Custom, Excise & Service Tax Tribunal
Shri Santosh Kumar Tiwari vs Allahabad on 26 September, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70107 of 2024
(Arising out of Order-in-Appeal No.1281/ST/ALLD/2023 dated 06.09.2023
passed by Commissioner (Appeals) Customs, CGST & Central Excise,
Allahabad)
Shri Santosh Kumar Tiwari, Proprietor of
M/s Om Shipping & Logistics, .....Appellant
(Niryat Bhawan, Station Road, Bhadohi,
Sant Ravidas Nagar, U.P.-221401)
VERSUS
Commissioner of Central Excise &
CGST, Allahabad ....Respondent
(38, M.G. Marg, Civil Lines, Allahabad-211001) APPEARANCE:
Shri Ramji Khare, Advocate, Shri S.P. Gupta, Consultant & Shri S.P. Mishra, Consultant for the Appellant Shri Santosh Kumar, Authorized Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER NO.- 70693/2025 DATE OF HEARING : 30.07.2025 DATE OF PRONOUNCEMENT : 26.09.2025 The present appeal has been filed by the Appellant assailing the Order-in-Appeal No.1281/ST/ALLD/2023 dated 06.09.2023 passed by Commissioner (Appeals), Customs, CGST & Central Excise, Allahabad.
2. The facts of the case in brief are that on the basis of third party information supplied by Income Tax Department, regarding gross receipts against sale of services declared by the Appellant in ITR for the F. Y. 2016-17 was Rs.97,32,640/-, it was observed that he Appellant failed to get himself registered with the Service Tax Department and to file statutory ST-3 Returns for the period 2016-17. Accordingly, a Show Cause Notice1 under 1 SCN Service Tax Appeal No.70107 of 2024 2 C. No.144/R-BDH/S. Tax/TPI/Santosh Kumar Tiwari/2016-17/21 dated 20.10.2021 was issued to the Appellant asking to show cause as to why: -
i. Service Tax liability of Rs.14,59,896/- should not be demanded and recovered from them under the proviso to the Section 73(1) of the Finance Act, 1994, read with Section 68 & 66B of the Finance Act, 1994 as amended. ii. Interest should not be demanded and recovered from them at the appropriate rates under Section 75 of the Act. iii. Penalty should not be imposed upon him/ them under Section 78 of the Act, for the suppression of facts from the department.
iv. Penalty should not be imposed upon him/ them under Section 77 (1) (a) of the Act for not obtaining Service Tax registration within stipulated time under Section 69 of the Finance Act, 1994 read with Rule 4 of Service Tax Rules, 1994.
v. Penalty should not be imposed upon him/ them under Section 77 (2) of the Act read with Rule 7 of Service Tax Rules, 1994 for not submitting ST-3 return. vi. Penalty should not be imposed upon him/ them under Section 77 (1) (c) of the Act for not furnishing information/ documents called by the department.
3. The said SCN was adjudicated by the Adjudicating Authority below wherein he confirmed the Service Tax demand of Rs.14,59,896/- alongwith interest under Section 75 of the Finance Act, 1994. He also imposed equal penalty under Section 78 of the Act besides imposing penalty of Rs.10,000/- each under Section 77(1)(a), 77(1)(c) and 77(2) of the Finance Act, 1994.
4. Aggrieved by the said order, the Appellant assessee filed appeal before Commissioner (Appeals), CGST & Central Excise, Allahabad who passed the impugned order and dismissed the appeal and upheld the order of Adjudicating Authority holding Service Tax Appeal No.70107 of 2024 3 that the Appellants have provided Cargo Handling Services. Hence, the present appeal before the Tribunal.
5. Before the Commissioner (Appeals), the Appellant submitted that they are a freight forwarder/trade forwarder who transported the goods i.e. Carpets to a place outside India as per the direction of the exporters.
