TaxTMI 
TaxTMI 
Service Tax on Air Cargo Agents under "Business Auxiliary Service" — Scope of
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.... 1994 and the rules made thereunder? Hearing & submissions: 3. The Air Cargo Agents Association of India was given hearing to explain their case to the undersigned on 9th June, 2005. 3.1 Mr. J.F. Pochkhanawalla, Senior Advocate and Mr. D. Arvind, Director of Deloitte Haskins & Sells appeared on behalf of Air Cargo Agents Association of India on 9th June, 2005. The record of submissions on the question of leviability of service tax during the hearing is reproduced below: "The Counsel urged that all over India, various Air Cargo Agents have been called upon to register for service tax under six different headings so far. These are - 1. Cargo handling services 2. Clearing and Forwarding agents services 3. Aircraft Operators services 4. Business Auxiliary Services 5. Transport of goods by air services 6. Transport of goods by Road Therefore, it was urged since in a central fiscal statute, there is no uniform of classification, no tax under service tax is payable by any Air Cargo Agent. It cannot be correct that in different parts of the country, different agents performing the same services are required to pay service tax under different headings. Th....
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.... counsel respectfully urged that the Board must consider the vital point that Air Agents and rail Booking Agents also book space for passengers for which they receive identical uniform commission from the Airlines under IATA. It was urged that it is inconsiderable that for passenger's space, the service is provided to the passenger but for Cargo space, the service is provided to the airline. This can never be so. Therefore, Business Auxiliary Service cannot logically be made applicable to Air Cargo Agents. The above supportive not only ban entries under service tax it is also supported by the decision of the Madras High Court directly on the buyers of air tickets and the classification issued by the Board itself in this behalf as far as passengers are concerned in the case of Air Travel Agent. Therefore, merely because there is no specific heading for Air Cargo Agents, they cannot be confined to the orphanage of "Business Auxiliary Services". If "Business Auxiliary Service" is still the service in the mind of the department, the department will have to show with evidence why Air Cargo Agents fall under the heading "Business Auxiliary Services". So far no evidence has been forthc....
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....ylon Ltd. - 1996 (87) E.L.T. 12 (S.C.). An analogy of their services with that of Air Travel Agent & Rail Travel Agent has been used. They therefore contended that unless a specific heading is created for covering the activity of cargo agents, tax cannot be demanded merely on assumption and ad hoc basis under the category of Business Auxiliary Services. They have relied on the decision of High Court of Rajasthan in the case of UOI v. Maharaja Shri Umed Mills Ltd. - 2000 (123) E.L.T. 348 wherein it is held that no tax can be collected without the authority of law. Findings: 5. Before I dwell on whether the above said activities are covered under the category "Business Auxiliary services", I consider it proper to discuss each of the issues raised by the Association. 5.1 The representatives of the Air Cargo Association of India in its oral submission dated 9-6-2005 which was reiterated under the written submissions dated 14-6-2005 have urged that the Air Cargo agents have been called upon from time to time to get themselves registered under six different headings, as follows: (a) Cargo handling services (b) Clearing and forwarding agents services (c) Air cra....
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....by the Air Cargo Agents, are taxable or not, I have analysed in subsequent paragraphs considering the various submissions (written as well as oral) made by the Association. 7. The Association has contended that they are neither employed by the airlines nor do they give any professional service to the airlines and in fact it is the shipper/consigners who are their clients and not the airlines, as alleged in the show cause notices. It is further contended by the Associations that the Air Cargo Agents do not promote any particular airlines to the exclusion of others and that Air Cargo Agents are not providing any customer care service to any airlines nor do they provide any incidental auxiliary support services and therefore, they do not perform any business auxiliary services. 8. The "Business Auxiliary Service" was brought under the Service Tax net w.e.f. 1-7-2003 by the Finance Act, 2003, vide Notification No. 7/2003-ST., dated 20-6-2003. As per Clause (19) of Section 65 of the Finance Act, 1994, as amended, "Business Auxiliary Services" means any services in relation to: (i) promotion or marketing or sales of goods produced or provided by or belonging to the client, or ....
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.... 12. It can be seen that all three prerequisite for coverage under service tax, namely, event of provision of taxable service, presence of taxable service provider and service receiver and the act of rendering taxable serviceagainst consideration/ charge/commission/ remuneration/value, are present in the instant case. The service tax is leviable as per law. 13. The contention of the Association that they are not rendering any services to any particular airline and that airlines are not their clients is incorrect. On examination of the "affidavit-in-reply" filed by Assistant Commissioner, Central Excise, Service Tax, Mumbai-IV, in Writ Petition Long No. 989 of 2004 at Bombay High Court, it is clearly stipulated in Para 7 of the Cargo Agency Agreement dated 16th May, 1999 executed between Director General of International Air Transport Association (IATA) acting as agent for the carriers and M/s Eastern Cargo Carriers ( Pvt. Ltd. Mumbai, one of the cargo agents and member of the Association, the "the Agent shall make known and shall promote the services of the Carrier in every way reasonably practicable including the use of display, promotional and publicity material that such C....