AI Drafter 
TaxTMI 
TaxTMI 
2014 (12) TMI 166
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....ts were rendering many other services on which they were not paying service tax. The services identified by Revenue were the following : (i) Services of for booking cargo space in various airlines for commission or incentives or discounts received from airlines or shipping lines; (ii) Services of Freight Forwarding for which they have charged to the customers under different heads which charges were not included in assessable value; (iii) Freight amounts charged from their customers for transporting goods by sea or by air; (iv) Services of goods transport agency which they received from others on which the appellants were required to pay tax as a recipient of service. 4. After adjudication, the demands in the show cause notices have been confirmed for a total demand of Rs. 33.26 crores (approx) along with interest and penalties under various sections of the Finance Act, 1994. The details of tax amounts confirmed are briefly as under : In relation to SCN dated 9-4-2008 S. No. Nature of Service Classification ordered Period for which tax is demanded Service tax demanded ....
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.... such services show cause notice demanded service tax under Business Auxiliary under Section 65(19)(iv) as service in relation to procurement of service for the client. He submits that he is not procuring any inputs or input service for his clients and these services are supporting services and some of the service charges are towards reimbursement of expenses incurred for procurement of service from various other service providers, Government agencies, etc., to their clients. According to him, these services cannot be classified under Section 65(19)(iv). He fairly concedes that some of these services would get classified under Business Support service from 1-5-2006 when Business Support Service as defined under Section 65(104c) came into force. They have accepted liability from this date and have paid tax on such services. The applicants also contest that on some of the items they have already discharged liability under the categories of CHA services. Clearing and Forwarding Services and Business Auxiliary services. The contention of the applicants is that prior to 1-5-2006 the services could not be taxed under Business Auxiliary Services. 8. Service tax demand of 13,55,90,....
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....msp;Opposing the prayer of the applicants, ld. AR for the Revenue draws our attention to para 6.1 of the impugned order which reads as under :- "6.1 The assessee are engaged in the business of Air Cargo Agents and Freight Forwarding Agents. They are members of International Air Transport Association and the assessee. The assessee accepts the cargo from the shippers on behalf of the airlines for transporting of cargo. The airlines provide blank Airway bills to the assessee. The assessee, as a cargo agent, books the cargo, prepare the airway bill and issue the same to the shippers on behalf of airlines. The airway bill contains various details such as name of the shipper, name of the IATA agent, destination airport, gross weight of cargo, chargeable weight, rate/charge and the total freight charges. The freight rates are fixed by airlines. The assessee collect payments for the pre-paid transportation and other charges and remit the same to the airlines. For above services the airlines pay in the name of Commission, Discount, Incentives and Market Price Adjustment. This Business Auxiliary service includes the service provided by a person in relation not only to promotion, mark....
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.... and hence the demand is confirmed for services as defined under Section 65(104c) which covers activity like managing distribution and logistics and information and tracking of delivery schedules which activities the applicants are doing. 17. The ld. A.R. did not make any submission in the matter of demand under the category of Goods Transport Agency the demand for Rs. 10,49,152/- in the second SCN. 18. We have considered arguments on both sides. In the matter of commission earned by the appellants from the airlines the tax liability is stated to be paid. The question whether incentives and discounts will form part of value of services under Business Auxiliary Service needs closer examine with reference to terms of contract. 19. In the case of miscellaneous activities, the proposal was to tax it under Section 65(19)(iv) as it is existing after 10-9-2004 as seen from para 4.2 of the SCN. It is seen that in the impugned order the demand is confirmed under Section 65(19)(iv) as existing prior to 10-9-2004. 19.1 Different clause under Section 65(19)(iv) prior to 10-9-2004 (i) Promotion or marketing of sale of goods produc....
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....prima facie view that ocean freight was not liable to service tax. While there are specific entries in Finance Act, 1994 levying tax on transportation of goods by road, rail, aircraft, pipeline, etc., there is no entry levying tax on transportation by sea. It has to be reasonably presumed that this is kept outside the tax net and it cannot be taxed under a general entry like business support services. Further it appears that such services are rendered in respect of export cargo. 22. It appears that the expression "aircraft operator" as defined in Finance Act, 1994 may cover any person who may not be having an aircraft also. But in the case of transportation of goods by air, there is an exemption under Notification 29/2005-S.T. for services rendered for transport of export goods by air. All these aspects are not considered while demanding tax on such charges. 23. Against the above background firstly we have evaluated the submissions to assess whether the deposit already made by the applicant is sufficient for the purposes of Section 35F of Central Excise Act. What we find is that the major component of demand to the extent of Rs. 27.06 crores is on account of airfrei....