Custom, Excise & Service Tax Tribunal
Delhi I vs Psb Logistics Pvt Ltd on 19 September, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO. 3
SERVICE TAX APPEAL NO.51968 OF 2018
[Arising out of Order-in-Appeal No.193/Central Tax/ Appl-II/Delhi/2018 dated
28.03.2018 passed by the Commissioner, Central Tax, Appeals-II, New Delhi]
The Commissioner, CGST Delhi South
Commissionerate, New Delhi
2nd & 3rd Floor, Engineers India Limited .....Appellant
(Annexe Building), Bhikaji Cama Place,
New Delhi- 110066
Vs.
M/s. PSB Logistics Pvt Ltd.
D-14/1 & 14/2, Okhla Industrial Area,
.....Respondent
Phase-I, New Delhi-110020
Appearance:
Present for the Appellant: Shri Manoj Kumar, Authorised Representative
Present for the Respondent: Ms. Vamini J., Advocate
CORAM :
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL)
HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)
Date of Hearing: 04.06.2025
Date of Decision: 19.09.2025
FINAL ORDER No.51331/2025
HEMAMBIKA R. PRIYA
Revenue has filed this appeal to assail the Order-in-Appeal
No.193/Central Tax/ Appl-II/Delhi/2018 dated 28.03.2018 passed
by the Commissioner, Central Tax, Appeals-II, Delhi wherein the
demand of service tax of Rs.1,31,58,013/- was confirmed along
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with interest and penalty under section 75, section 76, section 77
and section 78 of the Finance Act, 19941.
2. Brief facts are that the M/s. PSB Logistics Pvt. Ltd.
(hereinafter the respondent) were registered under taxable
services of 'Custom House Agents'. Intelligence was received that
the Respondent was a Cargo Handling agent and resorting to
evasion by not paying Service Tax on the gross value received for
the said services. On scrutiny of the documents submitted by the
Respondent, it was observed that a major portion of income from
operation shown as exempted was attributable to the services
provided to United Nation Organization whereas in the ST-3
returns nothing was reflected under the column for exempted
figures. It was also observed that in the Financial Statement,
there was difference under head income and expenditure account
2007-08 to 2011-12. Three Show cause notices demanding
Service Tax totaling to Rs. 1,31,58,013/-for the period 2007-08 to
2011-12, 2013-14 & 2014-15 were issued alleging non-payment
of service tax on (i) commission earned in lieu of sale of cargo
space (ii) amount received as reimbursable expenses; (iii)
services provided to Indian Army for transportation of stores to
United Nations Peace Mission out of India. The subject Show
Cause Notice were adjudicated by the Additional Commissioner
Service Tax, Delhi-II vide Order-in-Original No 133/KRM/DL-
11/2017 dated 07.04.2017 & 149-150/KRM/DL-II/2017 dated
1. the Finance Act
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26.05.2017, wherein adjudicating authority confirmed the
demand of Rs. 1,31,58,013/- and also imposed penalties as
under:
Order-in-Original Demand confirmed Penalty
133/KRM/DL-II/2017 Rs. 87,62,410/- Rs. 10,000/- under
dated 07.04.2017 Section 77 & Rs.
87,62,410/- under
Section 78 of the
Finance Act.
149-150/KRM/DL-II/2017 Rs. 23,908/- Rs. 2,52,391/- under
dated 26.05.2017 Section 76 & 10,000/-
under Section 77(2) of
the Act.
Rs. 18,71,695/- Rs. 1,87,170/- under
Section 76 & Rs.
10,000/- under
Section 77(2) of the
Act.
Aggrieved by the said order-in-original, the Respondent had
filed appeal before Commissioner who vide Order-in-Appeal No.
193/Central Tax/Appl-II/Delhi/2018 dated 28.03.2018, allowed
the Appeal filed by the Respondent. Aggrieved by the said order-
in-appeal, the Department has filed the present appeal before this
Tribunal.
