Custom, Excise & Service Tax Tribunal
Atlas Shipping Services Private Ltd vs Service Tax-I, Kolkata on 11 March, 2026
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.1
Service Tax Appeal No.76120 of 2016
(Arising out of Order-in-Original No.56/Commr./ST-I/Kol/2015-16 dated 29.03.2016
passed by Commissioner of CGST & Central Excise, Kolkata)
M/s Atlas Shipping Services Private Limited
(3A, Hare Street, 2nd Floor, Kolkata-700001)
Appellant
VERSUS
Commissioner of CGST & Central Excise, Kolkata
(180,Shantipally,Rajdanga Main Road,Kolkata-700107)
Respondent
APPERANCE :
Shri Rahul Tangri, Ms.Taniya Roy, both Advocates for the Appellant
Shri S.Dutta, Authorized Representative for the Respondent
CORAM:
HON'BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE MR.K.ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO.75466/2026
DATE OF HEARING : 11 MARCH 2026
DATE OF DECISION : 11 MARCH 2026
Per Ashok Jindal :
The appellant is in appeal against the impugned order.
2. The facts of the case are that the appellant is engaged in clearing
and forwarding of the goods from the exporter's premises in India to
Indian port and from foreign port to the ultimate destination abroad.
The customers of the Appellant may be Indian or foreign. These
services are classified under the C&F Services on which the Appellant is
duly discharging the service tax liability and the same is not in dispute
in the present proceedings.
2.1 Apart from this, the appellant also booked space in bulk in ocean
going vessels by entering into the direct contract with the shipping
companies, who raise invoices on the Appellant. The price at which the
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Service Tax Appeal No.76120 of 2016
Appellant purchases the said space is called ‗buy rate'. Further, the
appellant sells the space booked to various customers by adding its
mark-up. This price at which the appellant sells the space to its
customers is called ‗sell rate'. The difference between buy rate and sell
rate is the margin, which the Appellant retains. This trading of cargo
space is not any service provided by the Appellant, therefore, the
appellant never paid any service tax thereon.
Facts leading to the present dispute
2.2 On scrutiny of the books of accounts maintained by the appellant, ST-3 returns filed by the Appellant, Cenvat Ledger, Profit and Loss account, the department formed the view that tax was not paid on whole of the amount received, therefore, a Show Cause Notice (SCN) dated 21.10.2014 for the period 2009-10 to 2012-13 was issued by the department proposing to demand service tax amounting to Rs.3,36,21,507/- and deny Cenvat Credit amounting to Rs.90,173/-, along with interest and penalty, inter alia on the basis of the following allegations:
(i) the Appellant has not included the value of extra consideration received for air freight/sea freight from clients in their taxable amount for the purpose of discharging service tax.
(ii) the Appellant is engaged in providing services under the category of procurement of goods or services which are inputs for the client and also for undertaking activities relating to sale/purchase of service which are classifiable as ‗Business Auxiliary Services' defined under Section 65(105)(zzb) of the Finance Act, 1994, however, it has not paid any service tax towards the said service.3
Service Tax Appeal No.76120 of 2016
(iii) the Appellant has earned commission/brokerage for working as an intermediary/agent between exporter and shipping lines and the said service is classifiable under the category of ‗Business Auxiliary Services', however, the Appellant has not paid service tax on the commission earned by it.
(iv) the Appellant segregated the charges for transportation from clearing and forwarding service in the same bills and subsequently claimed abatement as a GTA service provider, however, in the absence of the Appellant being registered as GTA service provider, non-issuance of consignment note, non-issuance of separate bill for transportation, the abatement availed is inadmissible, as a result the C&F and GTA service were held to be a composite service thereby categorized as C&F service and service tax was liable to be paid on the gross value thereon.
(v) the Cenvat Credit availed by the Appellant on service tax paid on insurance premium of private motor vehicles was held to be inadmissible.
2.3 Despite furnishing a detailed reply in response to the afore- mentioned Show cause notice, the Ld. Adjudicating Authority vide the impugned Order-in-Original dated 31.03.2016 dropped the demand of service tax amounting to Rs.3,03,695/- while upholding the majority of the demand to the extent of Rs.3,33,17,812/-, along with interest and penalty. Further, the impugned order also confirmed the disallowance of credit amounting to Rs.90,713/- along with interest and penalty. 2.4 Being aggrieved by the impugned order dated 31.03.2011, the appellant is before us.
