2023 (10) TMI 997

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....or a single voyage. The ships are given on hire by entering into contracts with the respective charterers/parties. In terms of the contractual arrangement, the charterers hire the ships and the Appellant allows a specified percentage of discounts from the freight/hire charge, which is commonly known as 'Address Commission'. The Appellant, for promoting their chartering business, also entered into contractual arrangements with various indigenous as well as foreign agents/companies for soliciting/promoting their chartering business. The agents are entitled to commission which is calculated on the basis of freight business generated by such agents, and in the common trade parlance, is known as 'Third Party Commission'. 2. A show cause notice ....

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....ax rules would arise only when there is any physical remittance of value of services outside India in foreign currency, for the services rendered. In the present case, the amount received by the Appellant from the Chartering of Ships, is netted off on the 'Address Commission' and no remittance towards the 'Address Commission' was received by the Appellant outside India. Hence, they contended that the question of payment of service tax does not arise in this case. 4. The Ld. A.R. for the Revenue reiterated the findings of the Ld. Commissioner. 5. Heard both sides and perused the appeal records. 6. We observe that there are two types of commission mentioned in the agreement. There is a commission paid to Foreign Agents for promoting their ....

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....the Hire Charges were allowed by the Appellant only to promote their business and therefore, it should be treated as a 'commission' and leviable to service tax under the category of 'Business Auxiliary Service' (BAS). WE observe that there was remittance of money to the foreign chartere of ships. In the absence of any remittance to the foreign charterer of ships, payment of service tax under Section 66A would not arise. 8. We observe that in chartering business as a normal trade practice, the charterer is allowed a discount from the hire charges payable by them and the net hire charges is received by the ship owner. Thus, for all practical purposes, the charter is given a discount by the owner on the hire charges and no remittance is being....