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Issues involved: Service tax on custom house agent under the category of "business auxiliary services".
The judgment deals with the appeal arising from the Order-in Appeal confirming service tax on the custom house agent for arranging shipment of export cargo and negotiating with shipping lines under "business auxiliary services" u/s 65(19) of the Finance Act, 1994. The appellant contended that their activity does not fall under this category, but their plea was rejected. The learned counsel argued that the commission received for canvassing cargo does not qualify as "business auxiliary services" as defined in the Act. He emphasized that the clients are importers/exporters and the activity falls under the definition of "steamer agent" u/s 65(100) of the Finance Act. The counsel also highlighted the imposition of a penalty disproportionate to the service tax amount, seeking waiver based on bona fide belief. The Tribunal observed that the activities of the appellants do not align with the definition of "business auxiliary services" and are more suited to the specific category of "steamer agent" under the Act. Consequently, the appeal was allowed, setting aside the impugned order. The learned JDR defended the order, arguing that the appellant's activities fall under the promotion or marketing of services provided by the client as per section 65(19)(ii) of the Finance Act. However, the Tribunal noted that the appellant's actions did not fit within the defined categories of "business auxiliary services" such as promotion or customer care services. The Tribunal emphasized that the specific activities carried out by the appellants corresponded more closely to the description of a "steamer agent" under section 65(100) of the Act, involving booking, advertising, or canvassing cargo for shipping lines. Therefore, the Tribunal concluded that the appellant's services were not covered under "business auxiliary services" and set aside the order, allowing the appeal with any consequential relief.
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