Custom, Excise & Service Tax Tribunal
Kolkata South vs Sdv International Logistics Ltd on 19 February, 2026
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 75990 of 2017
(Arising out of Order-in-Original No. 134-135/COMMR/ST-II/KOL/2016-17 dated
28.02.2017 passed by the Commissioner of Service Tax-II, Kendriya Utpad Shulk
Bhawan, 180, Shantipally, Rajdanga Main Road, Kolkata - 700 107)
M/s. Ceva Freight India Private Limited : Appellant
[earlier known as 'M/s. SDV International Logistics Ltd.']
5th Floor, Kankaria Court, 7, Kyd Street,
Kolkata - 700 016
VERSUS
Commissioner of Service Tax-II : Respondent
Kendriya Utpad Shulk Bhawan,
180, Shantipally, Rajdanga Main Road,
Kolkata - 700 107
AND
Service Tax Appeal No. 76892 of 2017
Service Tax Cross Objection No. 75070 of 2018
(Arising out of Order-in-Original No. 134-135/COMMR/ST-II/KOL/2016-17 dated
28.02.2017 passed by the Commissioner of Service Tax-II, Kendriya Utpad Shulk
Bhawan, 180, Shantipally, Rajdanga Main Road, Kolkata - 700 107)
Commissioner of C.G.S.T. and Central Excise : Appellant
Kolkata South Commissionerate,
G.S.T. Bhawan, 180, Shantipally, Rajdanga Main Road,
Kolkata - 700 107
VERSUS
M/s. Ceva Freight India Private Limited : Respondent
[earlier known as 'M/s. SDV International Logistics Ltd.']
5th Floor, Kankaria Court, 7, Kyd Street,
Kolkata - 700 016
APPEARANCE:
Shri Anup Sinha, Chartered Accountant, for the Assessee / Company
Shri S. Dutta, Authorized Representative, for the Revenue
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NOs. 75273-75274 / 2026
DATE OF HEARING / DECISION: 19.02.2026
Page 2 of 16
Appeal No(s).: ST/75990 & 76892/2017-DB
& Cross Obj. No.: ST/CO/75070/2018
ORDER:[PER SHRI ASHOK JINDAL] The assessee is in appeal against the impugned order. The Revenue has also challenged the impugned order.
2. The facts of the case are as under: -
(i) The assessee/company is an international freight forwarder engaged in transportation of cargo as per the direction of its customer (consignor/consignee) from the place of origin in one country to the place of destination in another country and assumes the attendant risks. The assessee renders freight forwarding service both for outbound cargo and inbound cargo. The assessee books cargo space on its own account with airline company/shipping line company for transportation of cargo from the port of loading in one country to the port of release in another country. It sells cargo space, already booked with airline company / shipping line company, on its own account to the customer (consignor/consignee) at a profit.
Where the freight rate payable by the assessee- company to shipping line company/ airline company, termed as 'buy rate', is lower than the freight rate payable by customer to the assessee, termed as 'sell rate', the difference between 'sell rate' and 'buy rate' gives rise to business profit of the appellant.
(ii) Upon receipt of cargo, the airline company issues contract of carriage (airway bill) directly to the appellant. Upon receipt of cargo, the assessee issues contract of carriage (house airway bill) to the customer. The airline Page 3 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 company issues invoice directly to the assessee- company and the assessee issues invoice to the customer. Upon receipt of cargo, the shipping line company issues contract of carriage (bill of lading) directly to the assessee. Upon receipt thereof, the appellant issues contract of carriage (house bill of lading) to the customer. The shipping line company issues invoice directly to the assessee and the assessee issues invoice to the customer.
(iii) Apart from rendering freight forwarding service to customers as principal, being the primary business function of the assessee), the assessee, as and when directed by the customers (consignor/consignee), renders Custom House Agent (hereinafter referred to as 'CHA') service at the customs stations in Indian ports. As a CHA, the assessee gets export consignments/import consignments cleared from the Customs Authority of India at the customs stations (any place designated as customs office at the port of entry or exit of goods). In the present case, the CHA service is supplementary to the main service rendered by the assessee, that is, provision of freight forwarding service as a principal.
