9911796707
TMI Blog2023 (12) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... rt cargo and Terminal Handling Charges and documentation charges in respect of export cargo. The appellant has paid the service tax on all the above charges. 3. On verification of financial accounts, it was noticed that "Net Operating Income" had been accounted for by the appellant as income after deducting the operative expenses. Hence the gross receipts as per General Ledger pertaining to the different periods viz. 2006-07 to 2008-09 (upto Jan'09) and Feb'09- September'09 was verified with the value of taxable services as reckoned by the appellant for payment of service tax. It was seen that the freight expenses from the gross receipts and the resultant net receipts was found to be higher than the taxable value adopted by the appellant for paying service tax. The appellant had not discharged service tax on the mark up (difference) received by them on freight charges. The activity of providing transportation services would come under 'Business Support Services'. 4. It was noticed by the department that there is short payment of service tax and the appellant has not discharged the service tax liability on the entire amount received for providing the services. Show cause notice wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Company compared to rack rate which is normally charged by the shipping company to its retail / walk in customers. Thereafter, they sell the space so booked to exporters / importers / other Freight Forwarders and CHAs at market rate. In other words, the privity of ocean freight contract is between the appellant and customers on Principal to Principal basis and not between shipping line and the customers. The appellant undertakes the sea/air/road transportation of goods for customers and issues their own bill of lading to their customers which, in trade terminology, is known as 'House Bill of Lading'. The shipping/ airlines issue a Master Bill of Lading to the appellant on its "buy" rate. A Master Bill of Lading is basically, a contract of carriage between shipping/airlines and the appellant and covers a consolidated (aggregated) shipment of goods indicating the appellant as the shipper. The contractual arrangements for transportation of goods was therefore only between the appellant and shipping/airlines and the appellant issues their own airway bill (bill of lading) i.e. House Bill of Lading to its clients (ultimate shippers). 7. The appellant is neither the agent of shipping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to the Ocean Freight is not exigible to levy of service tax since 'Sea Transportation Services' i.e. Ocean Freight is outside the purview of levy of service tax. On the other hand, though Air Transportation Service (i.e.) Air Freight is covered by the taxable entry viz. "Transportation of Goods by Air Services" as defined under section 65 (105) (zzn) of the Finance Act, 1994, the responsibility to discharge service tax liability is on the 'Air Craft Operator' under this category of services. The learned counsel submitted that the appellant is not liable to pay service tax in respect of ocean freight /air freight and other charges / expenses in relation to transport of cargo recovered from the customers. 10. The learned counsel asserted that the charges recovered under the head 'documentation, de-stuffing, delivery order charges, LCL charges, transportation charges etc. are not standalone functions and only ancillary or incidental activities to the main activity of freight forwarding. Service tax is not payable even on such charges recovered from the customer. However, on misunderstanding of law, they were discharging the service tax liabilities in respect of all such cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence in freight charges is 'consideration' received for providing services has been analysed and settled in favour of the assessee by various judicial pronouncements.. The following decisions were relied by the learned counsel : (i) EMU Lines Pvt. Ltd Vs CGST & Central Excise - (2023) 4 Centax 122. The Tribunal decision was affirmed by the Hon'ble Apex Court in CGST & Central Excise, Belapur Vs EMU Lines Pvt. Ltd.- (2023) 4 Centax 129 (SC). (ii) Greenwich Meridian Logistics (India) Pvt. Ltd. Vs CST (2016) 43 STR 215 (Tri.). (iii) CST Vs Karam Freight Movers Final Order No.ST/A/5225/2017. (iv) CST New Delhi Vs Continental Carriers (2017) TIOL 3964 (v) International Clearing and Shipping Agency vide Final Order Nos.40974-40979/2023 dt. 01.11.2023. This Tribunal decision relied upon decisions in Karam Flight Freight Movers, Continental Carriers and Greenwich Meridian Logistics (supra). (vi) Geodis Overseas Pvt. Ltd. Vs The Commissioner of Service Tax Final Order No.40265-40266/2022 dt. 24.6.2022 (vii) Bax Global India Ltd. Vs CST Final Order No.42113/2017 dt. 18.09.2027 (viii) Airogo Travels and Cargo Pvt. Ltd. Final order No.43487/2017 dt. 19.12.2017 (ix) AVR Carg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation. - For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security; 21. The allegation in the SCN is that that amounts are received for managing, distributing and logistics. The appellant being a freight forwarder has discharged the service tax on the amount received for providing freight forwarding services. The amount accounted under 'net operating income' is now brought to levy of service tax under BSS. This amount is only excess of the freight charges. The differential freight earned by the appellant is not consideration for services rendered by them to their client. The issue as to whether the difference in the freight charges is a consideration for services and is liable to service tax was analysed in various decisions. In the case of Greenwich Meridian Logistics (I) Pvt. Ltd. Vs CST Mumbai - 2016 (43) STR 215 (Tri.-B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 994. We are in agreement with the findings recorded by the original authority. In this connection, we refer to the decision of the Tribunal in Greenwich Meridian Logistic (I) Pvt. Ltd. vs. CST, Mumbai - 2016 (43) STR 2w15 (Tri-Mumbai). The Tribunal examined similar set of fact and held that the appellants often, even in the absence of shippers, contract for space or slots in vessels in anticipation of demand and as a distinct business activity. It is a transaction between principal to principal and the freight charges or consideration for space procured from shipping-lines. The surplus earned by the respondent arising out of purchase and sale of space and not by acting for client who has space or not on a vessel. It cannot be considered that the respondents are engaged in promoting or marketing the services of any "client"." 7. As the issue has already been decided in favour of the assessee-Respondents in the above mentioned orders of the Tribunal, we find no merit in the present appeal filed by the Revenue and the same is dismissed." 24. This Bench in the case of M/s. International Clearing & Shipping Agency Vs CGST & CE Chennai vide per Final Order No.40974-40979/2023 dated 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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." 7.4.2 Following these decisions, we are of the opinion that the demand of Service Tax on freight brokerage cannot sustain and requires to be set aside. Ordered accordingly." 25. In the case of EMU Lines Pvt. Ltd. Vs Commissioner of GST & Central Excise, Belapur - (2023 (4) CENTAX 122 (Tri.-Bom) , the Tribunal had occasion to consider the issue as to whether the profit earned by sale and purchase of cargo space is subject to levy of service tax. The Tribunal considered the decision in the case of Greenwich Meridian Logistics (supra) and various other decisions and held that the demand cannot sustain. The said decision was upheld by the Hon'ble Apex court as reported in (2023) 4 Centax 129 (SC) . 26. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
