TaxTMI 
TaxTMI 
2013 (5) TMI 112
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.... provide cargo space already booked by them in Airlines/Ship for their clients use for export of goods. Assessee pays charges for space bookings to the respective Airlines/Steamer Agents. Whenever consignment of their customers are sent using the space booked, Assessee charge their customers freight charges for the transportation of the goods by the respective Airlines/Steamer Agents. While charging their customers towards freight charges for the cargo booked, the Assessee is said to be collecting extra charges and collect the same from their clients. The services of the Assessee are classifiable under 'Business Auxiliary Service' under the category of procurement of goods or services which are inputs for clients introduced with effect from 10.09.2004. Consequently, the Assessee is liable to pay service tax on the extra charges collected on the Airlines/Steamer Agents, which according to the Revenue is the consideration received for rendering the above services and will form part of the value of taxable service and liable for service tax under Business Auxiliary Service . 3. A Show Cause Notice No.11/2010 dated 12.01.2010 was issued by the Commissioner of Service Tax pro....
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....ontract between the clients and the Assessee is specifically one of providing transportation by various modes of transport to the clients and the same is not liable to be taxed. It was further submitted that the difference between the selling price and the purchase price is nothing but profit or loss, as the case may be, which cannot be subjected to service tax and when ocean freight is not liable to tax, the profit made on the ocean freight cannot be taxed. In support of his contention, the learned Senior Counsel placed reliance upon (2010) 18 STR 348 [M/S.GUDWIN LOGISTICS V. COMMISSIONER OF CENTRAL EXCISE, VADODARA]; (2010) 17 STR 266 [DHL LEMUIR LOGISTICS PVT. LTD. V. COMMISSIONER OF SERVICE TAX, BANGALORE] and (2012) TIOL 1558 CESTAT-MAD [M/S.FREIGHT SYSTEMS PVT. LTD. V. COMMISSIONER OF SERVICE TAX, CHENNAI]. 7. Per contra, Mr. V. Sundareswaran, learned counsel for Revenue submitted that though ocean freight as such is not chargeable to service tax under Chapter V of the Finance Act, 1994 and while charging the customers towards freight charges for the cargo booked, the Assessee collects extra charges from their clients i.e. in excess of what is paid to the Airlines/Steamer ....
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.... levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing. 11. Two important expressions used in Section 35F of Central Excise Act are undue hardship to such person and safeguard the interests of Revenue . While dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of the Revenue have to be kept in view. The same view was expressed by the Hon'ble Supreme Court in the case of MONOTOSH SAHA V. SPECIAL DIRECTOR, ENFORCEMENT DIRECTORATE AND ANOTHER 2008 AIR SCW 6004]. 12. The Hon'ble Supreme Court in the case of S.VASUDEVA V. STATE OF KARNATAKA [AIR 1994 SC 923] observed that under Indian conditions the expression undue hardship is normally related to economic hardship. Undue means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances . 13. There are two important expressions in Section 35F of Central Excise Act. One is Undu....
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....ted ocean freight . The department levied service tax under the clearing and forwarding charges under Custom House Agent taxable services. CESTAT held that the substantial portion of the collected amount relates to ocean freight which itself is not liable to service tax under the Custom House Agent. Hence, the issue as to whether the excess collection over and above the ocean freight was liable to service tax under the Business Auxiliary Service under Section 65(19)(iv) or not was not the issue in appeal in that case before the CESTAT. Therefore, such case is distinguishable on facts. 17. Learned Senior Counsel placed reliance upon (2010) 17 STR 266 [DHL LEMUIR LOGISTICS PVT. LTD. V. COMMISSIONER OF SERVICE TAX, BANGALORE] where the Tribunal held that Air/Sea Freight Rebate is a margin derived on principal to principal transaction and it is not for rendering Custom House Agent services. In the said case, the service provider was registered under Custom House Agent services (Section 65(35) read with Section 65(105)(h)) and it collected charges for collecting fees, Break Bulk fees, Profit share form origin, Unallocated income, Currency adjustment factor, Freight rebate, Airline co....