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TMI Blog2024 (5) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... on received from the airlines. The same is reflected in their Profit and Loss Account under the heading "Rebate on Airway Bill". No service tax was paid on these amounts collected. The discount is passed on to their clients and the same is reflected in the expenses side of their Balance sheet. No service tax was paid on this commission amount. (b) "Incentive from Sea" consists of Commission received for the clearance of sea shipments from other agents. No service tax was paid on this income. (c) "Due Agent Collected" consists of the Due Agent amount mentioned in Airway Bill. It consists of charges like CHA, Airport handling, loading, unloading, Terminal Charges payable to IAAL Regarding these receipts, they stated that the service tax other than CHA charges was paid during the course of investigation. (d) "Agency Charges Collected" consists of Custom House Clearing Charges for which service tax had been charged and paid. (e) "Cargo Forwarding Income" consists of other charges like airport handling, custom house agency charges, import clearing charges, loading charges, transport charges, and other charges. 2. It appeared to the department from the above details that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit in the process is not a taxable activity. (v)The Appellant retains a portion of the discount and the rest is passed on to the customer, namely, the shipper. (vi) There is no finding in the impugned order with reference to the taxability on discount except for observing that any consideration for service by whatever nomenclature by which it is called is liable for tax. (vii) The airline with whom the cargo space is booked is not the client of the Appellant and therefore, the discount is not subject to service tax. The Appellant relies upon the following decisions where in it has been held that freight difference i.e., discount/incentive given by the airline/shipper line is not taxable: (a) Commissioner of Service Tax Vs AVR Cargo (2018) TIOL 2097 (b) Freight Systems India Pvt Ltd. Vs Commissioner of GST & Central Excise (2018} TIOL 3395 (c) Commissioner of Service Tax Vs Karam Freight Movers (2017) 4 G.S.T.L. 215 (d) Sindhu Cargo Services Ltd. Vs Commissioner of Service Tax (2019) 24 G.S.T.L. 664) (e) Commissioner of Service Tax Vs Continental Carriers (2017) TIOL 3964 (f) Greenwich Meridian Logistics (I) Pvt Ltd. Vs Commissioner of Service Tax, Mumbai (201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce tax on GTA services as they were not aware that being a recipient, they have to discharge service tax. However, the amounts were properly accounted and not suppressed. The SCN issued invoking the extended period therefore, may be set aside. 4. The Learned AR Shri Sathya Narayanan appeared and argued for the department and supported the findings in the impugned order. 5. Heard both sides. 6. The demand of service tax is made under Business Auxiliary Services, Custom House Agency Services and Goods Transport Agency Services. 6.1 It is not disputed that the appellant who is an IATA agent has discharged service tax on the agency commission received by them. The SCN does not raise demand on the agency commission received by the appellant. It is seen that the demand for service tax under Business Auxiliary Services is raised on the discounts/incentives received from Airlines and Shipping lines. In para 5.1.2 of the order, the adjudicating authority has observed as under: "In the instant case, the assessee realized various amounts under the heads viz, income from airlines, incentive from airlines, income from sea, incentive from sea, due agent collected, etc., and the same are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r marketing of services provided by the client. The Learned Counsel has countered these allegations by submitting that the appellant does not do any activity of promotion or marketing of the airlines or the shipping lines. These airlines or shipping lines are not client of the appellant. 6.4 On appreciation of facts, it can be seen that the appellant books the cargo space on various airlines/shipping lines and pay freight for the same. The appellant collects the freight from the shippers for the space and transportation of the cargo. In some occasions, the total amount paid to the airline/shipping line may be less than the amount the appellant receives as freight charges from their client (importer/exporter). The appellant thus receives a markup. In some cases, when the appellant is unable to sell the total space or the freight charges collected from the client is less, appellant may incur loss. It is thus trading of cargo space, where there may be profit or loss to appellant. The airline/shipping line can never be considered as a client of the appellant as under Clause (ii) of Section 65(19). The client of the appellant is the importer/exporter or shipper. Thus it can be seen tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es [2021-TIOL-445-CESTAT-BANG], etc. ......... 7. We have considered the arguments on both sides and perused the records. For a service tax to be leviable: (a) a service must have been rendered; (b) the service so rendered must be a taxable service within the meaning of Section 63(105) of Chapter V of the Finance Act, 1994; and (c) a consideration must have been paid for that service; 8. If a service is not rendered at all, no service tax can be levied regardless of the fact that an amount has been received. Similarly, if the service so rendered does not squarely full within the definition of 'taxable service' under Section 63(105), no service tax can be levied. Even if it is doubtful whether the service is taxable or not, the benefit of doubt in respect of the charging section goes in favour of the assessee and against the revenue. The third important element is the consideration for the service. Any amount received must be for the service and it cannot be for some other purpose. For instance, if any amount is received towards any compensation, such amount cannot be taxed. 