2007 (7) TMI 665 - AT - Service Tax

Custom House Agent's Activities Re-Categorized as Steamer Agent; Service Tax Order Set Aside

The Member found that the Custom House Agent's activities did not align with the 'Business Auxiliary Services' category but were more suited to 'Steamer ... Business Auxiliary Services - appellant-CHA are rendering services of arranging shipment of the export cargo and negotiating the same with shipping lines on behalf of their clients - whether the demand of service tax under the head BAS justified? - Held that: - more specific category for coverage would be under the ‘Steamer Agent’ service which clearly refers to the type of activities carried out by the appellants under Section 65(100)(ii) i.e. “to book, advertise or canvass for cargo for or on behalf of a shipping line”. It cannot be broad enough to bring in a specified activity which has been delineated under steamer agent under the definition of ‘Steamer Agent’ under Section 65(100) which specifically covers in its item 2. i.e., “to book, advertise or canvas for cargo for or on behalf of a shipping line”. Appeal allowed - decided in favor of appellant. Issues:Service tax liability on Custom House Agent under 'Business Auxiliary Services' category.Analysis:The appeal challenged the Order-in-Appeal confirming Service tax on the Custom House Agent for arranging shipment of export cargo and negotiating with shipping lines under 'Business Auxiliary Services' from 1-7-2003. The appellant argued that their activities did not fall under 'Business Auxiliary Services' as defined in Section 65(19) of the Finance Act, 1994. The appellant's contention was that the commission received for canvassing cargo did not fit within the definition of 'Business Auxiliary Services.'The appellant's counsel emphasized that the clients were importers/exporters and canvassing cargo to specific shipping lines, which, in their view, did not constitute 'Business Auxiliary Services.' They also referred to the definition of 'Steamer Agent' under Section 65(100) of the Finance Act to support their argument. The counsel contended that based on the definition of 'Business Auxiliary Services' and 'Steamer Agent,' the appellant should not be liable for Service tax under 'Business Auxiliary Services.'On the other hand, the JDR defended the order, asserting that the appellant's activities fell within the ambit of 'Business Auxiliary Services' as per Section 65(19)(ii) of the Finance Act. The JDR maintained that the order imposing Service tax was legally sound.After considering the definitions of 'Business Auxiliary Services' and 'Steamer Agent,' the Member found that the appellant's activities did not align with the categories specified under 'Business Auxiliary Services.' The Member noted that the specific activities of arranging shipment and negotiating with shipping lines were more aptly covered under the definition of 'Steamer Agent,' particularly the aspect of booking, advertising, or canvassing cargo for shipping lines. Therefore, the Member concluded that the appellant's activities did not fall under 'Business Auxiliary Services' but were better categorized under 'Steamer Agent.' Consequently, the impugned order was set aside, allowing the appeal with any consequential relief.This detailed analysis of the judgment showcases the arguments presented by both parties, the legal interpretation of relevant sections of the Finance Act, and the final decision based on the specific definitions and categorizations provided under the law.