Custom, Excise & Service Tax Tribunal
M/S. Interfreight Services Pvt. Ltd vs Commissioner Of Service Tax, Chennai on 14 March, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. ST/564/2010
(Arising out of Order-in-Appeal No. 123/2010 (MST) dated 11.6.2010 passed by the Commissioner of Central Excise (Appeals), Chennai)
M/s. Interfreight Services Pvt. Ltd. Appellant
Vs.
Commissioner of Service Tax, Chennai Respondent
Appearance Ms. K. Nancy, Advocate for the Appellant Shri K.P. Muralidharan, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Date of Hearing / Decision: 14.03.2018 Final Order No. 40630 / 2018 Per Ms. Sulekha Beevi Brief facts are that the appellants are engaged in providing Custom House Agent Service, BAS etc. and are registered with the service tax department. During the audit of account, it was noticed that the appellant is engaged in booking space for cargo transportation in airlines/ ship. They paid charges for space bookings to the respective airlines / steamer agents. Whenever consignment of their customers are sent using the space booked, , they charge their customers freight charges for the transportation of the goods by the respective airlines / steamer agents. While charging their customers towards freight charges for the cargo booked, they are collecting extra charges and collect the same from their clients. Department was of the view that such revenue would fall under Business Auxiliary Service. Show cause notice was issued proposing to demand service tax along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. Hence this appeal.
2. On behalf of the appellant, ld. Counsel Ms. K. Nancy submitted that the issue stands covered by the decision of the Tribunal in the case of Bax Global India Ltd. Vs. Commissioner of Service Tax, Chennai vide Final Order No.42113/2017 dated 18.9.2017 as well as the decision in the case of Greenwich Meridian Logistics (I) Pvt. Ltd. Vs. CST, Mumbai 2016 (43) STR 215.
3. Heard both sides.
4. The demand is made alleging that the appellant had received consideration for pre-booking of space in airlines/ shipping lines. The very same issue was decided by the Tribunal in the case of cited by the ld. Counsel. The Tribunal relied the decision in the case of Greenwich Meridian Logistics (I) Pvt. Ltd. (supra). The relevant portion is reproduced as under:-
11.?Slots may be contracted for by the shipper or its agent with the shipping line through the steamer agent. Implicit is a uni-directional flow of consideration because the space belongs to the shipping line. Steamer agent or agent of shipper may earn commission in such a transaction. Leaving that situation aside, the contention of the appellant is that it is a multi-modal transport operator which entails a statutorily assigned role in cross-border logistics. According to Section 2 of the Multi-modal Transportation of Goods Act, 1993.
(m)?multimodal transport operator means any person who -
(i) concludes a multimodal transport contract on his own behalf or through another person acting on his behalf;
(ii) acts as principal, and not as an agent either of the consignor, or consignee or of the carrier participating in the multimodal transportation, and who assumes responsibility for the performance of the said contract; and
(iii) is registered under sub-section (3) of section 4;
and
(a)?carrier means a person who performs or undertakes to perform for a hire, the carriage or part thereof, of goods by road, rail, inland waterways, sea or air;
12.?The appellant takes responsibility for safety of goods and issues a document of title which is a multi-modal bill of lading and commits to delivery at the consignees end. To ensure such safe delivery, appellant contracts with carriers, by land, sea or air, without diluting its contractual responsibility to the consignor. Such contracting does not involve a transaction between the shipper and the carrier and the shipper is not privy to the minutiae of such contract for carriage. The appellant often, even in the absence of shippers, contract for space or slots in vessels in anticipation of demand and as a distinct business activity. Such a contract forecloses the allotment of such space by the shipping line or steamer agent with the risk of non-usage of the procured space devolving on the appellant. By no stretch is this assumption of risk within the scope of agency function. Ergo, it is nothing but a principal-to-principal transaction and the freight charges are consideration for space procured from shipping line. Correspondingly, allotment of procured space to shippers at negotiated rates within the total consideration in a multi-modal transportation contract with a consignor is another distinct principal-to-principal transaction. We, therefore, find that freight is paid to the shipping line and freight is collected from client-shippers in two independent transactions.
13.?The notional surplus earned thereby arises from purchase and sale of space and not by acting for a client who has space or slot on a vessel. Section 65(19) of Finance Act, 1994 will not address these independent principal-to-principal transactions of the appellant and, with the space so purchased being allocable only by the appellant, the shipping line fails in description as client whose services are promoted or marketed.
5. Following the same, we find that the demand cannot sustain. The impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Operative portion of the order was
pronounced in open court)
(V.Padmanabhan) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
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