9. As far as the differential in ocean freight is concerned, the appellant buys space on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni-directional flow of consideration because the space belongs to the shipping line. The tribunal in the case of Greenwich Meridian Logistics (I) Pvt. Ltd. versus Commr. of S.T., Mumbai 2016 analysed the issue in detail. It is re-produced as under:- 10. The original authority has proceeded on the assumption that there is only one payment and, that too, for freight charged by the shipping line. He has rejected the possibility of trading in space or slots on vessels by holding that trading in space or slots is a figment and freight is all that is transacted. This is a patent misconstruing of the usage of that expression. Freight, though used colloquially to describe all manner of carriage, Is the nomenclature assigned to the consideration for space provided on a vessel for a particular voyage. Freight is charged by the entity that is in possession of space on a vessel from an entity that requires the space for carriage of cargo. 11. Slots may be contracted for by the shipper or its agent with the shipping line through the steamer agent Implicit is a uni-directional flow of consideration because the space belongs to the shipping line. Steamer agent or agent of shipper may earn c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of space and not by acting for a client who has space or slot on a vessel. Section 65(19) of Finance Act, 1994 will not address these 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. Following the same, we are of the view that the demand cannot sustain and requires to be set aside which we hereby do. The impugned order is set aside. The appeal is allowed with consequential reliefs, if any. " 6.6 In the case of Direct Logistics Private Limited Vs CST Bangalore 2021 (55) G.S.T.L. (Tri - Bangalore (1.0.2021) the department was of the view that the amount collected by the assessee from client (shipper) over and above the ocean freight paid to the shipping line is to be included in the taxable value for payment of service tax under 'Clearing and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant, on the other hand, is that their earnings from the difference between the amounts charged to their customers for Ocean Freight and the amounts actually paid to the shipping lines is in the nature of profit earned from their business of selling cargo space on the ships. Elaborating on the arrangements, the Learned Counsel explains that at times they book cargo space on the ship as per the customers' specific orders. At other times, they book the cargo space in bulk on the ship in anticipation of the customers' requirement. Their contract with the shipping line is on principal-to-principal basis. Once they book the cargo space on a ship, they are bound to pay the shipping line for the entire cargo space whether or not they are able to get sufficient customers to utilize the entire space booked by them. On the other hand, their relationship with the customers is also on principal-to-principal basis and they assure the customers of transport of their cargo on the ship. They charge their clients at one rate and pay the shipping line at a different rate and the difference is their business profit from trading in the cargo space on the ships. At times, if there are not ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buys low and sells high and the margin is his profit. To earn this profit, he also takes the risk of being unable to sell. In the appellant's case, if the space on the ships which it bought cannot be sold to its customers fully, or due to market conditions, or is compelled to sell at lower than purchase price, the appellant incurs loss. In a contrary situation, it gains profits. This activity is a business in itself on account of the appellant and cannot be called a service at all. Neither can the profit earned from such business be termed consideration for service. Respectfully following Satkar Logistics, Nilja Shipping Pvt. Lid., Surya Shipping and ITC Freight Services, we hold that the appellant is not liable to pay service tax." 26. Similarly, in the case of Seamax Logistics Ltd. v. Commissioner of Central Excise and Service Tax, Tirunelveli, reported in 2018 (7) TMI 262 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." 6.8 In the case of CST, New Delhi Vs Karam Freight Movers 2017(4) G.S.T.L. 215 (Tri ~ Del) the very same issue of liability to pay service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction which is to be provided by the respondent on behalf of the client, that is, the exporters. The facts of the case indicated that the markup value collected by the respondent from the exporter is an element of profit in the transaction. The respondent when acting as agent on behalf of airlines/shipping lines was discharging service tax w.e.f. 10- 0-2004. However, with reference to amount collected from exporters/shippers the original authority clearly recorded that it is not the case that this amount is a commission earned by the respondent while acting on behalf of the exporter and said mark-up value is of freight charges and are not to be considered as commission. Based on these findings the demand was dropped. We do not find any impropriety in the said finding. The grounds of appeal did not bring any contrary evidence to change such findings. Accordingly, we find no merit in the appeal by Revenue. The appeal Is dismissed." 