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of <h1>Tribunal rules in favor of appellant on service tax liability for freight charges</h1> The Tribunal ruled in favor of the appellant, an Ocean Transportation Intermediary and IATA agent, regarding the liability of service tax on freight ... Waiver of pre deposit - C & F Agent service and CHA service - Business Support Service - Held that:- Appellant has made out a case in respect of this demand since the amount collected for the same service for two periods has been classified under two categories of service and in respect of CHA service, there is already a precedent decision in favour of the appellant. As regards the earlier period, we take note of the fact that the activity undertaken by the appellant is only organizing the transportation and in the absence of any evidence to show that no tax has been paid on the transportation activity, it may not be proper to levy tax on the appellant especially in the absence to show that appellant was a C & F agent of any of the customers in respect of these transactions. As regards the demand for 'Business Support Service', the appellant has only identified the transporter and mode of transportation for the customers and the department's view is that appellant has lent logistical support to the customer. The logistical support involves many types of activities and not mere transportation. From the facts as submitted during the discussions, what we see is that for levy of service tax there is much more than freight element involved. - Stay granted. Issues:1. Liability of service tax on freight charges collected by the appellant.2. Classification of services provided as C & F Agent service and CHA service.3. Applicability of service tax on Business Support Service.4. Imposition of penalties and interest.Liability of service tax on freight charges collected by the appellant:The appellant, an Ocean Transportation Intermediary and IATA agent, faced proceedings for service tax on freight charges collected from customers during 2007-2008 to 2011-12. The appellant argued that they organized transportation, identified transporters, and added a margin to the actual freight payable. Service tax was demanded on the entire amount, with a change from C & F Agent service to CHA service in 2010. The Tribunal noted the appellant's case that the freight charges collected for two periods were classified under different services and relied on a precedent favoring the appellant regarding CHA service. For the earlier period, as the appellant only organized transportation without evidence of unpaid taxes, the Tribunal found it improper to levy tax. The appellant was granted a waiver of pre-deposit and a stay against recovery during the appeal process.Classification of services provided as C & F Agent service and CHA service:The appellant's services were classified as C & F Agent service till March 2010 and CHA service thereafter. The appellant successfully argued that the freight charges collected for transportation service could not be considered part of CHA service, citing a precedent decision. The Tribunal agreed that the appellant had a prima facie case for a waiver of the demand related to CHA service. The Tribunal emphasized the need for clear evidence before levying tax, especially in cases where the appellant's role was limited to organizing transportation without acting as a C & F agent for customers.Applicability of service tax on Business Support Service:The appellant's involvement in identifying transporters and transportation modes led the department to view it as providing logistical support to customers, triggering a demand for Business Support Service tax. However, the Tribunal found that the appellant's role involved more than just freight elements and encompassed various activities beyond mere transportation. Considering this, the Tribunal concluded that the appellant had made a prima facie case for a complete waiver of the demand related to Business Support Service.Imposition of penalties and interest:In addition to the service tax demands, penalties were imposed on the appellant. However, the Tribunal's decision to grant a waiver of pre-deposit and stay against recovery during the appeal process implicitly addressed the issue of penalties and interest, providing relief to the appellant pending the final resolution of the appeal.
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