(iv) The assessee-company received assignments of transportation of cargo from India to foreign country from overseas customers through foreign affiliates/overseas group companies. They did not charge/pay service tax inter alia on freight and freight related charges and CHA charges on invoices raised by it on foreign affiliates considering the same as 'export of Page 4 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 services'. In respect of freight forwarding service and CHA service rendered to domestic customers, the assessee claimed exemption for freight and freight related charges as a freight forwarder acting as principal but it duly paid Service Tax on additional amounts such as terminal handling charge, bill of lading fee, pick- up charge, palletisation charge, advance manifest system charge, handling fee, documentation fee, profit share, CHA charge etc.
3. During the course of verification and reconciliation of the records of the assessee during the material period, it was inferred that the assessee had not discharged the Service Tax payable by them on certain amounts by claiming them to be either income from exports or income from exempted services.
3.1. Accordingly, two Show Cause Notices, dated 20.10.2012 and 15.05.2014, were issued to the appellant-company proposing to demand Service Tax amounting to Rs.97,18,844/- and Rs.44,88,429/- respectively, covering the period from 2007-08 to 2011-12, along with interest and penalties, on the allegation that they did not discharged the Service Tax liability on the gross taxable value of "Customs House Agent" services provided by them during the impugned period, by suppression as well as mis- statement of the fact of receiving additional amounts in respect of such taxable services.
Page 5 of 16Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 3.2. The matter was adjudicated by way of the impugned order wherein the demand of Service Tax amounting to Rs.1,04,63,975/- (inclusive of cesses) has been confirmed against the assessee/company, along with interest and penalties. The ld. adjudicating authority, however, dropped the rest of the demand of Rs.9,83,81,654/- as proposed in the impugned Show Cause Notices.
3.3. Aggrieved by the confirmation of the above demand of Service Tax vide the impugned order, the assessee/company has filed appeal. The Revenue has also filed appeal against the dropping of the demand of Service Tax in the impugned order.
4. The submissions made by the Ld. Counsel appearing on behalf of the appellant-company, inter alia, are as under: -
(i) Provision of CHA service falls under clause (h) of sub-section (105) of section 65 of the Finance Act, 1994 (hereinafter referred to as the 'Act').
The aforesaid taxable service falls under Rule 3(1)(ii) of the Export of Services Rules, 2005 (hereinafter referred to as the 'Rules'), provided that the service is performed outside India / partly performed outside India. Therefore, only when the service is performed outside India or partly outside India, then only the CHA service would fall under Rule 3(1)(ii) of the Rules. In the instant case, the appellant performs CHA service within the territory of India and hence, does not fall under Rule 3(1) (ii) of the Rules as it does not satisfy the performance test specified in the aforesaid rule.
Page 6 of 16Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018
(ii) Attention is invited to the Rule 3(1)(iii) of the Rules which inter alia states that all services specified in clause (105) of section 65 of the Act but excluding -Clause (c): those specified in clause (ii) of this rule, when provided in relation to business or commerce, be provision of such services to a recipient located outside India and when provided otherwise, be provision of such services to a recipient located outside India at the time of provision of such services.
(iii) Therefore, Rule 3(1)(iii) states that all services which are not falling under Rule 3(1)(ii) of the Rules (i.e. performance based services) and fulfilling the following conditions would be treated as export (recipient based services): (i) if they are provided in relation to business or commerce to a recipient located outside India and (ii) if they are provided in relation to activities other than business or commerce to a recipient located outside India at the time when such services are provided.
(iv) In the instant case, the order for provision of freight forwarding service together with CHA service for a foreign customer comes from any of the overseas group companies of the assessee which is incorporated outside India and carrying on the business of freight forwarding services outside India. Therefore, the provision of CHA service is to be treated as export of taxable service falling. under rule 3(1)(iii) of the Rules. As CHA service is provided by the appellant from India and used outside India (benefit accruing to customer located outside India) and the payment is received by Page 7 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 the appellant-company in convertible foreign exchange, the conditions laid down in rule 3(2) of the Rules are satisfied and therefore, the said service is to be treated as export of service which is exempt from service tax under rule 4 of the Rules. Therefore, the provision of CHA service by the appellant/company to foreign customer is required to be construed as export of service which is exempt from Service Tax.
