TaxTMI 
TaxTMI 
2026 (2) TMI 1434
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....ers freight forwarding service both for outbound cargo and inbound cargo. The assessee books cargo space on its own account with airline company/shipping line company for transportation of cargo from the port of loading in one country to the port of release in another country. It sells cargo space, already booked with airline company / shipping line company, on its own account to the customer (consignor/consignee) at a profit. Where the freight rate payable by the assessee-company to shipping line company/ airline company, termed as 'buy rate', is lower than the freight rate payable by customer to the assessee, termed as 'sell rate', the difference between 'sell rate' and 'buy rate' gives rise to business profit of the appellant. (ii) Upon receipt of cargo, the airline company issues contract of carriage (airway bill) directly to the appellant. Upon receipt of cargo, the assessee issues contract of carriage (house airway bill) to the customer. The airline company issues invoice directly to the assessee-company and the assessee issues invoice to the customer. Upon receipt of cargo, the shipping line company issues contract of carriage (bill o....
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....ies, on the allegation that they did not discharged the Service Tax liability on the gross taxable value of "Customs House Agent" services provided by them during the impugned period, by suppression as well as misstatement of the fact of receiving additional amounts in respect of such taxable services. 3.2. The matter was adjudicated by way of the impugned order wherein the demand of Service Tax amounting to Rs. 1,04,63,975/- (inclusive of cesses) has been confirmed against the assessee/company, along with interest and penalties. The ld. adjudicating authority, however, dropped the rest of the demand of Rs. 9,83,81,654/- as proposed in the impugned Show Cause Notices. 3.3. Aggrieved by the confirmation of the above demand of Service Tax vide the impugned order, the assessee/company has filed appeal. The Revenue has also filed appeal against the dropping of the demand of Service Tax in the impugned order. 4. The submissions made by the Ld. Counsel appearing on behalf of the appellant-company, inter alia, are as under: - (i) Provision of CHA service falls under clause (h) of sub-section (105) of section 65 of the Finance Act, 1994 (hereinafter referred to ....
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.... to be treated as export of service which is exempt from service tax under rule 4 of the Rules. Therefore, the provision of CHA service by the appellant/company to foreign customer is required to be construed as export of service which is exempt from Service Tax. (v) Without prejudice to the above, we have furnished below the concept of 'composite service' applicable to the instant case. Attention is invited to clause (b) of sub-section (2) of section 65A of the Act, which provides that when for any reason, a taxable service is prima facie classifiable under two or more sub-clauses of clause (105) of section 65 of the Act, the classification shall be effected as composite services consisting of a combination of different services which shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable. (vi) The main service of the appellant/company to a foreign customer is international freight forwarding service that involves overseas transportation of goods primarily by booking cargo space with airline company / shipping line company. A foreign customer located outside India places ....
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....he Rules: ▪ First condition: The assessee provides composite services from India and the services are used /consumed by foreign customer outside India as the benefits arising from such services accrue to foreign customer outside India [clarification given vide circular no. paragraph no. (3) of circular no. 111/5/2009-S.T. dated 24/02/2009] ▪ Second condition: The assessee raises invoice on overseas group company in convertible foreign currency and accordingly, receives payment from the latter in convertible foreign currency. (x) In view of the above, the composite services provided by the assessee/appellant to foreign customer are to be treated as export of service, which is exempt from service tax as per rule (4) of the Rules. Thus the provision of CHA service by the appellant to foreign customer amounts to export of service which is exempt from service tax. (xi) Without further prejudice to what we have stated hereinabove, it may kindly be noted that the provision of service by the assessee/appellant to a foreign customer is not complete until and unless the cargo/goods being transported reaches the destination as per the direction ....
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....f Commissioner of Service Tax-III, Mumbai versus Vodafone India Ltd reported in [2025] 33 Centax 152 (S.C.). It was held that since service tax is a destination-based consumption tax, services that are exported out of India are not meant to be taxed. Circular No. 56/5/2003-S.T., dated 25.04.2003 was issued by the Board, clarifying that since service tax is destination-based consumption tax, no such tax was leviable on export of services. Attention is also invited to the decision of Hon'ble Supreme Court in the matter of All India Fedn. Of Tax Practitioners vs. Union of India reported in [2007] (7) S.T.R. 625 (S.C.), wherein it was held that Service Tax is a VAT which in turn is destination based consumption tax in the sense that it is on commercial activities and is not a charge on the business but on the consumer and it would, logically, be leviable only on services provided within the country. Service tax is a value added tax. Reliance is also placed on the decision of the Hon'ble High Court of Bombay in the matter of Commissioner of Service Tax vs. SGS India Pvt Ltd reported in [2014] (34) S.T.R. 554 (Bom.), wherein it is held that as per the decision of the Hon'....
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....the Revenue. He prayed that the impugned order, qua giving relief to the appellant, be set aside. 6. Heard the parties. 7. The short issue involved in this matter is whether, when the appellant was providing CHA service to overseas customers in the Domestic Tariff Area (DTA), the appellant was eligible to claim the CHA service as "export of service" in terms of Rule 3(1)(ii) of the Export of Services Rules, 2005, or not. 7.1. The submission made by the assessee-appellant is that the they are freight forwarding agents and their main services are freight forwarding services. 8. For the subsequent period, proceedings in the assessee's own case have been dropped by this Tribunal vide Final Order 77937-77938 of 2025 dated 16.12.2025 in Service Tax Appeal No. 76188 of 2017 & Anr. [CESTAT, Kolkata] wherein this Tribunal observed as under: - "6. Regarding the demand of service tax confirmed under the category of CHA service in the impugned order, we find that the appellant-company, namely, M/s. Ceva Freight India Ltd., paid service tax on the CHA service rendered to domestic customers, on the amounts received by them such as terminal handling charge, bill of ladin....