Service tax on import freight charges cannot be levied again where freight is already included in customs assessable value.

Service tax under Section 66A of the Finance Act, 1994 was stated to apply only where the taxable service is received from a service provider established outside India. On the facts, air freight charges were paid in Indian currency to Indian freight forwarder agents who arranged transport as agents of the aircraft operator, so the demand was not shown to be against the actual foreign service provider contemplated by Section 66A. The freight component had also been included in the customs assessable value under Section 14 of the Customs Act, 1962, and could not be subjected to service tax again on the same value.

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Issues: Whether service tax could be demanded under Section 66A of the Finance Act, 1994 on air freight charges paid in Indian currency to Indian freight forwarder agents for import of goods, and whether such freight already included in customs assessable value could again be subjected to service tax.

Analysis: Liability under Section 66A arises only where the service received is one specified in Section 65(105) and is provided by a person established outside India to a recipient in India. The freight charges in question were paid to freight forwarder agents in India, who had arranged the transport service as agents of the aircraft operator. On the facts, the demand was not shown to be against the actual service provider contemplated by Section 66A. The freight element had also been included in the assessable value for customs duty under Section 14 of the Customs Act, 1962, so the same component could not be subjected to service tax again.

Conclusion: The demand of service tax on the appellant was unsustainable and the appeal succeeded in favour of the assessee.

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