(v) Without prejudice to the above, we have furnished below the concept of 'composite service' applicable to the instant case. Attention is invited to clause (b) of sub-section (2) of section 65A of the Act, which provides that when for any reason, a taxable service is prima facie classifiable under two or more sub-clauses of clause (105) of section 65 of the Act, the classification shall be effected as composite services consisting of a combination of different services which shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable.
(vi) The main service of the appellant/company to a foreign customer is international freight forwarding service that involves overseas transportation of goods primarily by booking cargo space with airline company / shipping line company. A foreign customer located outside India places order for overseas transportation of goods through an overseas group company of the assessee. The ld. adjudicating authority, in the Order-in-Original, has also noted that the main activities of the appellant are related to Page 8 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 freight forwarding. A substantial portion of their income included receipts under sea freight and air freight charges and other freight related charges.
(vii) For the overseas transportation of goods, it is essential to get clearance from Customs Officer posted at customs station in India airport / seaport. Therefore, while providing freight forwarding service to foreign customer, the assessee-appellant provides CHA service also in relation to the goods being transported overseas. Once the goods being transported reach the destination abroad, the assessee raises invoice in convertible foreign exchange on the overseas group company through which the appellant receives order from foreign customer. The invoice discloses air freight and related charges, sea freight and related charges, CHA service charge, goods transportation agency service charge, profit share, revenue from other transportation related services, tax and duties. It may kindly be noted that the provision of CHA service solely does not entitle the assessee to receive any payment from foreign customer.
(viii) In view of the above, it is evident that the assessee/company provides composite services to foreign customer under clause (b) of sub- section (2) of section 65A of the Act. As air freight / sea freight and related charges constitute substantial part of the revenue from export of services to a foreign customer, freight forwarding service gives the essential character of the services rendered by the appellant to Page 9 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 foreign customer. As freight forwarding service falls under clause (zzb) of sub-section 105 of section 65 of the Act ('Business Auxiliary Service'), all the services rendered by the assessee/company to foreign customer (including inter alia CHA service) would be classified together as if they consist of a single service which gives them their essential character, that is, freight forwarding service as aforesaid.
(ix) The composite services rendered by the assessee-appellant under clause (zzb) of sub- section 105 of section 65 of the Act falls under rule 3(1)(iii) of the Rules. It satisfies the two conditions prescribed by rule 3(2) of the Rules:
▪ First condition: The assessee provides composite services from India and the services are used /consumed by foreign customer outside India as the benefits arising from such services accrue to foreign customer outside India [clarification given vide circular no. paragraph no. (3) of circular no. 111/5/2009-S.T. dated 24/02/2009] ▪ Second condition: The assessee raises invoice on overseas group company in convertible foreign currency and accordingly, receives payment from the latter in convertible foreign currency.
(x) In view of the above, the composite services provided by the assessee/appellant to foreign customer are to be treated as export of service, which is exempt from service tax as per rule (4) Page 10 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 of the Rules. Thus the provision of CHA service by the appellant to foreign customer amounts to export of service which is exempt from service tax.
(xi) Without further prejudice to what we have stated hereinabove, it may kindly be noted that the provision of service by the assessee/appellant to a foreign customer is not complete until and unless the cargo/goods being transported reaches the destination as per the direction of foreign customer. The provision of CHA service solely does not entitle the assessee to receive any payment from foreign customer.
