TaxTMI 
TaxTMI 
2024 (5) TMI 1520
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....eive from the airlines and also 5% IATA commission received from the airlines. The same is reflected in their Profit and Loss Account under the heading "Rebate on Airway Bill". No service tax was paid on these amounts collected. The discount is passed on to their clients and the same is reflected in the expenses side of their Balance sheet. No service tax was paid on this commission amount. (b) "Incentive from Sea" consists of Commission received for the clearance of sea shipments from other agents. No service tax was paid on this income. (c) "Due Agent Collected" consists of the Due Agent amount mentioned in Airway Bill. It consists of charges like CHA, Airport handling, loading, unloading, Terminal Charges payable to IAAL Regarding these receipts, they stated that the service tax other than CHA charges was paid during the course of investigation. (d) "Agency Charges Collected" consists of Custom House Clearing Charges for which service tax had been charged and paid. (e) "Cargo Forwarding Income" consists of other charges like airport handling, custom house agency charges, import clearing charges, loading charges, transport charges, and other ch....
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.... principal transaction without the knowledge of the shipper. Mere sale and purchase of cargo space and earning profit in the process is not a taxable activity. (v)The Appellant retains a portion of the discount and the rest is passed on to the customer, namely, the shipper. (vi) There is no finding in the impugned order with reference to the taxability on discount except for observing that any consideration for service by whatever nomenclature by which it is called is liable for tax. (vii) The airline with whom the cargo space is booked is not the client of the Appellant and therefore, the discount is not subject to service tax. The Appellant relies upon the following decisions where in it has been held that freight difference i.e., discount/incentive given by the airline/shipper line is not taxable: (a) Commissioner of Service Tax Vs AVR Cargo (2018) TIOL 2097 (b) Freight Systems India Pvt Ltd. Vs Commissioner of GST & Central Excise (2018} TIOL 3395 (c) Commissioner of Service Tax Vs Karam Freight Movers (2017) 4 G.S.T.L. 215 (d) Sindhu Cargo Services Ltd. Vs Commissioner of Service Tax (2019) 24 G.S.T.L. 664) ....
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....vices, the allegation of short payment is only on the reimbursable expenses. Further, these amounts were also accounted and not hidden or suppressed by the appellant. The appellant did not discharge service tax on GTA services as they were not aware that being a recipient, they have to discharge service tax. However, the amounts were properly accounted and not suppressed. The SCN issued invoking the extended period therefore, may be set aside. 4. The Learned AR Shri Sathya Narayanan appeared and argued for the department and supported the findings in the impugned order. 5. Heard both sides. 6. The demand of service tax is made under Business Auxiliary Services, Custom House Agency Services and Goods Transport Agency Services. 6.1 It is not disputed that the appellant who is an IATA agent has discharged service tax on the agency commission received by them. The SCN does not raise demand on the agency commission received by the appellant. It is seen that the demand for service tax under Business Auxiliary Services is raised on the discounts/incentives received from Airlines and Shipping lines. In para 5.1.2 of the order, the adjudicating authority has observed as under: ....
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.... such goods or services; (iv) undertakes any activities relating to such sale or purchase of such goods or services;" 6.3 It is thus the case of the department that the airlines and shipping lines are clients of the appellant and the incentives received is a consideration for promotion or marketing of services provided by the client. The Learned Counsel has countered these allegations by submitting that the appellant does not do any activity of promotion or marketing of the airlines or the shipping lines. These airlines or shipping lines are not client of the appellant. 6.4 On appreciation of facts, it can be seen that the appellant books the cargo space on various airlines/shipping lines and pay freight for the same. The appellant collects the freight from the shippers for the space and transportation of the cargo. In some occasions, the total amount paid to the airline/shipping line may be less than the amount the appellant receives as freight charges from their client (importer/exporter). The appellant thus receives a markup. In some cases, when the appellant is unable to sell the total space or the freight charges collected from the client is less, appellant may ....
