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TMI Blog2024 (6) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 as well as for the period post-1.7.2012 cannot sustain and requires to be set aside - Appeal allowed. - HON BLE MS. SULEKHA BEEVI. C.S. , MEMBER ( JUDICIAL ) HON BLE MR. VASA SESHAGIRI RAO , MEMBER ( TECHNICAL ) Shri N. Prasad , Advocate , for the Appellant Shri Anoop Singh , Authorized Representative for the Respondent ORDER Per : Ms. Sulekha Beevi. C. S Brief facts are that the appellant is engaged in rendering various services such as Goods Transport Agency, Clearing and Forwarding Service, Storage and Warehousing Service, Management or Business Consultant Service, Steamer Agent Service and also arranges transportation of export cargo through ships as well as through airliners. They are registered with the department for providing these services. During the course of verification of balance sheets for the year 2011-12 to 2014-16, it was seen that the appellant has paid service tax only on certain receipts but had not paid service tax on ocean freight as well as air freight. The department was of the view that the appellant has to pay service tax on such air freight and ocean freight charges collected by them for the period prior to 01.07.2012 under Business Support Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name is only furnished in order to avoid insurance problems specific to such export shipments. Further, the Appellant nominates their Overseas group companies abroad for handling their shipments abroad. They raise the handling of shipping charges on their respective overseas companies and collect the same. However, if any extra charges are collected by the Overseas Companies for such shipments except Delivery Duty Unpaid (DDU), Delivered Duty paid (DDP) and prepaid, then the extra charges will be shared equally as profit share . 2.1 It is submitted by the Ld. Counsel that the Appellant stipulates the terms and conditions to their Agents in the contract based on shipment business and ensures that the Agent is no way connected to their end Customers. In turn, the Appellant has separate contracts with their end Customers for clearing and forwarding of their goods from places in India and also abroad. It is only the Appellant who is responsible for executing all the clearing and forwarding works to its end Customers and also liable for any damages if any, that occurs during the shipment to the ultimate recipient/buyer of its customer. Therefore, the Appellant, undoubtedly has acted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he object of support services was to tax outsourcing services. It is made clear by the Board Circular No. 334/4/2006-TRU dated 28.02.2006 and in the present case, no outsourcing is involved. 2.6 The Appellant submits that principle of noscitur-a-socis clearly applied even to the inclusive definition. The inclusive definition contemplated activities such as evaluation of prospective customers, tele-marketing, processing of purchase orders and fulfilment of services, information tracking of delivery schedule, managing distribution and logistics, Customer Relationship Management services, processing of transactions, Operational Assistance for marketing, formulation of customer service and pricing policies. The aforesaid activities looked essentially to market related work. The expression Managing, distribution and logistics would take its color from the other words found in the inclusive definition. 2.7 The Appellant submits that it is settled law that even in the context of inclusive definition, the principle of noscitur-e-socis will apply. Decision in Bangalore Water Supply and Sewerage Board Vs Rajappa-AIR 1978 SC 548 was relied by the Ld. Counsel. 2.8 The Appellant submits that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon`ble Supreme Court in the case of CST, Bangalore Vs Canara Bank reported in 2023 (5) TMI 137 at page 2 of the judgment was relied 2.15 Appellant is only a freight forwarder and NOT a Multimodal Transport Operator under the Multimodal Transportation of Goods Act, 1993. As per Section 13 of the said Act, it is ONLY the Multimodal Transport Operator who is responsible for the complete Shipment, in which case, even the Invoice will be raised by the Multimodal Transport Operator/IATA Agent on the Customer/Exporter. Whereas, in the present case, the Invoice is raised by the appellant directly on its customer. 3. It is submitted that the Tribunal and the courts have held consistently that there is no liability for service tax on ocean freight or air freight. The following decisions were relied by the Ld. Counsel : i) Greenwich Meridian Logistics (I) Pvt Ltd Vs Commr of ST, Mumbai - 2016 (43) STR 215 (Tri.) MUM -at para 5 to 14. ii) Surya Shipping Vs CCE and ST, Rajkot 2020 (2) TMI 282 (Tri.) AHMD- at para 4 and 5. iii) Nilja Shipping Pvt Ltd Vs CCE, Chennai-II- 2020 (3) TMI 752- (Tri)- CHN- at para 6 and 7. iv) M/s. Geodis Overseas Pvt Ltd Vs Commissioner of Service Tax, Chennai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mark-up/profit on buying and selling of ocean space were not liable to service tax. It is a settled legal principle that if the Assessee is under a bonafide belief that the service tax is not applicable, then the larger period of limitation cannot be invoked. In this regard, reference was drawn to the decision in Padmini Products Vs CCE reported in 1989 (43) ELT 195(SC) at para 8. 