MADHU AGENCIES vs COMMISSIONER, CGST-JAIPUR I

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH-COURT NO. IV


SERVICE TAX APPEAL NO. 50436 OF 2021

[Arising out of Order in Appeal No. 375(SM) ST/JPR/2020 dated
4.12.2020 passed by the Commissioner (Appeals) Central Excise and
Central goods and Service tax, Jaipur]

M/S. MADHU AGENCIES …..APPELLANT
Near Purna Sharda Diagnostic
Centre Sukhda, Ashok Marg,
Ajmer, Rajasthan-305001

Vs.


COMMISSIONER OF CGST –JAIPUR I …..RESPONDENT
NCR Building, Statue Circle, C-Scheme
Jaipur, Rajasthan-302005

Appearance:

Mr. SC Vaidyanathan and Srijit Chakrabarti, Advocates for the appellants

Mr. S.R. Meena Authorised Representative for the Department

CORAM:
HON'BLE MR. AJAY SHARMA, MEMBER (JUDICIAL)
HON'BLE MR. P.V.SUBBA RAO, MEMBER ( TECHNICAL )

FINAL ORDER NO’S. 51678 /2026
DATE OF HEARING : 3/11/2026
DATE OF DECISION : 05/11/2026
P.V.SUBBA RAO

1. The order dated 4.12.20220 passed by the
1
Commissioner(Appeals) upholding the Order dated 24.7.2019
passed by the Deputy Commissioner in which he decided the
proposals made in the show cause notice dated 5.10.2018 is
2
assailed by M/s Madhu Agencies in this appeal.
2. The Deputy Commissioner had confirmed demand of
service tax of Rs. 30,01,257/- under the proviso to section 73(1)

1 Impugned order
2 Appellant

2
ST/50436/2021
3
of the Finance Act, 1994 along with interest under section 75 of
the Act and imposed an amount equal to the duty as penalty
under section 78 of the Act. The Commissioner (Appeals) passed
the impugned order upholding the above order. Hence, this
appeal.
3. We have heard learned counsel for the appellants and the
learned authorized representative for the revenue and perused
the records.
4. The appellant is a proprietorship firm which was registered
with the service tax department and provided ‘Clearing and
Forwarding Agent (C&F)’ Service and it paid service tax on the
service charges which it had received for the services.
5. The appellant had entered into a agreement with M/s. Birla
Tyres Ltd. to act as its C&F Agent and it was required to receive,
warehouse, safely store and dispatch the tyres. The agreement
further provided that if Birla Tyers has to transfer stock, the
freight would be paid by the appellant which would thereafter be
reimbursed by Birla Tyres.
6. Separate bills were raised by the appellant on Birla Tyres
for the services which it rendered on which it paid service tax and
for reimbursement of the freight which it had incurred on behalf
of Birla Tyres. The actual transportation was done by other
parties and the consignment notes indicate Birla Tyres as both
the consignor and the consignee.

3 Act

3
ST/50436/2021
7. Birla Tyres has further confirmed that it had reimbursed the
freight charges and as the recipient of the GTA service, it had
also paid service tax under reverse charge.
8. However, initially an SCN dated 19.4.2017 was issued to
the appellant demanding service tax on the freight charges
reimbursed to it during the period October 2011 to November
2014. This demand was dropped by the Original Authority as the
Birla Tyres was both the consignor and the consignee and the
appellant had only acted as a pure agent while receiving
reimbursement of expenses incurred on freight. Revenue’s appeal
against the order was rejected by the Commissioner (Appeals)
through order dated 11.9.2018. Thus, the issue attained finality.
9. Thereafter, the present proceedings were started again by
issuing an SCN dated 5.10.2018 covering the period December
2014 to June 2017 on the ground that transportation was part
and parcel of the C&F Agent service and therefore, the appellant
had to pay service tax including the reimbursed freight charges.
The appellant resisted the proposals but both the lower
authorities confirmed the demand of service tax with interest and
penalties. Hence, this appeal.
10. The submission of the learned counsel for the appellant

before us is that the issue is no longer res integra and merely
because transportation activity is also undertaken under the
same agreement, it will not become part and parcel of the C&F
Agent service. Reliance is placed on Astha Solutions Vs.

4
ST/50436/2021
Principal Commissioner of CGST and Central Excise,
4
Jaipur and a few other decisions.
11. Learned authorised representative for the Revenue, on the
other hand, vehemently supported the impugned order.
12. We have considered the submissions advanced by both
sides and perused the records.
13. The appellant is undisputedly a C & F Agent. A C & F
agent’s service may or may not include transporting goods
depending on the terms of the contract. As per the contract of
the appellant with Birla Tyres, it was only required to receive,
warehouse, safely store and dispatch the tyres. It’s responsibility
did not include transportation which was carried out by
independent transporters or Goods Transport Agencies (GTA) and
the lis was be between the GTA or transporter and Birla Tyres
which was both the consignor and consignee. According to the
appellant, Birla Tyres paid service tax on the GTA service under
reverse charge.
14. Needless to say, that in such an arrangement, the C&F
agent and the transporter or GTA will have to work together. This
working together, as per the agreement between the appellant
and Birla Tyres, included paying the transporter or GTA and then
getting reimbursed by Birla Tyres. The mere fact that the
appellant paid the transporter or GTA on behalf of Birla Tyres and
was then reimbursed does not mean that the appellant had
transported goods of Birla Tyres. The lis with respect to the
transportation of goods was between Birla Tyres and the

4 Final order no. 50336/2026 dated 23.2.2026

5
ST/50436/2021
transporter or the GTA and not between the appellant and Birla
Tyres.
15. The appellant had paid the money to the transporter or
that the GTA on behalf of Birla Tyres which is more or less like
lending money to Birla Tyres and Birla Tyres reimbursing the
amounts so paid is like repaying the amounts. This cannot be
treated as part of C & F agent service rendered by the appellant.
16. In view of the above, the impugned order cannot be
sustained. We, accordingly, set it aside and allow the appeal with
consequential relief to the appellant.
[Order pronounced on 05/11/2026 ]

(AJAY SHARMA)
MEMBER (JUDICIAL)




(P.V.SUBBA RAO)
MEMBER ( TECHNICAL )
Tejo