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....ice tax is leviable on this amount as it is only a case of trading the space on ships and the profit gained there from. (h) The issue stands decided by various benches of Tribunal in the cases of Satkar Logistics [2021-TIOL-543-CESTAT-DEL], Nilja Shipping Pvt. Lid. [2020-TIOL-461-CESTAT-MAD], Surya Shipping [2019-TIOL-249-CESTATAHM], ITC Freight Services [2021-TIOL-445-CESTAT-BANG], etc. ......... 7. We have considered the arguments on both sides and perused the records. For a service tax to be leviable: (a) a service must have been rendered; (b) the service so rendered must be a taxable service within the meaning of Section 63(105) of Chapter V of the Finance Act, 1994; and (c) a consideration must have been paid for that service; 8. If a service is not rendered at all, no service tax can be levied regardless of the fact that an amount has been received. Similarly, if the service so rendered does not squarely full within the definition of 'taxable service' under Section 63(105), no service tax can be levied. Even if it is doubtful whether the service is taxable or not, the benefit of doubt in respect of the charging se....
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....eives commission and were discharging service tax liability on such commission received. Ocean freight is the amount paid to the steamer agent (appellant). Acting on behalf of the shipping line which was nothing but profit made from the trading of space or slots for ocean transport containers. Slots may be contracted for by the shipper or its agent with the shipping line through the steamer agent. There is a uni-directional flow of consideration because the space belongs to the shipping line. The tribunal in the case of Greenwich Meridian Logistics (I) Pvt. Ltd. versus Commr. of S.T., Mumbai 2016 analysed the issue in detail. It is re-produced as under:- 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. This is a patent misconstruing of the usage of that expression. Freight, though used colloquially to describe all manner of carriage, Is the nomenclature assigned to the consideration for space provided on a vessel ....
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....rocured from shipping line. Correspondingly, allotment of procured space to shippers at negotiated rates within the total consideration in a multimodal transportation contract with a consignor is another distinct principal-to- principal transaction. We, therefore, find that freight is paid to the shipping line and freight is collected from -client-shippers in two independent transactions. 13, The notional surplus earned thereby arises from purchase and sale of space and not by acting for a client who has space or slot on a vessel. Section 65(19) of Finance Act, 1994 will not address these independent principal-to-principal transactions of the appellant and, with the space so purchased being allocable only by the appellant, the shipping line fails in description as client whose services are promoted or marketed. 14. We, therefore, find no justification for sustaining of the demand and, accordingly, set aside the impugned order. Demands, with interest thereon, and penalties in both orders are set aside. Cross objections filed by the department are also disposed of. 7. Following the same, we are of the view that the demand cannot sustain and requires to be s....
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....erence between the amount of freight actually paid to the shipping line and the amounts collected towards freight from the customers by the appellant should farm part of the assessable value, as it cannot be attributed to the freight and it can only be attributed to the services rendered by the appellant which are in the nature of Clearing and Forwarding Agent Services. After examining the books of records and balance sheets of the appellant, demands were raised to charge service tax on this differential amounts. 7. The case of the appellant, on the other hand, is that their earnings from the difference between the amounts charged to their customers for Ocean Freight and the amounts actually paid to the shipping lines is in the nature of profit earned from their business of selling cargo space on the ships. Elaborating on the arrangements, the Learned Counsel explains that at times they book cargo space on the ship as per the customers' specific orders. At other times, they book the cargo space in bulk on the ship in anticipation of the customers' requirement. Their contract with the shipping line is on principal-to-principal basis. Once they book the cargo space on a ship....
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....37 (Tri. -Del.) supra the tribunal held as under: "9. As far as the differential in ocean freight is concerned, the appellant buys space on ships from the Shipping Line and the Shipping Line issues a Master Bill of Lading in favour of the appellant. In turn, it sells the space to its customers and issues a House Bill of Lading to each of them. The first leg is the contract between the Shipping line and the appellant. The second leg is the contract between the appellant and its customers. Evidently, anyone who trades in any merchandise or service buys low and sells high and the margin is his profit. To earn this profit, he also takes the risk of being unable to sell. In the appellant's case, if the space on the ships which it bought cannot be sold to its customers fully, or due to market conditions, or is compelled to sell at lower than purchase price, the appellant incurs loss. In a contrary situation, it gains profits. This activity is a business in itself on account of the appellant and cannot be called a service at all. Neither can the profit earned from such business be termed consideration for service. Respectfully following Satkar Logistics, Nilja Shipping Pvt. L....
