Vessel space trading profits not taxable under service tax laws. Tribunal rules in favor of appellant.

The Tribunal held that the appellant, engaging in purchasing and selling space on vessels, acted as a principal, not a service provider. Profit from trading activities, buying and selling goods at different prices, was not taxable under service tax laws. Service tax could only apply to the value of taxable services rendered, not profits from trading. The order demanding service tax on vessel space trading profits was unsustainable and set aside, ruling in favor of the appellant.

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Issues:
Interpretation of service tax liability on profit earned from purchasing and selling space on vessels.

Analysis:
The case involved an appeal against an Order-in-Appeal dated 30.05.2018, where the appellant was demanded service tax on the profit earned from purchasing and selling space on vessels. The revenue contended that such transactions constituted a service rendered, attracting service tax liability under Sec.73(2) of the Finance Act, along with interest and penalties. The appellant argued that they were acting as businessmen, buying space at a lower price and selling it at a higher price, making a profit. They highlighted previous cases where similar demands were set aside by the Tribunal and referred to a CBEC circular exempting freight forwarders from service tax liability when acting as principals in providing transportation services. The departmental representative supported the lower authorities' findings but did not dispute the nature of the transactions.

Upon considering the arguments and records, the Tribunal held that the appellant, by purchasing and selling space on vessels, was acting as a principal and not a service provider. The profit earned from trading activities, where goods were bought and sold at different prices, did not fall under the purview of taxable services for service tax levy. The Tribunal emphasized that service tax could only be levied on the value of taxable services rendered, not on the profit earned from trading activities. Therefore, the impugned order demanding service tax on the profit from purchasing and selling space on vessels was deemed unsustainable and set aside, allowing the appeal.

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