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TMI Blog2023 (9) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... result of the investigation, a show cause notice dated 25.08.2017 was issued to the Appellant demanding Service Tax of Rs.11,33,76,015/- including Education Cess, along with interest and penalty. The Notice was adjudicated by Commissioner of CGST & CX, Kolkata vide Order-in- Original dated 31.01.2018, wherein service tax of Rs.10,56,05,986/- was confirmed along with interest. Penalty equal to the service tax confirmed was imposed under Section 78 of the Finance Act, 1994. Penalty of Rs.10,000/- was imposed under Section 77 of the said Act. Rs.3,00,000/- already paid vide Challan dated 27.02.2017 was appropriated against the demand confirmed. Service Tax demand of Rs.77,70,029/-was dropped. Aggrieved against the impugned order, the Appellant has filed the present appeal. Department has filed appeal against dropping the demand. 2. In the impugned order, the demand has been confirmed in respect of the following activities rendered by the Appellant: (i) Service Tax on income arising from providing service of information and tracking of delivery schedule - Rs.10,21,87,062/- (ii) Service tax on Commission/Brokerage income - Rs.17.54,528/- (iii) Service Tax on Miscellaneous income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of another person i.e. on principal-to-agent relationship only liable to service tax. In the instant case undisputedly, they were buying the services of transportation of containerized goods outside the territorial water of the country and selling the same to their clients in their own capacity and is not obligated to work on principal-to-agent relationship. The issue stands completely settled by several decisions of this Tribunal, which have all attained finality. Some of the latest decisions of different Benches of this Tribunal are as under:- (i) Direct Logistics India Pvt. Ltd. Vs. Commissioner of S.T. 2021 (55) GSTL 344 (T) (ii) Tiger Logistics (India) Ltd. Vs. Commissioner of Service Tax 2022 (63) GSTL 169 (T) [C/p 12-19] (iii) Console Shipping Services India Ltd. Vs. Commissioner of Service Tax 2023 (5) TMI 192 CESTAT, New Delhi [C/p 20- 23] (iv) Balmer Lawrie & Company Ltd. Vs. Commissioner of Service Tax 2023 (5) TMI 100 CESTAT, NEW DELHI [C/p 28- 31] (v) Marinetrans India Pvt. Ltd. Vs. CST, Hyderabad 2020 (33) GSTL 241(T) [C/p 32-34] 6. Accordingly, they contended that the activity of arranging ocean transportation of containerized goods through in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect to onward movement of goods from India. Such charges were incurred by them during the course of providing Clearing & Forwarding Agency Services for onward movement of goods from India to foreign destination. As per Rule 10 of the Place of Provision of Services Rules 2012, the place of provision of the service of transportation of goods by air/sea, other than by mail or courier, is the destination of the goods. It follows that the place of provision of the service of transportation of goods by air/sea from a place in India to a place outside India, will be a place outside the taxable territory. In this case also, the requirement of Rule 6A of the Service Tax, 1994, as amended, stands duly satisfied. Consequently these charges are within the purview of the Export of Service Rules and hence outside the service tax net. 11. The Appellant further submitted that they have been paying service tax for the considerations received as Amendment Charges, Container Detention Charges, Customer Administrative Charges, DTHC Charges, Handling Fees, Seal Charges and other charges when charged on Indian customers in Indian Currency. Accordingly, they submitted that the demand confirmed in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is derived from transportation of containerized goods through international ocean water outside the jurisdiction of India. We observe that the space for transportation of containerized goods outside the territorial water of the country has been bought by the Appellant company in a bulk and thereafter sold to other companies on principal to principal basis. In this sale they earn a margin of profit over the cost incurred by them on such bulk purchase. Since this transaction is entirely conducted on principal-to-principal basis and not on Principal - to - Agent basis, we hold that the income derived would not fall within the ambit of Business Support Service. In the impugned order, it has been held that the Appellant has realized income in the form of margin arising out of difference between the ocean freight income and ocean freight expenses as indicated in their trial balance. It has been held that the excess realization effected during the course of providing or arranging freight facility to the customer would fall within the purview of 'Business Support Service' in terms with Section 65 (105) (zzzq) of the Finance Act 1994. In this regard, we observe that the principal to princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant as per the records towards trading of cargo space. Evidently as any prudent business world, the appellant is buying space on 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 bheing 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. 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 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are reproduced below: 6A.(1) The provision of any service provided or agreed to be provided shall be treated as export of service when,- (a) the provider of service is located in the taxable territory, (b) the recipient of service is located outside India, (c) the service is not a service specified in section 66D of the Act, (d) the place of provision of the service is outside India, (e) the payment for such service has been received by the provider of service in convertible foreign exchange, and (f) the provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 3 of clause (44) of section 65B of the Act. " 21. In the instant case the facts on record conclusively establish that each of the applicable clauses of Rule 6A(1) stands duly satisfied . Since export of services is outside the purview of service tax under the Act, we hold that the demand of service tax of Rs.17,54,528/-in the impugned order is not sustainable and accordingly, we set aside the same. Service Tax on Miscellaneous income like Amendment Charges, Container Detention charges etc. not shown in ST- 3 return - Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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