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.... under business auxiliary service since 10-9- 2004. The original authority recorded that the show cause notice did not specify as to who is the client to whom the respondent is providing service. Original authority considered both the scenario, airline/shipping lines as a client or exporter/shipper as a client. In case the respondent is acting on behalf of airlines/shipping lines as client, it was held that they are covered by tax liability under BAS. Further, examining the issue the original authority viewed that commission amount is necessarily to be obtained out of transaction which is to be provided by the respondent on behalf of the client, that is, the exporters. The facts of the case indicated that the markup value collected by the respondent from the exporter is an element of profit in the transaction. The respondent when acting as agent on behalf of airlines/shipping lines was discharging service tax w.e.f. 10- 0-2004. However, with reference to amount collected from exporters/shippers the original authority clearly recorded that it is not the case that this amount is a commission earned by the respondent while acting on behalf of the exporter and said mark-up value is of ....
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....of section 65(19). 6.13 Again, the other clause invoked by department to allege that the incentives received are taxable under Business Auxiliary Services is clause (vii) of section 65(19). The said clause has already been reproduced. The activity does not fall under clause (vii) also; as this clause is ancillary to clause (if). If the activity cannot fall under clause (ii) it cannot fall under clause {vii) also. Further, clause (vii) covers activities generally carried out mostly by banks and other financial institutions, and includes that of a commission agent. The appellant is not appointed as commission agent of the airline/shipping line, Appellant is a CHA, working under the Customs Broker Licensing Regulation 2013. As per Section 65 (35) of Finance Act 1994, the Customs House Agent means a person licensed temporarily or otherwise under the regulations made under sub-section (2) of Section 146 of Customs Act. 6.14 From the above and relying on the decisions discussed in para 6.5 to 6.10, we are of the view that the demand of service tax on incentives under Business Auxiliary Services is not sustainable and requires to be set aside. Ordered accordingly. 7. The next iss....
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.... even prior to the time stipulated in the invoice, upon receipt of such payment [Rule 3(b)]. In the present case, no invoice is said to have been raised. However, the petitioner confirms that it has, in fact, received lump sum advances corresponding to several initial landmarks in the contract, even prior to the achievement of such landmarks. As per the provisions of Rule 3(b), the entire sum received thus becomes taxable upon receipt and according to Mr. Prabhakar, has been offered to tax. 25. Instead of such determination by application of the provisions of Rule 3, the respondent relies upon the P and L accounts to conclude that the amounts reflected therein have not been offered for service tax. The reporting of income in the P and L being irrelevant for the purposes of determination of service tax payable, the basis of the impugned assessment is erroneous. 26. It is a well settled position that when a statutory provision or rule addresses a specific scenario, such rule/provision is liable to be interpreted on its own strength and context and one need look no further to alternate sources to seek clarity in regard to the issue that has been addressed by the afor....
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....ance Act, 1994, 11.1 In the result, the impugned order is modified as under: (i) The demand of service tax, the interest thereon, the penalties imposed under Business Auxiliary Services is set aside entirely. (ii) The demand of service tax, the interest thereon, the penalties imposed under Customs House Agent Services is set aside entirely. (iii) The demand of service tax and interest thereon on Goods Transport Agency Services is upheld. The penalties imposed in this regard are set aside entirely. 12. The appeal is partly allowed in above terms with consequential reliefs, if any. (Pronounced in Court on 13-12-2023) Sd/- (M. Ajit Kumar) Member (Technical) Sd/- (Sulekha Beevi C.S.) (Member (Judicial) Per contra M. Ajit Kumar, 13. I have gone through the orders of the learned Member Judicial Ms. Sule....
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....he Indian Evidence Act, 1872, which is of greater relevance in the more stringent circumstances of a criminal trial, holds that when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. The section is reproduced below. 106. Burden of proving fact especially within knowledge.-When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. The broad effect of the application of the basic principles underlying section 106 ibid especially in a case of duty evasion would be that the onus is discharged by the Department if it adduces evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of facts sought to be proved. [See; Collector of Customs, Madras & Ors. v. D. Bhoormul [1974] 3 3 S.C.R. 833] 17. Once a query has been raised by Revenue regarding evasion of duty on specific services rendered by the appellant, adverse inference could be drawn against the appellant if they are not able to provide a satisfactory reply. The initial burden of rebuttal is on the assessee, because the basic facts are within their special....