6. The Ld. Advocate appearing for the Appellant submitted that they are receiving the goods from the exporters/manufacturer‟s end and arrange to transport the same on his own to a place outside India. In this process, they engage local transportation up to the port of exports, complete all the customs formalities and engage ocean liner for export of the goods to a place outside India. In this process, they purchased space from the shipping lines on a principal-to-principal basis and in turn sold the place to exporters/ manufacturer exporters. Such buying and selling of cargo space of ship/ vessels fails to qualify as „Service‟ and thus such transactions were not liable to Service Tax. The bills were raised against the Appellant by various parties so engaged in the process and the payment was made to such parties accordingly. The Appellant in turn raised the bill against the exporter by charging all the expenditure incurred by him towards local transportation, THC charges, Seal charges, Bill of lading charges, S/Bill charges, EP copy chares, loading/unloading charges, ocean freight charges etc. by adding his profit by raising bills/debit notes against such exporters. It was also submitted that the activities performed by them are that of freight forwarder. They also relied on Board‟s Circular No.197/7/2016-Service Tax dated 12.08.2016.
7. The Ld. Departmental Authorized Representative justified the impugned order and prayed that the Appeal filed by the Appellant, being devoid of any merits, may be dismissed.
8. Heard both the sides and perused the Appeal records.
9. I find that the Appellant has undertaken the responsibility for arranging the transport of carpet‟s consignment received from various carpet exporters/manufacturers up to a place outside India, as per directions received from such exporters. In Service Tax Appeal No.70107 of 2024 4 the process, the Appellant, after receipt of the consignment from such exporters, engages various agencies from local transportation, up to the port of export, completion of customs formalities and booking of ocean-going vessels from shipping liners for delivery of goods to such foreign destination on his own account. The payment is made by the Appellant against the bills raised by such agencies. Such payments include local transportation, THC charges, Seal charges, Bill of lading charges, S/Bill charges, EP copy chares, loading/unloading charges, ocean freight charges, warehousing charges etc. The Appellant, in turn raises the bills/debit notes for claiming the actual expenditure so incurred by him by producing the bills along with such debit notes and adding his own profit. Thus, I find that the Appellant is responsible for transportation of goods up to foreign destination after receipt of goods from such exporters.
10. In the light of these facts, I find that the Appellant was not providing "Cargo Handling Service" as held by the learned Commissioner (Appeals). I further find that CBEC Circular No.197/7/2016-Service Tax dated 12.08.2016 in paras-2.2 & 3 (supra) also clarifies that freight forwarder/trade forwarder when acting as a principal, will not be liable to pay Service Tax when the destination of the goods is from a place in India to a place outside India. The relevant paras are reproduced for ready reference :-
"2.2 The freight forwarders may also act as a principal who is providing the service of transportation of goods, where the destination is outside India. In such cases the freight forwarders are negotiating the terms of freight with the airline/carrier/ocean liner as well as the actual rate with the exporter. The invoice is raised by the freight forwarder on the exporter. In such cases where the freight forwarder is undertaking all the legal responsibility for the transportation of the goods and undertakes all the attendant risks, he is providing the service of transportation of goods, from a place in India to a place Service Tax Appeal No.70107 of 2024 5 outside India. He is bearing all the risks and liability for transportation. In such cases they are not covered under the category of intermediary, which by definition excludes a person who provides a service on his account.
3.0 It follows therefore that a freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is from a place in India to a place outside India."
11. I also find that the Appellant is responsible for transportation of goods up to foreign destination after receipt of goods from such exporters. I observe that the main service involved in the transaction is Transport of Goods to foreign destination. Since, in such cases the destination of goods is a place outside India, as per Rule 10 of the "Place of Provision of Services Rules, 2012", the place of provision of service is such foreign destination. It is my considered view that Service Tax is not leviable on the transaction.
12. The Appeal filed by the Appellant is thus allowed with consequential relief, if any, as per law.
(Order pronounced in open court on - 26.09.2025) Sd/-
(P. K. CHOUDHARY) MEMBER (JUDICIAL) LKS