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Service Tax Appeal No.76120 of 2016
3. At the outset, the ld.Counsel appearing on behalf of the appellant submits that the issue is no longer res integra inasmuch as mere purchase and sale of cargo space is not a ―service‖ during the positive list as well as negative list regime. Hence, the transaction is not liable to service tax.
3.1 In the instant case, he submits that the first and second issue relates to demand of service tax on the profit earned by the Appellant upon sale of pre-booked cargo space on ships to its clients/ customers. 3.2 He submits that as is evident from the foregoing paragraphs, the Appellant is working as a freight forwarder to facilitate exportation of containers from India to overseas countries by interalia booking of cargo space with a particular shipping line.
3.3 He further submits that the Ld. Principal Commissioner, vide the impugned order, has undisputedly held that the collection of ocean freight is not liable to service tax, however, the Ld. authority has proceeded to hold that the extra consideration being collected over and above the freight would qualify as ―Business Auxiliary Service‖ (BAS) under Section 65(104)(zzb) of the Finance Act, 1994. Further, the Ld. authority also held that the extra amount received as discount by the Appellant was in the nature of commission/brokeragefor working as an intermediary/agent between exporter and shipping lines which is also liable to be categorisedas ―Business Auxiliary Service‖ under Section 65(104)(zzb) of the Finance Act, 1994.
3.4 He submits that it is pertinent to mention that the demand confirmed vide the impugned order involves the positive list regime as well as the negative list regime, therefore, the following submissions 5 Service Tax Appeal No.76120 of 2016 shall deal with both the periods separately.
3.5 In this regard, it is submitted that for the period April 2009 to June 2012,in order to categorize the disputed service under BAS, the presence of a third party is required for whom the Appellant would be procuring the goods or services. However, the Appellant was not buying and selling the cargo space on behalf of their client but on their own account as they were directly buying it themselves and thereafter, selling the same to the exporters, as per availability. In the absence of any activity being done on behalf of the client, no demand under Business Auxiliary Service can be raised. The sea freight is generated out of trading of space. Further, it is submitted that unless the space is booked by the Appellant specifically as agent on behalf of the shipping line for a client, the components of BAS do not come into play. 3.6 It is further submitted that the appellant was purchasing space from the Shipping Lines on a principal-to-principal basis and in turn selling these spaces to individual exporters at a slightly higher amount keeping a mark-up, for transportation of their containerized cargo. It is a settled law that profit earned from such buying and selling of cargo space on ships/vessel does not qualify as 'service' per se and thus, such transactions are not liable to Service Tax.
3.7 He submits that this issue is no longer res-integra being decided in favour of the assessee by this Hon'ble Bench in M/s Blue Moon Logistics PVt. Ltd. v. Principal Commissioner of Service Tax-I Commissionerate, Kolkata (vice versa), 2025 (8) TMI 86-CESTAT Kolkata, wherein it has been held that the mere purchase and sale of cargo space is not a ‗service' and surplus income receipt earned by the 6 Service Tax Appeal No.76120 of 2016 Appellant/assessee is not a ‗consideration' towards rendition of any business support service. Accordingly, no service tax was payable by the Appellant/assessee. The said proposition was also settled in M/s Bluemoon Logistics (P) Ltd. v. Commissioner of Central Excise, Noida, 2024 (3) TMI 285-CESTAT Allahabad wherein the Tribunal held that the trading of cargo space in the ship/aircraft by the assessee does not amount to rendition of any service and thus, service tax is not payable under the category of ‗Business Support Service' or ‗Business Auxiliary Service'. The aforesaid decision was further maintained by the Hon'ble Supreme Court in Commissioner of Central Excise Noida v. M/s. Bluemoon Logistics (P) Ltd, 2025 (1) TMI 1041-SC ORDER. To support of his contention, he also relies on the following case laws :
Commissioner of Service Tax, New Delhi v. Karam Freight Movers, 2017 (4) G.S.T.L. 215 (Tri.-Del.) M/s Skylift Cargo (P) Ltd. v. Commissioner of Service Tax, Chennai and vice versa, 2018 (2) TMI 320- CESTAT Chennai Marinetrans India Pvt. Ltd. v. CST, Hyderabad-ST, 2020 (33) GSTL 241 (Tri.-Hyd.) 3.8 Further, he submits that since there are only two parties in the transaction, the seller of space and the buyer of space, therefore, any discount or an incentive received as a result of this transaction of sale cannot be considered as supply under BAS, irrespective of the fact that it is recorded as commission/ brokerage in the books of accounts.