6.9 Though the department filed appeal before the Hon'ble Apex Court against the judgement passed by Tribunal in the case of Greenwich Meridian Logistics (I) Pvt Ltd., the same was dismissed on 1.4.2019 on the grounds of delay, as reported in 2019-TI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not appointed as commission agent of the airline/shipping line, Appellant is a CHA, working under the Customs Broker Licensing Regulation 2013. As per Section 65 (35) of Finance Act 1994, the Customs House Agent means a person licensed temporarily or otherwise under the regulations made under sub-section (2) of Section 146 of Customs Act. 6.14 From the above and relying on the decisions discussed in para 6.5 to 6.10, we are of the view that the demand of service tax on incentives under Business Auxiliary Services is not sustainable and requires to be set aside. Ordered accordingly. 7. The next issue is the demand under CHA services. It is not disputed that the appellant has discharged the service tax on agency commission received for CHA services. The demand is raised on the various expenses incurred and reimbursed by client. In para 5.3 to 5.4.2 of the impugned order, the original authority discusses that the appellant has to include the various expenses incurred by them and reimbursed by client in the taxable value. The issue as to whether reimbursable expenses are to be included in the taxable value is settled by the decision of the Hon'ble Apex Court in the case of UOI Vs Int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclude that the amounts reflected therein have not been offered for service tax. The reporting of income in the P and L being irrelevant for the purposes of determination of service tax payable, the basis of the impugned assessment is erroneous. 26. It is a well settled position that when a statutory provision or rule addresses a specific scenario, such rule/provision is liable to be interpreted on its own strength and context and one need look no further to alternate sources to seek clarity in regard to the issue that has been addressed by the aforesaid rule/provision. 27. I am conscious of the fact, and indeed Mr. Sundar has repeatedly emphasized, that there is an alternate statutory remedy available in respect of the impugned order and as such there is no warrant for the interference of this Court in extraordinary jurisdiction under Article 226 of the Constitution of India. However, all relevant facts are on record. Both Learned Counsel concur on the position that the agreements that provide for the landmarks or stages of completion of work by the petitioner and consequential payments by the customers, is available with the Department. ....... 34. In the light of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Technical) Sd/- (Sulekha Beevi C.S.) (Member (Judicial) Per contra M. Ajit Kumar, 13. I have gone through the orders of the learned Member Judicial Ms. Sulekha Beevi C.S. The impugned order of the lower authority covers issue pertaining to three services as below. 1) Service tax payable on Business Auxiliary Service (BAS) 2) Service tax payable on Custom House Agent Service (CHA) 3) Service tax payable on Transport of Goods by road service (GTA) Two of the above services (i.e. BAS and GTA) were, as alleged in the SCN, not declared earlier by the Appellant. The appellant had acquiescence to the classification of the non-declared services with a few reservations expressed on valuation before the original authority. They have now raised a host of legal issues that require a deeper examination in conjunction with the facts of the case. T would hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of facts sought to be proved. [See; Collector of Customs, Madras & Ors. v. D. Bhoormul [1974] 3 3 S.C.R. 833] 17. Once a query has been raised by Revenue regarding evasion of duty on specific services rendered by the appellant, adverse inference could be drawn against the appellant if they are not able to provide a satisfactory reply. The initial burden of rebuttal is on the assessee, because the basic facts are within their special knowledge which they have concealed by not filing statutory returns / documents. The appellant has not been able to explain with proper evidence the nature and substance of the sale, discount and commission allowed to them SO as to examine the true nature of these activities. In fact in their reply to the SCN they had reworked out the duty payable towards the three services mentioned in the SCN and agreed to pay the balance duty as per their calculations. The Apex Court in Commissioner of Income Tax v. Best & Co. (Pvt.) Ltd. [AIR 1966 S.C. 1325] stated as under: "We may point out, as some argument was advanced on the question of burden of proof, that this Court did not lay down that the burden to establish that an income was taxable was on the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the facts in issue and is necessary to be scrutinized as a part of the compliance verification during the investigation especially since statutory returns were not filed. It was for the Appellant to provide the best possible evidence to the departmental officers. Having chosen to give the profit and loss statement and further having not raised any doubts