TaxTMI 
TaxTMI 
2026 (3) TMI 1151
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....istered service provider providing services under the categories of air travel agents, customs house agents, cargo handling services and engaged in booking and sale of cargo space exporters. During the course of audit of accounts of the appellant and scrutiny of the balance sheet, it was noticed that the appellant was in receipt of airway bill fees towards providing documentation work. It is also seen that the appellant are in receipt of commissions, discounts, incentives from the airlines on the sales turnover towards trade and from the difference in the taxable income reported in the ST- 3 returns and its income as per the balance sheet trial balance. It appeared that the appellant has not discharged service tax liabilities on the amounts received under these heads. It was also seen that the appellant had not paid service tax on certain reimbursable expenses collected from the clients towards terminal charges due carrier etc. The department being of the view that the appellant is liable to pay service tax, on the airway bill fees; and on the commission earned in booking cargo space and in the commission / discounts / incentives for the booking and selling cargo space, under the c....
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....een price at which the cargo space is purchased and the price at which it is offered to the customers is a profit margin for their entrepreneurial activity and therefore not liable to service tax. He would submit that it is settled by a catena of decisions that this activity of the Appellant is not exigible to tax and places reliance on the decisions in Skylift Cargo Private Limited Vs. Commissioner of Service Tax, Chennai - Final Order No.42242-42244/2017; La Freight Pvt. Ltd. Vs. Commissioner of Service Tax, Chennai - Final Order Nos. 40464-40467/2018; Pawan Cargo Forwards Pvt. Ltd. Vs. Pr. Commr. Of Service Tax, Chennai I - 2020 (34) GSTL 559 (Tri. - Mad); Principal Commissioner of Service Tax, Chennai - I Vs. Pawan Cargo Forward Pvt. Ltd. (2025) 33 Centax 227 (SC); M/s. Nilja Shipping Pvt. Ltd. Vs. The Commissioner of Central Excise - Final Order Nos.4027340274/2020; M/s. Geodis Overseas Private Limited Vs. The Commissioner of Service Tax Final Order Nos.40265 - 40266/2022; Direct Logistic India Pvt. Ltd. Vs. Commr. Of S.T., Bangalore S.T.-12012 (55) GSTL 344 (Tri.- Bang); Commr. Of Service Tax, New Delhi Vs. Karam Freight Movers - 2017 (4) GSTL 215 (Tri. Del); Bax Global India....
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....ndering the services on which the client has discharged the liability to pay service tax. The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants & Technocrats Pvt Ltd v UOI, 2013 (29) STR 9 (Del), wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections. The Honourable Supreme Court had also noticed the nature of such expenses that arose for consideration in the facts of the case as well as that in connected appeals before it, which is seen to include Air and Sea Freight, and has gone on to hold as under: "21. Undoubtedly, Rule 5 of the Rules, 2006 brings within its sweep the expenses which are incurred while rendering the service and are reimbursed, that is, for which the service receiver has made the payments to the assessees. As per these Rules, these reimbursable expenses also form part of 'gross amount charged'. Therefore, the....
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....May 1, 2006. Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of subsection (1). Mandate of sub-section (1) of Section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider. 26. It is trite that rules cannot go beyond the statute. In Babaji Kondaji Garad, this rule was enunciated in the following manner : "Now if there is any conflict between a statute and the subordinate legislation, it does not require elaborate reasoning to firmly state that the statute prevails over subordinate legislation and the byelaw, if not in conformity with the statute in order to give effect to the statutory provision the Rule or bye-law has to be ignored. The statutory provision has precedence and must be complied with." 27. The aforesaid principle is reiterated in Chenniappa Mudaliar holding that a rule which comes in conflict with the main enactment has to give way to the provisions of the Act. 28. It is also well established princ....
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....aning that arise by presumptions as to the intent of the maker thereof. 28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit : law looks forward not backward. As was observed in Phillips v. Eyre [(1870) LR 6 QB 1], a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon ....
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....efore, what exactly is the service rendered and received are best known to the service provider and the service receiver. The SCN does not rely on any statement or any other correspondence that would evidence as to what was the service rendered by the Appellant and what it is that the Appellant's client's understood when they were invoiced for the said service. When the Department proposes to change the classification of services from that which was hitherto being adopted, by the Appellant, it is a settled position in law that the onus is on the Department to prove with evidence that such a change in classification is warranted and that the classification is as what is being contended by the Department. The decisions in Jetlite (India) Ltd v. CCE, New Delhi, 2011 (21) STR 119 (Tri-Del) and Dewsoft Overseas v CST, New Delhi, 2008 (12) STR 730 (Tri-Del) refers in this regard. Thus, the allegations in the SCN that a change in classification is warranted are on assumptions without any evidence, all the more when the Appellant is already registered and paying service tax under a particular category. xxxxxxxxxxxxxxxxxx 20. It is the contention of the Appellant that it i....
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....f 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 for a particular voyage. Freight is charged by the entity that is in possession of space on a vessel from an entity that requires the space for carriage of cargo. 11. Slots may be contracted for by the shipper or its agent with the shipping line through the steamer agent. Implicit is a unit-directional flow of consideration because the space belongs to the shipping line. Steamer agent or agent of shipper may earn commission in such a transaction. Leaving that situation aside, the contention of the appellant is that it is a 'multi-modal transport operator' which entails a statutorily assigned role in cross-border logistics. According to Section 2 of the Multi-modal Transportation of Goods Act, 1993. (m) "multimodal transport operator" means any person who - (i) concludes a multimodal transport contract on his own behalf or through another person acting on his behalf; (ii) acts as principal, and not as an agent either of the consignor, or consignee or of the carrier pa....
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.... orders are set aside. Cross objections filed by the department are also disposed of." 22. As regards the decision in the case of Progeon Global Forwarding P Ltd, 2023 (8) TMI 941-CESTAT CHENNAI, cited by the Ld. A.R. we notice that the decision has been rendered in the peculiar facts and circumstances of that case, as seen from the fact that the nature of the Appellant's activities therein was unclear, and hence in the said decision the matter was remanded for examination afresh. On the contrary, the SCN in the instant case itself concedes that the activity of the Appellant includes coordinating from the time of picking containers till delivery at the destination port and till consignees take delivery of cargo, corroborating their stand that they are as a multimodal transporter. This decision is therefore clearly distinguishable from the facts of the instant case and is thus inapplicable. It is also seen that repeatedly and consistently coordinate benches of this Tribunal has gone on to hold similar transactions as not exigible to service tax as is evidenced by the plethora of decisions cited by the Appellant supra, and we refrain from reproducing from these decisions to ....