Reliance in this regard is placed on M/s Console Shipping Services India Pvt. Ltd. v. Commissioner of Service Tax, Delhi-II, 2023 (5) TMI 192- CESTAT New Delhi and M/s Seagull Maritime Agencies Pvt. Ltd. v. Commissioner of Central Goods & Service Tax, Audit-II, New Delhi, 7 Service Tax Appeal No.76120 of 2016 2024 (12) TMI 677-CESTAT New Delhi. Further, he relies on the following case laws :
M/s Emu Lines Pvt. Ltd. v. Commissioner of CGST & CE, Belarpur, 2023 (6) TMI 64-CESTAT Mumbai. This decision was affirmed by the Hon'ble Supreme Court in Commissioner of CGST & CE, Belarpur v. M/s Emu Lines Pvt. Ltd., 2023 (2) TMI 1155-SC Order.
M/s Speedways Logistics Private Limited v. Commissioner of CGST and Central Excise, 2024 (8) TMI 1104-Cestat Kolkata. Commissioner of CGST & Central Excise, Kolkata South v. M/s Tierra Logistics Pvt. Ltd., 2023 (9) TMI 1141- CESTAT Kolkata Balmer Lawrie and Company Ltd. v. The Commissioner of Service Tax Delhi II Commissionerate, 2023 (5) TMI 100- CESTAT New Delhi Haiko Logistics India Pvt. Ltd. v. Commissioner of Service Tax- Delhi 3 and Commissioner of Central GST Audit-II (Vice- Versa), 2023 (8) TMI 539 -- CESTAT New Delhi Geodis Overseas Private Limited v. Commissioner of Service Tax, Chennai, 2022 (6) TMI 1085 -- CESTAT Chennai Tiger Logistics (India) Ltd. V. Commissioner of Service Tax-II, Delhi 2022 (2) TMI 455-CESTAT New Delhi Direct Logistics India Pvt. Ltd. V. CST, Bangalore, Service Tax-
I 2021 (9) TMI 500-CESTAT Bangalore Sea Master Shipping and Logistics v. Commissioner of C.T., Visakhapatnam, 2019 (25) GSTL 458 (Tri.-Hyd) 3.9 In view of the above, he submits that the transaction is not amenable to Service Tax under the category of `Business Auxiliary Service'. Further, during the period post 01.07.2012 as well,basis the submissions above, the activity does not qualify as ‗service' and thus, the demand of service tax confirmed vide the impugned order is not sustainable and liable to be set aside. Hence, demand of service tax for 8 Service Tax Appeal No.76120 of 2016 profit earned on ocean freight amounting to Rs.3,23,35,884/- (Rs.2,95,57,109/- as freight charges and Rs.27,78,775/- as commission/brokerage under the category of BAS) is liable to be set aside.
3.10 He further submits that the activity carried out by the appellant for providing the services of ―Goods Transport Agency‖ does not within the category of ―Clearing and Forwarding|‖ Services solely on the ground of issuance of a consolidated invoices.
3.11 It is submitted that the impugned order confirmed demand amounting to Rs.9,81,928/- on the ground that the Appellant segregated the charges of transportation from the clearing and forwarding services in the bills and claimed abatement on the transportation charges, however, the Appellant was neither registered under the category of Transportation of Goods by Roadnorany consignment note was issued thereto, thus, it was held that the Appellantwas providing composite servicewhich shall be covered under the category of ‗Clearing and Forwarding Agent Service' and no abatement would be eligible to the Appellant under the category of Transport of Goods by Road. It is submitted that the ―Transport of goods by road service‖ and ―Clearing and Forwarding Agent Service‖ are two independent services and cannot be inter linked. 3.12 Further, it is submitted that during the positive list regimeas per Section 65(105)(zzp) a taxable service means any service provided or to be providedto any person, by a goods transport agency, in relation to transport of goods by road in a goods carriage. Additionally, the definition of ―goods transport agency‖ during the positive (Section 9 Service Tax Appeal No.76120 of 2016 65(50b)) and negative list regime (Section 65B(26)) is similarly worded wherein ―goods transport agency‖ means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. Thus, as per the aforesaid definition, an entity is considered as a goods transport agency for the purposes of service tax when:
i. it is any person; ii. it provides service in relation to transport of goods; iii. it is transporting goods by road; iv. it issues consignment note.
