TaxTMI 
TaxTMI 
2026 (3) TMI 1374
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....ants records, it was observed that in addition to providing the above mentioned services, the appellant also arranges for the transportation of export/import cargo in containers by sea through shipping agencies. The freight for the above, known as 'ocean freight is fixed/agreed between the appellant and the shipping companies. The appellant received booking orders from their export of cargo from their customers and makes arrangements with the shipping company for the shipment of the export cargo to the destination by the ship. Similarly, in the case of imports the appellants books the containers and arrangement is made with the shipping company for the provision of international freight services for the transportation of cargo in the containers to the destination in India. The appellant collects the negotiated and agreed amount from the customers as ocean freight charges in the case of exports and imports. These charges vary from customer to customer depending on the destination and the size of the containers. It was seen that the amounts collected as ocean freight charges by the appellant from their customers is more that the ocean freight charges paid by the appellant to the ship....
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....ment was also of the opinion that since the exact nature of services provided by the appellant and the income earned was not disclosed in any manner to the department and it was known only during the audit, therefore the appellant had willfully and deliberately suppressed the material facts of the services provided by them with intent to evade payment of service tax and hence extended period of time limit under proviso to Section 73(1) of the Act was invokable. Hence, the Show Cause Notice No.50/2016 dated 26.07.2016 demanding service tax of Rs.2,70,90,296/- for the period from April 2011 to March 2015, under proviso to Section 73(1) along with the interest at the appropriate rate and proposing to impose penalties under Section 78 of the Act was issued. After due process of law the Adjudicating Authority confirmed the demand of service tax and imposed penalties as afore mentioned. Aggrieved, the appellant has preferred this appeal. 6. Shri Janakiraman, Ld. Advocate appearing on behalf of the appellant submitted that ocean freight charge by the appellant as the Multi Modal Transport Operator concerns goods exported/imported by the clients of the appellant. It was contended that t....
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....ndia Ltd. vs. Commissioner, Delhi, Pawan Cargo Forwarders (P) Ltd vs Pr. CCE & ST, Chennai-2020 (34 ) GSTL 559 (Tri.Chennai), Appeal No.ST/00050/2012 CESTAT, Chennai in PVGT Freight Forwarders vs CST, Chennai, LEAAP International (P) Ltd. vs. Commissioner of ST, Chennai -2018TIOL-2147-CESTAT-MAD Order dated 12.03.2018, Geodis Overseas Pvt. Ltd. vs Commissioner of ST, Chennai-(2023) 6 Centax 22 (Tri. Mad.), Dunmite Groupage Services (P) Ltd vs CCE, GST, Jaipur,(2024) 16 Centax 390 (Tri-.Del) and Haiko Logistics (I) Pvt. Ltd. vs Commissioner of ST, Delhi, 2023 (13) Centax 79 Tribunal, Delhi. He prays that the appeal be allowed. 8. Shri Anoop Singh, Ld. Authorized Representative appearing for the Respondent reiterated the findings of the Ld. Adjudicating Authority. However, with his characteristic candour, that we have noted on earlier occasions too, he would also bring to our notice that the issue is no more res-integra and stands decided against the Revenue and produced the Apex Court decision in Commissioner of CGST and CE Belapur vs M/s.EMU Line Pvt. Ltd, 2023(2)TMI 1155-SC. He also submitted the following decisions wherein, it is seen that in similar instances the matter stood....
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....rt 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 core issue is as to whether Section 67 of the Act permits the subordinate legislation to be enacted in the said manner, as done by Rule 5. As noted above, prior ....
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....r, Section 67(4) is expressly made subject to the provisions of sub-section (1). Mandate of subsection (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 byelaw 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 principle that Rules are framed for achieving the purpose behind the provisions of the Act, as held in Taj Mahal Hotel : "the Rules were meant only for the pur....
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....ablished 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 the faith of the then existing law. 29. The obvious basis of the principle against retrospectivity is the principle of "fairness", which must be the basi....
