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TMI Blog2021 (9) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... the cargo ship at a lower price and selling it to its client at a higher price. The difference is its profit. It would have been a different case, if the appellant is organizing space on the ship for their clients and the client is paying shipping line directly and the service of organizing or arranging the space on the ship, the appellant gets paid service charge by the client. In such an arrangement, the amount being received would be a consideration for the service. The present arrangement is an arrangement of the trader who buys cargo space at a lower price and sells it at a higher price and enjoys the margin as profit. The profits gained by the appellant by buying space on ships at lower price and selling at a higher price to the customers cannot by any stretch of imagination be called Clearing and Forwarding Agent Service . No service tax can be charged on this amount. Whether the appellant is liable to discharge service the on the amounts which it received from the agents of the Shipping Line for booking cargos under the head Steamer Agency Service or not? - HELD THAT:- There is nothing on record to prove either that the appellant was a steamer agent or that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amounts paid appropriated (In Rs.) 6,99,811/-towards demand 1,18,895- towards interest - - - - 7. Amounts paid as pre-deposit (In Rs.) 10,00,000 35,86,397 45,43,342 44,87,603 15,00,000 8. Interest As applicable under Section 75 of the Finance Act, 1994 9. Penalty Section 76 of the Finance Act, 1994 Section 77 of the Finance Act, 1994 Section 78 of the Finance Act, 1994 Section 76 of the Finance Act, 1994 Section 77 of the Finance Act, 1994 Section 77 of the Finance Act, 1994 Section 78 of the Finance Act, 1994 10. Order-in-Original 12/2008 dated 5.05.2008 25/2011 dated 23.02.2011 13/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the destination as per the instructions of their clients. The said activities clearly fall under the category of Clearing and Forwarding Agents . b) The assessee raised invoices to their clients for the following: i. Ocean Freight ii. Halting Charges iii. Fumigation Charges iv. Customs Documentation charges v. Bill of lading charges vi. Transportation charges vii. Service charges, etc. c) For Ocean Freight and other related services of other agencies, namely M/s. Airsea Forwarders, Bangalore, M/s. Rosemount Shipping (India) Pvt. Ltd., Bangalore etc., is availed, who in turn raise an invoice for such services provided, on the assessee. d) The assessee raises a consolidated bill, which includes ocean freight and other charges on the shipper. e) Though the prime activities undertaken by the assessee relate to that of a freight forwarder, they also arrange the incidental / ancillary services through other agencies. For example, the assessee is not a CHA but gets the work done through other licensed CHA, and the assessee not being a shipping agent or shipping liners, gets the materials shipped through other agents. f) Scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the shipping line and the appellant. This arrangement with the shipping line could be done beforehand where the appellant has a rate agreement / contract or it could be on case-to-case basis in which the shipping line is engaged after the appellant gets confirmation from the customer to move their goods. The appellant issues its own documents for Ocean freight and assumes full responsibility and liability towards the customer. In case of export, the appellant gets paid after it issues its own Bill of Lading (BL) to the client depending upon the payment terms agreed. In case of imports, appellant gets paid after it issues delivery order to its customers upon arrival of goods at the port of discharge as per the terms agreed with the customers. Appellant does not have any warehouse and the goods are always held in the ICDs or CFS pending clearances. The appellant has been raising bills upon the customers for their services under the following heads: (i) Ocean Freight (ii) Halting Charges (iii) Fumigation Charges (iv) Customs Documentation charges (v) Bill of lading charges (vi) Transportation charges (vii) Service charges, etc. 6. Under dispute is the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to the customers, there could be profit or loss. By no stretch of imagination, can this profit or loss be called as service rendered to their customers. This service is not a part of the Clearing and Forwarding Agent Service rendered by the appellant, for which they are collecting service charges and have undisputedly paid service tax on them. 9. As far as the demand on the service tax on the alleged Steamer Agent Service in appeal No.ST/263/2008 is concerned, it is the case of the appellant that during the disputed period they had received some commission from the agents of the shipping lines who are authorized by the shipping lines to book the cargo for a commission. The commission or brokerage which they receive from the agents cannot be called as Steamer agent service because no service is being rendered by them to the shipping lines at all. Steamer Agent and Steamer agent Service are defined in Section 65(100) and section 65 (105) (i) as follows: Section 65(100) Steamer Agent means any person who undertakes, either directly or indirectly,- (i) to perform any service in connection with the ship s husbandry or dispatch including the rendering of admin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (zzzzb), (zzzzc), [(zzzzd), (zzzze), (zzzzf), (zzzzg), (zzzzh), (zzzzi), [(zzzzj), (zzzzk), (zzzzl), [(zzzzm), (zzzzn), (zzzzo), (zzzzp),(zzzzq), (zzzzr), (zzzzs), (zzzzt), (zzzzu), (zzzzv) (zzzzv) and (zzzzw)] of clause (105) of section 65 and collected in such manner as may be prescribed. Therefore, for service tax to be charged, there must be a taxable service as defined in any of the clauses of section 65 (105) of the Act according to which (105) taxable service means any service provided or to be provided,- (a) (b) .. (i) to a shipping line, by a steamer agent in relation to a ship s husbandry or dispatch or any administrative work related thereto as well as the booking, advertising or canvassing of cargo, including container feeder services; (j) to a client, by a clearing and forwarding agent in relation to clearing and forwarding operations, in any manner ; The first issue identified by us to be decided in this case is Is the appellant liable to discharge service tax on the difference between the amounts charged by it from its clients towards Ocean Freight and the amounts paid by it to the Shipping line towards Ocean Freight under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it at a higher price and enjoys the margin as profit. 15. The nature of the transaction is also clear from the fact that there are cases on record where the appellant had booked the space for higher amount on the ship but due to market conditions, had to sell the space to its customers at a lower price incurring loss. Therefore, in our considered view, the profits gained by the appellant by buying space on ships at lower price and selling at a higher price to the customers cannot by any stretch of imagination be called Clearing and Forwarding Agent Service . No service tax can be charged on this amount. On an identical question, in the case of Seamax Logistics Ltd. vs Commissioner of Central Excise and Service Tax, Tirunelveli, reported in 2018 (7) TMI 262-CESTAT Chennai has held that no service tax is chargeable on the difference between the ocean freight collected from the clients and the ocean freight paid to the shipping lines. 16. The second question which we have framed is whether in Service Tax Appeal No.263 of 2008, the appellant is liable to discharge service the on the amounts which it received from the agents of the Shipping Line for booking cargos under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X
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