Therefore, delivery of goods to the consignee abroad is an essential part of the service rendered by the assessee to a foreign customer. The service rendered by the assessee to a foreign customer is partly performed in India and partly performed outside India. However, the benefit arising from overseas transportation service (inter alia including CHA service) accrue to customer located abroad, thereby implying that the service rendered by the assessee is used /consumed by foreign customer outside India. The assessee raises invoice on overseas group company in convertible foreign exchange after the goods are transported from the consignor in India to the consignee abroad and accordingly, receives payment in convertible foreign exchange. Therefore, the conditions provided in rule 3(2) of the Rules are satisfied in the instant case and the provision of service of overseas transportation of goods (inter alia including provision of CHA service) is to be Page 11 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 treated as export of service which is exempt from service tax under rule (4) of the Rules.
(xii) Attention is invited to the decision of the Ahmedabad Tribunal in the matter of Commissioner of Service Tax versus B.A. Research India Ltd reported in [2010] (18) S.T.R. 439 (Ahmedabad). The respondent therein is engaged in providing service under the category of "Technical Testing and Analysis', to some of the clients abroad. In such cases, the main testing and analysis are wholly performed in India and the reports of such testing and analysis are sent to the clients abroad. The Tribunal in the said case has held that the performance of service is not complete until the testing and analysis report is delivered to its client abroad. Thus, delivery of report to its client abroad is an essential part of the service and as the report is delivered outside India, the service is used outside India. The Tribunal has held therein that the respondent satisfies the conditions of rule 3(2) of the Rules. The principle enunciated by the Hon'ble Tribunal in the aforesaid decision is squarely applicable to the facts of the instant case.
(xiii) On the issue of Destination-based Consumption Tax, attention is invited to the decision of the Hon'ble Supreme Court in the matter of Commissioner of Service Tax-III, Mumbai versus Vodafone India Ltd reported in [2025] 33 Centax 152 (S.C.). It was held that since service tax is a destination-based consumption tax, services that are exported out of India are not meant to be taxed. Circular No.56/5/2003-S.T., Page 12 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 dated 25.04.2003 was issued by the Board, clarifying that since service tax is destination- based consumption tax, no such tax was leviable on export of services. Attention is also invited to the decision of Hon'ble Supreme Court in the matter of All India Fedn. Of Tax Practitioners vs. Union of India reported in [2007] (7) S.T.R. 625 (S.C.), wherein it was held that Service Tax is a VAT which in turn is destination based consumption tax in the sense that it is on commercial activities and is not a charge on the business but on the consumer and it would, logically, be leviable only on services provided within the country. Service tax is a value added tax. Reliance is also placed on the decision of the Hon'ble High Court of Bombay in the matter of Commissioner of Service Tax vs. SGS India Pvt Ltd reported in [2014] (34) S.T.R. 554 (Bom.), wherein it is held that as per the decision of the Hon'ble Supreme Court, Service Tax is a value added tax which in turn is destination based consumption tax in the sense that it is not a charge on the business, but on the consumer, and it is leviable only on services provided within the country. In this case, the respondent provided technical inspection and certification agency services to customers located abroad, which were performed by the respondent at different places in India. in respect of goods imported by their customers located abroad and the reports of such tests and analysis were sent abroad. For such services, the respondent received consideration in convertible foreign exchange. Applying the principle of 'destination-based consumption Page 13 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 tax', the Tribunal held that as the benefit of the services accrued to customers located outside India, the services rendered by the respondent would be treated as 'export of service'. The Hon'ble High Court confirmed the order of the Tribunal.
(xiv) In the instant case, the customers located abroad engages the assessee-appellant for overseas transportation of goods by booking cargo space with aircraft / ship. As receipt of customs clearance. in respect of goods being transported is essential for onward transmission of goods from Indian port, the appellant renders CHA service to the customer located abroad. Thus, the service of overseas transportation of goods and the CHA service both are used/consumed by the customer located abroad in the sense that the benefits arising from such services accrue to the customer located abroad. By applying the principle of 'destination-based consumption tax', as explained in the aforesaid cases, the assessee considered the aforesaid services rendered by it to customers located abroad as export of services under rule 3(2) of the Rules and claimed exemption in respect of export of both the services.
4.1. In view the above submissions, the Ld. Counsel for the assessee/company contended that the provision of CHA service by the appellant to foreign customer amounts to export of service, which is exempt from Service Tax. Accordingly, he prayed for setting aside the impugned order to extent of confirmation of the demand of Service Tax in respect of CHA service, along with interest and penalties.
