2023 (8) TMI 539 - AT - Service Tax

Tribunal rules in favor of appellant, dismissing service tax demands on various grounds.

M/s Haiko Logistics India Pvt. Ltd. Versus Commissioner of Service Tax- Delhi 3 and Commissioner of Central GST Audit-II (Vice-Versa)

M/s Haiko Logistics India Pvt. Ltd. Versus Commissioner of Service Tax- Delhi 3 and Commissioner of Central GST Audit-II (Vice-Versa) - TMI Issues Involved:1. Demand of service tax on the profit/markup of ocean freight during buying and selling of shipping space.2. Demand of service tax on commission income from shipping lines.3. Demand of service tax on legal expenses and on difference in reconciliation of ST-3.4. Demand of service tax under category of business support services on the amount of custom duty, overseas ocean & air freight and other charges.5. Demand of service tax on difference between the figures in Form 26AS and ST-3 returns.Summary:1. Demand of Service Tax on the Profit/Markup of Ocean Freight:The Tribunal found that the activity of buying and selling cargo space is trading, not a service, and thus not subject to service tax. The appellant's role as a Multi-Modal Transport Operator was substantiated by their license, and they fulfilled all conditions in the Circular dated 12.08.2016. The Commissioner's finding that the appellant failed to provide evidence of acting as a multi-modal transport operator was incorrect. The demand was set aside as the destination of goods was outside India, making the transaction non-taxable under rule 10 of the Place of Provision of Service Rules, 2012.2. Demand of Service Tax on Commission Income Under BAS:The Tribunal held that the appellant was not acting as an agent on behalf of shipping lines but was buying and selling space on its own account. Thus, it was not covered under the definition of BAS, and the demand for service tax on commission income was not sustainable.3. Demand of Service Tax on Legal Expenses and Difference in Figures in ST-3:The Tribunal noted that the appellant had paid the service tax along with interest before the issuance of the show cause notice. Therefore, no penalty was imposable under Explanation (2) to section 73 (3) of the Finance Act. The demand could not be confirmed as the appellant was entitled to the benefit of section 73(3) of the Finance Act.4. Demand of Service Tax on Income Shown as Non-Taxable in Summary Sheet (Department Appeal):The Tribunal upheld the Commissioner's decision to drop the demand, stating that the non-taxable income included components like customs duty, overseas ocean & air freight, and other charges, which were merely reimbursements and not taxable. The demand was based on obsolete provisions and under a category that ceased to exist.5. Demand of Service Tax on Difference in Figures in Form 26AS and ST-3 Returns (Department Appeal):The Tribunal found that the demand could not be sustained merely on the basis of differences in figures in ST-3 and Form 26AS, as Form 26AS is not a statutory document for determining taxable turnover under service tax provisions. The Commissioner's finding that the demand was not sustainable was upheld.Conclusion:Service Tax Appeal Nos. 52935 of 2016 and 53001 of 2018 filed by the appellant were allowed, and the impugned orders were set aside. Service Tax Appeal No. 53022 of 2018 filed by the department was dismissed.