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of <h1>Tribunal rules in favor of appellant: Ocean freight charges not taxable under Service Tax</h1> <h3>M/s. Geodis Overseas Private Limited Versus Commissioner of Service Tax, Chennai</h3> M/s. Geodis Overseas Private Limited Versus Commissioner of Service Tax, Chennai - TMI Issues Involved:1. Whether ocean freight charges collected by the appellant are subject to levy of Service Tax under Business Support Services.2. Whether the appellant is eligible for the benefit of Notification No. 04/2004 dated 31.03.2004 for input services not physically consumed within the SEZ unit.Issue-wise Detailed Analysis:1. Levy of Service Tax on Ocean Freight Charges:The primary issue is whether the ocean freight charges collected by the appellant are subject to Service Tax under Business Support Services. The Department contended that these charges fall under Business Support Services, thus attracting Service Tax. However, the appellant argued that ocean freight charges are not incurred in the course of providing freight forwarding services and should not form part of the taxable value. The appellant cited multiple Tribunal decisions, including M/s. Bax Global India Ltd. v. C.S.T., Chennai and others, which consistently held that ocean freight charges are not subject to Service Tax under Business Support Services or Business Auxiliary Services. The Tribunal reiterated that the appellant's transactions for ocean freight are principal-to-principal transactions, not agency functions, thus not falling under the taxable services category. Consequently, the demand for Service Tax on ocean freight charges was set aside.2. Eligibility for Notification No. 04/2004:The second issue concerns the eligibility for the benefit of Notification No. 04/2004, which exempts certain services provided to SEZ units from Service Tax. The Department argued that the appellant was not eligible for this benefit as the services were not physically consumed within the SEZ unit. The appellant countered that the term 'consumption' should not be narrowly interpreted to mean physical consumption within the SEZ but should include services used by the SEZ unit. The appellant cited several decisions, including M/s. Vision Pro Event Management v. Commr. of C.Ex. & S.T., Chennai, which supported a broader interpretation of 'consumption' in line with the SEZ Act's intent. The Tribunal agreed, noting that the SEZ Act's provisions have an overriding effect and that the benefit of the notification cannot be denied based on a restrictive interpretation. The Tribunal concluded that the demand for Service Tax on the grounds of wrongful availing of Notification No. 04/2004 was unjustified and set it aside.Conclusion:Both issues were resolved in favor of the appellant. The Tribunal set aside the impugned order, ruling that the demand for Service Tax on ocean freight charges and the denial of the benefit under Notification No. 04/2004 were unsustainable. The appeals were allowed with consequential reliefs as per law.
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