3. Learned Authorized Representative for the Department-
Appellant submitted that the respondent purchased bulk cargo
space and sold the same at a premium. The difference between
the amount charged by the Respondent to the Customer and the
amount paid to the Shipping line/air lines, was actually the cost
for procuring the services of shipping lines/air lines for the benefit
of Importer/Exporter and therefore, such amount was rightly
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classified as under "Business Auxiliary service". As regards
reimbursable expenses, the Commissioner (Appeals) had
observed that all the expenses were exempted as per Rule 5(2) of
Service Tax (determination of value) Rules, 2006. However,
learned authorized representative contended that all expenses
were to be reimbursed on actual basis to fall under the category
of 'Pure Agent'. But in the instant case 'Mark up' or profit earned
on reimbursable expenses took the Respondent out of the
category of pure agent and thus made him inadmissible of the
benefit of Rule 5(2) of the Service Tax(Determination of Value)
Rules, 2006. As regards transportation of stores depot out of
India to the United Nations peace mission, Learned authorized
representative alleged that impugned order had overlooked the
fact that the contract awarded by the Army to the respondent for
provisioning of multi Modal transportation services to UN Peace
keeping mission and the Respondent himself admitted that major
portion of the consideration received was for ocean freight
thereby indicating that the consideration received did not consist
wholly of ocean freight. Learned authorized representative
contended that the Commissioner (Appeals) had erred in holding
that whole of the consideration received was in respect of ocean
freight without examination and quantification. Hence, he prayed
the appeal may be allowed.
4. Learned counsel for the Respondent submitted that
reimbursements which were in the nature of expenditure are not
subject to service tax as the same cannot be considered as
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consideration for the services provided. In terms of section 67 of
the Finance Act, 1994 as amended the consideration received for
the taxable service alone is subject to service tax. The learned
counsel relied upon the decision of the Delhi High Court in the
case of Intercontinental Consultant and Technocrats Private
Limited Vs UOI2 wherein the High Court had struck down Rule
5(1) of the Valuation Rules, 2006 which provides for inclusion of
expenditure or costs incurred by the service provider in the course
of providing taxable service in the value on the ground that it is
ultra vires Section 66 and Section 67 and travels much beyond
the scope of the said Sections. This view has been upheld by the
Supreme Court in the case of UOI Vs. Intercontinental
Consultants and Technocrats Pvt. Ltd.3. Learned counsel
submitted that the respondent did not fulfill the condition of Rule
5(2) of the Service Tax (Determination of Value) Rules, 2006 as
the same was not relevant in view of the fact that Rule 5(1) itself
had been struck down by the Delhi High Court in
Intercontinental Consultant and Technocrats Private
Limited (supra). Further, he contended that even in the case of
any mark-up with respect to reimbursement amounts, the same
was not subject to service tax in the light of the decision of the
Supreme Court which affirmed the position that there was no
power to levy service tax on reimbursements prior to 14.05.2015.
He submitted that post this decision, the Finance Act, 2015 had
2. (2013) 29 STR 9
3. (2018) 10 GSTL 401
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amended Section 67 in order to bring reimbursements under the
service tax net.
4.1. As regards the difference in the freight amount, learned
counsel for the respondent contended that the Department had
held that the order of the Tribunal had been challenged before the
Mumbai High court in the case of CST Vs Greenwich Meridian
Logistics4 does not hold good as the High Court dismissed the
said appeal in Commissioner of Service Tax, Mumbai-VII vs.
