TMI Blog2024 (2) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... ract is with the shipping line/airline and OLSPs. The shipping line/airline issues invoice in the name of the OLSPs. In case of defect, the shipping line/airline can sue only OLSPs. OLSPs in turn enter into contract with Appellant. OLSPs charge agreed fixed charges from Appellant. There is no contract between OLSPs and the customers of the Appellant. Accordingly, the OLSPs cannot be taxed under clause (vi) of the business of auxiliary service as there is no contract between the OLSPs and customers of the Appellant. The expression on behalf of the client 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). In the case of SAI COMPUTER CONSULTANCY VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [ 2011 (8) TMI 788 - CESTAT, NEW DELHI ] it has been held that When the client of the appellant was UP Power Corporation Ltd., it cannot be held that the appellant served clients of that Corporation on its behalf. Therefore, the appellant goes out of the ambit of sub-clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services in relation to import of goods from abroad. The scope of such services inter alia covers the following activities: 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court in Coal Handlers Pvt Ltd vs. Commissioner of C.Ex., Range, Kolkata-I, 2015 (38) STR 897 (SC ). (iii) The Ld. Commissioner, in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and related MIS, relevant formats and information. For carrying this order, the assessee developed and designed software, fed data into computer and processed such 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 Mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of duty, interest and penalties confirmed in the impugned order and allow their appeal. 5. The Ld. Departmental Representative submits that the activities undertaken by the appellant are covered within the ambit of Clause (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s enough to examine whether the above said services rendered by the OLSPs to the Appellant would fall under any of the sub clauses of Section 65(19) of the Finance Act or not. 7.4 For the sake of ready reference the provisions of the Section 65(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no contract between OLSPs and the customers of the Appellant. Accordingly, we find that the OLSPs cannot be taxed under clause (vi) of the business of auxiliary service as there is no contract between the OLSPs and customers of the Appellant. 7.6. We observe that the expression on behalf of the client 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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