TMI Blog2016 (5) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... which would mean any amount of reimbursement of the expenses cannot be included for discharge of Service Tax liability. - Decided against the revenue - Appeal No. ST/88800/13-Mum - Order No. A/86880/16/STB - Dated:- 31-3-2016 - SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) AND SHRI C.J. MATHEW, MEMBER (TECHNICAL) For the Petitioner : Shri V.K. Singh, Spl. Counsel For the Respondent : Shri H.K. Maingi, Advocate with Shri C.S. Biradar, Advocate ORDER PER: M.V. RAVINDRAN: This appeal is filed by the Revenue against Order-in-Original No. GOA/ST/Commr/2/12-13 dated 28.02.2013 passed by the Commissioner of Customs, Central Excise Service Tax, Panaji-Goa. 2. The relevant facts that arises for consideration, after filtering out unnecessary details are during the course of inspection of the records of the respondent, it was noticed that they were receiving certain amounts pertaining to Port Services, Cargo Handling Services and Steamer Agent services (hereinafter referred to as the said services) from various parties to whom they had provided the said services, however, they were not paying Service Tax on the entire amounts so received as seen in the ledger accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hom the respondent is claiming to be a pure agent. Whether or not the expenditure incurred by the respondent is for providing a service to the principle is in the nature of a pure agent would depend on the contractual relationship between the principle and other party. Without correctly ascertaining the principle and the services rendered to the same by the respondent, the adjudicating authority has erred in dropping the proceeding initiated by the show-cause notice. It is his submission that the adjudicating authority has mentioned that nature of expenses incurred and payments made by the respondent on behalf of their principle, is being done so as a pure agent, seems to be incorrect, as the activity relates to Cargo related activity and labour engaged for loading/unloading of Cargo an activity which is an integral part of the services provided by respondent to their principle/clients and the respondent holds licence for these activities at the Mormugao Port Trust. The respondent has not produced any contract between them and their principle to show that there exists a contractual relationship between the respondent and their principle for the respondent to act as a pure agent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent. 7. On perusal of Order-in-Original, we find that the adjudicating authority has considered the entire proposal in show-cause notice and analysis thereof and has also considered the various evidences which are produced by respondent on him. We reproduce the relevant findings:- 22. I have gone through Annexure VIII Colly to Reply to show-cause notice i.e. copies of certain documents which are in the form of letters/mails received from their clients either dully appointing the noticee as agent or entrusting the job of attending to their vessels due to call at Mormugoa/Panaji Ports. I find that the said letters/mails referred particular vessels which were due to call on Mormugoa and Panaji Ports respectively for mostly loading of bulk iron ore, Most of the said letters/mails made it clear that the noticee was appointed by them as their agents for the said vessels call at the said ports for arranging all port, Customs Formalities, Payments, Tax formalities etc. directly with the above port prior to ships berthing for smooth loading operation in good time. It appeared that based on the letters/mails whose nature is nothing but authorizations, the noticee acted on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, Bunker supplied, Cash to Master, Port Dues for loading of vessels by Transhipper 1. Mormugoa Port Trust 2. Bunkers 3. Cash paid to Masters 8 M.V. Dona Paula Expenses All expenses are reimbursement for handling/manning of the Floating Crane Dona Paula e.g. Crane Operators Salary, Material supplied, launches engaged by crew, taxies and miscellaneous expenses 1. Mormugoa Launch Owners Association 2. Mormugoa Port Trust 3. Crane Operators as wages 9 Ship Agency Income Amount paid to parties on behalf of principals Goa Mineral Ore Exports, Goa Chamber of Commerce 10 Shipment Income Amount paid to parties on behalf of principals Goa Mineral Ore Exports, Goa Chamber of Commerce 11 Vessel related charges Port Dues, Pilotage, Berth Hire, etc. for Agency vessel Mormugoa Port Trust/Captain of Ports 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncipals. 23.2 Therefore, from the nature of the payments made it can t be said that such payments are in the nature of expenditure incurred by the Noticee for providing the taxable services and hence can t be included in the taxable value. Moreover, the noticee says that the recipients of such payments have charged the Service Tax to their principals but they have not taken any credit of such tax payment. If they are the recipient of the service then they would have taken the Service Tax paid as credit. It implies that they have acted as only agents to their principals who paid the amounts or reimbursed the expenses on such services. Such expenses can t be linked to the services provided by the Noticee. As agent to their principals they are required to organise a job and for that they get some payment which they call as agency income and the actual cost of the job is reimbursed by the principals. It the said cost is also treated as includable in the agency income and then subjected to tax then they should be actually providing that service to the principals. But the evidence suggests that the job is done by a third party and not by the Agent. Therefore, asking agent to includ ..... 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