2017 (12) TMI 388 - AT - Service Tax

Business Auxiliary Services - respondent were involved in shipment of cargo and promoted the business of shippers - Held that - similar issues came up for decision before the Tribunal. The Tribunal after examining the facts held that in the arrangement relating to shipment of cargo provided by the shippers, the freight element or any profit on such freight cannot be subjected to tax under BAS - reliance placed in the case of Greenwich Meridian Logistics (I) Pvt. Ltd. vs. CST, Mumbai 2016 (4) TMI 547 - CESTAT MUMBAI - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Demand for service tax under Business Auxiliary Service category.
2. Applicability of tax liability under Section 65 (19) of the Finance Act, 1994.
3. Nature of activities undertaken by the respondent.
4. Interpretation of terms of agreement and consideration received.
5. Comparison with similar cases and tribunal decisions.

Analysis:

1. The Revenue filed appeals against the original orders passed by the Commissioner dropping proceedings demanding service tax under the Business Auxiliary Service category against the respondent. The Adjudicating Authority found that the respondent was not promoting or marketing the services of clients, leading to the dropping of the demand proceedings.

2. The Revenue argued that the respondent received various considerations such as freight TLC, local charges, and documentation charges, making them liable under BAS as they were involved in the shipment of cargo and promoting the business of shippers and shipping lines. They relied on Section 65 (19) of the Finance Act, 1994 to support their claim.

3. The respondent, engaged in multi-modal transport, contended that they acted on a principal to principal basis with shippers and shipping lines, not as agents. They emphasized that they did not promote any person's business or service, and there was no arrangement providing them consideration for activities on behalf of others. The terms of the agreement were clear, and the Original Authority's findings were supported by various decided cases with similar facts.

4. Upon examination, the Tribunal noted that the Adjudicating Authority correctly assessed the activities of the respondent and found the tax entry under Section 65 (19) inapplicable. The Tribunal observed that the respondent did not promote or market services of any client, as per the factual findings. The Revenue's grounds of appeal did not contest these factual findings but sought a different interpretation based on the same facts.

5. Referring to previous decisions, the Tribunal held that considerations received as freight or mark up on freight in arrangements related to shipment of cargo could not be subjected to tax under BAS. Citing cases like Bax Global India Ltd. Vs. CST, Chennai and Greenwich Meridian Logistics (I) Pvt. Ltd. vs. CST, Mumbai, the Tribunal found no merit in the Revenue's appeals and dismissed them based on the detailed examination in the impugned orders and the established tribunal decisions.