2023 (6) TMI 1195 - AT - Service Tax

Non-payment of Service Tax - providing Custom House Agent (CHA) and freight forwarding services - Air freight commission - Sea freight commission - Service Charges - Documentation charges - airport/port truck charges - other direct reimbursements - reverse charge mechanism - extended period of limitation. Air Freight Commission - It is the contention of the Appellant that this service was rendered in connection with export of goods and therefore, no service tax will be leviable on such services - HELD THAT - The services rendered by the Appellant were related to export of goods and hence there is no liability of service tax on the commission received from the airlines in connection with the goods exported - this view has been held in Robinson Air Services Vs. CCE, Delhi 2016 (10) TMI 680 - CESTAT NEW DELHI that demand will not be upheld in such issue - the demand confirmed in the impugned order on this count is not sustainable. Service charges - HELD THAT - Even though the Appellant has contested the issue earlier, they are not contesting it now and paid the service tax on these service charges collected. Hence, the demand confirmed in the impugned order on this count is upheld. Documentation charges - handling charges - DO charges and other direct reimbursements - HELD THAT - The Appellant had produced sample invoices and after verifying the same the adjudicating authority has accepted their contention in respect of those 40 entries in the order-in-original. The appellant stated that since the data is huge and bulky, from the year 2002-03 to 2006-07, they requested the Adjudicating Authority to depute an officer to the Appellant s premises to verify the remaining invoices, in case he has any doubt about the nature of reimbursements in respect of the remaining entries and submitted a worksheet containg all reimbursements. This fact has been recorded in the impugned order by the adjudicating authority . Therefore, it is not open to the Adjudicating Authority to confirm the demand on the ground that all invoices have not been produced. The issue as to whether reimbursable expenses are liable to be taxed or not is settled by the decision of the Hon ble Supreme Court in the case of UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd., 2018 (3) TMI 357 - SUPREME COURT wherein the Hon ble Apex Court has affirmed the decision of the Delhi High Court striking down Rule 5(1) of the Valuation Rules, 2006, which provides for inclusion of expenditure or costs incurred by the service provider in the course of providing taxable service in the value, as ultra vires - As the issue has already been settled by the decision of the Hon'ble Apex Court, the demand confirmed on the reimbursable expenses in the impugned order is not sustainable. Pickup charges - HELD THAT - It is observed from the Show Cause Notice that the transportation charges and loading unloading charges were referred to as pick up charges in the Notice. In the earlier Order-in-Original dated 31.01.2009, the adjudicating authority has dropped the demand for the period prior to 01.01.2005 and has allowed abatement of 75% under GTA services - the demand of service tax on these charges have been made in the Notice under CHA service. There is no liability of service tax under CHA service on these charges. Accordingly, the demand confirmed in the impugned order is beyond the scope of the Notice and accordingly hold that the demand on this count is not sustainable. Income from M/s GE Industrial Ltd. - amounts recovered from GE Industrial Ltd., for clearing and forwarding - HELD THAT - The Notice has proposed to levy service tax on these charges under the category of C F agency services. The OIO has confirmed the levy under CHA services. Thus, the impugned order has travelled beyond the Show Cause Notice and hence the demand confirmed on this count is not sustainable. Time limitation - HELD THAT - The Notice was issued on 17.10.2017, by invoking the extended period. As there was no suppression involved, the demands confirmed by invoking the extended period not sustainable, the Appellant has been discharging service tax with respect to the service charges received - There is no suppression involved in this case and hence extended period not in-vocable. Hence, the demands confirmed by invoking the extended period in the impugned order are not sustainable. Appeal allowed in part.

Summary

Issues Involved:

1. Air Freight Commission
2. Service Charges
3. Documentation Charges and Handling Charges; DO Charges and Other Direct Reimbursements
4. Pickup Charges
5. Income from GE Industrial Ltd.
6. Limitation and Extended Period

Summary:

1. Air Freight Commission:
The Appellant argued that no service tax is leviable on the commission received from airlines for booking cargo space meant for export of goods. The Tribunal observed that the services related to export of goods are not liable for service tax, referencing decisions in *Robinson Air Services Vs. CCE, Delhi* and *Airogo Travels and Cargo Pvt Ltd.* Consequently, the demand confirmed in the impugned order on this count is not sustainable.

2. Service Charges:
The charges related to the issuance of delivery orders were contested by the Appellant earlier but they have since paid the service tax and produced ST-3 returns. The Tribunal upheld the demand confirmed in the impugned order on this count.

3. Documentation Charges and Handling Charges; DO Charges and Other Direct Reimbursements:
The Appellant asserted that these charges are pure reimbursable expenses incurred on behalf of the customer and provided invoice-wise details and sample documents. The adjudicating authority accepted the sample invoices but confirmed the balance demand on the ground that mere submission of a worksheet is not enough. The Tribunal referred to the Supreme Court decision in *UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd.*, which held that reimbursable expenses are not includable in the taxable value. Therefore, the demand confirmed on reimbursable expenses in the impugned order is not sustainable.

4. Pickup Charges:
The Appellant stated that transportation charges have been taxed under GTA services with abatement, and loading and unloading charges are pure reimbursements. The Tribunal noted that the demand under CHA service is beyond the scope of the Notice and thus not sustainable.

5. Income from GE Industrial Ltd.:
The Appellant contended that the amounts recovered for clearing and forwarding services are reimbursable expenses and not liable to tax. The Tribunal observed that the impugned order has travelled beyond the Show Cause Notice by confirming the levy under CHA services instead of C&F agency services. Hence, the demand confirmed on this count is not sustainable.

6. Limitation and Extended Period:
The Appellant argued that the extended period for issuing the Show Cause Notice was not applicable as there was no suppression involved. The Tribunal agreed, noting that there was confusion regarding the inclusion of reimbursable expenses in the taxable value, which was clarified by the Supreme Court. Thus, the demands confirmed by invoking the extended period are not sustainable.

Conclusion:
The Tribunal set aside the demands in the impugned order for the issues discussed and confirmed the demand wherever paid by the Appellant. The department's appeal was rejected, and the impugned order was modified accordingly.