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TMI Blog2024 (2) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... s: i. Obtaining the goods from the foreign suppliers, ii. Handling of imported cargo, iii. Negotiating and finalizing the freight with the air/sea transporter, iv. Carrying it to the load port from the place of the foreign supplier, v. Storing it in a safe place abroad before the goods are loaded on the airline/ship, vi. undertaking the customs clearance at the exporting country, vii. clearance of the goods in India, viii. Transportation of goods from port/airport to the factory of the customer in India. 2.1 Since the Appellant has no physical presence abroad, for the performance of the overseas part of the above-mentioned services, it has entered into contracts with various Overseas Logistics Service Providers (OLSPs). In terms of the said agreement, the OLSPs raise invoices on Appellants for handling the overseas part of the operations. The invoice raised by the Appellant to its clients comprises of 2 components: a. Taxable component, and b. Non-taxable component. The Appellant claimed that they have duly discharged service tax on the amount shown as taxable component in the invoice raised on customers and not paid service tax on the component shown as non-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paragraph 5.1.2 of the impugned order has held that since there is no principal to agent relationship between the OLSPs and the Appellant and no commissions is paid to the OLSPs, the services received by the Appellant cannot be classified as clearing and forwarding services. In this regard, the Appellant submits that Section 65(25) does not require principal and agent relationship between the parties since it uses the phrase "any person" who is engaged in providing any service connected with the clearing and forwarding operations and not "any agent". Accordingly, they contended that the services received by the Appellant from the OLSPs are in the nature of clearing and forwarding agent service. They further submitted that since the services provided by the Appellant to its customers are in the nature of clearing and forwarding services, services provided by the OLSPs to the appellant are also classifiable as C&F services. Accordingly, they contended that the services provided by the OLSPs to the Appellant cannot be classified as 'Business Auxiliary Services'. (iv) As per Rule 3(ii) of the Taxation of Services (Provided from outside India and received in India) Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input data with help of own developed software and generated reports including energy bills and other ad hoc reports as required by RSEB. In such context the Hon'ble CESTAT held that the assessee has not undertaken any service on behalf of client as they do not have any contact with the customers of their client and are not issuing the bills directly to the customers of their client. * Gandhi & Gandhi Chartered Accountant vs. CCE, Hyderabad, 2010 (17) STR 25 (Tri-Bang) affirmed by the Hon'ble Supreme Court; reported in 2011 (23)STR J94 (SC)-assessee was rendering spot billing and data processing services to the Andhra Pradesh Central Power Distribution Company. While setting aside the demand under the category of "Business Auxiliary Service" the CESTAT held that Appellant here are directly rendering service to APCPDCL. They are not the agents of APCPDCL and doing any service on behalf of APCPDCL. * Sai Computer Consultancy vs. Commissioner of C. Ex., Meerut-I, 2011 (24) STR 624 (Tri-Del) * M/S. Rohan Motors Limited Versus Commissioner Of Central Excise, Dehradun, 2021 (45) GSTL315 (Tri-Del) * Hindustan Petroleum Corporation Ltd vs. Commr. of C. Ex., Delhi-II, 2019 (24) GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi) of Section 65(19) of the Finance Act, 1994. Accordingly, he supported the demands confirmed in the impugned order under the category of 'Business Auxiliary Service'. 6. Heard both sides and perused the appeal documents. 7. We observe that the Appellant enters into contract with its clients to render services in relation to import of goods from abroad. Since the Appellant has no physical presence abroad, they have entered into contracts with various OLSPs for performance of the activities abroad. The Appellant has not paid service tax on the part of the services rendered abroad by the OLSPs. The Department demanded service tax on these activities under the category of 'Business Auxiliary Services' and confirmed the demand of service tax of Rs. 22,25,87,789/- along with interest and penalty. 7.1 Regarding the demand of service tax amounting to Rs. 2,11,90,438/- for the period April 2005 to 18.04.2006, we observe that this demand pertains to the period prior to insertion of Section 66A of the Finance Act, 1994. The Hon'ble Bombay High Court in Indian National Ship Owners Assn. vs. Union of India, 2009 (13) STR 235 (Bom) has held that the recipient in India is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19) which defines "business auxiliary service" are reproduced below:- Before 1-5-2006: "Business Auxiliary Service" means any service in relation to,- (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation services. and include any information technology service. Explanation - For the removal of doubts, it is hereby declared that for the purposes of this clause, "information technology service" means any service in relation to designing, developing or maintaining of computer software, or computerized data processing or system networking, or any other service primarily in relation to operation of computer system. * w.e.f. 1-5-2006: "Business Auxiliary Service" means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in clause (vi) presupposes existence of three parties. The services should be provided as an agent of the principal to the customers of the principal. If the services are provided by the agent to the principal, that will be not covered in the scope of clause (vi). 7.7. In the case of Sai Computer Consultancy vs. Commissioner of C. Ex., Meerut-I [2011 (24) STR 624 (Tri-Del)] it has been held as under: - "5.5 Once the appellant is a different entity for the purpose of imposition of service tax as found above, its obligation under the law calls for examination. The agreement between the appellant and UP Power Corporation Ltd. throws light on the scope of work executed by the appellant. This clearly indicates the nature of activity carried out by the appellant (appearing at page 27 of the appeal folder vide clause-1). Reading of scope of work throws light that the appellant's obligation was to be discharged to UP Power Corporation Ltd. only. There is no evidence on record to suggest that all these services were provided to the clients of UP Power Corporation Ltd. on its behalf. In absence of any contrary evidence, obligation of the appellant under contract can be held to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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