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TMI Blog2023 (5) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... al dated 31.12.2015 wherein the Commissioner of Service Tax, Delhi-II confirmed the demand of Rs.5,25,21,302/- under Section 65(105)(zr) of the Finance Act, 1994, and dropped the remaining demand. M/s Balmer Lawrie the appellant are in appeal against the amount of service tax demand confirmed by the adjudicating authority whereas the department has filed an appeal against the dropping of some part of the demand. 2. The appellant was registered with the Service Tax Commissionerate, Kolkata for providing comprehensive range of logistics services to their clients. They had service tax registrations for the other branch offices from where they provided various taxable services. In order to provide services, the appellant entered into a contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant and their foreign associates, who provide auxiliary service to the appellant and vice versa, enjoy profit share on a 50:50 basis in each deal. The bill was divided into four parts, namely, freight, other charges origin, other charges, destination, and service tax. The appellant paid service tax only on the other charges destination. However, no service tax was paid on freight and other charges origin. On completion of investigation, a show cause notice dated 11.04.2014 was issued demanding service tax amounting to Rs.1,46,11,51,568/- for the period 01.10.2008 to 31.03.2013. The adjudicating authority vide order dated 31.12.2015 dropped the major portion of the demand and confirmed the demand of Rs.5,25,21,302/- along with interest and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them, and that remitted to the respective foreign associate was done in the same ratio of 50:50. He further submitted that as part of ocean freight or airfreight, the overseas agent also raises invoices towards the airline, fuel, surcharge, airline, security fee and agents, revenue share. Since these were associated components to the transporting of goods by air or ocean, they were not subject to service tax. However, on the other components of charges such as break bulk fee, charges collect fee etc., they had duly paid the service tax throughout the period including on transportation of goods by road. The learned counsel, placed reliance on the decision of the Tribunal in the following cases: i. Tiger Logistics India Ltd vs Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from their Indian customers, an amount over and above the actual amount remitted to their foreign associates. He further added that the adjudicating authority had failed to appreciate that the appellant had paid consideration for the actual freight other charges, origin and the profit share to their associates which was much higher than the actual freight. Therefore, the excess amount collected by the appellant was liable to be taxed. 5. We have heard the learned counsel and the departmental special counsel. We find that the disputed period is from 01.10.2008 to 31.3.2013. We also note that both the appeals are filed against the common order in original no. DLISVTAX002-Com- 006-15-16 dated 31.12.2015. The appellant viz., M/s Balmer Lawr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market conditions, or is compelled to sell at lower than purchase price, the appellant incurs loss. In a contrary situation, it gains profits. This activity is a business in itself on account of the appellant and cannot be called a service at all. Neither can the profit earned from such business be termed consideration for service. Respectfully following Satkar Logistics, Nilja Shipping Pvt. Ltd., Surya Shipping and ITC Freight Services, we hold that the appellant is not liable to pay service tax." 6.1 The Tribunal in an earlier decision the case of M/s Greenwich Meridian Logistics (India) Pvt Ltd., vs Commissioner of Service Tax, Mumbai 2016(4) TMI-547-CESTAT MUMBAI held as follows: 12. The appellant takes responsibility for safety of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(19) of Finance Act, 1994 will not address these independent principal-to-principal transactions of the appellant and, with the space so purchased being allocable only by the appellant, the shipping line fails in description as client whose services are promoted or marketed.
14. We, therefore, find no justification for sustaining of the demand and, accordingly, set aside the impugned order. Demands, with interest thereon, and penalties in both orders are set aside. Cross-objections filed by the department are also disposed of."
7. Accordingly, we dismiss the departmental appeal ST/51634/2016 and allow the appeal no. ST/52168/2016, with consequential relief, if any.
(Pronounced in the open court on 01.05.2023 ) X X X X Extracts X X X X X X X X Extracts X X X X
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