GAC Shipping (India) Pvt. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal filed against the Order-in-Appeal dated 12.07.2014, which had upheld the demand of service tax on the mark-up earned by the appellant on ocean freight charges.
The appellant was registered under Custom House Agent Service, Transport of Goods by Road Service and Business Auxiliary Service. During an audit, the department found that the appellant had paid ocean freight charges to shipping lines on behalf of its principals and had recovered higher amounts from its customers by adding a mark-up or margin during the period from October 2012 to September 2013. The department also noticed that the appellant collected share profits from its clients. It viewed the mark-up on ocean freight and share profits as liable to service tax under “Steamer Agent Services.” Since the appellant had not obtained service tax registration under that category, a show cause notice dated 27.02.2014 was issued demanding service tax of ₹27,599 along with interest and proposing penalties. The adjudicating authority confirmed the demand under Section 73(1) of the Finance Act, 1994 along with interest and imposed penalties under Sections 76 and 77. The Commissioner (Appeals) rejected the appellant’s appeal, leading to the present appeal before the Tribunal.