abouts its accuracy before the learned Adjudicating Authority they cannot do so now. In its judgment in Ideal Security vs. CCE, Allahabad [2011 (23) S.T.R. 66 (Tri. - Del.)] which is germane to this issue, a Coordinate Bench of this Tribunal at Delhi held as under: "9. We do agree with the Id. Appellate Authority in the matter of the discrepancy noticed by him in respect of the considerations received and appearing in different manner in two different statutory documents. While the ST 3 return was statutory document under Finance Act, 1994, the balance-sheet and profit and loss account were statutory documents under Companies Act, 1956. Therefore, when the public documents bring the discrepancy, the onus of proof was on the assessee to come out with clean hand to prove its stand." (emphasis added) 19. Having examined the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... client. The incentive cannot be considered as consideration for taxable service." (emphasis added) The relevant provisions of section 65(19) of the Finance Act 1994, (FA 1994) defining BAS, at the relevant time are reproduced below. "Business Auxiliary Service means any service in relation to (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or Explanation - For the removal of doubts, it is hereby declared that for the purpose of this sub-clause, service in relation to promotion or marketing of service provided by the client includes any service provided in relation to promotion or marketing of games of chance, organized, conducted or promoted by the client in whatever form or by whatever name called whether or not conducted on line including lottery, lotto, bingo. ******** ******** ******** (vii) a service incidental or auxiliary to any activity specified to subclauses (i) to (vi) such as billing, issue or collection of recovery of cheques payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar nature and are classifiable under the category of BAS as per the terms of the contract, for promotion or marketing of service provided by the client-liners. 23. I find that the Hon'ble Apex Court in Singapore Airlines Ltd. Vs CIT, [Civil Appeal No. 69646965 OF 2015 / 2022 SCC OnLine SC 1588] examined an issue whether 'Supplementary Commission' in the hands of the IATA travel agent, besides the 'Standard Commission' would be subject to Tax Deduction at Source ("TDS") requirements under Section 194H of the Income Tax Act, 1961. The said section requires deduction of TDS at 10% plus surcharge from payments falling under the definition of "Commission" or "Brokerage". The issue arose because within the aviation industry during the relevant period, the base fare for air tickets was set by the International Air Transport Association ("IATA") with discretion provided to airlines to sell their tickets for a net fare lower than the Base Fare, but not higher. Within this framework, the airlines would have no control over the Actual Fare at which the travel agents would sell the tickets. While the ceiling price could not be breached, the agents would be at liberty to set a pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws of this Tribunal, on issues of law. Hence although we are the last fact-finding authority, we are left to decide a mixed question of fact and law while being in the dark about facts relevant to the issue. It is this context that the judgment of the Hon'ble Supreme Court in Singapore Airlines (supra) though delivered in a case pertaining to the Income Tax Act, 1961 is relevant. It is a pointer to the fact that the surplus received between the price of advance booking the cargo with the liner and then negotiating the charges with the consignor could have the colour of a 'brokerage' or 'commission' which will be clear only when the terms of engagement between the parties is known. Moreover Section 194H (ibid) referred to "service rendered" as the guiding principle for determining whether a payment fell within the ambit of a "Commission", and the Hon'ble Court concluded that the classification of the difference between the 'Actual Fare' and "Net Fare' as being a "Commission". Further the judgment has cited with approval the Hon'ble Court's judgment in Khedut Sahakari Ginning and Pressing Society v. State of Gujarat [(1971) 3 SCC 480 ] and has placed emphasis on the need to close ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction with the liners are on a principal to principal basis. Discounts received from the liners are not part of the consideration and hence cannot be taxed. 26. Para 28 of the Apex Court's judgment in Sushilaben Indravadan Gandhi & Another v. The New India Assurance Company Limited and Others [Civil Appeal No. 2235 of 2020 / (2021) 7 SCC 151] is relevant to the impugned issue and is reproduced below. "28. Itis exceedingly doubtful today whether the search for a formula in the nature of a single test to tell a contract of service from a contract for service will serve any useful purpose. The most that profitably can be done is to examine all the factors that have been referred to in the cases on the topic. Clearly, not all of these factors would be relevant in all these cases or have the same weight in all cases. It is equally clear that no magic formula can be propounded, which factors should in any case be treated as determining ones. The plain fact is that in a large number of cases, the Court can only perform a balancing operation weighing up the factors which point in one direction and balancing them against those pointing in the opposite direction [ See Atiyah, PS. "Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The terms "Agent' and 