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2016 (1) TMI 300 - CESTAT CHENNAI

2016 (1) TMI 300 - CESTAT CHENNAI - TMI - Valuation - Steamer agent services - reimbursement of expenses - inclusion of additional expenditure towards arranging drinking water, garbage clearance - expenses incurred by them for supply of mobile phones, and airtime charges, crew medical etc. - Held that:- the type of expenses involved in the present dispute will not definitely fall within the ambit of the taxable service vis-`-vis a steamer agency.

They are only courtesy services or ass .....

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any such assistance requested for. Items that may be required for the ship or her officers for personal use are thus very often procured from the market and supplied by steamer agent. In my view, the billings made by the Appellant for expenses incurred by them for supply of mobile phones, and airtime charges, crew medical etc. would fall in this category of other/ additional assistance rendered and the value thereof is not required to be added to value of taxable services and hence no tax liabi .....

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jected - Decided in favor of assessee. - ST/140/2006 - 41779 / 2015 - Dated:- 2-9-2015 - Shri R. Periasami, Technical Member And Shri P.K. Choudhary, Judicial Member For the Petitioner : Shri Rammohan Rao, JC (AR) For the Respondent : Shri V.S. Manoj, Adv., ORDER Per: P.K. Choudhary The appeal was originally filed along with a COD application. Vide miscellaneous order No. 164/07 and Final Order No. 195/2007 dated 2.3.2007, COD application was rejected and the accordingly, the appeal was also dis .....

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vice charges collected in respect of services rendered by them under the category of steamer agent. They also incur additional expenditure towards arranging drinking water, garbage clearance, transport for crew etc. The shipping line reimburses these expenses to the respondent and the same does not form part of the service charges. Charges for the services rendered as a steamer agent to the shipping line are collected separately and service tax is being paid on the said amount. The Department is .....

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Notice alleged that the said amount of ₹ 21,89,729/- also forms part of value of services rendered and also proposed interest and penalty of ₹ 100/- per every day under Section 76 and under Section 78. The respondent vide reply dated 19.01.2005 had objected to the proposals set out in the Show Cause Notice on various grounds. The Assistant Commissioner of Central Excise, Service Tax vide order in original No.2/2005 dated 28.02.2005 has confirmed the proposals set out in the Show Caus .....

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ng authority has rightly construed the amount collected is for the serviced provided as a steamer agent. He relied on the LB decision of the Tribunal in the case of Sri Bhagavathy Traders Vs. Commissioner of Central Excise, Cochin -2011 (24) STR 290 (Tri.-LB). 4. The Ld. Counsel Shri V.S. Manoj, Advocate, appearing on behalf of the respondent assessee filed a copy of the trade notice No. 39-CE (Service Tax 39) 97 dated 11.06.1997 of the New Delhi Commissionerate giving clarifications of two serv .....

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he taxable value in relation to the services provided. Trade Notice No.- 39 which deals with steamer agents is reproduced as under for better interpretation of the statues:- 3.1 The expression steamer agent has been defined to mean any person who undertakes, either directly or indirectly,- (a) to perform any service in connection with the ships husbandry or dispatch including the rendering of administrative work related thereto; or (b) to book advertise or canvass for cargo for or on behalf of .....

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e, shall be the gross amount charged by such agent from the shipping line for services in relation to a ships husbandry or dispatch or any administrative work related thereto or in relation to the booking, advertising or canvassing of cargo, container feeder services including the commission paid to such agent. 3.3 Steamer agents incur various types of expenses on behalf of the shipping line such as pilotage and berth hire charges, Indian Coast light dues paid to the port authorities, cargo exp .....

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the agency commission which is paid by the shipping line on the import and export cargo. These commission are usually paid as a percentage of the net ocean freight (basic freight) which is clearly indicated in the agreement entered into between the steamer agent and shipping line. 3.4 It is clarified that in relation to the steamer agent the service charges will constitute the husbandry fee as well as the agency commission on import/export cargo. Other expenses incurred by the steamer agent on .....

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offices and do not raise any bills to the shipping line, need not be registered. This is for the reason that billing is done by the sea port offices and not the branch offices. On going through para -3.4 above, it clearly mentioned that in relation to the steamer agent, the service charges will constitue the husbandry fee and agency commission on import/export cargo. Other expenses incurred by the steamer agent on behalf of the shipping line shall not be taken into account. 6. Further, We find .....

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rposes of determining the tax liability of a steamer agent, sub-clause (i) of Section 65 (105) of the Act defines the taxable service as any service provided to a shipping line, by a steamer agent in relation to a ship s husbandry or dispatch or any administrative work related thereto as well as the booking, advertising or canvassing of cargo, including container feeder services I find that as per the Departmental Clarifications on Frequently Asked Questions, in respect of the question of what w .....

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ne Charges , Garbage and Sewage removal , Payment of air time charges for cellphones , Shipment of mail bags to France , supply of fresh water , potted plants , transport , toner cartridge , etc. By no stretch of imagination these services provided by the Appellant can be considered as service in connection with the ship s husbandry or dispatch and the rendering of administrative work related thereto , as the statutory definition of Steamer Agent envisages. I further find that a ship s husbandr .....

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er agency service. There would sometimes also arise requests for assistance for the ship or her officers, on issues not related to ship s husbandry or booking etc. of cargo of the genre billed in this case. The Steamer Agent, by virtue of their ongoing relationship with the shipping line, inevitably extends any such assistance requested for. Items that may be required for the ship or her officers for personal use are thus very often procured from the market and supplied by steamer agent. In my v .....

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d directly to the shipping line but also any services rendered indirectly in connection with the shipping line as steamer agent is covered under the definition I am afraid this is an inaccurate interpretation. The expression directly or indirectly merely implies that the agent can undertake all the specified services by himself, or he may get various parts of the services executed through intermediaries. 7. The judgment of the Hon ble High Court of Madras in the case of Sangamitra Services Agenc .....

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Tribunal referred to the decision rendered by the Tribunal in the case of Sri Sastha Agencies Pvt Ltd., v. Asst. Commissioner reported in 2007 (6) S.T.R. 185 (Tri.-Bang.), holding that no element other than remuneration received by a Clearing & Forwarding agent from their principal was to be included in the taxable value of the service. Thus, the Tribunal allowed the appeal. 6. Aggrieved by this, the present appeal has been preferred by the Revenue. Learned Standing counsel appearing for th .....

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freight, labour, electricity, telephone, etc., in connection with clearing and forwarding services, the same would form part of remuneration/commission. 7. We do not agree with the said contention. In the absence of any material to show the understanding between the Principal and the Client that the Commission payable by the principal was all inclusive, it is difficult to hold that the gross amount of remuneration/commission would nevertheless include expenditure incurred by the assessee providi .....

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