Service tax liability - Proportionate amount

[Asked by Guest]

We are providing C&F services for our clients who are manufacturers of Fertilizers. We are registered with the Service Tax under “C&F” “Cargo Handling” and “Storage & ware housing services”. We provide Loading/ Unloading of the fertilizers from railway wagons (Cargo Handling), store the same in my warehouses (Storage & ware housing) and dispatch to clients. As per our agreement we charge them for each of the services rendered by us on at a specific rate(M T basis) but not on commission basis. The Department has issued Show cause notice to us to pay service tax on the Gross amount charged/received by us. Since we are basically C&F agents we are of the view that we are liable to pay service tax on the net amount (i.e. amount received as per agreement less actual expenditure incurred by us like loading, unloading, go down rents and other expenditure) as it is the net amount which is our commission. We request you to offer your valuable suggestion/case laws in this regard.

The amount of service tax was paid on the amount received regarding 'C&F Agent Service'not on the amount which is reimbursable by the princpal. Related cases-(i) 2007(6) S.T.R. 389 (Tri-Bang.) (ii) 2006 (4) S.T.R. 103 (Tri-Bang.)

AI Summary

Service tax liability on C&F services: tax applies to charges received, not merely net commission after reimbursements.
Whether service tax for C&F, cargo handling and storage services is payable on gross charges or only on the net commission after deducting reimbursable expenditures; taxpayer argues net commission basis while revenue issued show cause notice seeking tax on gross receipts; advisory response notes tax was paid on amounts received for C&F agent services and not on reimbursable expenses, citing tribunal reports.