Haiko Logistics India Pvt. Ltd. Vs Commissioner of Service Tax (CESTAT Delhi)
CESTAT Delhi held that appellant was buying and selling space on its own account and was not acting on behalf of the shipping lines. Hence, the same is not covered under the definition of Business Auxiliary Service (BAS).
Facts- The appellant is a multi-modal transport operator under Multi-Modal Goods Transport Act, 1993 and is having a license/registration issued by Directorate General of Shipping.
The clients (importers/exporters) approach the appellant for transportation of their goods from overseas or to overseas and the appellant in turn approaches various shipping lines/airlines and books cargo space on such ships/planes as per requirements of the clients on agreed price and transports the goods thereafter. The amount paid towards freight by the appellant to the shipping lines/airlines can be less than what the appellant receives from the selling of space to clients or more than that or it can be the same. Thus, there can be profit or loss or no profit no loss to the appellant while buying and selling cargo space.
There are also certain payments towards customs duty, air freight, ocean freight and surcharges which are made by the appellant on behalf of the clients and thereafter recovered from the clients without any mark-up. The appellant claims that since the payment made by the client towards the said charges are in the nature of reimbursements, the same are recorded by the appellant as non-taxable in the books of accounts.
Demand of service tax was raised towards profit/markup of ocean freight during buying and selling of shipping space; commission income from shipping lines; etc. Notably, the said demand was dropped by the Commissioner. Being aggrieved, department has preferred present appeal.
Conclusion- Held that the appellant was not acting as an agent on behalf of the shipping lines as it bought and sold space on its own account. Thus, it cannot be said that the appellant was acting as a commission agent and thereby, covered under the definition of BAS.
During the audit, an objection was raised with respect to nonpayment of service tax on legal expenses and on difference in figures in ST-3 returns. The said payments were made by the appellant with interest before the issuance of the show cause notice. Thus, the appellant was entitled to the benefit of section 73(3) of the Finance Act. The demand could not, therefore, have been confirmed.
FULL TEXT OF THE CESTAT DELHI ORDER
1. Service Tax Appeal No. 52935 of 2016 has been filed by M/s Haiko Logistics India Pvt. Ltd.1 to assail the order dated 10.08.2016 passed by the Commissioner of Service Tax, New Delhi2 adjudicating the show cause notices dated 10.10.2014 and 26.08.2015.
2. Service Tax Appeal No. 53001 of 2018 has been filed by the appellant to assail the order dated 22.05.2018 passed by the Commissioner adjudicating the show cause notice dated 11.04.2016.
3. Service Tax Appeal No. 53022 of 2018 has been filed by the Department to assail that part of the order dated 22.05.2018 by which the Commissioner has dropped the demand of Rs. 22,12,87,459/-.
4. The details of the aforesaid three appeals are as follows:-