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.... they could perform compliance verification. The Profit and Loss statement was submitted by the Appellant to the officers during the investigation showing the income received, as stated at para 4.0 of the SCN. The belief, knowledge and intention of the parties are evidence, and these can be gathered from the actions and internal documents of the appellant's company. It is not denied by the appellant that the document relied upon by the department is a financial statement of the company itself, which has been submitted by them to the departmental officers. It is drawn based on the facts as available in the company's ledgers following acceptable accounting standards. Hence the profit and loss statement to that extent contains valuable information, which may be relevant to the facts in issue and is necessary to be scrutinized as a part of the compliance verification during the investigation especially since statutory returns were not filed. It was for the Appellant to provide the best possible evidence to the departmental officers. Having chosen to give the profit and loss statement and further having not raised any doubts abouts its accuracy before the learned Adjudicating Authority ....
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....al (Annexure 1)" (emphasis added) Again at para 31 and 33 of the Appeal paper book, it was stated as under: ""31. The commissioner of Central Excise failed to appreciate that section 65(19)(ii) provides for promotion or marketing of services provided by the client. In the instant case, the appellant is not promoting any sort of service provided by airline in order to attract section 65(19)(ii). The appellant books cargo in any airlines that is appropriate at that particular point of time based on the freight rates, client's preference, route etc." "33. The Commissioner of Central Excise failed to appreciate that in terms of section 65(105)(zzb), taxable services has to be provided to a client by any person in relation to business auxiliary services. In the instant case, the airline is not our client. The incentive cannot be considered as consideration for taxable service." (emphasis added) The relevant provisions of section 65(19) of the Finance Act 1994, (FA 1994) defining BAS, at the relevant time are reproduced below. "Business Auxiliary Service means any service in relation to (i) promotion or marketing or sale of goods produced o....
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.... not taxable. vi) They are not involved in the promotion or marketing of service provided by the liners who are also not their client. 22. The Appellant has stated that they are not involved in the promotion or marketing of service provided by the liners who are also not their client, so as to fall under the classification of their activity under BAS. Incentives / concessions are usually offered to intermediaries by the liners with the object of promoting their own business of booking and delivering cargo. Such collaboration leads to a steady supply of customers for the liners services and helps them achieve a faster turnaround time for the vessels and lesser demurrage to be paid to ports etc. Due to this the demand for the particular liners services increases and correspondingly does their business giving them the capacity to withstand competition from other liners. Hence the issue is whether these services by the Appellant are of a similar nature and are classifiable under the category of BAS as per the terms of the contract, for promotion or marketing of service provided by the client-liners. 23. I find that the Hon'ble Apex Court in Singapore Airlines Ltd. Vs....
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..... The Apex Court Consequently, went on to determine whether the travel agents were "acting on behalf of" the airlines during the process of selling flight tickets. The Apex Court from the exposition of law on the ambit of a contract of agency and its resultant effect concluded that the classification of the difference between the Actual Fare and Net Fare as being a "Commission" liable to deduction of TDS. 24. The present appeal relates to a case of alleged duty evasion where we are to decide an appeal in which the Appellant has sought to rephrase their earlier averments and have resiled on the acquiescence made regarding the classification of the services involved. However, the specifics of the nature and substance of the activity and how the payments are made or accounted between them, the liners and consignors has not been placed before either the Lower Authority or before us. No contract has been shown except for assertions made based on case laws of this Tribunal, on issues of law. Hence although we are the last fact-finding authority, we are left to decide a mixed question of fact and law while being in the dark about facts relevant to the issue. It is this context that the....
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....invoice in the person's name and in turn, the person subsequently issues House Bills of Lading and invoice from his account to its customers / consignors. b) the amount paid to the Shipping line for block booking of cargo space in advance should normally be lesser than the total charges he collects from the consignors before the liner sails. The mark-up received in the transaction, or a lack of it, depends on market conditions. Thus, theoretically there could be a loss if the person is unable to distribute the total space it booked from the shipping line or has to book the cargo from the consignors at a lower rate in a contrary condition. No Service tax is payable on the mark-up as it is only a case of trading. c) undertakes all the legal responsibility and liability for the transportation of the goods and undertakes all the attendant risks. d) are not involved in the promotion or marketing of service provided by the liners who are also not their client. The transaction with the liners are on a principal to principal basis. Discounts received from the liners are not part of the consideration and hence cannot be taxed. 26. Para 28 of the Apex Court's ju....