Greenwich Meridian Logistics (I) Pvt Ltd.5. On further appeal
before the Supreme Court, the appeal was dismissed on the
ground of inordinate delay in Diary No. 6897/2019 dated
01.04.2019. Consequently, the decision of the Tribunal had
attained finality. He also submitted that the position with respect
to freight difference was no more res integra as the same had
been settled by various other High Courts & Tribunal in a catena
of decisions. The Respondent had purchased the cargo space and
the transaction was on principal to principal basis. Hence, there
was no question of service tax as regard for the period post
01.07.2012; there was no reference to the Place of Provision of
Service Rules, 2012 in the Show Cause Notice. Further, there
cannot be a demand of service tax with respect to export cargo as
the destination of goods is outside India in terms of Rule 10 of the
Place of Provision Rules, 2012.
4. (2016) 43 STR 215
5. 2019 (28) G.S.T.L 591 (Bom.)
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4.2 Learned counsel further submitted that as regards the
transaction in respect of import cargo, the same was non-taxable
in terms of Section 66D(ii)(p) of the Finance Act, 1994 as services
by way of transportation of goods by an aircraft or vessel for a
place outside India up to the customs station of clearance in India
fell under the negative list. Ocean freight was taxable only from
01.06.2016 onwards and the Respondent had been discharging
service tax where ever applicable. He relied on the Chennai
Tribunal‟s decision in the case of Fairmacs Shipping and
Transport Service vs. CGST & ST6 and M/s. A.G.X Logstics
Vs. CGST7.
4.3 As regard the liability on UN Peace Keeping Mission, learned
counsel submitted that no amount had been quantified in the
Show Cause Notice in respect of the said proposal. The learned
counsel submitted that evidence to prove that a contract had
been entered into with Indian Army for the movement of stores
for the United Nation Peace Keeping Mission, had been recorded
in the impugned Order-in-Appeal. Hence, the contention of the
Department that evidence was not provided was not correct. In
addition, learned counsel stated that the notice did not specify the
specific taxable service category under which the demand was
proposed. He contended that the entire demand had been raised
by taking the figures from the financial statements following the
6. Final Order Nos. 41203-41208/2024 dated 02.09.2024
7. Final Order Nos. 41104-41106/2023 dated 12.12.2023
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difference noticed under the head 'income and 'expenditure' in the
Profit and Loss account. In this regard, he stated that the Hon'ble
High Court of Madras in the case of Firm Foundations &
Housing Pvt. Ltd. vs. P.R. CST8 had held that the income
reported and reflected in the profit and loss account is irrelevant
for the purposes of determination of taxable value. He prayed
that the Departmental appeal may be dismissed.
5. We have heard Shri Manoj Kumar, learned authorised
representative for the Department and Ms. Vamini J., learned
counsel for the respondent. The three issues for our
consideration are whether service tax is payable on the following
activities:
(i) Commission earned in lieu of sale of cargo space.
(ii) Amount received as reimbursable expenses
(iii) Service provided to Indian Army for transportation of
stores to UN Peace Mission.
5.1 As regards the issue (a) (i), the same is no more res
integra. This Tribunal in Tiger Logistics India Ltd. vs.
Commissioner, Central Tax and GST, New Delhi9 held as
follows:
"13. Even otherwise, it is seen that the appellant provides
cargo space to customers who are importers/exporters of
goods. The appellant pays charges for space booking to
different Shipping Lines/Airlines and later on sells such
8. (2018) 16 GSTL 209
9. (2023) 9 CENTAX 117 (Tri.Del)
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space to the exporters/importers at a slightly higher
amount. The difference between the amount paid by the
appellant to the Shipping Lines/Airlines and the amount
recovered by the appellant from the customers
(exporter/importers) is called the „mark-up‟. The view of the
department that for the services provided by the appellant,
service tax would be leviable under the category of "support
services of business or commerce‟ for the period prior to
01.07.2012 and would continue to be taxable for the period
w.e.f. 01.07.2012 as it is not covered by any service
notified in the negative list, has been considered and
rejected by various Division Benches of the Tribunal.
