2013 (10) TMI 90 - AT - Service Tax

Classification of service - canvassing air cargo - Business Auxiliary Service or not - Held that - Case law relied upon for considering service as Business Auxiliary Service 2013 (8) TMI 451 - CESTAT CHENNAI is not applicable Since ocean freight itself was not taxable under any entry, it was considered proper to grant total waiver. In the case before us, the issue is service of canvassing air cargo which is actually a taxable service though exemption is provided in respect of export cargo. Transportation activity is predominantly done outside. Canvassing of cargo is done in India. So taxability of both the activities are to be treated differently. So the argument that there cannot be a Business Auxiliary Service for a non-taxable service may not be applicable to the instant case. We find that in this case the service is taxable but exempted. In the other cases relied upon by the advocate, there were other elements like, CHA service, ocean freight service etc. involved. Therefore the facts are not identical - applicant to make a pre-deposit of 50% of the tax demanded - stay granted partly.

Summary

Issues:
1. Stay petitions in two different appeals by the same assessee.
2. Taxability of margin in air freight under 'Business Auxiliary Service'.
3. Applicability of exemption notification 29/05-ST to the case.
4. Pre-deposit requirement for admission of appeal.

Analysis:
1. The judgment involves two stay petitions in two separate appeals by the same assessee, both arising from a common impugned order related to different periods. The issue is whether both stay petitions can be considered together for disposal due to the commonality of the impugned order.

2. The core issue revolves around the taxability of the margin in air freight under the category of 'Business Auxiliary Service'. The department contended that the margin earned by the applicants from selling cargo space at a higher price is taxable. The applicants argued that they were not providing a service but engaged in buying and selling services, thus not liable to pay service tax on the margin.

3. The advocate for the applicants relied on exemption notification 29/05-ST, claiming that since air freight itself is not taxable under the exemption, auxiliary services related to such exempted services should also be exempted. The argument was centered on the contention that the difference in freight should not be subject to taxation.

4. The judgment addressed the pre-deposit requirement for admission of the appeal. The Revenue argued that the applicants were canvassing customers for airlines and marketing their services without bearing any business risk. They cited a previous case where the tribunal ordered a pre-deposit of 50% of the tax demand. In contrast, the applicants referred to a case where a lower pre-deposit was accepted, emphasizing the need for a reduced pre-deposit or complete waiver.

5. The tribunal analyzed the submissions from both sides and differentiated the current case from previous cases based on the nature of activities and services involved. While acknowledging the exemption on export cargo, the tribunal concluded that the service of canvassing air cargo was taxable but exempted. As the facts were not identical to previous cases, the tribunal directed the applicant to make a pre-deposit of 50% of the tax demanded within a specified timeframe for the admission of the appeal, with a stay on the collection of the balance dues during the appeal's pendency.