TMI Blog2017 (9) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... f space in shipping liners would amount to BAS or not? - Held that: - The appellant pre-books the slots even before they get an order from their exporter or other client. It is not the case that the appellants are doing on behalf of client only after they get an export order - The Tribunal in RE : Greenwich Meridian Logistics (I) Pvt. Ltd. Vs CST Mumbai [2016 (4) TMI 547 - CESTAT MUMBAI] held that while notional surplus was earned from purchase and sale of space however that it was not by acting for the client. Appeal allowed - decided in favor of appellant. - Appeal No. ST/150/2008 - Final Order No. 42113 / 2017 - Dated:- 18-9-2017 - Ms. Sulekha Beevi C.S. Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri Raghavan Ramabadran, Advocate For the Appellant Shri A. Cletus, ADC (AR) For the Respondent ORDER Per Bench The Appellant is engaged in the business of Custom House Agent (CHA), Freight Forwarder services, besides providing logistics services such as Business Support Services (BSS) and Storage and Warehousing Services. The Appellant is registered with Service Tax Commissionerate under CHA, BSS, Storage and Warehousing and GTA se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 76 78 of the Finance Act, 1994. Hence this appeal. 2.1 Today when the matter came up for hearing, ld. Advocate Shri Raghavan Ramabadran the grounds of appeal and also made oral and written submissions which can be broadly summarized as under : In respect of demand under CHA service (i) Service Tax is paid on the CHA agency services at Chennai. The Appellant, besides being a CHA is also a Freight Forwarder. As far as the freight forwarder business, the Appellant is centrally registered at Delhi under the category of BAS and service tax is paid on the commission earned. (ii) The demand has been made on the basis of the entire revenue earned by the Appellant with the exclusion of air/ocean freight and GTA charges (inland freight). (iii) The Appellant submits that under CHA Service, Tax is payable only on the taxable service of Custom House Agency. The charges on which demand under CHA Service has been confirmed do not relate to the taxable service of CHA. These charges are: a) Documentation charges b) Cartage c) Break Bulk charges d) Spread share charges e) Handling charges f) Management charges g) Miscellaneous charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services to their customers. (ii) The demand under BAS pertains to services which are in the nature of air/ocean freight. The Appellant merely collects the freight from the customers and remits the same to the airline/shipping liner. Thus, no service is provided to the importer. (iii) Air freight in relation to export cargo is also not taxable. In the case of both import and export cargo, ocean freight is not a taxable service. Thus, any sum collected towards freight is therefore outside the purview of the Finance Act, 1994. (iv) The Appellant submits that just because some amount in excess of actual freight has been collected, this will not alter the nature of the services. In this regard, the decision of the Hon ble Apex Court in the case of Indian Oxygen Limited v. CCE [1998 (36) E.L.T. 723 (SC)] and Baroda Electric Meters v. CCE [1997 (94) E.L.T. 13 (SC)] are relied upon. The latter decision was also followed by the Tribunal in the Appellant s own case, discussed supra. (v) Booking of container space and selling the same to the exporter is an independent business activity. The Appellant is not providing any taxable service of procurement of services for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore issue in this appeal concerns the nature of services, if any, performed by the appellant and whether they would fall under the ambit of Custom House Agent s Service (CHA) and Business Auxiliary Service (BAS) respectively. 5.2 The entire demand is based upon the income shown in the trial balance of the appellant including house air-way bill charges, bill of lading charges, agency fees, documentation charges, cartage/freight charges, break bulk charges, spread share charges, handling charges, management charges and other miscellaneous charges. Out of the above, assesees were paying service tax on the agency charges under CHA services and management charges under Storage and Warehousing Services and on cartage/freight charges they were paying service tax under GTA services. In para-5 of the impugned order, the adjudicating authority himself acknowledges that appellants were paying service tax on all other charges except that relating to air freight and ocean freight and the cartage, these appeared to be in relation to provision of taxable service of GTA service. 5.3 Taxable services of CHA is defined in Section 65 (105 ) (h) as any services provided to a client in relation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the appellant initially make payment for the activities on behalf of the client and later collected the amount from the client and that these are actually reimbursable expenses and not relating to the CHA activities. Even in respect of air freight, the Tribunal held that these charges cannot be said to be related to the activities of CHA. The relevant portion of the Tribunal s decision is reproduced below for ready reference. 9. On a very careful consideration of the issue, we find that the appellants apart from the activity of the Customs House Agent undertake work as freight forwarders and other activities related to that. We have perused the details of the billing for their entire period under dispute. It is broadly categorized in the following way. The charges are relating to :- (1) Air exports (2) Air imports (3) Ocean exports (4) Ocean imports (5) Customs clearance (6) Logistic. For example, in respect of Air exports, for the year 2000-2001 the Freight revenue is of the order of 8.8 crores. That means, this amount represents the freight collected by the appellants towards air freight for the customers and then paid to the airliners. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gents Licensing Regulations, 2004 defines customs house agent as under : (c) Customs House Agent means a person licensed under these regulations to act as agent for the transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station. When we carefully go through the definition of the customs house agent, we find that the activity of the CHA relates to the entry or departure of conveyances or import or export of goods at any Customs station. Therefore the activity of the CHA is limited to the Customs Station. It cannot extend beyond it. For example, in the present case, the appellants collect air freight for export from the clients, but before collection he pays from his pocket to the Airliner. Thus this activity relates to transportation from a port in India or from a place in India to any other place in a foreign country. These freight charges cannot be said to be related to the activity of the CHA. In any case, the air freight fee is for a passage beyond India. This service is also not rendered by the CHA. The freight charges collected is for the transportation of the goods and the transportation ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uni-directional flow of consideration because the space belongs to the shipping line. Steamer agent or agent of shipper may earn commission in such a transaction. Leaving that situation aside, the contention of the appellant is that it is a multi-modal transport operator which entails a statutorily assigned role in cross-border logistics. According to Section 2 of the Multi-modal Transportation of Goods Act, 1993. (m) 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 performs or undertakes to perform for a hire, the carriage or part thereof, of goods by road, rail, inland waterways, sea or air; 12. The appellant takes responsibility for safety of goods and issues a document of title which is a multi-modal bill of lading a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rketing of service provided by the client; (ii) or any customer care service provided on behalf of the (iii) client; or procurement of goods or services, which are inputs for the (iv) client; or xxxx provision of service on behalf of client; or (v) xxxxx and includes services as a commission agent A harmonious reading of the provisions supra points to the client being an essential ingredient in the rendering of a taxable service; the client is the one who pays the consideration for rendering of such service. No record of any receipts from airlines has been brought on record to evince the flow from them as clients. On the contrary, the appellant pays the airlines for booking of space in aircraft. The airlines, therefore, lack the distinguishing characteristics of a client. The excess reimbursement is the true market price paid by the consignor to the appellant over and above the price at which slot was pre-booked from the airline. Of the many activities listed in the definition supra, the closest may, at best, be the procurement of services that are inputs for a client. However, here too, the appellant does not, in relation to the amounts entered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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