Appeal allowed: Service tax demand set aside for booking export cargo space commission

The Tribunal allowed the appeal, setting aside the demand of Rs. 9,46,435/- imposed by the Revenue on the appellant for service tax on commission received for booking export cargo space. The Tribunal found the appellant's activity as a secondary service to airlines for export, aligning with the exemption criteria in CBEC Circular No. 56/5/2003-ST and previous judicial decisions. Citing precedents, the Tribunal held the demand unsustainable under Business Auxiliary Services, ultimately dismissing the demand and penalties due to the clear alignment with the circular and established case law principles.

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Issues:
- Whether commission received by the appellant for booking export cargo space is liable to service tax under Business Auxiliary Services.
- Interpretation of CBEC Circular No. 56/5/2003-ST dated 25th April, 2003.
- Applicability of previous judicial decisions in similar cases.

Analysis:
1. The appellant, holding service tax registration for providing services like CHA, Clearing & Forwarding, Cargo Handling, received commission and incentives from airlines for booking cargo space for export of goods. Revenue claimed the commission received is taxable under Business Auxiliary Services per Section 65 (19) of the Finance Act, 1994, leading to a demand of Rs. 9,46,435/-.

2. The appellant contested the demand citing the CBEC Circular No. 56/5/2003-ST, which states that if secondary services merge with exported services, no service tax is applicable. The Tribunal found the appellant's activity as a secondary service to airlines for export, aligning with the circular's exemption criteria.

3. Referring to previous decisions like Ruth Shipping Agencies Pvt. Ltd. and Lee & Muir Head Pvt. Ltd., the Tribunal noted that the appellant acted as secondary service providers for shipping lines, making them exempt from service tax under Business Auxiliary Services. The Tribunal emphasized that the demand was unsustainable based on these precedents.

4. Ultimately, the Tribunal allowed the appeal, setting aside the impugned order due to the clear alignment of the appellant's case with the CBEC Circular and previous judicial decisions. The Tribunal found the issue no longer res-integra, leading to the dismissal of the demand and penalties, in line with the exemption criteria established by the circular and previous case law.

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