2018 (10) TMI 1558 – CESTAT CHENNAI – TMI – Liability of Service Tax – Department took the view that appellants should have been paying service tax also on the freight charges reimbursed by them from their customers charged over and above the freight amount payable to the airline companies – Held that:- The very issue had been addressed in the decisions of this Tribunal in the case of Skylift Cargo (P) Ltd. Vs CST Chennai [2018 (2) TMI 320 – CESTAT CHENNAI] relied upon by Ld. Advocate holding that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity – demand set aside – appeal allowed – decided in favor of appellant. – Appeal Nos.ST/40931/2016 & ST/40932/2016 – FINAL ORDER No. 42656-42657/2018 – Dated:- 24-10-2018 – Shri Madhu Mohan Damodhar, Member (Technical) And Shri P. Dinesha, Member (Judicial) Shri G. Sivakumar, Consultant For the Appellant Shri K. Veerabhadra Reddy, ADC (AR) For the Respondent ORDER Per Shri Madhu Mohan Damodhar The
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rest thereon and also imposed penalties under Section 76 & 77 of the Finance Act, 1994. Hence this appeal. 2. When the matter came up for hearing on 11.10.2018, on behalf of the appellants, Ld. Consultant Shri G. Sivakumar made oral and written submissions which can be broadly summarized as under : (i) The Valuation by the Department of the Difference is incorrect – in as much as, the Department have taken the entire amount collected from the Customer as the Value of Service and made it taxable in the hands of the Appellant, which is incorrect. In other words, the Department wants to tax the Margin but has calculated the Service Tax on the Gross amount collected from the Customer on behalf of the Airlines, which is contrary to the order itself. (ii) Even assuming but without admitting that the intention of the Department is to tax the entire amount collected from the Customer in the hands of the Appellant – assessee still the demand would fail for the reasons below : a. The Appella
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o treat the entire amount collected from Customer as taxable in the hands of the Appellant, then the Service Tax paid by the Airlines would be available as CENVAT Credit to the Appellant, which would make the entire exercise revenue neutral. Period Credit available Demand made in Order July 2012 to Mar 2013 17,62,41,264 17,47,72,549 Apr 2013 to Mar 2014 31,83,43,214 31,86,74,007 Total 49,45,84,478 49,34,46,556 (iv) Further, even assuming but without admitting tax is payable the difference amount, in the present case, there is no difference as the amount collected from the Customers and the amount paid to the Airlines is same. The same can be verified from Para 6(e) of the OIO. (v) Finally, it is a settled law that no Service Tax can be demanded on difference between Amount Freight amount collected from the Customer and paid to the Airlines. Reliance is placed on :- 1. M/s.Skylift Cargo (P) Ltd. Versus Commissioner of Service Tax, Chennai And (Vice-Versa) 2018 (2) TMI 320 – CESTAT CHENN
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ibunal in the case of Skylift Cargo (P) Ltd. Vs CST Chennai (supra) and La Freight Pvt. Ltd. Vs CST Chennai (supra) relied upon by Ld. Advocate holding that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity. The relevant portion of the decision in Skylift Cargo (P) Ltd. is reproduced for ready reference as under : 2. The facts of the case are that assessee M/s. Skylift Cargo (P) Ltd., [hereinafter referred to as assessees] are engaged in providing Cargo Handling Service, Clearing & Forwarding Service, Customs House Agent Service. They are also involved in the activities of booking domestic and international air cargo for various airlines for rendering the said bookings. Department took the view that the assessee were paying service tax under Business Auxiliary Service only on the commission amount without considering the incentive amount. Accordingly, proceedings were initiated against the assessee by way of issue of show-cause notice
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