TaxTMI 
TaxTMI 
2019 (4) TMI 534
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....t services". Intelligence gathered by the Central Excise department revealed that the appellant is purchasing space from the shipping lines and selling it to the exporters for profit. The space purchased at a lower price from the shipping lines is in turn sold at higher price to the exporters and thereby the appellants earn an extra income. A show cause notice was issued to the appellant seeking to charge service tax on this amount holding it as business auxiliary service holding that they were promoting the service of the main shipping line and getting paid for that. Extended period of demand was invoked. Interest was also demanded on the service tax demanded and penalties were proposed to be imposed under Sec.78 & 77. After following due ....
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....ticular shipping line at a premium or profit, i.e., appellant books the space in advance with the shipping line, say for Rs. 100/- per sq. ft. and sells the space to any of the customers who would like to use the space at Rs. 115/- per sq. ft. The additional amount of Rs. 15/- earned by the appellant is being regarded by him as a profit in trading and selling of space. Revenue's contention is that this amount is for the services rendered to the client. In our considered view, the appellant herein, under this head is not rendering any service either to the shipping line or to the customers. The appellant books the space and make payment to the shipping line in advance and /or, as and when the bill is raised, and sells the same to their custo....
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....unts to acting as an intermediary for helping the business of the shipping lines and therefore they are liable to pay service tax on business auxiliary services on the profit which they receive. It is the case of the appellant that this is a deal on principal to principal basis between them and the shipping lines and again between the exporters and them. They are not acting as an agent. They could purchase the space for a lower price and sell it at a higher price and thereby earn profit. On the other hand, if they failed to sell the space to exporters, after purchasing from the shipping lines, they may incur a loss. They are not receiving any commission whatsoever from the shipping line or from the exporters. We have considered the Circular....
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....th the exporter. The invoice is raised by the freight forwarder on the exporter. In such cases where the freight forwarder is undertaking all the legal responsibility for the transportation of the goods and undertakes all the attendant risks, he is providing the service of transportation of goods, from a place in India to a place outside India. He is bearing al the risk and liability for transportation. In such cases they are not covered under the category of intermediary, which by definition excludes a person who provides a service on his account. 3.0. It follows therefore that a freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is from a place in India to a place outs....