14. In Marinetrans India Pvt. Ltd. vs. CST,
10
Hyderabad-ST , the Division Bench held after considering
the Circular dated 12.08.2016 issued by the Central Board
of Excise and Customs that buying and selling space on
ships does not amount to rendering a service and any profit
or income earned through such transactions would not be
leviable to service tax. The relevant portions of the order
passed by the Tribunal is reproduced below:
"6. We have considered the arguments on both sides
and perused the records. It is not in dispute that the
appellant herein is purchasing the space from the
shipping lines and then is selling the same to
exporters. It is the case of the Revenue that this
amounts to acting as an intermediary for helping
the business of the shipping lines and therefore
they are liable to pay service tax on business
auxiliary services on the profit which they receive.
It is the case of the appellant that this is a deal on
principal to principal basis between them and the
shipping lines and again between the exporters and
them. They are not acting as an agent. They could
purchase the space for a lower price and sell it at a
higher price and thereby earn profit. On the other hand,
if they failed to sell the space to exporters, after
purchasing from the shipping lines, they may incur a
10. 2020(33)G.S.T.L.241(Tri.-Hyd.)
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loss. They are not receiving any commission whatsoever
from the shipping line or from the exporters. We have
considered the Circular of the C.B.E. & C. cited by
the Learned Departmental Representative at Para
2.1-3 which are as follows:
"2.1The freight forwarders may deal with the
exporters as an agent of an airline/carrier/ocean
liner, as one who merely acts as a sort of booking
agent with no responsibility for the actual
transportation. It must be noted that in such cases
the freight forwarder bears no liability with respect to
transportation and any legal proceedings will have to
be instituted by the exporters, against the
airline/carrier/ocean liner. The freight forwarder
merely charges the rate prescribed by the
airline/carrier/ocean liner and cannot vary it unless
authorized by them. In such cases the freight
forwarder may be considered to be an intermediary
under rule 2(f) read with rule 9 of POPS, since he is
merely facilitating the provision of the service of
transportation but not providing it on his own
account. When the freight forwarder acts as an agent
of an airline/carrier/ocean liner, the service of
transportation is provided by the airline/carrier/
ocean-liner and the freight forwarder is merely an
agent and the service of actual transportation will
not be liable for service tax under Rule 10 of POPS.
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 outside India. He is bearing all the
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risk 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. 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."
7. It is evident from the C.B.E. & C. Circular also
that the Revenue was also of the view that service
tax is payable when one acts as an intermediary
and not as a trader dealing on principal to
principal basis on their own account which is
undisputedly the case here. We further, find that in
an identical case, in the case of Phoenix International
Freight Service Pvt. Ltd. (supra) the Tribunal has held
that buying and selling space on ships does not
amount to rendering a service and any profit or
income earned through such transactions is not
leviable to service tax. We find no reason to deviate
from this view taken by the Tribunal which view is also
supported by the C.B.E. & C. circular cited above. In
conclusion, the demand of service tax, interest and
penalties are liable to be set aside and we do so."
(emphasis supplied)
15. In Bhatia Shipping (P) Limited vs.
Commissioner of Service Tax-I, Mumbai11, the Division
Bench followed the earlier Division Benches and observed as
follows:
"5. The appellant is primarily engaged in the
business of freight forwarding, clearing and
forwarding and other allied activities that involve
booking of Containers/Air Cargo with various
Shipping Lines/Airlines for their customers and
recovering other miscellaneous charges from their
customers (mainly importers and exporters). The
appellant provides cargo space to the customers
11. [2022] 136 taxmann.com 407 (Mumbai-CESTAT)
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who are importers/exporters of goods. The
appellant pays charges for space booking to
different Shipping Lines/Airlines and later on sells
such space to the exporters/importers at a slightly
higher amount. The difference between the amount
paid by the Appellant to the Shipping Lines/Airlines and
the amount recovered by the Appellant from the
customers (exporter/importers) is called the "mark-up".