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.... in the absence, of a formal document the intention of the parties must be inferred from the circumstances and conduct of the parties. If the terms of the document evidencing the agreement between the parties are not clear, the surrounding circumstances and the conduct of the parties have also to be borne in mind for ascertaining the real relationship between the parties. The appellant have claimed that the liners are not their clients. Their relationship is that of principle to principle with the liners, without the shippers knowing about it. It has to be stated at the risk of repetition that the expressions 'principal' and 'agent' used in a document are not decisive. The nature of transaction is required to be determined on the basis its substance and not by the nomenclature used. For this the Appellant is required to provide precise data in support of their pleading which are within their knowledge, especially since they also serve as IATA Agents for airlines and get a commission for this activity. The terms "Agent' and 'principal' are defined by Section 182 of the Indian Contract Act, 1872 which reads as under: 182. An "agent" is a person em....
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.... the liner would be required to indemnify the appellant or are they liable to indemnify the consignor. Can the Appellant sue the liner for this breach of contract. b. Whether the Appellant is under a duty to compensate the consignor for any injury caused to him/ cargo due to the appellants or liners neglect or want of skill, after the goods are handed over to the Appellant and till they reach their destiny, in the terms of the agreement of the consignor with the Appellant. VIII. whether the incentives received by the Appellant from the liners are commission or discounts? IX. whether the amount received by the Appellant and reflected in his books of account is purely the differential between the mark-up of the cost of booking cargo and the profit gained therefrom or for a bundle of activities. 29. It is seen that the Appellant after receiving the SCN have themselves worked out the actual amount of service tax payable on BAS and CHA services and presented a table working out the revised duty payable. They have only challenged the Departments allegations of the incentive received from the liners being commission on sales. Further they have distinguished b....
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....ntention. The seller and such purchaser would have to be ad idem as to the subject matter of sale or purchase. The Court would have to arrive at the conclusion as to what the parties had intended when they entered into a particular transaction of sale, as being the subject matter of sale or purchase. In arriving at a conclusion the Court would have to approach the matter from the point of view of a reasonable person of average intelligence. ******** ******** ******** 79. Therefore whether goods are incorporeal or corporeal, tangible or intangible, they must be deliverable." (emphasis added) The Hon'ble Apex Court in Commissioner of Service Tax, Delhi Vs Quick Heal Technologies Ltd [CIVIL APPEAL NO. 5167 OF 2022 / 2022 (63) G.S.T.L. 385 (S.C.)] has listed out the essential requirement of a transaction for the transfer of the right to use the goods. 52. From the judicial decisions, the settled essential requirement of a transaction for the transfer of the right to use the goods are : (i) itis not the transfer of the property in goods, but it is the right to use the property in goods; (ii) Article 366(29A)(d) read with the latte....
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.... intangible, corporeal or incorporeal; whereas as 'Service' involves human effort / exertions, skill, or labour. Service tax is a value added tax on activity. The effort made by the Appellant to 'collect the goods in a parcel from our client and send the same to abroad through Air or ship' are performance-based services and a composite activity, from collection to sending, that involves human exertions. The appellant has also referred to their activity as a 'secondary service' rendered to the consignor in their reply to the SCN. The issue hence needs to be examined on facts. Custom House Agent Service (CHA) 32. As seen from the SCN, Revenue was of the opinion that 'Cargo Forwarding Income' and 'Custom House Agency Charges' received by the assessee / appellant are covered under the 'Custom House Agent Service'. Hence the entire 'Cargo Forwarding Income' and the CHA charges including other charges collected while rendering CHA service are covered and chargeable under 'Custom House Agent Service'. The appellant has not challenged the element constituting CHA service sought to be taxed before the Original Authority, except for the taxability of 'agency charges' and 'due agent col....
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.... dated 16/10/2023, they have mentioned the issue but not contested the same. Hence the issue has not been challenged. No Discussion on Reimbursable Charges 34. The appellant in their synopsis have stated that there is absolutely no findings in the impugned order with reference to the taxability of reimbursements. As discussed above the appellant has not challenged the element constituting CHA service sought to be taxed before the Original Authority, except for the taxability of 'agency charges' and 'due agent collected' as these were payments towards handling charges and other charges at the air / sea port and later collected from their clients which is not their income and was not liable to discharge service tax. The Hon'ble Supreme Court's judgment in Union Of India vs M/S Intercontinental Consultants and Technocrats Pvt Ltd [Civil Appeal No. 2013 OF 2014/ 2018 (10) G.S.T.L. 401 (SC)] examined the expression 'such' occurring in Section 67 of the Act. It held that the value of taxable service shall be the gross amount charged by the service provider 'for such service' and the valuation of tax service cannot be anything more or less than the consideration paid as quid pr....
