2024 (9) TMI 1492 - AT - Service Tax

Levy of service tax - Cargo Handling Services - profit margin made on the freight - liability to pay Service Tax on Commission received as an agent - HELD THAT - These issues stand settled in the appellant s own case in FLYJAC LOGISTICS VERSUS COMMISSIONER OF GST AND C. EX, CHENNAI SOUTH COMMISSIONERATE 2018 (3) TMI 631 - CESTAT CHENNAI where in the Tribunal observed ' The impugned order infer that these fees/charges are to be attributed to the Cargo Handling Service without identifying the presence of physical handling of cargo by the appellant. We find that there is no evidence to identify the appellant s activities as Cargo Handling Agent . Accordingly, the service tax liability on this account will not survive.''' Further it was held that ' Regarding tax liability under BAS for incentives received from liners, we note that the matter stand settled by the Tribunal decision in the case of BAX GLOBAL INDIA LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI 2017 (9) TMI 1264 - CESTAT CHENNAI . Following the said ratio, we hold that service tax liability of the appellant on this issue cannot sustain. The matter stands settled in favour of the appellant, on both the issues with regard to Cargo Handling Services and Business Auxiliary Services, in their own case for the different period. Consequently, the impugned order is set aside and the appeal is allowed.

Summary

Issues: Liability to pay Service Tax on profit margin made on freight under Cargo Handling Service and liability to pay Service Tax on Commission received as an agent.

Analysis:

1. The appellant, engaged in various logistics services, was found collecting charges from clients for services related to cargo handling, freight, documentation, etc. The Service Tax department demanded Rs. 1,08,60,498/- for these services falling under Cargo Handling Services and Rs. 67,866/- for Business Auxiliary Service. The department invoked the extended period for the demands due to suppression of facts.

2. The appellant contended that the difference amount in freight collected from Indian clients and paid to foreign counterparts was merely a trading profit, not liable for tax under Cargo Handling Service. They also argued that the demand for Business Auxiliary Service was time-barred, citing previous Tribunal decisions favoring them.

3. The Revenue argued that the charges collected by the appellant for cargo handling services and cargo space booking were taxable under Service Tax. They justified invoking the extended period for demands as the facts were discovered during audit verification.

4. The Tribunal examined the nature of appellant's activities and charges collected, finding no evidence of physical handling of cargo by the appellant. Referring to previous Tribunal decisions, the Tribunal ruled in favor of the appellant, stating that the service tax liability on profit margin made on freight and commission received as an agent could not be sustained.

5. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant on both issues related to Cargo Handling Services and Business Auxiliary Services, citing their own case law for different periods.