TMI Blog2018 (7) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... ines for booking of space, is liable to service tax under the head BAS? - Held that:- Appellant are not engaged in providing any marketing or promoting services for the airlines or shipping lines - reliance placed in the case of DHL Logistics Pvt. Ltd. vs. CCE [2017 (8) TMI 600 - CESTAT MUMBAI], where it was held that Any commission/incentive received, as a result of this transaction of sale cannot be considered as supply of BAS - demand set aside. Penalties - Held that:- As the main demand itself is not sustainable, the penalties are also required to be set aside. Appeal allowed - decided in favor of appellant. - ST/613/2008-DB - Final Order No. 20947 / 2018 - Dated:- 11-7-2018 - HON'BLE MR. S.S GARG, JUDICIAL MEMBER And HON'BLE MR. P. ANJANI KUMAR, TECHNICAL MEMBER Shri Pradyumna G. H. Advocate For the Appellant Dr. J. Harish, AR For the Respondent ORDER Per : P. Anjani Kumar The appellants, M/s. Sindhu Cargo Services Ltd., are Custom House Agents (Customs Brokers) and are registered with service tax. Department issued a show-cause notice dated 6.7.2005 demanding service tax of ₹ 75,21,124/- under Agency Commission received by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by them falling under the category of Business Auxiliary Service , they submitted that it is clear from the definition of the Business Auxiliary Service under Section 65(19) of the Finance Act, 1994 that service tax under Business Auxiliary Service is leviable on any service in relation to promotion or marketing or sale of goods produced or provided by or belonging to the client; or promotion or marketing of service provided by the client; or any customer care service provided on behalf of the client. The learned counsel for the appellants submitted that they were not engaged in promoting or marketing services, they were not buying or selling space on behalf of the airlines to their clients but they were buying space on their own behalf. It is not the case that they were selling space on carrier from the airlines directly to the exporters without themselves purchasing the space so as to amount to a service involving promotion of sales. In the instant case, the appellants are directly buying the space and thereafter selling the same to the exporters. In this activity, they had received only incentive and commission based on the total space purchased by them from the airline. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that a subcontractor is also essentially a taxable service provider. Services provided by the subcontractors are in the nature of input services; therefore, they are also liable for payment of service tax. In the instant case, the appellants have claimed to be subcontractors of M/s. UPS Jet Air Express Pvt. Ltd. and are liable to pay service tax. 4. Heard both sides and have perused the records of the case. There are two issues to be decided. One is whether the Agency Commission received by them from M/s. UPS Jet Air Express Pvt. Ltd. is chargeable to service tax and other is, whether the Brokerage Commission received by them from the airlines for booking of space, is liable to service tax. 4.1 Coming to the first issue, we find that the appellants vide letter dated 29.7.2018 have submitted to the learned Commissioner that they also act as sub-agents to their customers. One such customer was M/s. UPS Jet Air Express Pvt. Ltd. On completion of the job, they will raise bill on M/s. UPS Jet Air Express Pvt. Ltd. who in turn will raise a consolidated bill on the importer/exporter. On receipt of payment from the respective customers, service tax will be paid by M/s. UPS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by them from M/s. UPS Jet Air Express Pvt. Ltd. 4.2 Coming to the issue of commission received from airlines/shipping lines, the appellant submitted that they are engaged in buying and selling of space in the airlines and depending on the volume of the space bought by them from the airlines, they had received the commission/incentive. They are not engaged in providing any marketing or promoting services for the airlines or shipping lines. We find that this Bench in the case of Lee Muir Head Pvt. Ltd. cited supra, has opined that : 8.4 As regards brokerage commission of 2% paid for booking of the export cargo, it is seen that the agents of shipping lines normally book the export cargo. The appellants actually get brokerage or commission for getting orders for the export of cargo. For this, they are getting commission of 1.75% to 2%. Even if this activity is considered as Business Auxiliary Services as they promote the taxable services of other person, it is seen that there is a Notification No. 13/2003 dated 20-6-2003 which gives exemption under Business Auxiliary Services for services rendered as commission agent. Moreover, Board s Circular dated 25-4-2003 clarifies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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