AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 324
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Date Period Demand (Rs.) I 20.10.2015 2010-11 to 2014-15 31,75,79,992/- II 12.04.2018 2015-16 to 2017-18 (up to June 2017) 13,55,63,617/- Total 45,31,43,609/- Order-in- Original (Impugned order) No. 01-02/KAM/PC/CGST/DSC/2019-20 dated 16.05.2019 Demand confirmed SCN Tax (in Rs.) Interest Penalty (in Rs.) U/s 75 of the Act 76 77 78 I 28,10,64,386/- - 10000 28,26,64,078/- II 11,84,59,318/- 1,18,45,931 10000 -- Total 39,95,23,704/- 1,18,45,931 20000 28,26,64,078/- Taxable category of services Business Auxiliary Service 165 (105) (zzb) read with section 65 (19) of the Act up to 30.06.2012 Section 65B (44) of the Finance Act 1994 read with section 66B of the Finance Act 1994 read with Rule 9 of Place of Provision of Services Rules, 2012 STC No. AABCD 9009JST 001 2. The undisputed facts of the case are that Aeroflot, a Russian airlines in the business of transporting passengers and cargo by air, appointed the appellant as its sole selling agent in India, Nepal, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... consolidated amount based on the nature of goods, destination, volume, size, the cost of transporting the goods from the exporter's location to Delhi or Goa from where Aeroflot operated it's aircrafts, incidental expenses such as loading and unloading of cargo, repair of tampered cargo, etc. Thus, what the appellant received from the exporter was a single amount covering all costs including and upto the place of destination. 5. Aeroflot invoiced the appellant for transportation of cargo and the appellant paid Aeroflot for transporting the goods from Delhi or Goa to the destination. 6. There was thus, a no lis between the exporter and Aeroflot. The appellant issued a single Airway Bill to the exporter from the domestic airport from where the goods were shipped to Delhi or Goa and further up to the final destination. All costs of domestic transportation of goods were borne by the appellant. The appellant and the exporters dealt with on Principal to Principal basis. The appellant neither served as an agent of the exporter nor served as an agent of Aeroflot. The amounts charged by the appellant from the exporter included the cost of transportation paid to Aeroflot, cost of domes....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of destination. (iv) The price included the consideration which the appellant paid to Aeroflot for the international transportation, cost of domestic transportation by air or road and other incidental expenses such as loading and unloading. (v) Since Aeroflot operated only from Delhi and Goa, the appellant had arranged with other airlines for the domestic transportation by air and also for road transportation wherever required. (vi) The appellant issued Airway bills to the exporters covering the entire transport including the domestic leg. Their relationship was on Principal to Principal basis. (vii) The department erred in classifying the appellant's services for the period upto 1.7.2012 as Business Auxiliary Services when in fact, they were transportation of goods by air services under Section 65 (105) (zzn) of the Act. (viii) The appellant availed the services of Aeroflot and other domestic airlines to deliver its own services to the customers. It did not act as an agent of either the airline or of the customer. (ix) Buying and selling space on ships or aircrafts on one's own account is an act of trade and is not rendering o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ported the impugned order and submitted as follows: (i) For the period up to 30.6.2012, the Agreement with Aeroflot clearly indicates that the appellant was appointed as General Sales & Service Agent (GSSA) and it also undertook various activities on behalf of Aeroflot. (ii) The actual transportation of the goods was not being done by the appellant at all but was being done by Aeroflot. Nothing in the GSSA shows that the transportation of goods was delegated by Aeroflot to the appellant. (iii) Therefore, neither the appellant owned or leased or operated any aircraft nor was it delegated the job of operating Aeroflot's aircraft. Therefore, the question of the appellant's services being 'Transport of Goods by Air' service does not arise at all. (iv) The services rendered by the appellant squarely fall under the category of Business Auxiliary Services as defined under clause (iv) of section 65 (19) of the Act which were not exempted under notification no. 9/2005-ST dated 15.7.2015. (v) After 1.7.2012, the appellant continued to act as an intermediary between Aeroflot and the exporters and hence the place of provision of this service was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellant paid Aeroflot and others for their services. 16. Thus, instead of acting as an agent of either Aeroflot or of the exporter, the appellant entered into Principal to Principal agreements with the exporters and with Aeroflot, domestic airlines and other service providers. 17. A few examples will make the position clear and remove all doubts about the nature of transaction. If A buys a sack of rice from B and sells it to C there will be two transactions of sale- from B to A and from A to C. On the other hand, if A connects B and C as an agent, B sells the rice to C directly and A only receives commission for his services from B and/or C. Neither the rice nor the money will belong to A at any point of time. He only acts as an agent of his principal. 18. There are agents who act on behalf of one and there are those who act on behalf of both. A stock broker, for instance, acts on behalf of the seller or buyer. The stock brokers interact among themselves and the stocks are transferred from seller to the buyer and the cost of the stocks is transferred from the buyer to the seller. The buyer's agent receives commission from the buyer and the seller's agent receives commission....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provided,- *** (zzb) to a client, by any person in relation to business auxiliary service; (zzn) to any person, by air craft operator, in relation to transport of goods by aircraft; 21. According to the Revenue, the appellant rendered Business Auxiliary services to its clients (the exporters) by procuring services for its clients. If the appellant had procured the services, they must have been procured from someone else, say, Aeroflot or other operators. If that be the case, the provider of the service would be Aeroflot and the recipient would be the exporter who would pay Aeroflot for its service. The appellant, as an agent would get a service charge for its services of procuring the service. The responsibility for transporting the goods would have been that of Aeroflot and the Airway bill would have been issued by Aeroflot to the exporter. This would have been consistent with the GSSA entered into between the appellant and Aeroflot. However, the actual transactions, as discussed above, took place differently. The appellant undertook transportation of the goods up to the destination, issued Airway bills to the exporters and collected a consolidated a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The only question to be answered is where the service has been provided since as per section 64, the Finance Act applies to the whole of India and if the service is provided outside India, it will not be in the taxable territory and hence no service tax can be charged. Section 66C empowered the Central Government to make Rules for such determination. This section reads as under: 66C.Determination of place of provision of service- (1) The Central Government may, having regard to the nature and description of various services, by rules made in this regard, determine the place where such services are provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided. (2) Any rule made under sub-section (1) shall not be invalid merely on the ground that either the service provider or the service receiver or both are located at a place being outside the taxable territory. 27. The POPS Rules were framed by the Government under the above section. These become significant because at times the service provider and service recipients could be in different places and the service could have been rendered in different places (say ....