6. The Department was of the view that this
"mark-up" was for services provided by the
Appellant to customers and was, therefore, liable
to service tax under the category of "support
services of business or commerce", covered under
section 65(104) of the Finance Act, 1994 . The
Department was also of the view that after July, 2012,
the service was not covered by any service notified in
the negative list and, therefore, continues to be taxable.
******
10. A Division Bench of the Tribunal in the earlier decision rendered in Satkar Logistics vs. CST7 accepted the contention advanced on behalf of the appellant that the appellant was only trading in space and was not providing any service. The Division Bench also noted that the issue involved in the Appeal was covered by the decision of the Tribunal in Greenwich Meridian Logistics (India) Pvt. Ltd. vs. CST 12 and Commissioner of Service Tax, New Delhi vs. Karam Freight Movers13.
11. Subsequently, the decision earlier rendered in Satkar Logistics on 21.08.2018 was followed by the Division Bench of this Tribunal in Satkar Logistics.
(emphasis supplied)"
In view of the settled legal position, we uphold the findings of the impugned order in this regard.
12. (2016) 69 taxmann.com 100/55 GST 635 (Mum.-CESTAT)
13. (2017) 82 taxmann.com 363 (New Delhi-CESTAT) 13 ST/51968/2019 5.3 As regards the second issue on leviability of service tax on reimbursable expenses, we note that the impugned order has noted as below:
" xxxxx xxxxx xxxxx
(iii) Regarding the re-imbursement of expenses, from the perusal of sample invoices annexed with the appeal, I find that the appellant have specifically mentioned the statutory expenses separately. In the schedule of rates, they have mentioned that "Statutory charges:- these are payable at actual as per statutory receipts. Amount payable in advance as per our requisition. These charges include (a) Customs duty; (b) IAAI charges; (c) Air line. Air consol agent charges for air freight and delivery order; (d) Municipal Government levies such as Octroi etc; (e) Toll tax; (f) Service Tax; (g) EDI receipt of Customs; (h) Statutory agencies testing charges etc." I find that all of these charges are statutory levies. For example, the Customs duty is payable on actual basis by the Service receiver to the appellant. Levying Service Tax on such charges would tantamount to levy of Service Tax on Customs duty which is not permissible in the law.
(iv) Even if for the sake of argument, it is assumed that the said reimbursable levies are leviable to Service Tax, then also the same would be exempted from Service Tax in view of Rule 5 (2) of Service Tax Rules, 1994 which provides that "(2) Subject to the provisions of sub-rule (1), the expenditure or costs incurred by the service provider as a pure agent of the recipient of service, shall be excluded from the value of the taxable service if all the following conditions are satisfied, namely :- (i) the service provider acts as a pure agent of the recipient of service when he makes payment to third party for the goods or services procured; (ii) the recipient of service receives and uses the goods or services so procured by the service provider in his capacity as pure agent of the recipient of service; (iii) the recipient of service is liable to make payment to the third party; (iv) the recipient of service authorizes the service provider to make payment on his behalf; (v) the recipient of service knows that the goods and services for which 14 ST/51968/2019 payment has been made by the service provider shall be provided by the third party: (vi) the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service; (vii) the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and
(viii) the goods or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account." In the instant case, all these conditions are satisfied. So, the reimbursable expenses are not taxable by virtue of this Rule."
6. It has been submitted before us that the respondent was not a pure agent as there was a mark up in prices. In this context, the impugned order clearly notes that the sample invoices separately indicate the statutory charges viz., Customs duty IAAI charges, Airlines, Air Console agent charges for air freight & delivery order, Municipal Government levies such as Octroi, Toll tax, Service Tax etc. It has also been clearly noted that Rule 5 (2) of Service Tax Rules 1994 lays down certain conditions on „Pure Agent‟ services and it has been held that the respondent had satisfied all the conditions. We note that the Department has not led any evidence contrary to this finding.
Hence, we hold that the Commissioner (Appeals) has rightly dropped the demand in this regard.