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.... where the appellant has not disputed the allegations in the SCN. Reasoning disclosed in judgments and orders play a vital role in setting up precedents for the future and it also helps appellate bodies understand the rationale for a particular conclusion so that it can tested against the provision of law. No tax can be collected merely because of the consent of parties. There has to be a legally valid levy. The Apex Court in M/S Kranti Asso. Pvt. Ltd. & Anr vs Masood Ahmed Khan & Ors [(2010) 9 SCC 496] stated as under; "18. This Court always opined that the face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak. It must not be like the "inscrutable face of a Sphinx'." The Hon'ble Court, in the above judgment summarized and laid down the following principles relating to a 'speaking order": "51. Summarizing the above discussion, this Court holds: a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. b. A quasi-judicial authority must record reasons in support of i....
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.... the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process". The summary has been quoted extensively so as to be a guide to quasi- Judicial Officers who may have missed the import of the judgment initially and can be guided by the principles stated therein. In the light of the gaps found both in the pleadings and in the impugned order, it is felt that a finding of fact on the lis as expected from the Tribunal is not possible. 36. I find that the impugned order has failed to make a determination of the issues of fact and law in a manner required by the statute an....
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.... In view of the difference of opinion between the Members of the Bench regarding Service tax payable on Business Auxiliary Service (BAS) and on Custom House Agent Service (CHA), the following issues which arise from the appeal are framed for resolution: POINTS OF DIFFERENCE (i) Whether the demand of service tax on BAS and CHA services is liable to be set aside on the basis of submissions made and following the ratio of judgments / case laws submitted. OR (ii) Whether the Tribunal being the last fact-finding authority is required to examine the facts, written agreement / contract between the parties and in its absence remand the matter to the Original Authority for giving an opportunity to the appellant to adduce evidence as may be found necessary for determining the issue. (Pronounced in open court on 13-12-2023) Sd/- (M. Ajit Kumar) Member (Technical) &nb....
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....airlines does not amount to marketing or promoting the services of airline. d) It is a principal to principal transaction without the knowledge of the shipper. Mere sale and purchase of cargo space and earning profit in the process is not a taxable activity. e) The Appellant also relied upon a catena of decisions wherein it has been held that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity. The incentive / discount earned is not taxable. 42. She further submits that the Hon'ble Member (Technical) has remanded the matter on the following grounds: * That the burden of proof is on the Appellant as the Appellant has not been able to explain with proper evidence the nature and substance of sale, discount and commission allowed to them so as to examine the true nature of the activities * That no contract has been shown except for assertions made based on case laws of this Tribunal on issues of law. * The Appellant is required to provide precise data in support of their pleading which are within their knowledge especially since they also serve as IATA agents for airlines and get a commission ....
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.... "Further, the difference between the rate per kg by the airlines and the rate per kg charged on the customers by the assessee is also shown as is income from airlines. This is also nothing but commission received for procuring business for airlines. The rates charged by the assessee on their customers (passed on fare) are shown under rebate on airway bill." 44. She further submits that the Show-Cause Notice and the Order-in- Original only question the non-payment of service tax. Before the Adjudicating Authority, the appellant has specifically contended that the discounts are not taxable, however, the demand is confirmed on the ground that "... any consideration for services by whatever nomenclature by which it is called is liable for tax and it is immaterial whether the same is a regular income or otherwise..." and not on the ground that the appellant has not produced any contract nor adduced any evidence. She further submits that the observation/ propositions made with regard to non-production of the contract; non-production of precise data in support of their pleading which are within their knowledge etc. were not even pleaded at the time of arguments by the Departm....
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....1588, which is a decision under the Income Tax, cannot be made applicable to the instant case. The decision of the CESTAT in the case of EMU Line Pvt Ltd Vs Commissioner of CGST (2023) 4 CENTAX 122 (Tri. Bom.) wherein it has been held that service tax on the incentives received from the shipping line is not taxable under Business Auxiliary Services has been affirmed by the Hon'ble Supreme Court as reported in EMU Line Pvt. Ltd. Vs Commissioner of CGST (2023) 4 CENTAX 129 (SC). The said decision was relied upon by the Appellant and the same is also recorded at para 6.10 of the Order. The Hon'ble member (Technical) has not considered the same. 46. Learned Counsel for the appellant further relies upon the decision of the Larger Bench of the Tribunal in the matter of Kafila Hospitality & Travels Pvt. Ltd. Vs Commissioner of Service Tax, Delhi- 2021 (47) G.S.T.L. 140 (Tri. LB) wherein it has been held that incentives received by the travel agent is not for promoting the business of the airline and therefore it cannot be termed as consideration and consequently not leviable to service tax. Learned Counsel further submits that the observations of the learned Member (Technical) ....
