TaxTMI 
TaxTMI 
2024 (12) TMI 677
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....vice Tax, Audit-II, New Delhi. 2. The appellant is registered with the Service Tax Commissionerate, Delhi for provisioning of 'Business Support Service' (Section 65(105)(zzzq) of the Finance Act, 1994). The appellants have been issued show cause notice dated 23.04.2016 in the matter seeking recovery for alleged non-payment of Service Tax on extra charges collected i.e. mark up for the freight income (ocean freight/air freight). The period of dispute in the matter pertains to 2010-11 to 2014-15 and 1st April 2015 to 30th June 2017. The department vide the impugned show cause notice confirmed the demand of Service Tax for an amount of Rs.3,67,38,471/- along with interest besides imposing penalty of equal amount. 2.1 The show cause notice al....
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....d it is these containers/cargo space booked by such agents that are availed by the exporters for the purpose of export. 2.2 In view of the nature of activity as stated above, the department contends the same as procurement of service as input service for its clients. 3. The appellants have submitted that they act as agent or intermediary who is procuring the transportation service being rendered by the shipping line/airline for and on behalf of importer/exporter of goods. It is in this process that they earn freight margin/mark up as a consideration. The show cause notice thus alleged that as the appellant and the service recipient are located in India, the mark up earned by them being in the nature of agency charges is liable to Service ....
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....customers. The appellant also placed reliance on CBEC Circular No.17/07/2016-ST dated 12.08.2016 clarifying that a freight forwarder may act as principal and raise invoice to the exporter on his own account. In that case the freight forwarder is providing transportation of goods and is not acting as "intermediary". They submit that in such circumstance, the appellant is not liable to pay service tax, when the destination of the goods is a place outside India, as also flows from the said circular. 6. We note from records that the Ld.Commissioner has not disputed the fact that the appellant is providing the above referred services to its clients and acts on a principal to principal basis. However, despite so, he has taken the stance that the....
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....the exporters. We have considered the Circular of the C.B.E. & C. cited by the Learned Departmental Representative at Para 2.1-3 which are as follows : "2.1 The freight forwarders may deal with the exporters as an agent of an airline/carrier/ocean liner, as one who merely acts as a sort of booking agent with no responsibility for the actual transportation. It must be noted that in such cases the freight forwarder bears no liability with respect to transportation and any legal proceedings will have to be instituted by the exporters, against the airline/carrier/ocean liner. The freight forwarder merely charges the rate prescribed by the airline/carrier/ocean liner and cannot vary it unless authorized by them. In such cases the freight forwa....
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....he goods is from a place in India to a place outside India." 7. It is evident from the C.B.E. & C. circular also that the Revenue was also of the view that service tax is payable when one acts as an intermediary and not as a trader dealing on principal to principal basis on their own account which is undisputedly the case here. We, further, find that in an identical case, in the case of Phoenix International Freight Service Pvt. Ltd. (supra) the Tribunal has held that buying and selling space on ships does not amount to rendering a service and any profit or income earned through such transactions is not leviable to service tax. We find no reason to deviate from this view taken by the Tribunal which view is also supported by the C.B.E. & C....
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....e negative list and, therefore, continues to be taxable. ** 10. A division Bench of the Tribunal in the earlier decision rendered in Satkar Logistics v. CST Service Tax Appeal No.50411 of 2016 decided on 10-08-2021 accepted the contention advanced on behalf of the appellant that the appellant was only trading in space and was not providing any service. The Division Bench also noted that the issue involved in the Appeal was covered by the decision of the Tribunal in Greenwich Meridian Logistics (India) Pvt.Ltd. v. CST (2016) 69 taxman.com 100/55 GST 635 (Mum.-CESTAT) and Commissioner of Service Tax, New Delhi v. Karam Freight Movers (2017) 82 taxman.com 363 (New Delhi-CESTAT). 11. Subsequently, the decision earlier rendered in Satkar L....