2018 (8) TMI 1682 - AT - Service Tax

Business Auxiliary Services - Steamer Agents Services - During the course of audit, Revenue found that there was a huge difference between the total receipts and the amounts on which service tax was paid - Revenue was of the view that the amounts are liable to payment of service tax under the category of BAS - Held that - Most of the amounts received by the appellant for which no service tax has been paid are in the nature of reimbursements by the customers to cover the expenses incurred by the appellant for activities carried out on behalf of the customers such as obtaining the services abroad, clearance of goods from port and transporting the same to the customer s premises, CFS charges, CHA charges, Fumigation charges etc. Reliance placed in the Apex Court decision in the case of UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (3) TMI 357 - SUPREME COURT OF INDIA , where it was held that service tax is to be paid only on the services actually provided by the service provider - in the present case, amounts reimbursed to the appellant for various miscellaneous services in India as well as abroad which were contracted by the appellant on behalf of the customers cannot be levied to service tax - demand set aside. Amounts recovered by the appellant from the customers towards ocean freight payable to the foreign shipping lines - Held that - The levy of service tax on the freight elements, in respect of the discounts enjoyed by the appellant in payment of freight charges set aside - reliance placed in the case of CCE, TIRUNELVELI VERSUS M/S. DIAMOND SHIPPING AGENCIES PVT. LTD. 2018 (1) TMI 169 - CESTAT CHENNAI - demand of service tax made on the portion of freight and discounts set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Order-in-Original Nos. 82-84/2009 dated 23.12.2009 challenging demands raised under three SCNs covering the period October 2003 to March, 2009 for services provided by appellant to international steamer agents.

Detailed Analysis:

1. Service Tax Liability Dispute:
The appellant contested the demands raised by the Revenue for service tax under BAS falling under Section 65 (19) of the Finance Act, 1994. The appellant argued that amounts received for services provided abroad, freight elements, discounts, and other activities were not liable for service tax in India. The adjudicating authority confirmed the service tax demand, leading to appeals challenging the order.

2. Appellant's Arguments:
The appellant's counsel relied on legal precedents, including a Supreme Court decision, to support their arguments. They emphasized that reimbursements received by the appellant for various services used on behalf of customers should not be subject to service tax. The appellant also contended that ocean freight charges and discounts from shipping lines were not taxable under the law.

3. Revenue's Justification:
The Revenue defended the impugned order, distinguishing it from a previous Tribunal decision related to CHA services. They maintained that the impugned order specifically pertained to steamer agents services, justifying the service tax demands raised.

4. Tribunal's Decision:
After considering arguments from both sides and analyzing legal principles, the Tribunal referred to a Supreme Court decision emphasizing that service tax should only apply to services actually provided by the service provider. The Tribunal set aside demands related to reimbursements for services provided abroad and miscellaneous activities.

5. Resolution on Freight Elements and Discounts:
Regarding ocean freight charges and discounts obtained by the appellant, the Tribunal referenced a Tribunal decision favoring the appellant's position. The Tribunal ruled that transportation by sea falls beyond territorial waters and is not subject to service tax. Additionally, discounts on freight charges were deemed non-taxable as per the Tribunal's decision.

6. Final Verdict:
In conclusion, the Tribunal found no merit in the impugned order and set it aside, allowing the appeals filed by the appellant. The decision was pronounced in the open court, providing a comprehensive resolution to the service tax liability dispute raised in the case.