2018 (8) TMI 1225 - AT - Service Tax

Business Auxiliary Service - it was alleged that the activities undertaken for the promotion of the business of others would fall under the category of Business Auxiliary Service which is a taxable service w.e.f. 01/07/2003. Held that - The services rendered by the appellant do not fall in the definition of BAS as it existed during the relevant time - Also, the appellant is only getting an incentive for booking the space in the ship as per the requirements of the shipper and he is getting only brokerage from the steamer line or steamer agent which is nothing but a business incentive / commission - This issue has been considered by the Tribunal in the case of AVR Cargo Agency Pvt. Ltd. 2018 (6) TMI 524 - CESTAT CHENNAI , where it was held that the commission received from the airlines prior to 10.9.2004 cannot be subjected to service tax under Business Auxiliary Service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Commissioner(Appeals) order upholding Orders-in-Original for service tax on brokerage received for business promotion.

Analysis:
The appellants filed appeals against a common impugned order passed by the Commissioner(Appeals) upholding the Orders-in-Original and dismissing the appeals. The issue pertained to the appellant receiving brokerage for promoting the business of other establishments without paying service tax on it. The original authority confirmed the demand and imposed penalties, alleging willful tax evasion. The appellant contended that the impugned order failed to appreciate the facts and law correctly. They argued that the services provided did not fall under 'Business Auxiliary Service' (BAS) and the received remuneration was merely a business incentive, citing relevant case laws.

The learned counsel for the appellant argued that the appellant acted as a Customs House Agent and identified vessels for cargo based on shipper requirements, without being an agent for any steamer line. The brokerage earned was a business incentive passed on to the shipper. They emphasized that the same service cannot be taxed twice under different categories and that the appellant dealt with steamer lines on a principal-to-principal basis. The Tribunal, after considering the submissions and relevant case laws, found that the services did not fall under BAS. The appellant received brokerage as a business incentive for booking space in ships based on shipper needs, not as a BAS. The Tribunal cited precedents where similar activities were not considered taxable under BAS due to the absence of a third party in the transactions.

The Tribunal observed that the issue had been decided in favor of the assessee in previous cases, and hence, the present appeal by the Revenue was dismissed. The Tribunal found no merit in the department's appeal, following the decisions in previous cases. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential reliefs. The Tribunal pronounced the order on 31/07/2018, dismissing the appeal filed by the department.