3.6 The Appellant submits that the Adjudicating Authority has failed to see that for invoking the extended period of limitation, a mere omission to pay service tax is not sufficient. It should be deliberate. Something positive was required to be established by the Revenue. That burden was wholly on the Revenue. Yet, the SCN under challenge has not discharged that burden. In this regard, it is submitted that the CESTAT, New Delhi in the case of M/s. SOTC Travels Services Pvt Ltd. (Formerly known as Kuoni Travel India Pvt Ltd) Vs Principal Commissioner of CE, Delhi-I(at para 33-41) reported in 2021 (9) TMI 897 has held that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression‟ or collusion is willful with an intent to evade payment of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 65B (44) of the Act ibid. Para 7.17 of the order passed by the original authority was adverted to by the Ld. A.R to submit that the appellant has not collected the freight charges on actual basis from its customer. They have collected mark up value on the freight charges. Therefore the freight charges collected by them are subject to levy of service tax. It is prayed that the appeal may be dismissed. 6. Heard both sides. 7. The issues to be considered are whether the air freight charges / ocean freight charges along with mark up collected by the appellant is subject to levy of service tax and whether the activity of the appellant would fall under Business Support Service prior to 1.7.2012 and under Section 65B (44) of the Act for the period post 1.7.2012. 8. The Ld. Counsel has explained that the activity carried out by the appellant indicates that the appellant s subsidiary company in Japan viz. Vantec HTS Forwarding Ltd., Tokyo, Japan engages the appellant for transportation of the cargo to the foreign buyer. The appellant engages an agent viz. New Globe Logistik Pvt. Ltd., Mumbai as Multimodal Transporter for transport of their cargo. The appellant then raised invoices to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Leaving that situation aside, the contention of the appellant is that it is a 'multi-modal transport operator' which entails a statutorily assigned role in cross-border logistics. According to Section 2 of the Multi-modal Transportation of Goods Act, 1993. (m) multimodal transport operator means any person who - (i) concludes a multimodal transport contract on his own behalf or through another person acting on his behalf; (ii) acts as principal, and not as an agent either of the consignor, or consignee or of the carrier participating in the multimodal transportation, and who assumes responsibility for the performance of the said contract; and (iii) is registered under sub-section (3) of section 4; and (a) carrier means a person who performs or undertakes to perform for a hire, the carriage or part thereof, of goods by road, rail, inland waterways, sea or air; 12. The appellant takes responsibility for safety of goods and issues a document of title which is a multi-modal bill of lading and commits to delivery at the consignee's end. To ensure such safe delivery, appellant contracts with carriers, by land, sea or air, without diluting its contractual responsibility t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017 and ST/41626/2019, the demand is on ocean freight for both export and import whereas in the case of appeal No. ST/40296/2018, the demand of Service Tax is on the air freight as well as mark-up received while paying the freight charges to the liners. The Ld. counsel submitted that the activity does not involve rendering of service and it is mere buying and selling of cargo space for the purpose of transport of goods by ocean / air on principal-to-principal basis. Ocean freight and air freight is not subject to levy of Service Tax. With effect from 2016, though freight charges for transportation of goods by way of air is subject to levy a Service Tax, the liability to pay Service Tax is on the air liners. The demand raised on the appellant is against the provisions of law. .. 6.1 On perusal of the Annexure to the Show Cause Notice, it is seen that the demand is raised not only on the mark-up but also on the ocean freight and air freight. These charges are not subject to levy of Service Tax during the disputed period. The mark-up received by the appellant on the freight charges is due to the difference in the freight charges collected from the shipper and paid to the shipping / ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed consideration for service. Respectfully following Satkar Logistics, Nilja Shipping Pvt. Ltd., Surya Shipping and ITC Freight Services, we hold that the appellant is not liable to pay service tax. . . 18. We find that the only allegation of these elements held against the appellant in the impugned order is that of suppression of facts‟ and the reason for this is that they have not disclosed the full value of the taxable services in their ST-3 returns. It is also accepted in the impugned order that these services were all duly recorded by the appellant. It is now well established legal principle that suppression of facts‟ is not mere omission. It must be a deliberate act with mens rea to suppress and thereby evade. The facts brought out in the impugned order do not demonstrate the mens rea. On the other hand, they show that the appellant had recorded all the transactions in its records and when called for during investigation, provided full facts to the department based on which the SCN was issued. Insofar as the appellant did not dispute the demands of service tax, it paid the same along with interest even before the SCN was issued. In our considered view, this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cannot by any stretch of imagination be called Clearing and Forwarding Agent Service . No service tax can be charged on this amount. On an identical question, in the case of Seamax Logistics Ltd. v. Commissioner of Central Excise and Service Tax, Tirunelveli, reported in 2018 (7) TMI 262-CESTAT Chennai has held that no service tax is chargeable on the difference between the ocean freight collected from the clients and the ocean freight paid to the shipping lines. 16. The second question which we have framed is whether in Service Tax Appeal No. 263 of 2008, the appellant is liable to discharge service tax on the amounts which it received from the agents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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