7. We know take up for consideration the third issue i.e, transportation of stores depot to U.N. Mission. We note that the impugned order has dropped the demand on the ground that the 15 ST/51968/2019 amount related to ocean freight which was not taxable. We also note that the Show Cause Notice has not quantified the amount based on any invoices, but has taken the difference between „Income‟ and „expenditure‟ and raised the demand. Further, we note that the appellant had claimed exemption vide Notification No.16/2002-ST dated 02.08.2002, which is reproduced below:
" 2nd August, 2002 Notification No. 16/2002-Service Tax In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Government of India, in the Ministry of Finance, Department of Revenue vide GSR 205(E), th 24 April, 1998, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all the taxable services specified in section 65 of the said Act provided by any person, to the United Nations or an International Organisation, from the whole of the service tax leviable under section 66 of the said Act.
EXPLANATION:- For the purposes of this notification, "International Organisation" means an international organisation declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), to which the provisions of the Schedule to the said Act apply.
Suraksha Katiyar Under Secretary to the Government of India.
F.No.149/03/2002-CX.4"
8. It is an admitted fact that the contract had been awarded by the Indian Army for provisioning multi-modal transportation service to UN Peace Keeping mission. It is also an admitted fact that the major portion of the consideration was for ocean freight. 16
ST/51968/2019 Learned authorized representative submitted that the entire amount was not for ocean freight, hence Commissioner (Appeals) had erred in dropping the demand. The appellant was providing services to UN Peace Keeping mission. The Security Council is one of the primary organs of the United Nations Organization. One of the roles and responsibilities of the Security Council is to execute peace keeping operations and political missions. The role of the Security Council is to place for the political, military, operational and support (i.e. logistics and administration) aspects of the peace operation. The service provided by them is to the United Nations and not International Organization and therefore the same is also exempted under Notification No.16/2002 dated 02.08.2002 and is not liable to service tax at all in its entirety.
9. It is a fact that such Peace Keeping missions are under the aegis of the Security Council, which is an integral part of the U.N. Consequently, supply of all services to the UN Peacekeeping Mission by the respondent is eligible for the exemption under Notification No.16/2002-ST dated 02.08.2002. Further, we also hold that the said exemption was also available under Notification No.25/2012-ST dated 20.06.2012. In this context, we draw support from the decision of this Tribunal in the case of Commissioner of Service Tax vs. Corporate Housekeeping Services vide its Final Order No.56009-56010 of 2024 dated 09.07.2024:
"7.1 In the instant case, we find that the appellant- respondent Kas provided services to UNDP, UNICEF, UN 17 ST/51968/2019 Women, UN AIDS, UNODC, & UNOPS. The question before us is whether the said organisations are covered by the aforesaid notification. For the period prior to 01.07.2012, the applicable notification was Notification no. 16/2002 which exempted United Nations or International Organisation or an International Organisation, which was declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947. It is generally understood that United Nations is part of the UN system, which in addition to itself comprises many specialized agencies, funds, programmes, each having their own area of work, leadership and budget. We note that the six organs of the United Nation are being represented by the various Funds and Programmes/ Departments and Offices/ Subsidiaries/ Functional and Regional Commissions and Other Entities etc. These representatives also have their offices at different locations in India. Therefore, Indian offices of these representatives of United Nations are basically part of United Nations, which are provided various privileges and immunities under Indian Laws. It is seen that the Central Government vide the aforesaid notification granted exemption from payment service tax on all the taxable services to United Nations. There is no connection between exemption provided to United Nations and International Organizations as both are independent from each other. Further, the reference to 'The United Nations (Privileges and Immunities) Act, 1947' in the definition of 'Specified International Organisations' is for limited purpose and has nothing to do with exemption provided to United Nations. In this context, we take note of the decision in M/s Ballset Entertainment Pvt Ltd., vs Commissioner of Service Tax, Delhi wherein the Tribunal vide Final Order No. 58436/2017 dated 19.12.17 held as follows:
"5. On the second issue regarding services provided for use by the international organization UNICEF, we note the lower authorities denied the exemption under Notification 16/2002-ST on the ground that the services were provided by the appellant to M/s Lintas India (P) Ltd. and not to UNICEF. Notification 16/2002-ST exempts all taxable services provided by 18 ST/51968/2019 any person to the United Nations or an international organization as declared by the Government. UNICEF is covered by the exemption notification. We have perused various bills raised by the appellant to receive the consideration for such services. Though the bills were raised in the name of M/s Lintas India (P) Ltd., the nature of service is clearly mentioned as charges towards branding cost of three UNICEF Van, UNICEF Girl Star activities, cost of UNICEF Float Operational for 30 days, branding of Van for UNICEF.