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....r 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. XXXXXXX 20. It is the contention of the Appellant that it is a multimodal transporter and that the appellant's transactions with the Shipping Lines for procuring cargo space in containers were on principal-to-principal basis. The tr....
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.... 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 uni-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 participating in the multimodal transportation, and who assumes responsibility for the performance of the said contract; and (iii) is registered under sub-section (3) ....
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....I 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 avoid prolixity. In such circumstances, judicial discipline mandates us to adhere to the view taken by the coordinate benches and we find no compelling reason to take a different view....
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....e nature of reimbursable expenses for providing transportation of goods and therefore is liable to pay service tax. When considering that the amount is reimbursable expenses for transporting the goods, it becomes ocean freight only and not a consideration received as intermediary. The allegations in the Show Cause Notices for the different period appears to be contradicting and inconsistent. 8. The very same issue as to whether the markup on freight charges collected by an assessee is subject to levy of service tax under Business Support Services was considered by the Tribunal in the case of Team Global Logistics Pvt. Ltd. Vs. Commissioner of GST and Central Excise [Final Order Nos. 4111341114/2023 dated 13.12.2023]. The period involved in the said decision was prior to 01.07.2012 and the demand raised was under BSS alleging that the assessee was providing support services. The Tribunal after analyses of the issue held that the amount collected by the appellant is nothing but a markup on freight charges. The ocean freight per se is not subject to levy of service tax and therefore the demand on the markup also cannot be subject to service tax. The relevant paragraphs read a....
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....TR 215 (Tri .- Bom), the very same issue came up for consideration and the Tribunal held that the notional amount earned by the assessee from purchase and sale of cargo space cannot be subject to levy of service tax. 22. In the case of CST New Delhi Vs Karam Freight Movers - 2017 (4) GSTL 215 (Tri.) it was held that demand of service tax on the income earned by the assessee is profit earned out of sale of cargo space and cannot be subjected to levy under BAS. ......... ......... ......... 25. In the case of EMU Lines Pvt. Ltd. Vs Commissioner of GST & Central Excise, Belapur - (2023 (4) CENTAX 122 (Tri .- Bom), the Tribunal had occasion to consider the issue as to whether the profit earned by sale and purchase of cargo space is subject to levy of service tax. The Tribunal considered the decision in the case of Greenwich Meridian Logistics (supra) and various other decisions and held that the demand cannot sustain. The said decision was upheld by the Hon'ble Apex court as reported in (2023) 4 Centax 129 (SC). 9. The decision rendered by the Tribunal in the case AGX Logistics Pvt. Ltd. Vs. Commissioner of GST and Central Excise [Final ....
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....on the ocean freight and air freight . These charges are not subject to levy of Service Tax during the disputed period. The mark-up received by the appellant on the freight charges is due to the difference in the freight charges collected from the shipper and paid to the shipping / airliners. The issue is no longer res integra, the Tribunal in the case of Tiger Logistics (supra) held that the activity is trading of cargo space and there is no rendering of service. The demand of Service Tax on mark- up / differential of ocean freight was set aside. The relevant Paragraphs reads as under :- "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 65(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 fall within the definition of '....
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....t demonstrate the mens rea. On the other hand, they show that the appellant had recorded all the transactions in its records and when called for during investigation, provided full facts to the department based on which the SCN was issued. Insofar as the appellant did not dispute the demands of service tax, it paid the same along with interest even before the SCN was issued. In our considered view, this case is covered squarely by Section 73(3) and no SCN should have been issued to that extent. 19. The appellant disputed service tax on mark up which it received from trading space on ships and the reimbursements of the container detention charges and the toll taxes which it paid on behalf of its clients and got reimbursed. We have already found above that no service tax is leviable on these receipts." ....... ....... ....... 6.3 The Tribunal in the case of EMU Lines Pvt. Ltd. (supra) had considered the very same issue where the demand of Service Tax was raised under Business Auxiliary Services. It was held by the Tribunal that the activity does not amount to rendering of service and it is merely trading of cargo space. The said decision w....