TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 547
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....ve confirmed tax demand of Rs. 2,27,02,697/- for the period 2005-06 to 2009-10 and Rs. 48,43,493/- for 2010-11 respectively with interest thereon as provider of 'business auxiliary service.' The adjudicating authority has also imposed penalty under section 76, 77 and 78 of Finance Act, 1994 in the former and under section 76 and 77 of Finance Act, 1994 in the latter. As the issue in dispute in the two appeals is identical we dispose both by this common order. 2. The appellant handles the logistics of exporters for delivery to the consignee and is registered as 'multi-modal transport operator' with the Director General of Shipping. Their responsibilities and liabilities are codified in the Multimodal Transportation of Goods Act, 199....
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....nal authority recorded the inference that the appellant had carried out activities that were intended to promote the marketing of the services of the client which was taxable as 'business auxiliary service'. Consequently, it was held that surplus of Rs. 21,95,34,602/- was liable to tax. 5. We have heard both sides and given due consideration to various submissions canvassed on behalf of the disputants. Learned Counsel for appellant contends that this amount is a profit from trading, that Finance Act, 1994 taxes certain services and not profits, that this purchase and sale is in relation to international trade transactions, that the taxable service in section 65(105)(zzb) of Finance Act, 1994 are those rendered for or to a client, that ....
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....ax in view of those activities, they cannot be subjected to service tax in view of the Apex Court decision in the Baroda Electricity Meters Ltd. case...." 7. Each source of income must, therefore, be looked at independently. A service provider is not necessarily a specialist in rendering one service; the earnings of a service entity may accrue from one or more services - some of which may be taxable. Finance Act, 1994 does not envisage determination of taxability from accounting entries. The manner or mode of booking the profit in the accounts of a commercial organization has no bearing on the application of section 65(105) to a taxable activity. The nomenclature in the accounts that appears to have weighed heavily with the original author....
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....sent in the impugned order. 10. The original authority has proceeded on the assumption that there is only one payment and, that too, for freight charged by the shipping line. He has rejected the possibility of trading in space or slots on vessels by holding that trading in space or slots is a figment and freight is all that is transacted. Freight, though used colloquially to describe all manner of carriage, is the nomenclature assigned to the consideration for space provided on a vessel for a particular voyage. Freight is charged by the entity that is in possession of space on a vessel from an entity that requires the space for carriage of cargo. 11. Slots may be contracted for by the shipper or its agent with the shipping line through th....
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.... and the shipper is not privy to the minutiae of such contract for carriage. The appellant often, even in the absence of shippers, contract for space or slots in vessels in anticipation of demand and as a distinct business activity. Such a contract forecloses the allotment of such space by the shipping line or steamer agent with the risk of non-usage of the procured space devolving on the appellant. By no stretch is this assumption of risk within the scope of agency function. Ergo, it is nothing but a principal-to-principal transaction and the freight charges are consideration for space procured from shipping line. Correspondingly, allotment of procured space to shippers at negotiated rates within the total consideration in a multi-modal tr....