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....gency Vs. The Assistant Commissioner WP(MD) 14084/2017 order dated 11.10.2022 * Continental Foundation Vs. CCE 2007 (216) E.L.T. 177 (SC) * Bharat Hotels Ltd Vs. CCE 2018 (12) G.S.T.L. 368 (Del) * Nestor Pharmaceuticals Ltd Vs. CCE 2000 (116) E.L.T. 477 * Tata Johnson Controls Automotive Vs. Commissioner of Customs 2004 (167) E.L.T. 93 * Commissioner of Customs Vs. Toyo Engineering India Ltd 2006(201) E.L.T. 513 (SC) * Ramlala Vs. State of UP 2023 SCC Online ALL 2479 49. Further, the learned Counsel submits that in the present case, demand has been raised on the basis of Profit and Loss account which cannot be done in view of the decision in the case of Firm Foundations & Housing Private Ltd. Vs Commissioner of Service Tax reported in (2018) 16 G.S.T.L. 209 wherein it has been held that there cannot be a demand based on the P & L. As regards the penalty also, learned Counsel submits that the entire issue involves interpretation and the appellant was registered under the category of CHA and cargo handling service and has discharged service tax. Hence, there is no intention to evade payment and therefore, the penalty is liable ....
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.... the income by way of discounts is not taxable as they pass on 50% to 60% of such discounts to the customers by way of reduction in the price and it was stated that while commission was regularly received from the airline on the export of the goods, the discount was based on the volume of goods exported through a particular airline and therefore, not a regular income. On examination of the issue raised I find that any consideration for services by whatever nomenclature by which it is called is liable for tax and it is immaterial whether the same is a regular income or otherwise. Hence I do not propose to give any abatement towards the "discounts" as claimed by the assessee in their reply". 52. Further, I find that in the Show-Cause Notice, the incomes under various Heads have also been stated at Page 2 & 3 of the Show-Cause Notice which is reproduced herein below: "Further, the difference between the rate per kg by the airlines and the rate per kg charged on the customers by the assessee is also shown as is income from airlines. This case also nothing but commission received for procuring business for airlines. The rates charged by the assessee on their Customers (passe....
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....no allegation of the respondents being parties to any arrangement. In any event, no material in that regard was placed on record. The show cause notice is the foundation on which the department has to build up its case. If the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show cause notice. In the instant case, what the appellant has tried to highlight is the alleged connection between the various concerns. That is not sufficient to proceed against the respondents unless it is shown that they were parties to the arrangements, if any. As no sufficient material much less any material has been placed on record to substantiate the stand of the appellant, the conclusions of the Commissioner as affirmed by the CEGAT cannot be faulted. 53. Further, I find that the Hon'ble Apex Court, in the case of SACI Allied Products Ltd. Vs CEC, Meerut - 2005 (183) E.L.T. 225 (SC), has held in Para 18 as under: 18. In this context, we may usefully refer to the judgment of this Court in the case of Reck....
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....determine the relationship between the appellant and the liner is not valid in law. Similarly, as regard as the reimbursement of the expenses received by the appellant are not taxable in terms of Rule 5(1) as it travels beyond the scope of Section 67 and this issue has been settled by the Hon'ble Supreme Court in the case of UOI Vs Intercontinental Consultants and Technocrats Pvt. Ltd (supra). Further, I find that in the case of Firm Foundations & Housing Private Ltd. (supra), it has been held that there cannot be a demand based on Profit and Loss Account and in the present case, the demand has been raised based on the Profit and Loss Account which is not correct in law. As regards limitation, I find that the view taken by the learned Member (Judicial) is correct because the appellant has not suppressed any material fact and has provided all the details and the Show-Cause Notice has been issued on the basis of the details supplied by the appellant. Moreover, it is the question of interpretation and therefore, the extended period cannot be invoked as held by the learned Member (Judicial) which, in my view, is correct. As regards penalty also, the view taken by the learned Member (Ju....