'principal' are defined by Section 182 of the Indian Contract Act, 1872 which reads as under: 182. An "agent" is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the "principal". According to this definition, an agent never acts on his own behalf but on behalf of another. He either represents his principal in any transaction or dealing with a third person and does not do so in his own capacity. The crucial test of the status of an agent is that his acts binds the principal. As stated by the Hon'ble High Court of Gujarat in Varsha Engg Pvt Ltd v. Vijaya Traders, [AIR 1983 Guj 166], the essential feature of an agent is his power of making the principal answerable to third persons and enabling the principal to sue third parties directly or render him liable to be sued directly by the third party. In the circumstances a test of whether the Appellants transactions with the liners, as claimed, are on principal-to-principal basis and that with the consignors on a principal-to-client basis, is proposed as under. I. Whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the incentive received from the liners being commission on sales. Further they have distinguished between the commission regularly received from the Airlines on which service tax was being collected whereas discounts received from the airline are based on the volume of goods exported and no service tax is collected and paid on the same. Hence their grievance was that service tax was sought to be collected on discounts received from the airlines. Another view taken was that their activity amounts to export of services and also was a secondary service and hence no tax was leviable. This view was not pleaded before us and the facts were not stated nor examined with the relevant provisions of the Act and Rules. As regards 'agency charges' and 'due agent collected" they stated that these were paid as handling charges and other charges at the air / sea port and later collected from their clients which is not their income and was not liable to discharge service tax. They have accordingly as per their own tabulation accepted to pay service tax on BAS and CHA services of Rs 34,99,952, and on GTA services of Rs 1,83,646. The total service tax payable on BAS+CHA+GTA was worked out to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n goods; (ii) Article 366(29A)(d) read with the latter part of the clause (29A) which uses the words, "and such transfer, delivery or supply"... would indicate that the tax is not on the delivery of the goods used, but on the transfer of the right to use goods regardless of when or whether the goods are delivered for use subject to the condition that the goods should be in existence for use; (iii) in the transaction for the transfer of the right to use goods, delivery of the goods is not a condition precedent, but the delivery of goods may be one of the elements of the transaction; (iv) the effective or general control does not mean always physical control and, even if the manner, method, modalities and the time of the use of goods is decided by the lessee or the customer, it would be under the effective or general control over the goods; (v) the approvals, concessions, licences and permits in relation to goods would also be available to the user of goods, even if such licences or permits are in the name of owner (transferor) of the goods; and (vi) during the period of contract exclusive right to use goods along with permits, licenses, etc., vests in the lessee. I find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' and 'due agent collected' as these were payments towards handling charges and other charges at the air / sea port and later collected from their clients which is not their income and was not liable to discharge service tax. They recalculated the duty payable minus the said reimbursements and agreed to pay tax as per their calculations. The Original Authority examined the claim of the appellant and reworked out the demand under BAS from Rs 1,56,60,826/- to Rs 75,51,924/. He however did not exclude the amounts shown towards 'discounts' and 'commission' as these were consideration towards rendering the taxable service irrespective of the nomenclature. The appellant has stated that there is no finding in the impugned order with respect to the taxability of discounts. The airlines with whom the cargo space is booked is not their client, theirs is a principal-to-principal transaction, and therefore the discount is not subject to service tax. I have discussed the issue pertaining to the appellants claim for a principal-to-principal relationship with the liners above. It has to be stated at the risk of repetition that the expressions 'principal' and ''agent' used in a document ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid as quid pro qua for rendering such a service. Hence these stated 'reimbursable charges' are to be examined for facts and if shown to be not part of the gross amount charged as per agreement / contractual obligations, then the amounts need to be deducted from the assessable value before arriving at the tax to be paid, not otherwise. Suppression of Facts and Penalty 35. The appellant has submitted that the demand has been confirmed invoking extended period of time which is incorrect and unwarranted. In the present case, the period covered by the impugned orders from 2010 to 2015. The Show Cause Notice is dated 9.10.2015. Therefore, the maximum period up to which the demand can be imposed is only till October 2013 and the demand from 2010 to October 2013 merits to be set aside. There was never a suppression of facts to the department. Audit has been conducting periodical verification of accounts during the alleged period. They have been filing ST-3 returns and TR6 forms regularly in which they have disclosed all requisite information. I find from the impugned order that in this era of self-assessment the Appellant filed ST 3 returns for CHA service from April 2004 to September ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. f. Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. g. Reasons facilitate the process of judicial review by superior Courts. h. The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice. i. Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lp making good law by the last fact-finding Authority. Further it may also be relevant to examine whether the purported activity of the Appellant sought to be classified as BAS was incidental to its activity as a CHA or not. However as regards Service tax paid on 'Transport of Goods by road service' (GTA), the matter has reached a finality as the issue is not contested by the Appellant. 37. 1 find that the determination of the appeal arising from the impugned order is not possible, on issues other than GTA, without an examination of facts peculiar to this case in the light of the Hon'ble Apex Court's judgment's in Khedut Sahakari Ginning and Pressing Society (supra) and in Standard Radiators Pvt Ltd (supra). I am thus constrained to disagree with the orders of the learned Member (Judicial). 38. From the discussions, I find it necessary that all issues including that of penalty, but excluding the duty demanded on GTA, may be reexamined by the Adjudicating Authority on merits and a speaking order passed, after affording the Appellant a reasonable time to submit their written submissions if they so desire and after hearing them afresh within ninety days of receipt of this order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o separate orders passed by the learned Members of the original Bench has been placed before me to give my opinion as a third Member: (i) Whether the demand of service tax on BAS and CHA services is liable to be set aside on the basis of submissions made and following the ratio of judgments / case laws submitted. OR (ii) Whether the Tribunal being the last fact-finding authority is required to examine the facts, written agreement / contract between the parties and in its absence remand the matter to the Original Authority for giving an opportunity to the appellant to adduce evidence as may be found necessary for determining the issue. 40. Though the facts of the case have already been recorded by the learned Members of the original Bench therefore, I will not state the facts again and I will only confine to the points of difference. 41. 1 have heard both the parties on the points of difference and perused the material on record. Learned Counsel appearing on behalf of the appellant submits that the view taken by the learned Member (Judicial) who has allowed the appeal by setting aside the demand of service tax on discounts/ incentives under "Business Auxiliary Services" and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * That the various decisions of CESTAT on the same issue relied upon does not employ any test to determine the relationship between the Appellant and liners and the decisions appears to be made on assertion or statement made by parties / appellants solely on their authority, without any supporting evidence or proof or factual reasoning of the nature of activities being done by them. * Para 28 at page 37 proposes the test to be employed to prove as to of whether a transaction is principal to principal transaction. * Relies upon various decisions and circular wherein it has been held that whether the transaction involves transfer of possession and control is a question of fact and is to be decided based on the terms of the contract. Sale involves transfer of title of goods. Therefore the issue needs to be examined on facts. * Demands based on profit and loss statement are sustainable as the Appellant has not raised any doubts about its accuracy before the Adjudicating Authority. * That the extended period is invocable. The order also observes that OIO is very cryptic. 43. She further submits that the grounds on which the learned Member (Technical) has remanded the matter i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, liable to be set aside. In support of this submissions, learned Counsel has relied upon by the following decisions: (a) CCE v. Ballarpur Industries Ltd. (2007) 215 E.L.T. 489 (b) Caprihans India Ltd. v. Commr. ST 2015 (35) E.L.T. 632 (SC) (c) Saci Allied Products Ltd. v. Commissioner of C. Ex. Meerut 2005 (283) E.L.T. 225 (SC) (d) Precision Rubber Industries (P) Ltd. Commissioner of Central Excise, Mumbai 2016 SCC On Line SC 406 (e) Reckitt & Colman of India Ltd. v. Collector of Central Excise (1997) 10 SCC 379 (f) Faze Three Limited v. CCE & ST - Silvasa Final Order No. 10138-10140/2024 dt. 12.01.2024 (g) Commissioner of Customs vs Toyo Engineering India Ltd. (2006) 201 E.L.T. 513 (SC) (h) Ramlala vs State of UP and others (2023) SCC Online ALL 2479 45. She further submits that the arrangement of booking of cargo space with the shipping line/ airline is done on case to case basis and sometimes on a daily basis. There is no written contract between the appellant and the shipping line / airline. Further it is not necessary that a contract should be in writing. When a shipper wants to ship cargo to a particular country he just calls up and the Appellant wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it appears to resonate with revenue stand that no sale is involved in the Appellant's activity and they are involved in the service of booking cargo. 