A perusal of these bills make it clear that the services are for UNICEF though the bill is raised through M/s Lintas India (P) Ltd. We find in such situation, denial of exemption under Notification 16/2002-ST will not be sustainable. Accordingly, the claim of the appellant is accepted for such exemption."
7.2 We now take up the issue of exemption under the Notification no. 25/2012-ST dated 20.06.2012, which is reproduced hereinafter for ease of reference:
"Notification no. 25/2012 -ST dated 20.06.2012 In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act) and in supersession of notification number 12/2012-
Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 210 (E), dated the 17* March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the following taxable services from the whole of the service tax leviable thereon under section 66B of the said Act, namely:-
1. Services provided to the United Nations or a specified international organization;
.................................................................."
19ST/51968/2019 As per the said notification as well, we observe that it granted similar exemption from payment service tax on all the taxable services to United Nations or a specified International Organization. As already noted supra, the six organs of the United Nations are represented by the various Funds and Programmes/ Departments and Offices /Subsidiaries/ Functional and Regional Commissions and Other Entities etc, who have offices in India, making these essentially part of United Nations. These offices are provided various privileges and immunities under Indian Laws. It is seen that the Central Government vide the aforesaid notification granted exemption from payment service tax on all the taxable services to United Nations or a specified International Organization. As regards the 'specified International Organization' declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and immunities) Act, 1947 (46 of 1947), we have already held that this clause is different from United Nations. Therefore, section 3 of the United Nations (Privileges and Immunities) Act, 1947 only talks about the other International Organisation which are separately ntified by the Central Government.
7.3 Therefore, section 2 of the United Nations (Privileges and Immunities) Act, 1947 provides privileges and immunities to the United Nations and its representatives and officers adopted by the General Assembly of the United Nations on the 13th day of February, 1946, wherein India is also member. There is no connection between exemption provided to United Nations and International Organizations as both are independent from each other. Further, the reference to 'The United Nations (Privileges and Immunities) Act, 1947' in the definition of 'Specified International Organisations' is for limited purpose and has nothing to do with exemption provided to United Nations. We hold that to avail exemption under the Notification No. 25/2012-ST dated 20.06.2012, one has to be either United Nations or a notified International Organization. We note that the Mega Exemption Notification No. 25/2012-ST provides exemption to United Nations and there is no condition in this notification that any organizations/agency attached or affiliated to the United Nations also requires to be notified 20 ST/51968/2019 by Central Govt. under Section 3 of the United Nations (Privileges and Immunities) Act, 1947. Hence, we hold that the exemption to United Nations is general in nature and services provided to UNDP, UNICEF, UN Women, UN AIDS, UNODC, & UNOPS iS available on the basis of mega exemption Notification No. 25/2012-ST dated 20.06.2012 itself. The demand in this regard is accordingly is liable to be set aside."
10. In view of the above discussions, we find no infirmity with the impugned order and uphold the same. The appeal is, accordingly, dismissed.
(Order pronounced in the open court on 19.09.2025) BINU TAMTA MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) Archana