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TMI Blog2020 (2) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... going vessels, over and above the purchase price is not liable to service tax - Appeal allowed - decided in favor of appellant. - Service Tax Appeal No. 13162 of 2013, 10097 of 2016-DB - A/12235-12236/2019 - Dated:- 22-8-2019 - HON BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) AND HON BLE MR. RAJU, MEMBER (TECHNICAL) Shri J.C. Patel, Advocate for the Appellant Shri T.K. Sikdar, Assistant Commissioner for the Respondent ORDER RAMESH NAIR : The factual background of the case are that the appellants are engaged in the activity of purchasing space on ocean going vessels from shipping companies and selling the same to various exporters for export of goods. In most cases, the appellants have on purchase of the space on ocean going vessels from shipping companies and sold the same to exporters at a profit. However, in some cases the appellant have also incurred loss. The shipping companies raise invoices on the appellants for freight and the appellants raise their invoices/ debit notes on the exporters for the freight charged by appellants to the exporters. The difference between freight charged by shipping companies to the appellants and that charged by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pearing on behalf of the Revenue reiterates the findings of the impugned order. 4. We find that there is no dispute about the activity being carried out by the appellant i.e. they are engaged in purchase and sale of space on ocean going vessels. In the transaction of purchase and sale of space, they earn some profit for the reason that in some cases, the sale price of the space to various exporters is more than the purchase price of the space paid to shipping companies. In our considered view, there is no service involved in such transaction as the purchase and sale of the space is an activity of sale and purchase and hence, not liable to service tax. This issue has been considered by various judgments time and again and this Tribunal held that since the activity of sale and purchase involves no service hence the profit earned on sale of space is not liable to service tax. In the case of Chinubhai Kalidas Bros vs. CST, Ahmedabad (supra) this Tribunal held as under:- 4. We have gone through rival submissions. We find that the appellant have contended the brokerage and special commission/incentive is an income received in the activity of trading of freight space in variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai has inherent jurisdiction to entertain an appeal against the order of lower authorities and pass appropriate orders.. I feel that there thus exists a reasonable cause for the request of the appellants for no penalty under section 76 and 78 of the Finance Act, 1944 in respect if service tax demand against the air commission. In my view, when the appellant s activity of making arrangements for transportation of cargo by air was not clarified and was under dispute, the failure on their part is justified and I am inclined to waive the penalties imposed in respect of service tax demand against the air commission under section 76 and 78 of the Finance Act, 1994 under section 80 of the Finance Act, 1994. Having held that there was a reasonable cause for non-payment of duty, we find it just to set aside the invocation of extended period of limitation also in the instant case. 5. Consequently demand is set aside and the appeal is allowed. The issue was decided by this Tribunal in the case of CST, New Delhi vs. Karam Freight Movers (supra) wherein the following order has been passed:- 11. On the second issue regarding the service tax liability of the respondent under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is not the case that this amount is a commission earned by the respondent while acting on behalf of the exporter and said mark-up value is of freight charges and are not to be considered as commission. Based on these findings the demand was dropped. We do not find any impropriety in the said finding. The grounds of appeal did not bring any contrary evidence to change such findings. Accordingly, we find no merit in the appeal by Revenue. The appeal is dismissed. In the case of Pawan Cargo Forwarders Pvt. Limited vs. Pr. Commissioner of Service Tax, Chennai (supra) dealing with identical issue following order has been passed:- 5. We find that the very issue had been addressed in the decisions of this Tribunal in the case of Skylift Cargo (P) Ltd. Vs CST Chennai (supra) and La Freight Pvt. Ltd. Vs CST Chennai (supra) relied upon by Ld. Advocate holding that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity. The relevant portion of the decision in Skylift Cargo (P) Ltd. is reproduced for ready reference as under:- 2. The facts of the case are that assessee M/s. Skylift Cargo (P) Ltd., [hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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