47. As regards the reimbursement of expenses is concerned, the learned Counsel submits that the expenses reimbursed cannot form part of taxable value in terms of Rule 5(1) as it travels beyond the scope of Section 67. This position of law is laid down by the Hon'ble Supreme Court in the case of Union of India Vs Intercontinental Consultants and Technocrats Pvt. Ltd (2018) 10 G.S.T.L. 401. She further submits that there is no finding in the impugned order with reference to the taxability of reimbursements. However the Show Cause Notice from para 5.2.0 up to 5.4.2 refers to the definition of CHA Services and Rule 5(1) & Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 and states that expenditure or costs incurred by the service provider as the pure agent of the recipient alone is excluded. Therefore the Show Cause Notice proposes to demand service tax on the expenditure incurred while providing the CHA Services which is squarely covered by the decision of the Supreme Court in the case of Intercontinental Consul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pers. Therefore, the matter needs to be remanded to the Original Authority who can decide the matter afresh after providing opportunity to the appellant to produce evidence as may be necessary for determining the issue. 51. 1 have considered the submissions made by both the parties and perused the material on record including the decisions relied upon by both the parties in support of their submissions. Further, I find that the learned Member (Technical) while remanding the matter on the ground cited supra has, in fact, travelled beyond the Show-Cause Notice and the Order-in- Original. The observation of the learned Member (Technical) that the appellant has not produced any contract except assertions made in their reply to the Show-Cause Notice is not tenable. Perusal of the Show-Cause Notice in Para 5.1.2, it is also referred in the Order-in-Original at Page 90 of the Appeal Memorandum is reproduced herein below: "The assessee realized various amounts under the heads viz income from airlines, incentive from airlines, income from sea, incentive from sea, due agent collected, etc., and the same are received by the assessee for promotion and marketing of air cargo transportation s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in rate charged by the airline and the rate charged by the appellant from the customer. Therefore, the observation that appellant had not put forth before the authorities precise data, in my view, is not tenable. The Show-Cause Notice and the Order-in-Original only question the non-payment of service tax on the discounts and the reimbursement received by the appellant. Further, I find that the reasons given by the learned Member (Technical) in the remand order that no contract is produced and that the appellant was unable to explain with proper evidence, the nature and substance of sale, discount and commission that the nature of test to be employed for asserting as to whether the transaction is principal to principal basis and whether the transaction involves transfer of possession and control is a question of fact and the same has to be decided based on the terms of the contract, travels beyond the Show Cause Notice and the Order-In-Original because these facts have not been disputed either in the SCN or OIO and therefore the same travels beyond the Show-cause notice and is liable to be set aside. In this regard, the appellant has cited number of decisions of various Courts, incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur v. Ballarpur Industries Ltd. [2007 (215) E.L.T. 489 (SC)] wherein this Court held in para 21 that it is well settled that the show cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest. This view was reiterated in Commissioner of Central Excise v. Gas Authority of India Ltd: [2008 (232) E.L.T. 7 (SC)] in para 7 of the order. 55. In these circumstances, when the Show-Cause Notice which is the foundation on which the Department has to build up its case, is vague and lacks details, it has to be held that the impugned order based on such a Show-Cause Notice is bad in law and therefore cannot be sustained. 56. Further, I find that the learned Member (Judicial) has set aside the demand after relying upon the precedents decisions of the Tribunal which has consistently settled the issue regarding the sale of cargo space and reimbursement are not subject to service tax. Those precedents decisions have to be respected and followed otherwise there will be uncertainty in the administration of justice. I also find that the CESTAT in the case EMU Line Pvt Ltd cited supra has held that the service tax on incentives received from the shipping line is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Sd/- S.S. Garg (Member (Judicial) MAJORITY ORDER The Third Member has agreed with the view taken by Member (Judicial) holding that the demand of Service tax on Business Auxiliary Service and Custom House Agent's Services is required to be set aside. In view thereof, the impugned order is modified as under : (1) The demand of service tax, interest thereon, penalties imposed under Business Auxiliary Service is set aside entirely. (2) The demand of service tax, interest thereon, penalties imposed under Custom House Agent's Service is set aside entirely. (3) The demand of service tax and interest thereon, on Goods Transport Agency Service is upheld. The penalties imposed are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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