TaxTMI 
TaxTMI 
2025 (11) TMI 680
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.... Respondent entered into Charter Party Agreements with participating Indian ship owners and Government Departments and Public Sector Undertakings [PSUs]. As per the agreements, it arranged for shipping of goods by PSUs and Government departments and charged 1% of the freight, dead freight, demurrage, etc. as Chartering charges for this service. 3. It must be pointed out that even in the normal course of international trade, exporters often book space on ships through brokers or agents or buy space on the ship from those who bought such space in bulk on the ships. The Respondent provided this service to the PSUs but did not raise any invoices separately. The PSUs directly deposited the 1% service charge through challans in the banks as per the Charter Party Agreements. 4. It appeared to the Revenue that the service provided by the Respondent fell under the category of Business Support Services (BSS) as defined under section 65(104c) of the Finance Act, 1994 [Act] and was a taxable service as per section 65(105) (zzzq) of the Act from 1.5.2006 up to 30.6.2012. It also appeared that it was service from 1.7.2012 which was not covered in the negative list under section 66D of the ....
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.... Authority but they depend on the nature of service rendered. iv) For the period up to 30.6.2012- as clarified by CBEC circular no, 89/7/2006 dated 18.12.2006, consideration received for rendering statutory activities were exempted. The activities of the Respondent were not statutory activities but were consideration received as per the Chartering Agreements. v) The Respondent was providing the service of making shipping arrangements for PSUs and Government departments which was a commercial activity for a consideration. vi) The Principal Commissioner did not take cognizance of the classification of the service under the Business Support Service. vii) Even after 1.7.2012 when the negative list was introduced through section 66D, the support service provided by the Government was not in the negative list. viii) The Respondent admittedly provided Chartering service to PSUs which are commercial entities for a consideration which is taxable even if the Respondent is a part of the Government of India. ix) The impugned order may be set aside the proposals in the SCN and the Statement of Demand may be confirmed. Submissions on behal....
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.... not a profit-making organization nor was it carrying on any commercial activity. The entire purpose of the activity was to develop Indian shipping by utilizing the available tonnage. xiii) The impugned order may be upheld and the appeal may be dismissed. Findings 10. We have considered the submissions advanced by both sides and examined the records. The questions to be answered by us in this appeal are: a) Was the Chartering Service provided by the Respondent chargeable to service tax? b) If so, could extended period of limitation be invoked to raise the demand? c) Was the interest recoverable on the demand? d) Were the penalties under section 76,77 and 78 imposable on the Respondent? 11. The contention of the Revenue is that the nature of service rendered was not a sovereign function of the Ministry of Shipping and it was rendered as per a Contract and for a consideration of 1% of the freight, demurrage, etc. The Respondent was the service provider and the PSUs who used its services were the service recipients and they paid the consideration. 12. According to the Respondent, it was collecting the amounts from the Indian shi....
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.... 16. Much emphasis was laid on the fact that in the Chartering Agreements which the Respondent had entered into, there was no provision for service tax. We only need to say that taxes arise from the charging sections of the statutes and not from the agreements. If it is held that no service tax needs to be paid if the agreement does not provide for it, every prudent business will sign such agreements and not pay taxes. 17. It has been brought to our notice that the Joint Secretary of the Ministry of Shipping had written to the Department of Revenue expressing his views that no service tax needs to be paid. This is only relevant, in our opinion, to indicate the thought in that Ministry during the relevant period. The charge of the tax, if applicable, cannot be erased by a contrary view expressed by any officer in any letter. Taxes are charged as per the law passed by the Parliament which cannot be modified by any view expressed by any officer in any letter. 18. Learned counsel for the Respondent also submitted that the amounts were credited to the Consolidated Fund of India which is also not a factor relevant to determine the taxability of the activity. Governments undertake ....
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....zq) read as follows: "Section 65 (104c) "Support Services of Business or Commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation -For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security; Section 65 (105) (zzzq) "Taxable Service" means any service provided or to be provided to any person, by any other person, in relation to support services of business or commerce, in any manner;" 21. The services rendered by the Respondent were to support the PSUs and ....