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TMI Blog2023 (7) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... ying and selling space on ships does not amount to rendering a service and any profit or income earned through such transactions would not be leviable to service tax. It follows from the aforesaid decision of the Tribunal that when the appellant merely trades in space on ships, it would not be providing any service and so no service tax can levied upon the appellant. It has, therefore, to be held that the Commissioner was not justified in confirming the demand. The impugned order passed by the Commissioner, therefore, cannot be sustained and is set aside - The appeal is, accordingly, allowed. - SERVICE TAX APPEAL NO. 51456 OF 2018 - FINAL ORDER NO. 50864/2023 - Dated:- 4-7-2023 - MR. DILIP GUPTA, PRESIDENT AND MS. HEMAMBIKA R. PR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty under section 78 of the Finance Act, 1994/-. 4. The appellant submitted an explanation clarifying that where the freight forwarder acts as a principal while providing service of transportation of goods outside India and negotiates terms with the shipper/airline/ocean liner and with actual exporter, they are not covered under the category of intermediary and hence the Place of Provision of Services Rules 2010 [the 2010 Rules] would be applicable on them and they shall not be leviable to service tax on the margin of ocean freight. 5. The Commissioner confirmed the demand proposed in the show cause notice and the relevant portion of the order passed by the Commissioner is as follows: 13.7 I find that the assessee was making arra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -I, Mumbai [2022 136 taxmann.com 407 (Mumbai-CESTAT)] to contend that the appellant was only trading in space and was not providing any service. 7. Learned authorised representative appearing for the department, however, supported the impugned order. 8. The submissions advanced by the learned chartered accountant for the appellant and the learned authorised representative appearing for the department have been considered. 9. It is seen that the appellant provides cargo space to customers who are importers/exporters of goods. The appellant pays charges for space booking to different Shipping Lines/Airlines and later on sells such space to the exporters/importers at a slightly higher amount. The difference between the amount paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary services on the profit which they receive. It is the case of the appellant that this is a deal on principal to principal basis between them and the shipping lines and again between the exporters and them. They are not acting as an agent. They could purchase the space for a lower price and sell it at a higher price and thereby earn profit. On the other hand, if they failed to sell the space to exporters, after purchasing from the shipping lines, they may incur a loss. They are not receiving any commission whatsoever from the shipping line or from the exporters. We have considered the Circular of the C.B.E. C. cited by the Learned Departmental Representative at Para 2.1-3 which are as follows: 2.1 The freight forwarders may dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking all the legal responsibility for the transportation of the goods and undertakes all the attendant risks, he is providing the service of transportation of goods, from a place in India to a place outside India. He is bearing all the risk and liability for transportation. In such cases they are not covered under the category of intermediary, which by definition excludes a person who provides a service on his account. 3. It follows therefore that a freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is from a place in India to a place outside India. 7. It is evident from the C.B.E. C. circular also that the Revenue was also of the view that service tax is payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the Shipping Lines/Airlines and the amount recovered by the Appellant from the customers (exporter/importers) is called the mark-up . 6. The Department was of the view that this mark-up was for services provided by the Appellant to customers and was, therefore, liable to service tax under the category of support services of business or commerce , covered under section 65(104) of the Finance Act, 1994 . The Department was also of the view that after July, 2012, the service was not covered by any service notified in the negative list and, therefore, continues to be taxable. xxxxxxxxxxx 10. A Division Bench of the Tribunal in the earlier decision rendered in Satkar Logistics vs. CST [Service Tax Appeal No. 50411 of 2016 de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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