Freight mark-up excluded from service tax where excess over liner charges was treated as non-taxable profit element.

Freight mark-up collected by the appellant on the difference between amounts charged to customers and amounts paid to shipping liners was treated as not forming part of the taxable value of the service, because the excess represented a profit element unconnected with the taxable service. The Tribunal followed its earlier coordinate Bench ruling in the appellant's own case for the preceding period, noting that the precedent had not been stayed, set aside, or modified by a higher forum. Applying judicial discipline and consistency, it held that the service tax demand could not survive, and the connected interest and penalty also fell.

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Issues: Whether the mark-up received by the appellant on the difference between freight charges collected from customers and freight charges paid to shipping liners is liable to service tax.

Analysis: The dispute concerned the taxability of the profit element arising from freight mark-up collected by the appellant. The Tribunal followed its earlier coordinate Bench decision in the appellant's own case for the preceding period, which had held that the extra amount collected over actual freight charges had nothing to do with the taxable service and could not be added to the value of the service for levy purposes. The Tribunal also noted that the cited precedents had not been stayed, set aside, or modified by any higher forum, and therefore applied judicial discipline, comity, and consistency to follow the earlier view. On that basis, the demand, together with the connected issues of interest and penalty, could not survive.

Conclusion: The freight mark-up was held not liable to service tax, and the impugned order was set aside in favour of the appellant.

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