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Greenwich Meridian Logistics (India) Pvt. Ltd. Versus Commissioner of Service Tax Mumbai

2016 (4) TMI 547 - CESTAT MUMBAI

Demand of Service tax - Business auxiliary service - Commission received from shipping line for slots that were booked on ships according to instructions from exporters - Appellant contended that this amount is a profit from trading and the Finance Act, 1994 taxes certain services and not profits - Held that:- the appellant has admitted to receiving commission from shipping lines on account of freight and discharge of tax liability on the same. However, there is no justification for fastening th .....

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een the shipper and the carrier and the shipper is not privy to the minutiae of such contract for carriage. - The appellant often, even in the absence of shippers, contract for space or slots in vessels in anticipation of demand and as a distinct business activity. Such a contract forecloses the allotment of such space by the shipping line or steamer agent with the risk of non-usage of the procured space devolving on the appellant. It is nothing but a principal-to-principal transaction and t .....

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hases and sale of space and not by acting for a client who has space or slot on a vessel. Section 65(19) ibid will not address these independent principal-to-principal transactions of the appellant and, with the space so purchased being allocable only by the appellant, the shipping line fails in description as client whose services are promoted or marketed. Therefore, the demands, with interest thereon, and penalties are set aside. - Decided in favour of appellant - Appeal No.ST/49 & 96/2012, Cr .....

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firmed tax demand of ₹ 2,27,02,697/- for the period 2005-06 to 2009-10 and ₹ 48,43,493/- for 2010-11 respectively with interest thereon as provider of business auxiliary service.' The adjudicating authority has also imposed penalty under section 76, 77 and 78 of Finance Act, 1994 in the former and under section 76 and 77 of Finance Act, 1994 in the latter. As the issue in dispute in the two appeals is identical we dispose both by this common order. 2. The appellant handles the lo .....

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t times, cargo space is booked in accordance with instructions of the exporters for which the appellant receives a commission on which service tax liability is discharged. Space, in this context, are the container slots on a vessel for a specified voyage. The payment made to the steamer agent acting on behalf of the shipping line is the ocean freight. 3. In the course of audit of the appellant in 2009, income under the head ocean freight surplus' came under scrutiny which was explained as th .....

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eceipt of commission from shipping lines for slots that were booked on ships according to instructions from exporters. Convinced of this, and further taking note of the accounting entries at various stages before booking it as profit, the original authority recorded the inference that the appellant had carried out activities that were intended to promote the marketing of the services of the client which was taxable as business auxiliary service'. Consequently, it was held that surplus of  .....

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nt has not been defined in the statute, that they do not receive payment from shipping lines, that they are not agents but intermediaries akin to ship brokers as held by the Tribunal in Interocean Shipping Co vs Commissioner of Service Tax [2013 (30) STR 244 (Tri-Delhi)], that even if the surplus were to be deemed as a discount the decision of the Tribunal in Group M Media P Ltd. vs. Commissioner of Central Excise- 2012-TIOL-804-CESTAT-MUM would render this to be non-taxable, than a registered m .....

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appellant. In Bax Global India Ltd v Commissioner of Service Tax Bangalore [2008 (9) STR 412 (Tri-Bang)], the Tribunal held - "9…….. Summing up, we find that the appellants had already discharged the duty liability in respect of the Customs House Agent activities undertaken by him. As regards all the other activities, we find that they do not relate to customs house agent activities. Even if any profit has been made in respect of those activities, they cannot be subjected to .....

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ng entries. The manner or mode of booking the profit in the accounts of a commercial organization has no bearing on the application of section 65(105) to a taxable activity. The nomenclature in the accounts that appears to have weighed heavily with the original authority is not material to classification of the service when the taxable entry specifies the legislative intent. 8. The Hon'ble High Court of Gujarat in Sports Club of Gujarat Ltd vs Union of India [2010 (20) STR 17 (Guj)] has obse .....

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rticularly relevant here as it goes on to observe after drawing attention to section 68 and section 65 of Finance Act 1994 that "12. A conjoint reading of the above provisions of the law goes to show that the services provided to a client,… falls under the category of taxable service" 9. The description of the taxable service in section 65 (105) of Finance Act, 1994 as well as definition, if any, of the terms therein are the primary determinant for taxation of any service. From .....

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f trading in space or slots on vessels by holding that trading in space or slots is a figment and freight is all that is transacted. Freight, though used colloquially to describe all manner of carriage, is the nomenclature assigned to the consideration for space provided on a vessel for a particular voyage. Freight is charged by the entity that is in possession of space on a vessel from an entity that requires the space for carriage of cargo. 11. Slots may be contracted for by the shipper or its .....

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ot;multimodal transport operator" means any person who- (i) concludes a multimodal transport contract on his own behalf or through another person acting on his behalf; (ii) acts as principal, and not as an agent either of the consignor, or consignee or of the carrier participating in the multimodal transportation, and who assumes responsibility for the performance of the said contract; and (iii) is registered under sub-section (3) of section 4; And (a) "carrier" means a person who .....

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