Custom, Excise & Service Tax Tribunal
M/S Robinson Air Services vs Cce, Delhi Ii on 16 September, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 16/09/2016. DATE OF DECISION : 16/09/2016. Service Tax Appeal No. 1561 of 2010 (SM) [Arising out of the Order-in-Appeal No. 344/S.Tax/APPL/D-II/ 2010 dated 26/07/2010 passed by The Commissioner of Central Excise (Appeals), New Delhi.] For Approval and signature : Honble Shri V. Padmanabhan, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair :Seen copy of the order? 4. Whether order is to be circulated to the :Yes Department Authorities? M/s Robinson Air Services Appellant Versus CCE, Delhi II Respondent
Appearance Shri Rupesh Sharma, Advocate for the appellant.
Shri H.C. Saini, Authorized Representative (DR) for the Respondent.
CORAM: Honble Shri V. Padmanabhan, Member (Technical) Final Order No. 53632/2016 Dated : 16/09/2016 Per. V. Padmanabhan :-
The present appeal is directed against the order dated 26/7/10 passed by the Commissioner (Appeals), New Delhi. The appellant is holding service tax registration for providing various services such as CHA, Clearing & Forwarding, Cargo Handling etc. The present controversy arose during the course of the audit of the assessee carried out in November 2007. The appellant has undertaken booking of cargo space in various airlines as well as shipping lines. These were for export of goods. For this activity, they receive commission and incentive from airlines. Revenue took the view that such commission received will be liable to service tax under the category of Business Auxiliary Services which is covered under Section 65 (19) of the Finance Act, 1994. The dispute covers the period 2002 2007. A demand for service tax to the tune of Rs. 9,46,435/- was raised by Revenue and confirmed vide the order-in-original dated 28/4/2009. On appeal before Commissioner (Appeals), the demand was upheld, however, the penalty amount was reduced. The impugned order is challenged before the Tribunal mainly on the ground that no service tax will be liable on the brokerage/commission received by them in the light of the CBEC Circular No. 56/5/2003-ST dated 25th April, 2003. The appellant also cited the following decisions which are in their favour and on identical set of facts :-
(i) Ruth Shipping Agencies Pvt. Ltd. vs. CCE, Thirunelveli reported in 2010 (19) S.T.R. 39 (Tri. Chennai) ;
(ii) Lee & Muir Head Pvt. Ltd. vs. CST, Bangalore reported in 2009 (14) S.T.R. 348 (Tri. Bang.).
2. I have heard Shri Rupesh Sharma, learned Advocate for the appellant as well as Shri H.C. Saini, learned DR.
3. The activity undertaken by the appellant is selling of space for booking export cargo with various airlines and have received commission/brokerage for this activity. The CBEC Circular cited above has clarified as follows :-
4. Another question raised is about the taxability of secondary services which are used by the primary service provider for the export of services, Since the secondary services ultimately gets consumed/merged with the services that are being exported no service tax would be leviable on such secondary services. However in case where the secondary service gets consumed in part or toto for providing service in India, the service tax would be leviable on the secondary service provider. For this purpose both primary and secondary service providers would maintain the records deemed fit by them to identify the secondary services with services that are being exported.
4. It may be seen from the above that if the secondary services gets consumed with the services that are being exported, no service tax will be liable on such secondary services. It is not being disputed that the activity undertaken by the appellant is a secondary service rendered to the primary service provider namely the airlines towards export of cargo services. To this extent, I agree with the CBEC Circular cited above covered the issue in favour of the appellant.
5. I find that identical issue has come up before the Tribunal in both the decisions cited by the appellant. In the case of Lee & Muir Head Pvt. Ltd. vs. CST, Bangalore (supra), the Tribunal Division Bench held as follows :-
8.4?As regards brokerage commission of 2% paid for booking of the export cargo, it is seen that the agents of shipping lines normally book the export cargo. The appellants actually get brokerage or commission for getting orders for the export of cargo. For this, they are getting commission of 1.75% to 2%. Even if this activity is considered as Business Auxiliary Services as they promote the taxable services of other person, it is seen that there is a Notification No. 13/2003 dated 20-6-2003 which gives exemption under Business Auxiliary Services for services rendered as commission agent. Moreover, Boards Circular dated 25-4-2003 clarifies that the secondary service providers are not taxable. In fact the appellants are secondary service providers for the shipping lines, so they would not be covered in view of the Boards circular. Therefore, we are of the view that the brokerage commission of 2% paid for booking of export cargo cannot be taxed under the category of Business Auxiliary Services.
8.5?In view of the above, it is seen that the demand confirmed by the learned Commissioner is not at all sustainable. As the demand is not sustainable, the penalties cannot be levied and interest also cannot be demanded. Hence, we allow the appeal with consequential relief.
6. Since, the above decisions squarely cover the issue, in question, I find that the issue is no longer res-integra. Consequently appeal is allowed and the impugned order is set aside.
(Dictated and pronounced in open court.) (V. Padmanabhan) Member (Technical) PK ??
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