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TMI Blog2023 (7) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in providing business auxiliary services [BAS], clearing and forwarding agent services, storage and warehousing services and transportation of goods by road, rail and sea. 3. A show cause notice dated 17.10.2017 was issued to the appellant with the following allegations: "6. Whereas, on further examination of audited financial statements submitted by the assessee for the period from 2012-13 to 2015-16, it was observed that the assessee has collected an amount of Ocean Freight of Rs. 93,25,65,634/- from exporters and paid an amount of Ocean Freight of Rs. 66,35,77,298/- to the Shipping Lines (Annexure-A) as shown in their Profit & Loss account (RUD-8) and Balance Sheets submitted for the year 2012-13 to 2015-16 (RUD-9). Thus, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was being collected in excess of Ocean freight and retained by the assessee and not paid to the Shipping Lines is not the part of ocean freight. As such the same is not covered under non-taxable amount/category. Therefore, the difference of amount of ocean freight collected by the assessee from the exporter/service recipient and ocean freight paid to the Shipping Lines is the amount of margin and the same is taxable under 'Business Auxiliary Services' under Section 65(19)(iv) read with Section 65(105)(zzb) of the Finance Act, 1994. I am therefore of the view that the amount recovered over & above to the ocean freight would form part of the gross amount charged and is liable to service tax." 6. Learned chartered accountant appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment was also of the view that after July, 2012, the service was not covered by any service notified in the negative list and, therefore, continues to be taxable. 11. The issue involved has been decided by various Division Benches of the Tribunal. 12. In Marinetrans India, the Division Bench held after considering the Circular dated 12.08.2016 issued by the Central Board of Excise and Customs that buying and selling space on ships does not amount to rendering a service and any profit or income earned through such transactions would not be leviable to service tax. The relevant portions of the order passed by the Tribunal is reproduced below: "6. We have considered the arguments on both sides and perused the records. It is not in disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed by the airline/carrier/ocean liner and cannot vary it unless authorized by them. In such cases the freight forwarder may be considered to be an intermediary under rule 2(f) read with rule 9 of POPS, since he is merely facilitating the provision of the service of transportation but not providing it on his own account. When the freight forwarder acts as an agent of an airline/carrier/ocean liner, the service of transportation is provided by the airline/carrier/ ocean-liner and the freight forwarder is merely an agent and the service of actual transportation will not be liable for service tax under Rule 10 of POPS. 2.2 The freight forwarders may also act as a principal who is providing the service of transportation of goods, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax. We find no reason to deviate from this view taken by the Tribunal which view is also supported by the C.B.E. & C. circular cited above. In conclusion, the demand of service tax, interest and penalties are liable to be set aside and we do so." (emphasis supplied) 13. In Bhatia Shipping (P) Limited, the Division Bench followed the earlier Division Benches and observed as follows: "5. The appellant is primarily engaged in the business of freight forwarding, clearing and forwarding and other allied activities that involve booking of Containers/Air Cargo with various Shipping Lines/Airlines for their customers and recovering other miscellaneous charges from their customers (mainly importers and exporters). The appellant provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axmann.com 363 (New Delhi- CESTAT)].
11. Subsequently, the decision earlier rendered in Satkar Logistics on 21.08.2018 was followed by the Division Bench of this Tribunal in Satkar Logistics.
(emphasis supplied)
14. It follows from the aforesaid decisions of the Tribunal that when the appellant merely trades in space on ships, it would not be providing any service and so no service tax can levied upon the appellant. It has, therefore, to be held that the Commissioner was not justified in confirming the demand.
15. The impugned order dated 28.02.2018 passed by the Commissioner, therefore, cannot be sustained and is set aside. The appeal is, accordingly, allowed.
(Order pronounced in open court) X X X X Extracts X X X X X X X X Extracts X X X X
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