2016 (9) TMI 585 - AT - Service Tax

Invokation of extended period of limitation - Demand - Evasion/short-payment of service tax - Business Auxiliary Service viz., airline incentives income - Held that - the appellant is rendering services related to booking, preparation of bill, collection of realization by the appellant on behalf of the airlines which, in our view, would fall under the category of promotion and marketing of airline services. Inasmuch as the appellant is encouraging the various clients for booking the space in a specific airline, we do not find any merits in the submission made by the Learned Counsel on this point and we hold on merits against the appellant on this issue. As regards the question on limitation, on this point we find that they have very strong case on limitation as there was a confusion which may arose on this point as it is a question of interpretation. It was also brought to our notice that earlier show cause notice was issued on this issue and they were not adjudicated by the lower authorities. If that be so, the demand which is beyond the period of limitation from the date of issuance of the show cause notice in this appeal is hit by limitation while the demand within the limitation period in this appeal is liable to be upheld and confirmed. Invokation of extended period of limitation - Demand - Evasion/short-payment of service tax - Business Auxiliary Service viz., net income earned as a freight forwarder - appellant earned additional amount from their clients on the space which has been booked by the appellant with particular shipping lines - Held that - the appellant books the space and make payment to the shipping line in advance and/or, as and when the bills is raised, and sells the same to their customers at a profit. The appellant is not rendering any service either to the shipping line or to its customers, more so, under business auxiliary service. This view of ours is fortified by the decision of this very same bench in the case of Greenwich Meridian Logistics (India) Pvt. Ltd. 2016 (4) TMI 547 - CESTAT MUMBAI and by a coordinate bench of this Tribunal in the case of DHL Lemuir Logistics Pvt. Ltd. Since the issue involved in this case is already decided against the Revenue, respectfully following the same we set aside the impugned orders in both the appeals as regards the demand raised and confirmed under this issue Invokation of extended period of limitation - Demand - Evasion/short-payment of service tax - Business Auxiliary Service viz., income earned as charge collection fees - income earned by the appellant for the charges incurred by them in respect of freight charged to their customers on a specific query from the bench - Held that - was unable to justify that these were really reimbursements of the expenses/freight incurred by them. The adjudicating authority on this issue has categorically recorded that the appellant has recovered charge collection fees to cover the cost of financial and banking cost associated with the freight liability paid by them. In any case, we do find that the appellant is not seriously contesting the tax liability under this head. In appeal ST/217/2012 the demand under this head which is beyond the period of limitation is set aside and demands within the limitation period are upheld. Imposition of penalties - Held that - the issue involved in this case is question of interpretation and the interpretation could have been due to the confusion arising whether the amounts are chargeable to tax under specific heading under business auxiliary service or otherwise. Since the issue involved is of interpretation, we hold that penalties imposed by the lower authorities are unwarranted. Accordingly, the penalties are set aside. - Appeals disposed of

Summary

Issues:
1. Service tax liability on net income earned as a freight forwarder
2. Service tax liability on airline incentive income
3. Service tax liability on income earned as charge collection fees

Analysis:

Service tax liability on net income earned as a freight forwarder:
The appellant was charged with not discharging correct service tax for services rendered, leading to a show cause notice. The Revenue sought to tax the appellant on the additional amounts earned from clients for booking space in shipping lines. However, the Tribunal found that the appellant was not rendering any service under business auxiliary service but was merely trading space for profit. Citing precedents, the Tribunal set aside the demand raised by the Revenue.

Service tax liability on airline incentive income:
The appellant received airline incentives for services related to booking, bill preparation, and payment collection on behalf of airlines. The Tribunal held that these services fell under the promotion and marketing of airline services, rejecting the appellant's arguments to the contrary. The Tribunal upheld the tax liability on airline incentive income within the limitation period under business auxiliary service.

Service tax liability on income earned as charge collection fees:
The appellant earned charge collection fees for expenses related to freight charges. The Tribunal noted that the appellant failed to justify these fees as reimbursements and upheld the tax liability under this head. Penalties imposed were set aside due to the interpretational nature of the issue. The demands confirmed within the limitation period were upheld.

In conclusion, the Tribunal disposed of the appeals by setting aside penalties and upholding tax liabilities on specific issues within the limitation period. The judgments were based on a detailed analysis of the services provided by the appellant and relevant legal precedents.