3.13 In the instant case, the Appellant is a private limited company, engaged in providing the service of transportation of goods by road and also issued challans which consisted of all the features as mentioned under Rule 4(B) of the Service Tax Rules, 1994 so as to partake the nature of a consignment note, therefore, the allegation of the department by holding the said GTA service to be C&F service is completely erroneous. It is submitted that at no given point in time was the Appellant asked to submit copies of the challans, however, while passing the impugned order, the Ld. authority confirmed the demand inter alia on the ground of non-submission of challans/consignment notes so as to prove that the Appellant was providing GTA services. 3.14 As regards the finding of non-issuance of separate invoice for transportation charges is concerned, he submits that nowhere it is mentioned in the Act that for different service onehas to raise different bills.
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Service Tax Appeal No.76120 of 2016 3.15 Furthermore, the denial of 75% abatement on the gross bill raised under the head of ―Transport of Goods by Road‖ on the ground that the service provided by the Appellant by way of transportation of goods by road is part of ―Clearing and Forwarding Agent Service‖ is not tenable inasmuch asthe service rendered by the Appellant is not a composite service under C&F Agency Service but two independent services, therefore, the Appellant is eligible for abatement available vide Notification No. 1/2006-ST dated 01.03.2006 as amended on the independent GTA services provided by the Appellant.Reliance in this regard is placed on M/s Toll India Logistics Pvt. Ltd. v. CCE, Puducherry, 2018 (3) TMI 112-CESTAT Chennai and M/s. Auto Cars v. Commissioner of Central Excise & Service Tax, Aurangabad, 2022 (9) TMI 1060-CESTAT Mumbai.
3.16 Further, he submits that the appellant was initially not registered under the category of ―Transport of Goods by Road‖, in this regard it is submitted that mere non-registration under the same head does not result in misclassification. Thus, the denial of classification of service under ‗Transport of Goods by Road' is wholly arbitrary and unreasonable. Thus, the impugned order confirming demand to the extent of Rs.9,81,928/- is liable to be set aside. 3.17 It is alleged in the show-cause notice that in terms of Rule 2(k)(D) of Cenvat Credit Rules, 2004 (CCR), motor vehicles have been excluded from the definition of inputs. Further, Rule 2(1)(BA) of CCR,excludes insurance, servicing, repair and maintenance of motor vehicles which is not a capital goods of an assessee from the ambit of input service. Thus, the Cenvat Credit availed by the Appellant on 11 Service Tax Appeal No.76120 of 2016 service tax paid on insurance premium of private motor vehicle for the period 2010-11 to 2012-13is inadmissible. He submits that demand to the extent of Rs.64,320/- confirmed for the FY 2011-12 and 2012-13 is admitted by the Appellant and paid vide Challan No. 00006 dated 29.12.2015. Thus, the Appellant is only contesting the remaining demand amounting to Rs.26,393/- confirmed for the period 2010-11. C.1 It is further submitted that that the Cenvat Credit has been availed on the input service relating to motor vehicle and has not availed any Cenvat Credit on the purchase of motor vehicles as an input. Thus, the finding in the impugned order that Cenvat Credit is inadmissible to the Appellant on the ground that motor vehicles stand excluded from the definition of inputs is not only arbitrary but also irrational. The denial of Cenvat Credit availed on input services by relying upon the definition of ‗input' is legally untenable.Consequently, the impugned order confirming the demand to the extent of Rs.26,393/- is liable to be set aside.
3.18 Finally, he submits that the impugned order confirms the imposition of late fees amounting to Rs.52,400/- for delayed submission of ST-3 returns in terms of Rule 7C of the Service Tax Rules, 1994. In this regard, it is humbly submitted that the appellant has admitted the said liability and discharged the said amount vide Challan No.00006 dated 29.12.2015, therefore, the said amount ought to be appropriated accordingly. He, therefore, prays for allowing their appeals.
4. The ld.A.R. for the Revenue, has justified the impugned order.
5. Heard both the parties and considered the submissions. 12
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6. After hearing the parties, the following issues have been framed :
(a) Whether service tax can be demanded on receipt of profit earned from ocean freight in relation to trading of cargo space, collected from the clients/exporters ?
