TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 71
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....g certain charges on which they were not paying service tax. On the basis of scrutiny of documents and investigation, the service provider have provided the ledger heads/activities which have not been considered as taxable services by them. Statements of Mr. Samir J Shah, Director was also recorded. It appeared that said service provider while performing the various activities supported the business of exporters, importers, CHAs etc. and had also earned commission or brokerage for booking space in aircrafts and shipping lines for their customers. It thus appeared that the said service provider had provided "Business Auxiliary Service" as defined in Section 65(19) of the Finance Act, 1994 and had provided 'support services of business or commerce' as defined in section 65(104c) of the Finance Act, 1994, which were taxable under the respective sub-sections of Section 65 of Finance Act, 1994. Regarding the valuation of taxable services, the provisions of Service Tax (Determination of Value) Rules, 2006 (Valuation Rules) were invoked by the department and all the expenditure or costs treated as consideration for the taxable service provided was included in the value for the purpose of ....
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.... Bang,) * Seagull Freight Systems - 2012 (27) STR 530 (Comm, Appls) 2.3 He also submits that on other charges demand are confirmed under the category of BSS on the profit element of these activities which are not taxable under the category of BSS. A careful study of above stated activities reveals that recovering charges such as ocean freight or air freight or amount paid to shipping line or for customs clearing charges or fumigation or for insurance or palletization or statutory charges or transportation or documentation charges or administration charges is not an activity covered under in section 65 (104c) of the Finance Act, 1994 that defines 'support service of business or commerce'. Hence it is quite evident that no service tax is payable by the appellant on activities that are not taxable service in terms of provisions of Section 65(105) (zzzq) of the Finance Act, 1994 as presumed in the impugned order. The Ld. Commissioner found that the expression "service provided in relation to business or commerce" is all encompassing and includes every service provided in relations to business or commerce. However if this view of the Learned Commissioner is accepted there would not b....
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....ments are not taxable in appellant's hands as the activity is taxable specifically under the category of Customs House Agent and not under BSS. Similarly amount paid to insurance company, amount paid to fumigation agency, amount paid to palletisation company, statutory dues, transportation charges, documentation to facilitate shipping company, administrative expenses all their services are not provided by the appellant but by other respective agencies and service providers and they also discharged the service tax wherever applicable. Appellant have not provided these services and have only claimed reimbursements of such charges. The onus to prove with sufficient evidence that the receipts were against the taxable services lies on the department which was not discharged at all by the department. 2.7 He also submits that the demand of service tax confirmed on reimbursable expenses recovered by the appellant is not legal as these charges are not for any service provided by the Appellant. He placed reliance on the following decisions: * Bhuvaneshwari Agencies (P) Ltd. Vs. CCE - 2007 (8) STR 167 (Tri.-Bang.) * United India Shipping Services Vs. CGST & CE decided on 12.06.2023 by CE....
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....indings. 4. Heard both sides, perused the records of the case and carefully considered the submissions made by both the sides. 4.1 We first deal with the appeal filed by the Revenue. We find that revenue in their appeal disputed the dropping of service tax demand on the ground that as per the provisions of Rule 5(1) of the valuation Rules, all expenditure or costs incurred by the service provider shall be treated as consideration for the taxable service provided and shall be included in the value for the purpose of charging service tax for the said services. Service provider has not acted as a 'pure agent for the service recipient within the meaning provided in Explanation 1 to Rule 5(2) of Valuation Rules. Service provider further not fulfilled the conditions detailed in Rule 5 (2) of the valuation Rules. It is beyond doubt that in order to exclude expenditures or costs incurred by the service provider, they should have acted as a pure agent and the condition detailed in Rule 5 (2) of the valuation Rules were required to be followed in principle. The benefits are considerable and substantial and therefore, condition have to necessarily be fulfilled in order to exclude the costs ....
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....development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods." 4.4 The submission of Appellant is that it was necessary for the Department to specify the activity and the nature of service that was to be taxed and for this it was necessary for the Department to point out the specific clause out of above seven clauses mentioned in Section 65(19) of the Act but that was not mentioned in the show cause notice and impugned order. We find the force in this contention and observed that in the matter of Commissioner of Customs & Central Excise, Goa v. Swapnil Asnodkar [2018 (10) G..S.T.L. 479 (Tri. - Mumbai)], a Division Bench of the Tribunal observed as follows : "4. We have carefully considered the submission made by both sides. We find that though in the SCN the Respondent was made liable to pay Service Tax but as rightly held by the adjudicating authority, no specific clause of Section 65(19) defining Business Auxiliary service has been shown to be applicable to levy Service Tax. It is not appearing from the show cause ....
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....e Appellant was not promoting or marketing any kind of goods produced or provided by or belonging to the client ; appellant was not promoting any sort of services provided by any person; appellant was not providing any customer care services on behalf of the client; appellant was not procuring any sort of goods or services which are inputs for the client to attract the provisions of Section 65(19)(v); appellant are not either producer or processor on behalf of the client. Further appellant was not making any provision of services on behalf of the client in order to attract Section 65(19)(vi). Thus, in the absence of any services provided by the Appellant, Service Tax could not have been levied on the amount of incentive/profit share received by the Appellant. 4.7 We also find the Ld. Commissioner has confirmed the service tax demand of Rs. 32,18,471/- under "Support Services of Business or Commerce" on differential amount of costs/ expenditure amounts recovered by the appellant from their clients under 14 main heads i.e Ocean Freight Charges, Air Freight Charges, Charges paid to Shipping Line, Charges paid to Custom Clearance related activity, Paid to Fumigation Agency, Paid to in....
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....sis to confirm the service tax on differential amount under 'Support Service of Business or Commerce'. Further, there is no evidences on records to establish that the said difference amount are pertaining to the service provided by the appellant. We also find that in the case of Bax Global India Ltd. v. Commissioner of Service Tax - 2008 (9) S.T.R. 412 to canvas the point that if any profit has been made in respect of other activity they cannot be subject to levy of service tax as per the decision of the Apex Court in Baroda Electric Meters Ltd. v. Commissioner of Central Excise - 1997 (94) E.L.T. 13 (S.C.). Therefore the service tax demand confirmed by the Ld. Commissioner on difference amount is not sustainable and we set aside the same. 4.10 We also find that major demand are pertaining to the Ocean freight charges and Air Freight Charges. The issue on taxability of service tax on Freight charges and the liability of tax on profit/mark up, which is no more res integra as the same has been decided in catena of decisions. In the case of M/s Tiger Logistics (India) Ltd. Vs. Commissioner of Service Tax-II, Delhi 2022 (63) G.S.T.L. 337 (Tri. - Del.) supra the tribunal held as under ....
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....04.2011, other two show cause notices were issued on 21.10.2011 and 22.12.2012 for the period 2010-11 and 2011-12 respectively. Our above view is supported by the following Judgments: * In the case of Adani Enterprise Ltd Vs. CST the Hon'ble Supreme Court has passed the following decision: "19. As regard the limitation issue argued by the Learned Counsel, we find that in the facts of the present that firstly the issue involved is of pure interpretation of legal provisions therefore, it cannot be said that the Appellant had any mala fide intentions and have suppressed any fact with intention to evade payment of service tax. It is also on record that the Appellant have represented the matter before Audit team and also before department during the investigation of case. This clearly shows that there is no suppression or wilful misstatement on the part of the Appellant. The Appellant in the present matter also provided all the details/documents/records related to the disputed activity before department. In this circumstances charge of suppression or wilful misstatement do not survive against the Appellant. Thus extended period of limitation is also not invokable in the present matt....