Cargo space resale and UN mission transport were held outside service tax, with pure-agent reimbursements excluded from value.

Purchase and resale of cargo space on a principal-to-principal basis was treated as trading activity, not a taxable service, so the mark-up was not liable to service tax. Reimbursable statutory expenses shown separately and accepted as pure-agent recoveries were excluded from the taxable value, and no contrary evidence displaced that factual finding. Services for transportation of stores to the UN Peace Mission were held exempt under the notifications applicable to services provided to the United Nations, so the demand on that activity also failed. The departmental appeal was rejected and the relief granted to the assessee was sustained.

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Issues: (i) whether the difference between the amount paid for cargo space and the amount recovered from customers was liable to service tax; (ii) whether reimbursable expenses were includible in the taxable value; and (iii) whether services rendered for transportation of stores to the UN Peace Mission were exigible to service tax.

Issue (i): whether the difference between the amount paid for cargo space and the amount recovered from customers was liable to service tax.

Analysis: The activity was found to be purchase and resale of cargo space on a principal to principal basis. The Tribunal relied on earlier decisions holding that such mark-up does not amount to rendition of taxable service and that buying and selling space is trading activity rather than support service or intermediary service.

Conclusion: The issue was decided in favour of the assessee and the demand on this count was not sustainable.

Issue (ii): whether reimbursable expenses were includible in the taxable value.

Analysis: The reimbursable amounts were separately shown as statutory charges and the lower authority had found that the conditions for exclusion as a pure agent were satisfied. The Tribunal accepted that finding and noted that no contrary evidence was produced to dislodge the factual conclusion that the expenses were recoverable on actual basis.

Conclusion: The issue was decided in favour of the assessee and the demand on reimbursable expenses was rightly dropped.

Issue (iii): whether services rendered for transportation of stores to the UN Peace Mission were exigible to service tax.

Analysis: The Tribunal held that the services were rendered to the United Nations peace-keeping mission and were covered by the exemption granted to services provided to the United Nations under Notification No. 16/2002-Service Tax and also by Notification No. 25/2012-ST. It further observed that the demand had been raised by reference to profit and loss figures rather than invoice-wise quantification, and that the exemption was available to the service in its entirety.

Conclusion: The issue was decided in favour of the assessee and the demand on this count was not sustainable.

Final Conclusion: The departmental appeal failed and the order granting relief to the assessee was sustained, with the entire confirmed demand, interest, and penalties remaining unset aside.

Ratio Decidendi: Purchase and resale of cargo space on a principal to principal basis is not a taxable service, reimbursable statutory expenses recoverable as a pure agent are excluded from value, and services provided to the United Nations are exempt where the relevant exemption notification applies.

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