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TMI Blog2023 (8) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... sed under category of BAS as defined under section 65(19) of the Finance Act but the show cause notice does not mention any of the sub-sections of 65(19) of the Finance Act. It needs to be noted the appellant was not acting as an agent on behalf of the shipping lines as it bought and sold space on its own account. Thus, it cannot be said that the appellant was acting as a commission agent and thereby, covered under the definition of BAS. Legal expenses and difference in figures in ST-3 returns - HELD THAT:- During the audit, an objection was raised with respect to non-payment of service tax on legal expenses and on difference in figures in ST-3 returns. The said payments were made by the appellant with interest before the issuance of the show cause notice. Thus, the appellant was entitled to the benefit of section 73(3) of the Finance Act. The demand could not, therefore, have been confirmed. Demand on income shown as non-taxable in summary sheet - HELD THAT:- The demand has been rightly dropped in the order dated 22.05.2018. By letters dated 01.01.2016 and 15.01.2016, the appellant was asked to provide details of the value shown as non-taxable under financial data summar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Tax, New Delhi [the Commissioner] adjudicating the show cause notices dated 10.10.2014 and 26.08.2015. 2. Service Tax Appeal No. 53001 of 2018 has been filed by the appellant to assail the order dated 22.05.2018 passed by the Commissioner adjudicating the show cause notice dated 11.04.2016. 3. Service Tax Appeal No. 53022 of 2018 has been filed by the Department to assail that part of the order dated 22.05.2018 by which the Commissioner has dropped the demand of Rs. 22,12,87,459/-. 4. The details of the aforesaid three appeals are as follows:- Appeal No. ST/52935/2016 (by the Appellant) ST/53001/2018 (by the Appellant) ST/53002/2018 (by the Department) Order-in-Original 10.08.2016 22.05.2018 22.05.2018 Show cause notice 1. 10.10.2014 (for the period 2009-10 to 2012 -13) 2. 26.08.2015 (for the period 2013-2014) 11.04.2016 (for the period 2014-2015) 11.04.2016 (for the period 2014-2015) Tax demand in dispute For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce tax on legal expenses and on difference in reconciliation of ST-3 [Rs. 30,954 + Rs. 2,94,866=Rs.3,25,820 (2009-10 to 2012-13)]. This amount was paid with interest before issuance of the show cause notice and payment has been appropriated. 1. Demand of service tax on the profit/markup of ocean freight during buying and selling of shipping space .[Rs. 10,60,782] 1. Demand of service tax under category of business support services on the amount of custom duty, overseas ocean air freight and other charges [Rs. 14,99,54,386] 2. Demand of service tax on difference between the figures in Form 26AS and ST-3 returns [Rs. 7,13,33,073] 9. The two show cause notices dated 10.10.2014 and 11.04.2016 were adjudicated by a common order dated 10.08.2016, whereby demand of Rs. 21,37,803 with respect to certain issues was confirmed and rest of the proposed demand was dropped. 10. The third show cause notice dated 11.04.2016 was adjudicated by an order dated 22.05.2018, whereby demand of Rs. 10,60,782/- was confirmed and demand of Rs. 22,12,87,459/- was dropped. 11. The department has filed an appeal against the findings r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est judgement assessment. Since data has been provided which is duly supported by the CA certificate, demand has been re-computed with benefit of cum tax. 15. The demand was proposed and confirmed on the mark-up amount which arose as the amount of ocean freight paid by the appellant to the shipping lines was less than the amount collected from the clients towards ocean freight. According to the appellant, service tax is not leviable on this amount as it is only a case of trading space on ships and the profit is earned. This issue has been decided by the Tribunal in number of cases and it has been held that the activity of buying and selling of cargo space is actually trading of cargo space and the amount received for such activity is a profit earned from sale, which cannot be attributed to be consideration for a service. Thus, as the activity is not a service, it cannot be subjected to levy of service tax. 16. In this connection, reference can be made to the decision of the Tribunal in M/s. Tiger Logistics (India) Ltd. vs. Commissioner of Service Tax-II, Delhi [ 2022 (2) TMI 455-CESTAT New Delhi ] and the relevant portion of the decision is reproduced below: 7. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... envisaged in paragraph 2.2 of the Circular dated 12.08.2016 to establish that the appellant was acting on a principal-to-principal basis. This would be clear from the following facts:- Sl. No. Condition in the Circular Satisfaction by the appellant 1. The freight forwarder separately negotiates the terms of freight with the airline/ carrier/ocean liner as well as with the exporter. The appellant books the space with shipping lines in its own name and shipping line raise invoice on the appellant. Separate invoice is raised on the clients wherein different amount is charged, and this only resulted in mark-up. 2. The invoice is raised by the freight forwarder on the exporter. Invoices were raised on exporters. 3. The freight forwarder is undertaking all the legal responsibility for transportation of the goods and undertakes all the attendant risks. The appellant issued Bill of Lading in its own name and thus, all risk of transportation is borne by the appellant. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns. The said payments were made by the appellant with interest before the issuance of the show cause notice. Thus, the appellant was entitled to the benefit of section 73(3) of the Finance Act. The demand could not, therefore, have been confirmed. Demand on income shown as non-taxable in summary sheet (Department Appeal) 25. With regard to non-payment of service tax on the value shown as non-taxable in the financial data summary sheet, which is taxable under business support service [BSS ] , the finding recorded by the Commissioner is as follows: (i) As per the breakup provided by the appellant, the non-taxable income includes components like custom duty, overseas ocean air freight and other charges. Ocean freight and air freight is per se not taxable, though markup is taxable. Further, markup on air freight is not taxable as same do not form part of demand in show cause notice dated 10.10.2014; (ii) Custom duty is a statutory levy and further, same is just a reimbursement from client. Thus, it is not taxable; (iii) Components like BAF and CAF are part of ocean freight and are merely paid to the shipping lines which are later reimbursed from the client. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS, as reflected in Form 26AS, has been duly considered as part of audited financial year 2014-15 prepared by the appellant and that the income reflected in form 26AS forms part of the revenue figure of Profit Loss account and has duly been recorded in the books of account. Since demand has been raised on the basis of the differences in balance sheet and ST-3 (gross income vis- -vis the income on which service tax paid in ST-3 returns), the second demand on the basis of the reconciliation of the same with ST- 3 Returns filed by the appellant shall not be proper and correct as it would be superfluous and would lead to duplication of demand. Thus, demand is not sustainable. 29. The department has challenged the dropping of demand contending that the failed to appreciate the importance of Form 26AS in assessing the service tax liability. It has been repeatedly held that no demand can sustain merely on the basis of the difference in figures in ST-3 and Form 26AS as there is difference in the methodology in preparing both the records and Form No. 26AS is not a statutory document for determining the taxable turnover under the service tax provision. In this connection reliance can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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