9911796707
TMI Blog2023 (12) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... VERSUS COMMISSIONER OF SERVICE TAX MUMBAI [ 2016 (4) TMI 547 - CESTAT MUMBAI ], the very same issue came up for consideration and the Tribunal held that the notional amount earned by the assessee from purchase and sale of cargo space cannot be subject to levy of service tax. In the case of COMMISSIONER OF SERVICE TAX, NEW DELHI VERSUS M/S. KARAM FREIGHT MOVERS [ 2017 (3) TMI 785 - CESTAT NEW DELHI ] it was held that demand of service tax on the income earned by the assessee is profit earned out of sale of cargo space and cannot be subjected to levy under BAS. After considering the submissions and following the decisions, it is opined that the demand of service tax cannot sustain and requires to be set aside. Time Limitation - HELD THAT:- Demand has been raised after the verification of the accounts of the appellant by Audit Group. The quantification of demand has been arrived from the accounts maintained by appellant - there are no positive act of suppression with intent to evade payment of tax established by department Further, the issue is contentious and there are several decisions in favour of assessee - the SCN issued invoking extended cannot sustain. The is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand, interest and imposed penalties. Aggrieved by such orders, the appellant is now before the Tribunal. 5. The Ld. Counsel Ms. Radhika Chandrasekar appeared and argued for the appellant. Ld. Counsel adverted to para-9 of the OIO dt. 29.03.2012 to submit that the show cause notice did not clearly provide as to details of the computation of the value alleged to be not included in taxable value by appellant. The appellant vide letter dt. 26.07.2010 requested the department to give details / break up of differential amount of service tax and as to how the demand has been raised. In reply vide letter dt. 31.5.2011, it was intimated to the appellant that the demand in the notice has been arrived on the basis of details of income and other charges in the Profit Loss Account and the Ledger Accounts by the Internal Audit Group of Service Tax Commissionerate during the audit of appellant s accounts and had also provided break up of the taxable value. 6. On perusal of the show cause notice and the details of break up furnished by the department, the appellant came to understand that the demand has been raised on the profit earned by the appellant as a freight forwarder due to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negotiated rate charged by the shipping line to them or had to send out a Container due to time constraints without filling it up to capacity. The difference between buy rate and sell rate is their margin on trading in cargo space and not at all related to any services rendered by appellant to anybody. It represents profit (or loss) from selling cargo space known in trade terminology as air freight rebate , freight differential or net operating income (or loss) from freight operations. The charges relating to Ocean Freight and Air Freight are recovered and accounted for in the Books of Accounts under various heads which are as under: FREIGHT Charges paid for transport of container to destination BAF To offset the effect of fluctuations in the cost of bunkers CAF Freight rates to offset losses or gains for carriers resulting from fluctuations in exchange rates of tariff currencies CONGESTION Charges paid for accumulation of vessels at a port to the extent that vessels arriving to load or discharge are obliged to wait for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity 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 charges except ocean freight or air freight and related charges. 11. The difference between the selling price and the purchase price is nothing but profit or loss on air/ocean freight which cannot be subject to service tax. Air freight/ Sea freight per se is not subject to levy of service tax and for this reason itself the difference of freight charges cannot be subject to levy of service tax. The activity undertaken by the appellant is nothing but sale of cargo space and the difference between the purchase and selling price is nothing but profit earned on the freight booking and cannot be taxed under Business Support Service. 12. Ld. counsel referred to Board s circular DOF No.334/4/2006-TRN dt. 28.2.2006 wherein clarification has been issued in respect of Business Support Services. Relevant part reads as under : 3. 13 Business Support Services : Business entities outsource a number of services for use in business or commerce. These services include transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner 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 Cargo Agency Final Order No.40876/2018 dt. 2.3.2018 (x) Argonaut Logistics India Pvt. Ltd. Final Order No.40682/2020 dt. 5.3.2020. (xi) Marinetrans India Pvt. Ltd. VST Hyderabad-ST (2019) TIOl 1260 (xii) Island Aviation India Pvt. Ltd. Vs CGST C.Ex 2019-TIOL-2141-CESTAT-Mad. (xiii) Tiger Logistics (India) Ltd. Vs CST-II New Delhi (2022) 63 GSTR 337 (Tri.-Del.) 15. The Ld. Counsel put forward arguments on the ground of limitation also. It is submitted that the issue is purely interpretational and that the appellant was under bonafide belief that these amounts need not be included in taxable value. The appellant has properly accounted the receipts and has not suppressed facts with intent to evade payment of tax. 16. Ld. A.R Ms. O.M. Meena appeared and argued for the Department. The findings in the OIO dt. 29.03.2012 at para 19 24 were reiterated by the Ld.A.R. It is prayed that the appeals may be dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.-Bom), the very same issue came up for consideration and the Tribunal held that the notional amount earned by the assessee from purchase and sale of cargo space cannot be subject to levy of service tax. 22. In the case of CST New Delhi Vs Karam Freight Movers - 2017 (4) GSTL 215 (Tri.) it was held that demand of service tax on the income earned by the assessee is profit earned out of sale of cargo space and cannot be subjected to levy under BAS. 23. In the case of CST New Delhi Vs Continental Carriers 2017- TIOL-3964-CESTAT-DEL, the same issue was considered. Relevant part of the order reads as under : 2. The brief facts of the case are that, the assessee-Respondents are engaged in various activities as Customs House Agent and Freight Forwarder. The dispute in the present appeal relates to their tax liability under the category of Business Auxiliary Service for the period 01.07.2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee-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 01.11.2023 had an occasion to consider similar issue . Relevant part of order reads as under : 7.4.1 The third issue is the demand raised on freight and brokerage, etc.,. The Ld. Counsel submitted that the appellant receives a brokerage / rebate from the shipping line on the ocean freight that they have to pay to the shipping lines. It is in the form of the discounts or incentives paid to the CHA and such amount is not a consideration for providing any CHA services. In fact, the appellant does not provide any CHA service to the shipping line. They act as an agent on behalf of the importer / exporter. So the incentive or the discount received by the appellant from the shipping line cannot be treated as a consideration received for CHA services. In the case of Commissioner of Service Tax, New Delhi Vs. Karam Freight Movers [2017 (4) GSTL 215 (Tri. Del.)], the Tribunal observed that the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase 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. After considering the submissions and following the decisions cited supra, we are of the considered opinion that the demand of service tax cannot sustain and requires to be set aside. 27. Ld. counsel has argued on the ground of limitation also. Demand has been raised after the verification of the accounts of the appellant by Audit Group. The quantification of demand has been arrived from the accounts maintained by appellant. We therefore do not find any positive act of suppression with intent to evade payment of tax established by department Further, the issue is contentious and there are several decisions in favour of assessee. We find that the SCN issued invoking extended cannot sustain. The issue on limitation is also answered in favour of appellant. 28. In the result, the impugned orders are set aside. The appeals are allowed with consequential relief, if any. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
