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2024 (2) TMI 1307 - AT - Service TaxLevy of Service Tax - Business Auxiliary Service - contract with its clients to render services in relation to import of goods from abroad - activities undertaken by the appellant are covered within the ambit of Clause (vi) of Section 65(19) of the Finance Act, 1994 or not - scope of SCN - demand in the instant case is sustainable when the Show Cause Notice fails to specify under which sub-clause of Section 65(19) the demand has been raised - HELD THAT:- The services provided by the OLSPs will be taxable under clause (vi) of Section 65(19) mentioned above, only if the services are provided on behalf of the Appellant to the customers of the Appellant. In the present case, the OLSPs are not acting as 'agents' of the Appellant while handling the cargo of the customers of the Appellant. The OLSPs books space on various shipping lines/airlines for the purpose of transportation of the goods from abroad to India. The contract is with the shipping line/airline and OLSPs. The shipping line/airline issues invoice in the name of the OLSPs. In case of defect, the shipping line/airline can sue only OLSPs. OLSPs in turn enter into contract with Appellant. OLSPs charge agreed fixed charges from Appellant. There is no contract between OLSPs and the customers of the Appellant. Accordingly, the OLSPs cannot be taxed under clause (vi) of the business of auxiliary service as there is no contract between the OLSPs and customers of the Appellant. The expression “on behalf of the client” in clause (vi) presupposes existence of three parties. The services should be provided as an agent of the principal to the customers of the principal. If the services are provided by the agent to the principal, that will be not covered in the scope of clause (vi). In the case of SAI COMPUTER CONSULTANCY VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [2011 (8) TMI 788 - CESTAT, NEW DELHI] it has been held that When the client of the appellant was UP Power Corporation Ltd., it cannot be held that the appellant served clients of that Corporation on its behalf. Therefore, the appellant goes out of the ambit of sub-clause (vi) of the term ‘business auxiliary service’ defined by law prevailing at the relevant time. Thus, the services rendered by the OLSPs cannot be categorized under the category of 'Business Auxiliary Services'. Hence, the demand of service tax under the Category of 'Business Auxiliary Services' in the impugned order is not sustainable. Scope of SCN - SCN has not specified any specific sub-clause of Section 65(19) under which the activities under taken by the OLSPs would fall - HELD THAT:- In the impugned order, the Ld. Adjudicating authority only classified the activities undertaken by the OLSPs under the category of “business auxiliary service” under Section 65(19)(vi) and (vii) read with Section 65(105) (zzb) read with Section 66A of the Finance Act, 1994. Such a categorization is not available in the notice while demanding service tax under the category of 'Business Auxiliary Service'. It is a settled law that the defect in the notice cannot be cured by the observations of the adjudicating authority. Accordingly, the demand of service tax along with interest and penalty confirmed in the impugned order is not sustainable as the Show Cause Notice fails to specify under which sub-clause of Section 65(19) the demand has been raised. The demand of service tax confirmed along with interest and penalty confirmed in the impugned order under the category of 'Business Auxiliary Service' is not sustainable and accordingly, the same is set aside - Accordingly, the appeal filed by the appellant is allowed.
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