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The CESTAT held that the appellant's activity of purchasing cargo space (ocean and air) in bulk from shipping/airlines on a principal-to-principal basis and reselling such space to its customers does not fall within "Business Auxiliary Service" or "Business Support Service" under Section 65 of the Finance Act, 1994 for the pre-01.07.2012 period. The Tribunal found no element of promotion, marketing, or agency for the shipping/airlines; the margin earned was a trading surplus from purchase and sale of space, not consideration for a taxable service. As the transactions were conclusively principal-to-principal, the service tax demand, along with interest and penalties imposed in the impugned orders, was held to be unsustainable and was set aside.
The CESTAT held that the appellant's activity of purchasing cargo space (ocean and air) in bulk from shipping/airlines on a principal-to-principal basis and reselling such space to its customers does not fall within "Business Auxiliary Service" or "Business Support Service" under Section 65 of the Finance Act, 1994 for the pre-01.07.2012 period. The Tribunal found no element of promotion, marketing, or agency for the shipping/airlines; the margin earned was a trading surplus from purchase and sale of space, not consideration for a taxable service. As the transactions were conclusively principal-to-principal, the service tax demand, along with interest and penalties imposed in the impugned orders, was held to be unsustainable and was set aside.
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
TaxTMI 
of 4884 
