, as per the contract between the
      appellant and the Ambuja companies, is of supervising and
      liaisoning with the coal company as well as the Railways
      to see that the material required by Ambuja companies is
      loaded as per the schedule. At no stag~ custody of the
H     coal is taken by the appellant or transportation of the coal,
  COAL HANDLERS PVT. LTD. v. COMMISSIONER OF 879
      CENTRAL EXCISE RANGE [A.K. SIKRI, J.]

as forwarders, is arranged by the appellant. We are, thus, A
of the clear opinion that the services rendered by the
appellant would not qualify as C&F Agent within the
meaning of Section 65(25) of the Act.

    13) In view of the aforesaid discussion, the appeals     B
are allowed and the impugned orders passed by the
Tribunal are set aside by quashing the demand of service
tax made from the appellants.

     No costs.                                               c
     CIVIL APPEAL NO. 9967 OF 2014

      The Commissioner of Service Tax, Kolkata, is
aggrieved by the orders dated August 21, 2013 passed by
the High Court of Calcutta, which has dismissed the appeal D
of the Revenue by the impugned judgment, refusing to
entertain the said appeal which was preferred by the
Revenue against orders dated April 02, 2013 passed by
CESTAT. In the said appeal before the CESTAT, it had
taken the view, in the case of same appellant, that the E
appellant was not liable to pay any service tax as it was
not covered by the definition of C&F Agent as contained
in Section 65(25) of the Act. The appeal preferred by the
Revenue was dismissed by the High Court on the ground F
that Civil Appeal No. 5159 of 2013 is pending in this Court.
Since the said appeal of the appellant is allowed by us, as
a consequence, this appeal warrants to be dismissed and
it is ordered accordingly.

    No costs.                                                G

Kalpana K. Tripathy                    Appeal disposed of.



                                                             H