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CMA CGM Global (India) Pvt Ltd Versus Commissioner of Central Excise, Thane-II

2015 (8) TMI 638 - CESTAT MUMBAI

Classification of service - Business Auxiliary service or Business Support service - whether the expenses charged directly from customers such as Bill of Lading (B/L) reissue charges, switch B/L charges, B/L surrender charges, advance cargo declaration charges, administration charges on stamp duty, amendment charges, check dishonour charges, destination documents fees, late B/L charges are leviable to service tax under the Business Auxiliary Services - Held that:- The appellant provides end-to-e .....

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formed by the appellant independently for their customers.

The appellant did not remit these charges to the Principal. We find nothing in the Agreement which states that the appellant cannot provide such service and cannot receive charges from the customers for such activities. Therefore, we conclude that these activities constitute service provided directly to the customer and do not constitute services provided on behalf of the Principal. Hence, the services would not fall under the .....

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S Pruthi, Member (T),JJ. For the Appellant : Shri Prasad Paranjape, Adv. For the Respondent : Shri K S Mishra, Additional Commissioner (AR) ORDER Per: P S Pruthi: Appellant are in appeal against impugned order whereby Service Tax of ₹ 1,24,87,065/- for the period July 2003 - February 2006 is demanded. Amount of ₹ 47,57,661/- paid during the period June 2005 - February 2006 has been appropriated. Penalties under Sections 76, 77 and 78 have been demanded along with interest under Sect .....

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ppellant had entered into an Agency Agreement with CMA-CGM France (their Principals who are the owner of an International Shipping Company) for providing the Principal with various services in India grouped as port operations, logistics, documentation, finance freight transfers, accounts reporting, information systems. Under these group services the appellant was paid by the Principal for activities namely commission on outbound/inbound freight, transhipment fee, container control fee, communica .....

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lutions under the Agency Agreement. Therefore, these activities are customer management services and covered under the definition of Business Auxiliary Service under Section 65(19) of the Finance Act, 1994 effective from 1.7.2003. Revenue relies upon CBEC Circular 59/8/2003/ST dt. 20.6.2003 which states that "While it is not possible to give an exhaustive list of business auxiliary services, the following are the illustrations of services that are covered under this category viz., evaluatio .....

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ss auxiliary support services.' Revenue has also relied upon the Balance Sheets and its Notes to the Accounts which recognized commission income, documentation, administration communication fees, container handling charges on the basis of services rendered as per Agency Agreement with the Principal. Although, the show cause notice does not specify under which clause of Business Auxiliary Service the demand is made, during the course of hearing the A.R. agreed that the demand can only be made .....

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who acts on behalf of another person and undertakes activities relating to provision or receipt of services. On the advice of MANSA, they started paying service tax from 16.6.2005 onwards under the category of BAS. The counsel conceded that they are not disputing the service tax paid from 16.06.2005. According to him, the reference to services in Board Circular (supra) are actually activities which fall under the definition of Business Support Service (BSS) under Section 65(104c) which came into .....

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India) Pvt. Ltd. vs. Commissioner Chennai 2008 (12) STR 586 holding that recovery of service tax on documentation charges is not sustainable. And the Mumbai Service Tax Commissionerate dropped service tax proceedings on the same issue in respect of Mumbai office of APL(India) Pvt. Ltd. 5. We have carefully considered the submissions of both sides. We note that the show cause notice in the present case does not refer to any specific clause of the BAS service which is reproduced below as it stood .....

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half of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any information technology service and any activity that amounts to ma .....

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ent services. To this extent the proceedings are flawed. However we proceed to examine the case on the basis of facts available on record. We may only presume that Revenue seeks to demand service tax under Clause (iii) as mentioned above." 5.1 The point to be examined is whether the appellant is providing customer care service on behalf of the Principal. We find that these services are provided directly to the customers i.e. shipping lines/consignees. The charges are raised directly on the .....

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l such charges are credited to the account of the Principal as per the Agency Agreement. The remaining charges i.e. those on which service tax demand has been raised relate to activities performed by the appellant independently for their customers. The Ld. Counsel states that the latter payments are not credited to Principal's account. We find no evidence to the contrary in the findings of the Commissioner and therefore hold that such findings are wrong. The confusion seems to have arisen be .....

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