TaxTMI 
TaxTMI 
2025 (10) TMI 730
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....on by not paying Service Tax on the gross value received for the said services. On scrutiny of the documents submitted by the Respondent, it was observed that a major portion of income from operation shown as exempted was attributable to the services provided to United Nation Organization whereas in the ST-3 returns nothing was reflected under the column for exempted figures. It was also observed that in the Financial Statement, there was difference under head income and expenditure account 2007-08 to 2011-12. Three Show cause notices demanding Service Tax totalling to Rs. 1,31,58,013/-for the period 2007-08 to 2011-12, 2013-14 & 2014-15 were issued alleging non-payment of service tax on (i) commission earned in lieu of sale of cargo space (ii) amount received as reimbursable expenses; (iii) services provided to Indian Army for transportation of stores to United Nations Peace Mission out of India. The subject Show Cause Notice were adjudicated by the Additional Commissioner Service Tax, Delhi-II vide Order-in-Original No 133/KRM/DL-11/2017 dated 07.04.2017 & 149-150/KRM/DL-II/2017 dated 26.05.2017, wherein adjudicating authority confirmed the demand of Rs. 1,31,58,013/- and also im....
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....Learned authorized representative contended that the Commissioner (Appeals) had erred in holding that whole of the consideration received was in respect of ocean freight without examination and quantification. Hence, he prayed the appeal may be allowed. 4. Learned counsel for the Respondent submitted that reimbursements which were in the nature of expenditure are not subject to service tax as the same cannot be considered as consideration for the services provided. In terms of section 67 of the Finance Act, 1994 as amended the consideration received for the taxable service alone is subject to service tax. The learned counsel relied upon the decision of the Delhi High Court in the case of Intercontinental Consultant and Technocrats Private Limited Vs UOI [(2013) 29 STR 9] wherein the High Court had struck down Rule 5(1) of the Valuation Rules, 2006 which provides for inclusion of expenditure or costs incurred by the service provider in the course of providing taxable service in the value on the ground that it is ultra vires Section 66 and Section 67 and travels much beyond the scope of the said Sections. This view has been upheld by the Supreme Court in the case of UOI Vs. Interc....
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.... goods by an aircraft or vessel for a place outside India up to the customs station of clearance in India fell under the negative list. Ocean freight was taxable only from 01.06.2016 onwards and the Respondent had been discharging service tax wherever applicable. He relied on the Chennai Tribunal's decision in the case of Fairmacs Shipping and Transport Service vs. CGST & ST [Final Order Nos. 41203-41208/2024 dated 02.09.2024] and M/s. A.G.X Logstics Vs. CGST [Final Order Nos. 41104-41106/2023 dated 12.12.2023]. 4.3 As regard the liability on UN Peace Keeping Mission, learned counsel submitted that no amount had been quantified in the Show Cause Notice in respect of the said proposal. The learned counsel submitted that evidence to prove that a contract had been entered into with Indian Army for the movement of stores for the United Nation Peace Keeping Mission, had been recorded in the impugned Order-in-Appeal. Hence, the contention of the Department that evidence was not provided was not correct. In addition, learned counsel stated that the notice did not specify the specific taxable service category under which the demand was proposed. He contended that the entire demand had b....
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....not amount to rendering a service and any profit or income earned through such transactions would not be leviable to service tax. The relevant portions of the order passed by the Tribunal is reproduced below: "6. We have considered the arguments on both sides and perused the records. It is not in dispute that the appellant herein is purchasing the space from the shipping lines and then is selling the same to exporters. It is the case of the Revenue that this amounts 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 hav....
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....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. circular cited above. In conclusion, the demand of service tax, interest and penalties are liable to be set aside and we do so." (emphasis supplied) 15. In Bhatia Shipping (P) Limited vs. Commissioner of Service Tax-I, Mumbai [[2022] 136 taxmann.com 407 (Mumbai-CESTAT)], the Division Bench followed the earlier Division Benches and observed as follows: "5. The appellant is primarily engaged in the business of freight forwarding, clearing and forwarding and other allied activities that involve booking of Containers/Air Cargo with various Shipping Lines/Airlines ....
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....tual as per statutory receipts. Amount payable in advance as per our requisition. These charges include (a) Customs duty; (b) IAAI charges; (c) Air line. Air consol agent charges for air freight and delivery order; (d) Municipal Government levies such as Octroi etc; (e) Toll tax; (f) Service Tax; (g) EDI receipt of Customs; (h) Statutory agencies testing charges etc." I find that all of these charges are statutory levies. For example, the Customs duty is payable on actual basis by the Service receiver to the appellant. Levying Service Tax on such charges would tantamount to levy of Service Tax on Customs duty which is not permissible in the law. (iv) Even if for the sake of argument, it is assumed that the said reimbursable levies are leviable to Service Tax, then also the same would be exempted from Service Tax in view of Rule 5 (2) of Service Tax Rules, 1994 which provides that "(2) Subject to the provisions of sub-rule (1), the expenditure or costs incurred by the service provider as a pure agent of the recipient of service, shall be excluded from the value of the taxable service if all the following conditions are satisfied, namely :- (i) the service provider acts as a....
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....een 'Income' and 'expenditure' and raised the demand. Further, we note that the appellant had claimed exemption vide Notification No.16/2002-ST dated 02.08.2002, which is reproduced below: " 2nd August, 2002 Notification No. 16/2002-Service Tax In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Government of India, in the Ministry of Finance, Department of Revenue vide GSR 205(E), 24th April, 1998, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all the taxable services specified in section 65 of the said Act provided by any person, to the United Nations or an International Organisation, from the whole of the service tax leviable under section 66 of the said Act. EXPLANATION:- For the purposes of this notification, "International Organisation" means an international organisation declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), to which the provisions of the Schedule to the said Act apply. Suraksha Katiy....
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....Nations is part of the UN system, which in addition to itself comprises many specialized agencies, funds, programmes, each having their own area of work, leadership and budget. We note that the six organs of the United Nation are being represented by the various Funds and Programmes / Departments and Offices/ Subsidiaries/ Functional and Regional Commissions and Other Entities etc. These representatives also have their offices at different locations in India. Therefore, Indian offices of these representatives of United Nations are basically part of United Nations, which are provided various privileges and immunities under Indian Laws. It is seen that the Central Government vide the aforesaid notification granted exemption from payment service tax on all the taxable services to United Nations. There is no connection between exemption provided to United Nations and International Organizations as both are independent from each other. Further, the reference to 'The United Nations (Privileges and Immunities) Act, 1947' in the definition of 'Specified International Organisations' is for limited purpose and has nothing to do with exemption provided to United Nations. In th....
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................" As per the said notification as well, we observe that it granted similar exemption from payment service tax on all the taxable services to United Nations or a specified International Organization. As already noted supra, the six organs of the United Nations are represented by the various Funds and Programmes/ Departments and Offices /Subsidiaries/ Functional and Regional Commissions and Other Entities etc, who have offices in India, making these essentially part of United Nations. These offices are provided various privileges and immunities under Indian Laws. It is seen that the Central Government vide the aforesaid notification granted exemption from payment service tax on all the taxable services to United Nations or a specified International Organization. As regards the 'specified International Organization' declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and immunities) Act, 1947 (46 of 1947), we have already held that this clause is different from United Nations. Therefore, section 3 of the United Nations (Privileges and Immunities) Act, 1947 only talks about the other International Organisation whic....