TMI Blog2021 (7) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... he scope of a CHA s business, and freight forwarding is undertaken to get the goods transported from/to international boundaries to/from the Indian ports and the said activity is not in any way related to CHA s business and CHA is not required to execute these services in the course of CHA s business - further, as per Section 67 of the Finance Act, 1994 only any amount that is payable for the services provided or to be provided shall be included in consideration and any amount received is not related to the services provided cannot be included in Section 67. There are force in the submissions of the learned counsel for the appellant that in case of export freight, no service tax is payable because the said service is non-taxable service and is provided in a non-taxable territory. It is also found that with regard to export freight, the Circular of the Board No. 197/7/2016-S.T dated 12/08/2016 amply clarifies this position. Extended period of limitation - HELD THAT:- The ingredients mentioned in terms of proviso to Section 73(1) has not been fulfilled by the Department and moreover in the present case, the appellant has a bona fide belief that they are not liable to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an agreement dated 01/04/2010 with M/s. BPL Limited for integrated logistics service which includes freight forwarding and clearing services and customs house agent services. Though the contract is a single contract for provision of both freight forwarding and CHA services, but the terms of contract clearly demarcate the activity of CHA and rest of the activities as separate and distinct. Appellants have also entered into an agreement with various Overseas Freight Forwarders or Foreign Console Agents for the purpose of shipment of merchandise from the place of foreign customer destination to port of Lading in foreign country and vice versa in case of import or export as the case may be. As per the arrangement, the appellant remits freight charges to the Overseas Freight Forwarders and usually marked as miniscule percentage as padding to cover appellant s office expenses, and quote the same to importer in the form of CAN invoice. Appellant were collecting service tax amount billed in the CAN invoice for the local charges barring the freight amount from its customers during the disputed period. After verification of the financial records and the ST-3 returns of the assessee, Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (h) of Section 65(105) as services provided or to be provided to any person, by a custom house agent in relation to the entry or departure of conveyances or the import or export of goods. He also referred to the definition of CHA under the Customs House Agents Licensing Regulations, 2004 and as per regulations 3 no person shall carry on business as a Customs House Agent relating to the entry or departure of conveyance or the import or export of goods at any Customs station unless such person holds a license granted under these regulations. He further submitted that from the scope of CHA Services as prescribed under the Customs Act as well as Customs House Agent Regulation Act, the Freight Forwarding is an activity outside the scope of a CHA s business which is undertaken to get the goods transported from/to international boundaries to/from various ports. He further submitted that the activity of Freight Forwarding is not in any form or manner related to CHA s business nor is it required to be executed in the course of CHA s business. Rather the activity of freight forwarding is in relation to international freight, which transpires either prior to or subsequent to the actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same amount cannot be subjected to service tax. In this regard, reliance is placed on Notification No. 9/2011 dated 01/03/2011 which provides exemption to value equal to air freight w.e.f. 01/04/2011. The appellant places reliance on the case of United Shippers Ltd. V. CCE, Thane-III, reported at 2015 (37) S.T.R. 1043 (Tri.-Mumbai) as affirmed by the Hon ble Supreme Court in Commissioner v. United Shippers Ltd. reported at 2015 (39) S.T.R. J369 (S.C) wherein it was held that amounts which form part of the transaction value for the levy of customs duty should not be subject to service tax. He further submitted that ocean freight was not liable to service tax and the same cannot be taxed under any other entry like CHA Services or Business Support Services. For this, he relied upon the following decisions: a) Gudwin Logistics V. CCE, Vadodara reported in 2010 (18) S.T.R. 348 (Tri.-Ahmd.) b) Agility Logistics Pvt. Ltd. V. CST, Chennai 2014 (35) S.T.R. 858 (Tri.-Chennai) c) APL Logistics (India) Pvt. Ltd. V. CCE, Chennai-III 2014 (36) S.T.R. 1310 (Tri.-Chennai) 3.5. The learned counsel further submitted that freight and freight forwarding of import/export c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and overseas freight forwarders which were verified by the audit. He further submitted that the appellant had a bona fide belief that they are not liable to pay service tax on differential freight amount collected. He further submitted that whole issue of leviability of service tax on freight forwarding activity is a skewed matter of interpretation of the provisions and it was only after the decision of Bax Global India Ltd. V. CST, Bangalore reported in 2008 (9) S.T.R. 412 (Tri.-Bang.), the activity of freight forwarding per se was held to be not includible in the CHA services. 4. On the other hand, the learned AR defended the impugned order and submitted that the amount charged in excess of actual freight incurred was liable to be included in the gross amount charged by the appellant. He further submitted that the sizeable portion amount of mark-up charges loaded in freight was to be treated as trading of freight which is considered as taxable service as trading in goods is only specified in Section 66D(e) of the Act for the period July 2012 to March 2013. 5. After considering the submissions of both the parties and perusal of the material on record and after perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said activity is not in any way related to CHA s business and CHA is not required to execute these services in the course of CHA s business. We also find that this aspect has been considered by the Tribunal in the case of Bax Global India Ltd. Vs. CST, Bangalore cited supra wherein it has been held that the scope of the activity of a Custom House Agent is limited to the entry or departure of conveyances or import or export of goods at any customs station and does not extend beyond the same. Similarly, in the case of Lee Muir Head Pvt. Ltd. V. CST, Bangalore reported in 2009 (14) S.T.R. 348 (Tri.-Bang.), it has been held that freight forwarding is not a part of a Custom House Agent s activity and therefore cannot be charged to service tax under CHA Service.Further, in the case of DHL Lemuir Logistics Pvt. Ltd. V. Commr. of Service Tax, Bangalore reported in 2010 (17) S.T.R. 266 (Tri.-Bang.), the Tribunal has categorically highlighted that freight forwarding is an activity undertaken prior or post the business of a CHA and therefore does not form part of the taxable service of CHA service. Further, we find that the finding of the learned Commissionerthat the activity of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , no service tax is payable because the said service is non-taxable service and is provided in a non-taxable territory. We also find that with regard to export freight, the Circular of the Board No. 197/7/2016-S.T dated 12/08/2016 amply clarifies this position. As far as extended period of limitation is concerned, we find that the ingredients mentioned in terms of proviso to Section 73(1) has not been fulfilled by the Department and moreover in the present case, the appellant has a bona fide belief that they are not liable to pay service tax on the differential freight amount collected. We also find that the whole issue of leviability of service tax on Freight Forwarding activity was not clear and it was only after the decision of Bax Global India Ltd. V. CST, Bangalore cited supra, the activity of Freight Forwarding per se was held to be not includible in CHA Services. Therefore, we are of the opinion that the issue involved relates to interpretation of provisions of a statute and in such a situation, extended period cannot be invoked. 6. In view of our discussion above, we are of the considered view that the impugned order is not sustainable in law and therefore, we set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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