2024 (10) TMI 1464 - HC - Service Tax

Demand of Service Tax dropped by the CESTAT on the income shown as non-taxable in Financial Data Summary Sheets (FDSS) - Whether the Respondent / Assessee is liable to pay Service Tax on difference in figure of 'Income' in Form ST-3 and Form 26AS? - HELD THAT - As functioning of the respondent as a Multi-Modal Transport Operator and who is stated to have made payments toward customs duty, air freight, ocean freight and surcharges for and on behalf of various clients. From the material which was gathered in course of the enquiry as well as the verification details provided, the authorities had found that the payments made by the respondent were being reimbursed by the individual clients and the issue was thus clearly confined to that of a reimbursement of expenses incurred for and on their behalf. The respondent also did not place reliance on any material which may have indicated that the reimbursements were subject to a mark up that may have been charged by the respondent. CESTAT has ultimately observed non-taxable amount includes amounts like customs duty, BAF CAF charges, ocean freight and air freight. All these amount are paid by the appellant on behalf of the client and later on are reimbursed. Thus, same cannot be taxed as they are in nature of reimbursements. Bearing in mind the aforesaid, we find no substantial issue of law that can be said to arise in this appeal.

Summary

Issues:
1. Condoning delay in filing and refiling the appeal.
2. Impugning the order of Customs Excise and Service Tax Appellate Tribunal (CESTAT).
3. Liability to pay service tax on certain income.
4. Functioning of the respondent as a Multi-Modal Transport Operator.
5. Reimbursement of expenses incurred on behalf of clients.
6. Observations and decision of CESTAT.
7. Dismissal of the appeal due to lack of substantial legal issue.

Analysis:
1. The judgment begins by addressing the delay in filing and refiling the appeal, where the court condones the delays of 2 days and 15 days respectively, disposing of the applications related to the delays.

2. The Principal Commissioner CGST seeks to challenge the order of CESTAT and presents questions regarding the correctness of dropping a service tax demand and the liability of the assessee to pay service tax on income differences.

3. The issue revolves around the respondent's role as a Multi-Modal Transport Operator and the payments made towards customs duty, air freight, ocean freight, and surcharges on behalf of clients.

4. It is noted that the respondent's payments were being reimbursed by individual clients, indicating a reimbursement of expenses incurred for and on their behalf without any mark-up charges by the respondent.

5. CESTAT's observation emphasizes that the demand was rightly dropped, highlighting the absence of relevant provisions during the disputed period and the nature of the amounts paid by the appellant as reimbursements, including customs duty, BAF & CAF charges, ocean freight, and air freight.

6. Considering the overall circumstances, the court finds no significant legal issue in the appeal and consequently dismisses it due to the lack of substantial legal questions or grounds for further consideration.