TMI Blog2023 (9) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... y earn a margin of profit over the cost incurred by them on such bulk purchase. Since this transaction is entirely conducted on principal-to-principal basis and not on Principal - to - Agent basis, the income derived would not fall within the ambit of Business Support Service. As per the definition of Business Support Service, any activity which is rendered on behalf of another person ie, when the relationship is in the nature of principal-toagent, then only such activity is liable to service tax under the category of Business Support Service. In the instant case, the Appellant were buying the space for transportation of containerized goods outside the territorial water of the country and selling the same to their clients in their own capacity and is not obligated to work on principal-to-agent relationship. Accordingly, the income received by the Appellant is not liable to service tax under the category of 'Business Support Service' as confirmed in the impugned order - the demands confirmed in the impugned order on this count is not sustainable. Service tax on Commission/Brokerage income - HELD THAT:- The Appellant buy space for transportation of containerized goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is not sustainable. Time Limitation - Penalty - suppression of facts or not - HELD THAT:- In this case there was no evidence brought on record to establish suppression of facts with an intention to evade payment of tax. It is a settled principle that in order to invoke the extended period of limitation, it is necessary to establish that there has been intent to evade payment of the tax by means of fraud, collusion etc. These ingredients postulate a positive act of fraud or collusion or willful misstatement or suppression of facts, which are absent in this case. Accordingly, the demands confirmed in the impugned order are not sustainable on the ground of limitation also. For the same reason, the penalty imposed under Section 77 and 78 of the Finance Act, 1994, is also liable to be set aside. Impugned order set aside - appeal of Revenue dismissed. - HON BLE MR. ASHOK JINDAL , MEMBER ( JUDICIAL ) And HON BLE MR. K. ANPAZHAKAN MEMBER ( TECHNICAL ) Dr. S. Chakraborty , Sr. Advocate Ms. Bhavna Singh , Chartered Accountant for the Appellant Shri J. Chattopadhyay , Authorized Representative for the Respondent ORDER PER K. ANPAZHAKAN : Briefly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by them on such bulk purchase. Since this transaction is entirely conducted on principal-to-principal basis and not on Principal - to - Agent basis, the income derived would not fall within the ambit of Business Support Service, as confirmed in the impugned order. 4. In the impugned order, it has been held that the Appellant has realized income in the form of margin arising out of difference between the ocean freight income and ocean freight expenses as indicated in their trial balance sheet. It has been held that the excess realization effected during the course of providing or arranging freight facility to the customers would fall within the purview of Business Support Service in terms with Section 65 (105) (zzzq) of the Act, which are applicable when goods, materials or papers are sent through ships or trucks or courier service. Therefore, it has been held that the activity of procuring of space from the shipping lines and subsequent provision of the said service for the purpose of export/import of their cargo is a service provided under the category of Business Support Service . 5. In this regard, the Appellant submits that the principal to principal transactions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts in their own capacity. Hence, the relationship with the Shipping Lines as well as the customers is on principal-to-principal relationship. The Appellant obtained discounts from the Shipping Lines on account of bulk purchase of space in the ships. Such discount provided on account of purchase is outside the ambit of service tax. 8. The Appellant stated that this incentive was paid as they were instrumental in providing business in bulk quantities to the shipping lines. This discount amount is thus, connected with the act of bulk purchase of space in the ships and is received for selling of space outside the country in the course of shipment of cargo. It is an undisputed fact that the discount was billed as well as received in foreign currency. Therefore, it satisfies the main part of Rule 10 of the POP Rules which provides that the place of provision of services shall be the place of destination of the goods, which is outside India. 9. Further, in the instant case the requirement of the Export of Services Rules , contained in Rule 6A of the Service Tax Rules, 1994 also stands duly satisfied. Since export of services is outside the purview of service tax under the Act, dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation of the department is not enough to invoke the extended period of limitation. The entire facts and figure relevant to the instant case were duly disclosed in the Annual Accounts of the Company as well as the Service Tax Returns and the Appellant, as a bona-fide and law abiding assessee, has duly co-operated with the Service Tax Audit team. Hence the show cause notice and the impugned order are barred by limitation. Accordingly, the demands confirmed in the impugned order are not sustainable on the ground of limitation also. For the same reason penalty imposed under Section 77 and 78 of the Finance Act, 1994, is also liable to be set aside. 13. The Ld. A.R. reiterated the findings in the impugned order. 14. Heard both sides and perused the appeal records. 15. We observe that in the impugned order, the demand of service tax of Rs.10,56,05,986/- has been confirmed along with equal amount of tax as penalty under Section 78 of the Finance Act, 1994. The demand confirmed has been broadly categorized into the following three categories. (i) Service Tax on income arising from providing service of information and tracking of delivery schedule - Rs.10,21,87,062/- (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rritorial water of the country and selling the same to their clients in their own capacity and is not obligated to work on principal-to-agent relationship. Accordingly, we hold that the income received by the Appellant is not liable to service tax under the category of 'Business Support Service' as confirmed in the impugned order. 18. We observe that the issue stands settled by several decisions of this Tribunals cited by the Appellant. In the case of Direct Logistics India Pvt. Ltd. Vs. Commissioner of S.T. 2021(55)GSTL 344(T) this Tribunal observed has held as under : .......................................................................................... .......... 14. It is undisputed that the appellant is registered with service tax department for Clearing and Forwarding Agent Service and has been paying service tax on the service charges. What is exigible to service tax under Section 65(105)(j) is any service provided or to be provided to a client by a Clearing and Forwarding Agent in relation to clearing and forwarding operations in any manner. Transport of goods is distinct from clearing and forwarding operations. In this case, the appellant is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fereed above, we hold that the demands confirmed in the impugned order on this count is not sustainable and accordingly, we set aside the same. Service tax on Commission/Brokerage income - Rs.17.54,528/- 20. The Appellant stated that this income pertains to the discount received from the Shipping Lines on bulk purchase of space and it does not pertain to any services rendered to such Shipping Lines in the capacity of agent. We observe that the Appellant buy space for transportation of containerized goods outside the territorial waters of the country from Shipping Lines and selling the same to their clients in their own capacity. Hence, the relationship with the Shipping Lines as well as the customers is on principal-to-principal relationship. They obtained discounts from the Shipping Lines on account of bulk purchase of space in the ships. Such discount provided on account of purchase is outside the ambit of service tax. We observe that the Appellant was instrumental in providing business in bulk quantities to the shipping lines. This discount amount is, thus, connected with the act of bulk purchase of space in the ships and is received for selling of space outside the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nward movement of goods from India to foreign destination. As per Rule 10 of the Place of Provision of Services Rules 2012, the place of provision of the service of transportation of goods by air/sea, other than by mail or courier, is the destination of the goods. It follows that the place of provision of the service of transportation of goods by air/sea from a place in India to a place outside India, will be a place outside the taxable territory. In this case also, the requirement of Rule 6A of the Service Tax, 1994, as amended, stands duly satisfied. Accordingly, we hold that these charges are within the purview of the Export of Service Rules and hence outside the service tax net. Further, we observe that the Appellant have been paying service tax for the considerations received as Amendment Charges, Container Detention Charges, Customer Administrative Charges, DTHC Charges, Handling Fees, Seal Charges and other charges when charged on Indian customers in Indian Currency. In view of the above findings, we hold that the demand confirmed in the impugned order on this count is not sustainable and accordingly, we set aside the same. 23. Regarding the department s appeal, we find t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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