(b) Whether discounts received by the appellant from the shipping companies subsequent to the sale of cargo space can be considered as Business Auxiliary Services rendered by the appellant ?
(c) Whether two services, viz. clearing & forwarding and Goods Transport Agency services, which are rendered independently, can be clubbed together and categorized as clearing and forwarding service solely for the purpose of denial of abatement on GTA ?
(d) Whether the impugned order is vitiated in law for having denied the Cenvat Credit on input services by erroneously relying upon the definition of ‗input' and by giving retrospective effect to the exclusion clause in Rule 2(l)(BA) of the Cenvat Credit Rules, 2004 introduced w.e.f. 01.04.2011 ?
Issue (a) & (b)
(a) Whether service tax can be demanded on receipt of profit earned from ocean freight in relation to trading of cargo space, collected from the clients/exporters ?
(b) Whether discounts received by the appellant from the shipping companies subsequent to the sale of cargo space can be considered as Business Auxiliary Services rendered by the appellant ?
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7. We find that the issues involved in the matter are that as the appellant was engaged in purchase and sale of cargo space by getting discount from the shipping agencies, the said service cannot be considered as ―Business Auxiliary Service‖ as held by this Tribunal in the case of M/s Bluemoon Logistics (P) Ltd. (supra), wherein it has been held that the mere purchase and sale of cargo space is not a ‗service' and surplus income receipt earned by the appellant is not a ‗consideration' towards rendition of any business support service. Accordingly, no service tax is payable by the appellant.
8. Following the principle in the case of M/s Bluemoon Logistics (P) Ltd. (supra), we hold that the appellant is not liable to pay service tax under the category of ―Business Auxiliary Service‖ for the above two issues. Hence, the above two issues are answered in favour of the appellant.
Issue (c)
(c) Whether two services, viz. clearing & forwarding and Goods Transport Agency services, which are rendered independently, can be clubbed together and categorized as clearing and forwarding service solely for the purpose of denial of abatement on GTA ?
9. We find that the service tax sought to be charged from the appellant under the category of ―Cargo Handling Service‖ for transportation of goods by road by other means. In fact, the appellant has segregated the charges of transportation from the clearing and forwarding agents and has claimed the abatement for the transportation charges and the appellant being a Private Limited Company, was 14 Service Tax Appeal No.76120 of 2016 engaged in the service of transportation of goods by issuing challans, which are in the nature of consignment notes. Therefore, said service cannot be held as ―clearing and forwarding agent services‖. Admittedly, the appellant is raising separate invoices for goods transport service, therefore, the appellant is entitled for abatement from the gross bill raised available for transportation of goods by road and the same cannot be termed as part of ―clearing and forwarding agent service‖. Therefore, the appellant is entitled for the benefit of abatement in terms of Notification No.1/2006-ST dated 01.03.2006 as they have provided independent goods transport service. Therefore, no demand of service tax is sustainable under the category of ―clearing and forwarding agent services‖ Issue (d)
(d) Whether the impugned order is vitiated in law for having denied the Cenvat Credit on input services by erroneously relying upon the definition of 'input' and by giving retrospective effect to the exclusion clause in Rule 2(l)(BA) of the Cenvat Credit Rules, 2004 introduced w.e.f. 01.04.2011 ?
10. The cenvat credit sought to be denied on input service i.e. insurance premium relating to a motor vehicle prior to 01.04.2011 to the appellant as the same has been excluded under under Rule 2(1) of the Cenvat Credit Rules, 2004 w.e.f. 01.04.2011. Admittedly, the period involved in this case is 01.04.2009 to 31.03.2013. A part of demand is prior to 01.04.2011. Therefore, the appellant is not required to pay service tax for the period prior to 01.04.2011 and for subsequent 15 Service Tax Appeal No.76120 of 2016 period, the appellant has paid service tax and produced challans before the authorities below.
11. In that circumstances, we hold that the appellant has already paid the service tax post 01.04.2011, therefore, no demand of service tax is sustainable against the appellant.
12. As no demand is sustainable against the appellant, therefore, no penalty is imposable on the appellant.
13. In view of the above, we set aside the impugned order allow the appeal with consequential relief, if any.
(Operative part of the order was pronounced in the open court) (Ashok Jindal) Member (Judicial) (K.Anpazhakan) mm Member (Technical)