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TMI Blog2024 (5) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... line. This service agreement would be on principal to principal basis and not as agent of said airline/shipping line. Therefore, applicant would be covered by the exclusion clause i.e. provides the main service- inbound and outbound shipment on his own account in terms of Rule 2(f) of POP Rules and thus not covered under Rule 9 (c) ibid as intermediary service. Therefore, place of provision of said service will not be location of service provider. Rule 10 of POP Rules will not be applicable in respect of the applicant. Applicant submits that said Rule 10 is wide to cover not only the actual transportation, but also a person who arranges for the transport, that this is expressly clear from the exclusion to mail or courier from Rule 10 of PO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference in expenses which has been incurred by the appellant. This income as per the department is nothing but excess amount charged by the appellant from their customers towards ocean freight. The department after verification of the accounts, issued a show cause notice to the appellant demanding service tax of Rs. 3,93,172/- under Section 73(1) of the Finance Act, 1994. The interest and penal provisions were also invoked as per the provisions of Finance Act, 1994. The department has demanded service tax under the category of Business Auxiliary Service stating that differential amount of freight retained by them is nothing but commission received towards provision of service. The matter got adjudicated and the original adjudicating auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Guide, June 20,2012 by CREC (page no. 67 to 69) (post-negative list regime). Illustration : A freight forwarder arranges for export and import shipments. There could be two possible situations here one when he acts on his own account, and the other, when he acts as an intermediary. 1. When the freight forwarder acts on his own account (say, for an export shipment) A freight forwarder provides domestic transportation within taxable territory (say, from the exporter's factory located in Pune to Mumbai port) as well as international freight service (say, from Mumbai port to the international destination), under a single contract, on his own account (i.e. he buys-in and sells fright transport as a principal), and charges a consolidated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Departmental Representative who reiterated the findings as given in the impugned order-in-appeal. 4. Having heard both the sides, we take note of the fact that except for the brief period for November/ December, the majority of demand pertains to post negative period of service tax. In this regard, we take note of the CBEC Circular on the subject, which is reproduced as below:- 2.1 The freight forwarders may deal with the exporters as an agent of an airline/carrier/ocean liner, as one who merely acts as a sort of booking agent with no responsibility for the actual transportation. It must be noted that in such cases the freight forwarder bears no liability with respect to transportation and any legal proceedings will have to be instituted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 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. 5. We understand that in the case before us, the appellant would enter into an agreement with the carrier for transportation of cargo i.e. airline/shipping line. This service agreement would be on principal to principal basis and not as agent of said airline/shipping line. Therefore, applicant would be covered by the exclusion clause i.e. provides the main service- inbound and outbound shipment on his own account in terms of Rule 2(f) of POP Rules and thus not covered under Rule 9 (c) ibid as intermediary service. Therefore, place of provision of said service will not be location of servic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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