Custom, Excise & Service Tax Tribunal
Gac Shipping India Pvt Ltd vs Commissioner Of Central Tax & Central ... on 3 March, 2026
Service Tax Appeal Nos. ST/21763, 21764/2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 2
Service Tax Appeal No. 21763 of 2017
(Arising out of Order-in-Appeal No. COC-EXCUS-000-APP-201 & 202-2017 dated
14.09.2017 passed by the Commissioner of Central Taxes & Central Excise
(Appeals), Cochin.)
M/s. GAC Shipping (India) Pvt. Ltd.
GAC House, Subramanian Road,
Willingdon Island,
Kochi - 628 003,
Kerala. ...........Appellant(s)
VERSUS
The Commissioner of Central Tax and Central Excise,
Kochi Commissionerate,
Central Revenue Building, I.S. Press Road,
Kochi - 682 018,
Kerala. .......Respondent(s)
WITH Service Tax Appeal No. 21764 of 2017 (Arising out of Order-in-Appeal No. COC-EXCUS-000-APP-201 & 202-2017 dated 14.09.2017 passed by the Commissioner of Central Taxes & Central Excise (Appeals), Cochin.) M/s. GAC Shipping (India) Pvt. Ltd.
GAC House, Subramanian Road,
Willingdon Island,
Kochi - 628 003,
Kerala. .........Appellant(s)
VERSUS
The Commissioner of Central Tax and Central Excise, Kochi Commissionerate, Central Revenue Building, I.S. Press Road, Kochi - 682 018, Kerala. ......Respondent(s) APPEARANCE:
Mr. Joseph Kodianthara, Sr. Advocate for the Appellant Mr. Rajashekar B.N.N., Superintendent (AR) for the Respondent CORAM:
Hon'ble Mr. P. A. Augustian, Member (Judicial) Hon'ble Mr. Pullela Nageswara Rao, Member (Technical) Page 1 of 4 Service Tax Appeal Nos. ST/21763, 21764/2017 Final Order Nos. 20314-20315 /2026 Date of Hearing: 03.03.2026 Date of Decision: 03.03.2026 Per: Pullela Nageswara Rao These 2(two) appeals are filed against Order-in-Appeal No. COC- EXCUS-000-APP-201 & 202-2017 dated 14.09.2017 passed by the Commissioner of Central Taxes & Central Excise (Appeals), Cochin. The disputed periods are from October 2010 to September 2011, and October 2011 to September 2012, and the service tax demand is Rs.28,80,668/- and Rs.43,34,583/-, respectively.
2. The issues involved in the present Appeals are regarding service tax liability on;
(i) excess ocean freight (mark-up of ocean freight being the difference of actual ocean freight charges paid to the shipping line and the freight charges collected from the customers of the Appellant;
(ii) amounts collected by the Appellant for boat hire, launch hire, barge expenses and watchman charges in its capacity as pure agents; and
(iii) income earned on account of exchange rate fluctuation.
3. The brief facts are alleging that service tax is payable on the above amounts at para 2 above, department has issued show cause notices dated 23.04.2012 and 17.10.2013 for demand of service tax along with the interest and proposal for imposition of penalty for the period October 2010 to September 2011, and October 2011 to September 2012, respectively. On adjudication the adjudicating authority confirmed the demand along with the interest and also imposed penalty. Aggrieved by the order, appellant filed an appeal before Commissioner (Appeals), who has upheld the order of the adjudication authority and disallowed the appeal of the appellant.
Page 2 of 4Service Tax Appeal Nos. ST/21763, 21764/2017 Aggrieved by the impugned order the appellant filed this appeal before the Tribunal.
4. The Learned Sr. Counsel for the Appellant during the hearing submits that; at the outset in the Appellant's own case before the Hon'ble CESTAT, Chennai on the issue of excess ocean freight, the Tribunal had vide Final Order No.40854/2024 dated 12.07.2024 set aside the Order demanding service tax and allowed the Appeal following the decision of the Honourable Supreme Court in the case of Baroda Electric Meters Ltd. [1997 (94) ELT 13 (SC)]; the issue of ocean freight and the margin mark- up of ocean freight, this Honourable Tribunal in a recent decision in the case of Freight links International (India) Private Limited had vide Final Order No.21582- 21586/2024 dated 29.10.2024, following the decision of the Hon'ble CESTAT. Delhi in the case of Tiger Logistics (India) Limited - [2022 (63) G.S.T.L. 337 (Tri-Del)] held that the ocean freight or the mark- up on the same cannot be subject to levy of service tax and set aside the impugned Orders; Hon'ble CESTAT, Ahmedabad in the case of Gudwin Logistics, [2010) 18 STR 348 (Tri.-Ahmd)] had held that Ocean Freight is not liable to service tax; Hon'ble Supreme Court in the case of Baroda Electric Meters, [1997 (94) ELT 13 (SC)] had also held that when ocean freight actually paid is less than the amount collected, the differential amount cannot be included in the assessable value as the same is profit.
5. The Learned Sr. Counsel as regards the issue of service tax on ocean freight as well as on the exchange gain from foreign currency submits that; in the Appellant's own case for the subsequent period of October 2012 to March 2014, the Commissioner (Appeals), Cochin vide Order dated 18.06.2019 had set aside the Order of the adjudicating authority, finding that no service tax can be levied on ocean freight and further that any extra amounts earned due to fluctuation in the rate of exchange is also not taxable. This Order has not been challenged and has therefore attained finality.
6. The Learned Sr. Counsel as regards the demand of service tax on boat hire, launch hire, barge expenses and watchman charges submits Page 3 of 4 Service Tax Appeal Nos. ST/21763, 21764/2017 that the same were only reimbursement of actual expenses incurred by the Appellant as an agent clearly satisfying Rule 5 of the Service Tax (Determination of Value) Rules 2006 and all the invoices and Chartered Accountant's Certificates were produced before the adjudicating authority and the Appellate Authority; Copies of the invoices were also submitted in the paper books of the present Appeals; the issue stands covered by the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Intercontinental Consultants and Technocrats Private Limited reported in-][2018 (10) G.S.T.L. 401(SC) which held that reimbursable expenses have become taxable only on and from 14.05.2015.
7. The learned Authorized Representative (AR) for the Revenue reiterated the findings of the Commissioner (Appeals).
8. Heard both sides and perused the records.
9. The issues involved in this case are as enumerated in Para 2, supra. We find that the issues are squarely covered by the decisions cited against the respective issues which were discussed in Paras 4 to 7, supra. Following the decisions of the Hon'ble Apex Court and the Tribunal, the impugned orders are not sustainable and are liable to be set aside.
10. Accordingly, the impugned orders are set aside, and the appeals are allowed with consequential relief, if any, as per law.
(Operative portion of the order was pronounced in Open Court on conclusion of hearing.) (P.A. AUGUSTIAN) MEMBER (JUDICIAL) (PULLELA NAGESWARA RAO) MEMBER (TECHNICAL) sasi Page 4 of 4