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2024 (12) TMI 677 - AT - Service Tax


Issues:
Interpretation of Service Tax liability on mark up collected by a service provider for extra charges, determination of whether the appellant acted as an intermediary or principal in providing transportation services, applicability of Service Tax exemption, and imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:

The case involved an appeal by M/s. Seagull Maritime Agencies Pvt. Ltd. against a show cause notice issued by the Commissioner of Central Goods & Service Tax, Audit-II, New Delhi, alleging non-payment of Service Tax on mark up collected for extra charges related to transportation services provided by the appellant. The appellant was registered for 'Business Support Service' and was accused of not paying Service Tax on mark up earned from ocean/air freight charges. The department contended that the mark up constituted consideration liable to Service Tax, as the appellant's services were not considered transportation of goods, but rather procurement of services as input service for its clients.

The appellant argued that they acted as a principal in providing transportation services by purchasing cargo space from shipping lines/airlines and selling it to importers/exporters. They relied on a CBEC Circular stating that a freight forwarder acting as a principal is not liable to pay service tax when the destination of goods is outside India. The Tribunal noted that the appellant operated on a principal to principal basis and was not acting as an intermediary, as confirmed by previous judgments and the CBEC Circular.

Referring to the case of Marinetrans India (P) Ltd. v. CST and Bhatia Shipping (P) Ltd. v. CST, the Tribunal held that buying and selling cargo space did not amount to providing a service subject to Service Tax. The Tribunal emphasized that the appellant's transactions were independent of promoting the business of shipping lines/airlines, and thus, the mark up collected by the appellant was not taxable under Service Tax laws. The Tribunal set aside the lower authority's order and allowed the appeal with consequential relief, if any, as per law.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the mark up collected by the appellant for transportation services did not attract Service Tax, as the appellant acted as a principal in the transactions and was not considered an intermediary. The Tribunal's decision was supported by previous judgments and the interpretation of relevant legal provisions and circulars.

 

 

 

 

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