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2021 (9) TMI 500 - AT - Service TaxLevy of service tax - Clearing and Forwarding Agency Service - difference between the amounts charged by it from its clients towards Ocean Freight and the amounts paid by it to the Shipping line towards Ocean Freight - steamer agency service - amount received from the agents of the Shipping Line for booking cargoes - differential amounts of Service Tax be demanded under Section 73 of the Finance Act, 1994 - extended period of limitation - levy of interest and penalty. Is the appellant liable to discharge service tax on the difference between the amounts charged by it from its clients towards Ocean Freight and the amounts paid by it to the Shipping line towards Ocean Freight under the head of ‘Clearing and Forwarding Agency Service’? - HELD THAT:- Trading in Ocean Freight is not a service being rendered to the client and no amount is being paid by the client to the appellant as per the records towards trading of cargo space. Evidently as any prudent business would, the appellant is buying space on the cargo ship at a lower price and selling it to its client at a higher price. The difference is its profit. It would have been a different case, if the appellant is organizing space on the ship for their clients and the client is paying shipping line directly and the service of organizing or arranging the space on the ship, the appellant gets paid service charge by the client. In such an arrangement, the amount being received would be a consideration for the service. The present arrangement is an arrangement of the trader who buys cargo space at a lower price and sells it at a higher price and enjoys the margin as profit. The profits gained by the appellant by buying space on ships at lower price and selling at a higher price to the customers cannot by any stretch of imagination be called “Clearing and Forwarding Agent Service”. No service tax can be charged on this amount. Whether the appellant is liable to discharge service the on the amounts which it received from the agents of the Shipping Line for booking cargos under the head ‘Steamer Agency Service’ or not? - HELD THAT:- There is nothing on record to prove either that the appellant was a steamer agent or that the appellant rendered service to a shipping line. The service, if any, is rendered by the appellant, it is to the broker and not to the shipping line. Therefore, no service tax can be charged on the disputed amount under the category of Steamer Agent Service on the amounts paid by the brokers to the appellant. Since no demand can be sustained, neither can any interest be charged, consequently, the penalties imposed upon the appellant also needs to be set aside - appeal allowed - decided in favor of appellant.
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