Page 14 of 16Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018
5. The Ld. Authorized Representative of the Revenue has urged the grounds taken in the appeal filed by the Revenue. He prayed that the impugned order, qua giving relief to the appellant, be set aside.
6. Heard the parties.
7. The short issue involved in this matter is whether, when the appellant was providing CHA service to overseas customers in the Domestic Tariff Area (DTA), the appellant was eligible to claim the CHA service as "export of service" in terms of Rule 3(1)(ii) of the Export of Services Rules, 2005, or not.
7.1. The submission made by the assessee-appellant is that the they are freight forwarding agents and their main services are freight forwarding services.
8. For the subsequent period, proceedings in the assessee's own case have been dropped by this Tribunal vide Final Order 77937-77938 of 2025 dated 16.12.2025 in Service Tax Appeal No. 76188 of 2017 & anr. [CESTAT, Kolkata] wherein this Tribunal observed as under: -
"6. Regarding the demand of service tax confirmed under the category of CHA service in the impugned order, we find that the appellant- company, namely, M/s. Ceva Freight India Ltd., paid service tax on the CHA service rendered to domestic customers, on the amounts received by them such as terminal handling charge, bill of lading fee, pick- up charge, palletisation charge, advance manifest system charge. handling fee, documentation fee, profit share, CHA charge etc. The demand confirmed under CHA service in the impugned order pertains to the CHA service rendered to foreign customers, which the appellant-company considered as 'export of service' and hence there is no liability to pay service tax on such services. In this regard, it is pertinent to note that the CHA service rendered by the appellant is supplementary to the main service Page 15 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 of freight forwarding service rendered by the appellant. The company received assignments of transportation of cargo from India to foreign country from overseas customers. We find that the appellant-company did not charge / pay Service Tax on the freight and freight related charges and CHA charges on invoices raised by it on foreign affiliates considering the same as export of services. In respect of CHA service, where the goods are not required to be made physically available by the recipient of service to the provider of service, we observe that the place of provision of service is abroad. As CHA, they are merely engaged in processing of documents with respect to clearance of goods through customs station and as such we hold that the provisions of Rule 4(a) of the Place of Provision of Services Rules, 2012 are not applicable to the CHA service rendered by the appellant- company to their foreign clients. Thus, we find that the said service rendered by the appellant-company to the overseas customers falls within the ambit of 'export of services' and consequently, no service tax is payable on such services received abroad. Accordingly, we hold that the demand of Service Tax confirmed under the category of CHA service in the impugned order is not sustainable and therefore, we set aside the same."
9. Admittedly, the assessee-appellant's main service is that of freight forwarding and the order for provision of freight forwarding service together with CHA service for a foreign customer comes from any of the overseas group companies of the assessee which is incorporated outside India and carrying on the business of freight forwarding services outside India. Therefore, the provision of CHA service is to be treated as export of taxable service in terms of Rule 3(1)(ii) of the Export of Services Rules, 2005. As the CHA services provided by the assessee-appellant from India is used outside India, and payment for the same is received by the assessee in convertible foreign exchange, we find that the assessee-company has Page 16 of 16 Appeal No(s).: ST/75990 & 76892/2017-DB & Cross Obj. No.: ST/CO/75070/2018 satisfied the conditions laid down under Rule 3(2) of the said Rules. Therefore, we hold that the said service is to be treated as "export of service", which is exempt from levy of Service Tax under Rule 4 of the said Rules.
10. Accordingly, we hold that the assessee- appellant is not liable to pay Service Tax as their activity qualifies as "export of service".
11. In view of the above, we set aside the impugned order qua confirming the demand of Service Tax against the appellant-assessee, along with interest and penalties, and allow the appeal filed by the assessee. We do not find any merit in the appeal filed by the Revenue and hence the same is dismissed. The cross-objection filed by the assessee is disposed of in these terms.
(Operative part of the order was pronounced in open court) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd