2024 (1) TMI 87 - AT - Service Tax

Levy of Service Tax - Business Support Services or not - amount paid by the appellant to the overseas joint-venture companies in delivering the consignments of consignors in India to consignees situated outside India - reverse charge mechanism. The principal argument of the appellant is that the joint-venture companies also render the service, which is in the nature of Courier Agency Service and they are to be considered as co-loaders ; accordingly, the amount paid by them to the co-loaders, which already suffered service tax, cannot be levied to service tax under Business Support Service . HELD THAT - The issue has been considered by this Tribunal in a series of cases referred to by the learned advocate for the appellant and this Tribunal has consistently held that the service received by the appellant from the overseas companies in delivery of the couriers/ parcels of the customers of India at various international destinations fall under Courier Agency Service , and the services so rendered is in the nature of co-loaders service; accordingly held to be outside the purview of Business Support Service. Also, it is held that since the service is performance based service and provided outside India; hence not taxable. In view of the consistent stand of different Benches of the Tribunal including Bangalore Bench in the case of M/S TNT INDIA LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX BANGALORE-LTU 2020 (3) TMI 845 - CESTAT BANGALORE , there are no reason not to follow the said judgment - it was held in the said case that issue decided in the case of FIRST FLIGHT COURIERS LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-II 2016 (8) TMI 145 - CESTAT MUMBAI where it was held that the services received by the courier agency from the co-loader is not liable to Service Tax, and further where such service is provide by a co-loader situated outside India, the said activity is beyond the territorial jurisdiction of Service Tax Law and on this account also not taxable. It is found that following the said principle, demand notices for different periods issued to the appellants for different periods have been set aside by the Department and no appeals have been filed by the Revenue accepting the said principle of law. The impugned orders against which appeals filed by the appellant are set aside and their appeals are allowed.

Summary

Issues involved:
The judgment involves issues related to service tax liability on international courier services provided by the appellant, classification of services received from overseas joint-venture companies, and applicability of reverse charge mechanism.

Issue 1: Service tax liability on international courier services
The appellant, engaged in providing domestic and international courier services, paid service tax on amounts collected for international courier services under the category of "Courier Service." The Revenue sought to recover service tax on amounts paid by the appellant to overseas joint-venture companies for delivering couriers to consignees outside India, contending it falls under "Business Support Service." The appellant argued that the joint-venture companies provide services akin to "Courier Agency Service" and are co-loaders, thus not liable to service tax under "Business Support Service."

Issue 2: Classification of services from overseas companies
The appellant maintained that services received from foreign courier companies should be classified as "Courier Agency Service" and not as "support service of business or commerce." They argued that the services are fully rendered outside India and should not be taxable under Section 66A of the Finance Act. The Tribunal, citing precedents, held that the services provided by overseas companies are performance-based and fall outside the purview of "Business Support Service."

Issue 3: Applicability of reverse charge mechanism
The Tribunal considered whether the amount paid by the appellant to overseas joint-venture companies for delivering consignments outside India is subject to service tax under reverse charge mechanism. Relying on previous judgments and consistent Tribunal decisions, it was held that the services received by the appellant from overseas companies for international courier delivery are akin to "Courier Agency Service" and not taxable under "Business Support Service." The appeals filed by the appellant were allowed, and the Revenue's appeals were rejected.

Separate Judgment:
No separate judgment was delivered by the judges in this case.