2018 (7) TMI 333 – CESTAT CHENNAI – TMI – Business Auxiliary Services – freight charges collected by the appellant – according to the Department, these are nothing but charges for the transportation of cargo from the customer's premises to the desired destinations or vice versa as per the directions of the customers and would be taxable under BAS for the period 1.7.2003 to 30.4.2006 and would fall under the category of BSS with effect from 1.5.2006 – Held that:- The issue whether the said charges collected by the appellant would fall under BAS has been decided in the case of M/S. SKYLIFT CARGO (P) LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI AND (VICE-VERSA) [2018 (2) TMI 320 – CESTAT CHENNAI], where it was held in favor of the assessee noting that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity and that commission earned by the assessee while acting on behalf of the exporter and mark-up value was of freight charges are not to be c
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te for the Appellant Shri K.P. Muralidharan, AC (AR) for the Respondent ORDER Per Bench The appellants are registered with the service tax department under the category of Business Auxiliary Service, Business Support Service, Cargo Handling Service, Storage Warehousing Service and Transport of Goods by Road service. During the course of audit of accounts, it was noticed that they collected charges under various heads such as documentation charges, examination charges, processing fees, stuffing charges and freight charges for transporting cargo of their clients to the required destination. They also undertook to handle and transport the goods from the premises of their clients to the desired destinations. In the case of export of goods, they undertook loading of goods meant for export, storing the same in Container Freight Stations/Airport, processing the shipping bills, filing and stuffing the cargo in the containers etc. Similarly, in the case of import of cargo, the appellant underto
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vices were performed outside the SEZ. Aggrieved, the appellants are now before the Tribunal. 2. The department has filed cross objections No. ST/CO/32 & 33/2012 contending that for the period 2006 to 2010, as the show cause notice has alleged the activity to fall under BSS, the Commissioner ought to have held that the activity is taxable under BSS and not under BAS. 3. On behalf of the appellant, ld. counsel Shri S. Muthu Venkataraman submitted that the details of the show cause notice, period of dispute and the amount involved in the cases to be as under:- SCN No. & Date Order-in-Original No. & Date Period of Dispute Amount (In Rupees) 293/2010 dt. 21.4.2010 106/2011 dt. 30.11.2011 Oct. 2004 to March 2009 58,69,92,442 543/2010 dt. 30.9.2010 April. 2009 to March 2010 10,06,92,132 329/2010 dt. 23.4.2010 129/2011 dt. 28.12.2011 Oct. 2004 to March 2009 15,38,58,064 4. The ld. counsel submitted that the issue whether the ocean/air freight charges are taxable under BAS has been
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available to the service provided to the SEZ Units, he relied upon the decision of the Tribunal in the case of Vision Pro Event Management vide Final Order No. 40964/2018 dated 28.3.2018. 7. The ld. AR Shri K.P. Muralidharan reiterated the findings in the impugned order. 8. Heard both sides. 9. The demand has been raised alleging that the freight charges collected by the appellant forms part of taxable value under BAS for the period 1.7.2003 to 30.4.2006 and would fall under the category of BSS with effect from 1.5.2006. The issue whether the said charges collected by the appellant would fall under BAS has been decided in the cases relied upon by the ld. counsel for the appellant The relevant portion of the decision in the case of Skylift Cargo Pvt. Ltd. (supra) is as under:- "3. When the matter came up for hearing learned consultant Shri D. Aravind made oral and written submissions, which can be summarised as follows:- (a) During the course of freight forwarding, the assessee boo
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artment stand is that this freight difference is earned on account of promoting an airline, whereas, there is no payout by the airlines to the assessee. On the other hand, the assessee recovers full freight from the exporters and the difference between the purchase and sale price is retained by the assessee. (e) The assessee issues House Airway Bills to their customers based on which the transportation takes place and, therefore, act in the capacity of a transporter/principal, rendering service to exporters (f) Freight Forwarder rendering service as a principal has been recognised by CBEC in Education Guide as well as in their Circular of August 2016. (g) The matter is no longer res integra and have been held in their favour, vide a number of decisions, namely:- (i) Commissioner of Service Tax, New Delhi Vs M/s. Karam Freight movers reported in 2017 (4) G.S.T.L.215 (Tri.Del.). (ii) DHL Lemuir Logistics Pvt Ltd Vs Commissioner of Central Excise, Thane-1 reported in 2016-TIOL-1455-CESTAT
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by the department also vindicate this stand. xxxx xxxx xxxx xxxx 11. On the second issue regarding the service tax liability of the respondent under BAS, we find that the impugned order examined the issue in detail It was recorded that the income earned by the respondent to be considered as taxable under any service category, should be shown to be in lieu of provision of a particular service. Mere sale and purchase of cargo space and earning profit in the process is not a taxable activity under Finance Act, 1994. 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 Logistics (1) Pvt. Ltd. CST, Mumbai – 2016 (43) S.T.R. 215 (Tri. – Mumbai) The Tribunal examined similar set of fact and held that the assessee 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
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wed that commission amount is necessarily to be obtained out of transaction 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 mark-up 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 with effect from 10-9-2004. 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. T
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he notification is reproduced as under:- The Central Govt. being satisfied that it is necessary in the public interest so to do, hereby exempts taxable service of any description as defined in clause (105) of Section 65 of the said Act provided to a developer of Special Economic Zone or a unit (including a unit under construction) of Special Economic Zone by any service provider for consumption of the services within such Special Economic Zone, from the whole of service tax leviable thereon under Section 66 of the said Act, The doubt has arisen as the notification uses the words consumption of services within Special Economic Zone. The period involved is February 2008. SEZ Act 2005 has come into force w.e.f. 10.02.2006. Section 26 of the Act provides for various exemptions and concessions to SEZ unit/developers. Section 51 lays down that the SEZ Act will have overriding effect over any other Act for the time being in force. The relevant section is reproduced as under:- 51. Act to have
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of the Notification No. 9/2009 is reproduced as under:- In exercise of the powers conferred by sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Govt of India, Ministry of Finance (Department of Revenue), No. 4/2004-ST, dated 31.03.2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated the 31s.03.2004, vide G.S.R. 248 (E), dated 31.03.2004, except as respects things done or omitted to be done before such supersession, the Central Govt., on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in clause (105) of Section 65 of the said Finance Act, which are provided in relation to the authorized operations in a Special Economic Zone and received by a developer or units of a special economic zone, whether or not the said taxable services are provided inside the special economic zone, from the whole of the service tax le
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