Business Auxiliary Service not attracted to cargo space pre-booking, as transactions were held to be principal-to-principal dealings.

Pre-booking of cargo space with airlines and shipping lines was treated as a principal-to-principal commercial arrangement, not as promotion or marketing of a client's service. The Tribunal held that freight paid to the carrier and freight recovered from customers arose from two independent transactions, so any surplus reflected purchase and sale of space rather than rendition of Business Auxiliary Service. The service tax demand under Business Auxiliary Service was therefore not sustainable and was set aside, with consequential relief to the assessee.

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Issues: Whether the consideration received for pre-booking of cargo space in airlines and shipping lines was taxable as Business Auxiliary Service.

Analysis: The demand was based on the view that the assessee earned revenue by arranging space bookings for cargo transportation. The Tribunal followed its earlier decision on the same issue and the reasoning adopted therein, which treated the procurement of space from airlines or shipping lines as a distinct commercial arrangement. It was held that the freight paid to the carrier and the freight recovered from customers arose from two independent transactions, and that the assessee was not acting merely as an agent promoting or marketing the services of a client. The surplus, if any, was attributable to purchase and sale of space on a principal-to-principal basis, not to the rendition of Business Auxiliary Service.

Conclusion: The demand of service tax under Business Auxiliary Service was not sustainable and was set aside, with consequential relief to the assessee.

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